I recently started working in Ho Chi Minh City as an architect. I have heard the term “Viet Kieus” used a lot but I don’t really know what it means exactly. I’ve also heard that they enjoy many benefits, for example with investment. Is that true?
Even though the Vietnamese term is widely used in practice, you won’t be able to find it anywhere in Vietnamese laws. From a legal perspective, a more accurate definition would therefore be “Vietnamese residing overseas.” According to the Vietnamese Ministry of Foreign Affairs, there are roughly 4 million Vietnamese people living overseas, and the biggest communities can be found in the US, Cambodia and France.
There are various reasons why Vietnamese people live overseas. It probably goes without saying that many moved to the US after the liberation of Saigon in 1975, but others had already moved to France during the colonial period. In more recent times, immigrants have moved to countries such as Australia, Japan, South Korea and countries in the European Union for family, economic or educational purposes. Around the world you can find Vietnamese communities with names such as, “Little Saigon” and “Little Hanoi.”
The role of the Viet Kieu in society, and the attitude of the Vietnamese government towards them have evolved positively over time. Since 2013, the Constitution of Vietnam explicitly mentions that Viet Kieus form an integral part of the Vietnamese community. It also mentions that the State shall encourage and provide favorable conditions for them to preserve the identity of the Vietnamese national culture, to keep close contacts with their families and their home country, and to contribute to the construction of Vietnam.
Now what does this special status mean in practice? You rightfully asked me whether Viet Kieus enjoy any preferential treatment in terms of doing business in Vietnam. In order to answer that question, we need to know how Vietnamese law defines this group of people. There is not a single, unified definition, but the one under the Law on Vietnamese Nationality is helpful in this regard: “Vietnamese residing overseas are Vietnamese citizens, and persons of Vietnamese origin, who permanently reside in foreign countries.” This means that the following groups are covered: a) people holding Vietnamese nationality, b) people who used to hold Vietnamese nationality at the time of their birth, and c) the children and grandchildren of group a.
Note that neither the Vietnamese Law on Enterprises, nor the Vietnamese Law on Investment contains any provision that specifically favors Viet Kieus. Instead, these two fundamental laws make a distinction on the basis of nationality. Under the law, there are “domestic” investors (any individual with Vietnamese nationality, or any company without a foreign investor being a member or shareholder), and there are “foreign” investors (any individual with a foreign nationality, or any company established in accordance with foreign law). Domestic investors are exempt from the sometime burdensome rules and procedures that would apply to their foreign counterparts.
This means that Viet Kieus who have lost or given up their Vietnamese nationality may want to consider restoring their Vietnamese nationality in order to benefit from a preferential treatment under the Law on Investment. Also, Vietnamese nationals who concurrently have another nationality may choose whether to invest as a domestic or foreign investor.
One sector in which Viet Kieus do enjoy special treatment is real estate. Under the Law on Residential Housing, for example, Viet Kieus who own a residential house enjoy the same rights as Vietnamese individuals and companies who actually reside in the country. For example, the housing quota and the 50-year ownership limit that apply to foreign owners of residential houses do not apply to Viet Kieus who hold Vietnamese nationality. Furthermore, the Law on Real Estate Business states that Viet Kieus can invest in the construction of houses and buildings on land leased from Vietnamese individuals, family households and companies for the purpose of leasing it out. This is something that foreigners and foreign companies are not allowed to do.
Another way in which the government tries to encourage Viet Kieus to return to their home country and/or to invest in Vietnam’s economy is by granting tax incentives. For example, Vietnamese tax law states that income in the form of foreign currency remitted by Viet Kieus shall be exempt from personal income tax. This incentive is apparently working quite well as the World Bank has estimated that the total amount of so-called “inward remittance” for Vietnam in 2015 was more than USD13 billion. In addition, Viet Kieus without Vietnamese nationality receive favorable conditions when obtaining residence permits and visas.
Finally, subject to certain conditions, Viet Kieus who decide to resettle in Vietnam do not need to pay import duties and value added tax on their first imported car and motorbike. As if there weren’t enough motorbikes in Vietnam, already!
Every month, Marijn Sprokkereef answers legal questions from Oi readers. If you have any legal questions you want answered, send them to [email protected].
BIO: Marijn Sprokkereef is an associate of Audier & Partners, an international law firm with offices in Vietnam (Ho Chi Minh City and Hanoi), Myanmar and Mongolia. Audier & Partners provides advice to foreign investors on a broad range of legal issues.