Importance of Training for Overseas-Helmed Groups
Article Title: Vietnam's Foreign-Invested Enterprises and Labor Training: A Focus on Skills Development
In a bid to enhance the quality and quantity of its labor force, Vietnam's foreign-invested enterprises (FIEs) are being encouraged to invest in employee training. This push towards continuous vocational training, skills certification, and workforce upskilling is part of a broader national strategy aimed at building a future-ready workforce aligned with socio-economic development needs.
According to the 2025 Employment Law, employers, including FIEs, are mandated to offer training and development programs, particularly targeting workers vulnerable to redundancy amid technological or market changes. The policy framework establishes National Skills Qualification Frameworks (NSQF) aligned with regional and international standards, facilitating skills assessment, certification, and mutual recognition of qualifications across borders. The government also incentivizes training investments via tax relief, subsidies, and preferential access to employment funds.
Ministerial reports highlight that FIEs may be mandated to prepare labor training plans as a condition for their operation in Vietnam. This requirement is part of a wider policy environment prioritizing vocational training reforms and social insurance adjustments over wage increases.
Recently, the Minister of Finance, Nguyen Van Thang, proposed that labor training should be a condition for FIEs to invest and do business in Vietnam. He suggested achieving this through various support policies such as tax incentives, advanced science and technology development, formation of industry-linked clusters, and development of industrial zones and industry-linked clusters on scales of up to 1,000 hectares of land.
Despite these efforts, only 57% of total FIEs in Vietnam are implementing training programs for their employees. The government recognizes the need to improve this figure and will continue working on the policy framework to create a complete legal foundation for labor protection and improvement in FIEs.
The World Bank has highlighted Vietnam's serious shortage of high-skilled labor. High-skilled positions such as electrical engineers, specialised technicians, programmers, or managers comprise less than 6% of all manufacturing jobs in 2021, which is lower than the proportion seen in Thailand (12.8%). To address this issue, the government is focusing on attracting, training, and retaining highly skilled personnel crucial for advanced sectors such as science, technology, artificial intelligence, and other emerging fields.
In the first half of 2021, total newly registered and added foreign capital, and capital from stake acquisitions amounted to $21.52 billion, up strongly by 32.6% year-on-year. As of late June, there were over 43,700 foreign-invested projects registered in Vietnam, totaling $519.54 billion. FIEs contributed about $20.5 billion to the state budget in 2024, representing a 12% year-on-year increase and accounting for 24.7% of total budget revenue.
However, Vietnam's integration into global value chains (GVCs) has led to a high concentration in low value-added final assembly, with close to 85% of all manufacturing jobs being low-skilled. FIEs frequently use probationary contracts and dismiss workers, particularly older ones, which causes harm to workers' rights. Encouraging links between FIEs and domestic enterprises is crucial to facilitate technology transfer, enhance domestic production capacity, and create a foundation for sustainable growth.
In conclusion, Vietnam's policy landscape mandates foreign-invested enterprises to actively engage in labor training, supported by government incentives and strategic frameworks, aiming to protect and improve labor quality and quantity by fostering continuous skill development and aligning enterprise labor forces with national and global economic standards. The government will need to continue improving the policy framework and create a complete legal foundation for labor protection and improvement in FIEs to address the shortage of high-skilled labor and ensure sustainable growth.
[1] Source [2] Source [3] Source [4] Source [5] Source
- In light of the government's emphasis on fostering a future-ready workforce, foreign-invested businesses in education-and-self-development sectors could benefit from offering advanced training programs that cater to high-skilled positions, such as electrical engineers, programmers, and managers.
- Recognizing the need to upskill its workforce and attract foreign investment, the Vietnamese government's focus on financing initiatives, like tax incentives and subsidies, for businesses that invest in continuous training and development could drive growth in the finance and business sectors.
