Foreign Investment Restrictions and Business Conditions for Recruitment Agency Business in Vietnam, and Obtaining a Recruitment Agency License

A Vietnamese-qualified lawyer provides a practical, hands-on explanation of the foreign investment restrictions, investment conditions, capital requirements, and licensing procedures for establishing a recruitment agency business in Vietnam. The article comprehensively covers the legal matters that should be understood before market entry, including the distinction between business registration and license acquisition, points of caution in administrative procedures, and whether any restrictions apply to foreign ownership. NEXORA LAWFIRM has extensive experience supporting Japanese companies with entity establishment and license acquisition in the human resources services sector, providing strategic support that takes a cross-cutting view of local legal practice, labor law, and foreign investment regulation. From the planning stage through post-launch legal matters, we strongly support the development of trusted business relationships between Japan and Vietnam.

1. Foreign Investment Restrictions on the Recruitment Agency Business

Business: Domestic Recruitment Agency Business in Vietnam

Official Business Name under Vietnamese Law

CPC Code

VSIC Code

1. Activities of centers and agencies providing consulting, referral, and intermediary services relating to labor and employment

None

7810

2. Supply and management of labor

7830

Investment and Business Conditions

Conditions under WTO Commitments

Conditions under Vietnamese Domestic Law

· Employment Law No. 38/2013/QH13

· Decree No. 23/2021/ND-CP detailing Article 37, Clause 3, and Article 39 of the Employment Law regarding employment service centers and enterprises providing employment services

(1) This sector is not committed under the WTO. However, because it does not fall within the list of sectors restricted from market access in Vietnam, it may be understood that foreign-invested enterprises may establish a recruitment agency business in Vietnam with up to 100% foreign ownership.

(2) Where services are provided on a cross-border basis, the following two scenarios must be considered separately.

① Referring Vietnamese personnel to a receiving entity in Japan

Where Vietnamese personnel are sent abroad, this falls within the scope of the business of sending workers abroad for overseas employment. The business of sending workers abroad for overseas employment (i.e., functioning as a sending organization) falls within the sectors restricted from market access in Vietnam. In other words, foreign investors, or foreign-invested enterprises, may not enter the sending-organization sector in Vietnam.

② Referring Japanese personnel to a receiving entity in Vietnam

There are cases in which a Japanese recruitment agency refers Japanese staff to a local company in Vietnam. Broadly, there are two such scenarios.

① Cases in which the referral takes place between Japanese companies (i.e., between a Japanese recruitment agency and the Japanese head office of a Vietnamese local subsidiary), with the individual ultimately working in Vietnam

In this case, because the referral takes place within Japan (regardless of the eventual place of work), Vietnamese law does not apply.

② Cases in which the Japanese recruitment agency directly refers personnel to the Vietnamese local company and receives a referral fee from the Vietnamese referring party

In this case, the Japanese recruitment agency is not required to establish a local entity in Vietnam and may provide its services under a recruitment service agreement with the Vietnamese local company. However, when receiving the referral fee from Vietnam, foreign contractor tax must be declared and paid in Vietnam.

(3) The recruitment agency business itself falls within a conditional business sector, and a business operation license for recruitment agency services must therefore be obtained.

2. Obtaining a Business Operation License for Recruitment Agency Services

(1) Requirements for Obtaining a Business Operation License for Recruitment Agency Services

To obtain a business operation license for recruitment agency services, the following requirements must be satisfied.

① Owning, or leasing under a stable lease agreement of at least three years (36 months or more), the premises of the head office or a branch office

② Depositing VND 300,000,000 (VND 300 million) into an escrow account at a bank (demonstrating financial capacity)

③ Satisfying the personnel requirements

The company's legal representative must satisfy the following conditions.

o Being a manager of the enterprise as defined under the Law on Enterprises

o Not falling under any of the following: being subject to criminal prosecution, being detained, serving a prison sentence, being subject to an administrative measure requiring compulsory rehabilitation or compulsory education, being a fugitive from their place of residence, having limited or no legal capacity, having difficulty in perceiving or controlling their own behavior, or being prohibited by a court from holding a position or engaging in an occupation or employment-service-related work

o Holding a university degree or higher, or having at least two years (24 months or more) of direct professional or managerial experience in recruitment agency services or labor supply within the five years preceding the license application

(2) Other Related Matters

① The competent authority for the business operation license for recruitment agency services is the Department of Labor, Invalids and Social Affairs.

② The business operation license for recruitment agency services is valid for 60 months. An application for renewal may be filed after this period expires.

3. Other Matters

Recruitment agency operators must submit reports on the status of their recruitment agency operations to the Department of Labor, Invalids and Social Affairs where the enterprise's head office is located, on a semi-annual and annual basis. Semi-annual reports must be submitted by June 20, and annual reports by December 20.