Expats In Vietnam Unhappy About Compulsory Foreign Insurance

Vietnam is the new kid on the block as regards popularity with expats, but the new compulsory social insurance isn’t winning any prizes.

Vietnam’s growth potential, its low cost of living and the friendliness of its people has attracted a good number of expats over the past few years, overtaking its Southeast Asian neighbours as the place to be for lifestyle as well savings opportunities. However, a new government plan to introduce compulsory national insurance for foreign workers isn’t getting any support within the growing expat community.

Vietnam’s Ministry of Labour recently asked for public opinion on the potential new charges for working expats, which would entitle them to cover for occupational diseases, sickness, maternity leave and accidents, as well as retirement and death benefits. If the public opinion results are satisfactory, the new tax, similar to the tax paid by Vietnamese nationals, will be introduced on 1 January, 2018.

Comments from expats include the point that many foreign workers don’t intend to stay in the country permanently and will be unhappy about having to pay social insurance once in their home country and again in Vietnam. A spokesperson for the US Chamber of Commerce also pointed out that expats are often on short-term contracts and are therefore unable to make use of a Vietnamese pension.

Others, he said, may not be eligible for some reason, and the majority don’t want it. All told, he said, the new regulation will be impractical for almost all foreign employees. The plan’s draft gives a monthly payment of eight per cent of total salary to be put towards the death and retirement fund by employees.

Employers would contribute 18 per cent of each foreign worker’s monthly wages, made up of three per cent to the maternity and sickness fund, 14 per cent to the death and retirement fund and just one per cent to the accident and disease fund. The immediate question is the maternity portion, as the vast majority of expat workers in Vietnam are male and single.

Expatriates who are intending to return to their home countries are concerned over the currencies in which benefits would be paid, with others suspect companies will spend more on foreign labourers, thus reducing the competitiveness of local industries. For the Vietnamese government, it’s a huge cash cow as around 84,000 expats now live and work in the country.