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Thayer Consultancy

ABN # 65 648 097 123

Background Briefing: Vietnam and Illegal Chinese Workers Carlyle A. Thayer September , 2011

[clientnamedeleted] 1.WhyhastheinfluxofunskilledChineseworkerscontinuedtofloodVietnameseconstruction sitesdespitelocalofficialsvowingtocrackdownonthis?Besidesthethreatstheseworkerspose tothejobopportunityandsecurityofthelocalitieswheretheyareworking,whatcanbeother hazardsthatVietnameseauthoritiescannotignoreinthismatter? ANSWER:UnskilledChineseworkerscontinuetoenterVietnambecauseofconnivancebetween Chinese employers and Vietnamese authorities. Unskilled Chinese workers are either given touristvisasoraregivenworkpermitsasskilledworkerswithoutproperchecking. ThesepracticesraisequestionsabouttherelationsbetweenChinesecompaniesandVietnamese bordercontrolandlocalauthoritiesinVietnam.Chinamustbebribingorhandsomelyrewarding officials who turn the other way and do not enforce the law. While it is true that unskilled ChineseworkerstakejobsawayfromlocalVietnamese,itisalsotruethattheyaremoreefficient becausetheyunderstandthelanguageandworkpracticesoftheiremployers. Chineseworkershaveformedethniccommunitiesinthelocalitieswheretheyreside.Therehave been reports that they flout Vietnamese laws and some of them have extorted local shopkeepers. 2. The blame game has appeared to bog down the handling of the Chinese workers as parties involved have been blaming one another on the continued presence of droves of unlicensed ChineseworkersacrossVietnam.Whatshouldbebeingdoneinstead? ANSWER: The Prime Minister and those ministers directly concerned must meet and adopt a nationalpolicythatisstrictlyimplemented.Finesfornotfollowingthelawmustbeincreasedso thatitisarealpenaltyforthosewhodonotcomply.FinesaretoolowandChineseemployers caneasilypaythematpresent.Localauthoritiesshouldbetoldtochecktheworkpermitsand credentialsofallsocalledskilledChineseworkersnowinVietnam.AnyChinesefoundtobein VietnamillegallyshouldbefinedandreturnedtoChina.Specialattentionmustbepaidtoborder securityandimmigrationofficialsalongtheChinabordertoensurethattheyarerigorousintheir inspectionofvisaapplicationsandrequestsforworkpermits.Finally,Vietnameseofficialswho assistChinesecompaniesinfloutingthelawshouldbesubjecttothepenaltyofthelaw. 3.Chinesecontractorshavecashedinonthemusttomeetthedeadlinesoftheirprojectstoget theunskilledChineseworkersintoVietnambyhookorbycrook.Isntthereanysolutiontothis ploy? ANSWER:Chinesecompaniesregularlyoutbidotherforeigncompaniesinobtainingconstruction contracts.Theyareabletobeattheircompetitorsandmeetdeadlinesbecausetheyuseunskilled Chineselabour.AslongasVietnamseekstogetthecheapestandquickestconstructioncontracts this practicewill not end.Vietnam needstochange theincentivepackageandreward Chinese companiesthatemployunskilledVietnameselabor.Vietnamcouldhelpalleviatethissituationby

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running short intensive courses inChinese language and Chinese business culture for unskilled workerstomakethemmoreemployable. 4.Undera new decreethat has taken effect sinceearly August, foreignbusinesses bidding for VietnamesegovernmentcontractswillberequiredtogiveprioritytoVietnameseworkers.How could the Vietnamese government make the most of this decree to ward off another wave of unskilledChineseworkersthreateningtofloodthecountryagain? ANSWER:Rulebydecreeisnotenough.Vietnamneedstochangetheincentivestructuresothat foreigncompanieswillfollowthelaw.Inaddition,Vietnamneedstosuperviseandcontrolthe implementationofthisdecree.Disincentivesintheformofheavyfinesorevenimprisonmentfor repeatedoffendersshouldalsobeconsidered.Thelawshouldaimatbothforeignfirmsandlocal officialswhohelptheforeignersevadethelaw. 5. Vietnam could crack down on these Chinese workers by tightening the work permit proceduresforforeignersworkinghereinthecountry.Butifthathappens,thecollateraldamage for other foreign communities would be inevitable. Is there any way for Vietnam to minimize suchcollateraldamage? Workpermitsareforskilledlabourers.ManyChineseunskilledworkersaregivenworkpermits becausetheiremployerssaytheyareskilled.Vietnamshouldimproveitscontrolproceduresso that work permitsare only given to those who havethe appropriatequalifications. This would apply to Chinese and nonChinese workers. Chinese companies are the largest offenders, if Vietnam could get the cooperation of nonChinese foreigners and reward them, Chinese companies might begin to change their methods of operation. It takes two sides to employ unskilledworkerssoVietnamneedstotargetbothforeigncompaniesandlocalofficials.Vietnam mustapproachtheproblemofunskilledworkersinaneutralfashionandnotjustsingleoutthe Chinese. 6.Youradditionalcommentswouldbeappreciated. Illegalimmigrationisatwowaystreet.TheChinesemediareportsthatthereareatleast10,000 illegalVietnameseworkersinGuangxi.ThisnumberisundoubtedlyhigherifVietnameseinother provinceswereincluded.VietnammustbepreparedforretaliationbyChina.

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