
Tet holidays have passed and lots of work for 2009 are still ahead. In the photo is a "rare" scenery on Lang Ha street, Hanoi, with nice weather and "peaceful" traffic. (Sunday afternoon. 15 Feb 2009). Photo: DTK Consulting.

Two months have passed and there are lots of things to do for the year. In the context of world economic crisis, Vietnam is not "outside the game". For each enterprise, it is time to try the best to maintain basic operations, base on core competencies and hope for improvements in the macroenvironment.

Newsletter No.15

(February 2009)

Written for organizational counterparts

and individuals - collaborators

Business Environment

Macroeconomics

After the first month of the year with low inflation (0.32%), due to the traditional Tet holidays, falling mainly on the last week of January, CPI for February has been higher (1.17%). However, compared to recent years, CPI for Feb 2009 was still lower and this was surely due to world economic crisis, resulting in reducing purchasing power of the consumer. With uncertainties for the coming months, the ordinary person also has to save the money and limit to spending for only most basic needs.

Table 1: Consumer Price Index (CPI, %) for the first months of the year from 2005-2009

Year	Jan	Feb	Mar
2005	101.10	102.50	100.10
2006	101.20	102.10	99.50
2007	101.05	102.20	99.80
2008	102.38	103.56	102.99
2009	100.32	101.17

February’s CPI has increased at 1.49% and 14.78% compared to December 2008 and February 2008, respectively. Compared to the same period last year, CPI of the first 2 months has already increased 16.13%; however, the price level of food and foodstuff has increased by nearly 25%. This is an important factor affecting the daily life of the majority of workers who receive modest salaries. With the average rise in retail electricity price of 8.92% from 1 March 2009 (by Prime Minister’s Decision No. 21/2009/QĐ-TTg dated 12 Feb 2009), there will be probably much higher inflation from March or April 2009; in this process the effect of “jumping on the bandwagon” often happens in the market for various kinds of basic goods and services, even the Government tries lots of efforts to have prices under control.

Table 2: CPI for February 2009

Price Index in February 2009 Compared to (%)

CPI of the first 2 months in 2009 compared to same period in 2008

Feb 2008

Dec. 2008

Jan 2009

Consumer price index

114.78

101.49

101.17

116.13

Food and foodstuff

122.16

102.07

101.67

124.84

Of which: - 1. Food

135.29

100.78

100.82

136.91

2. Foodstuff

116.00

102.28

101.72

119.27

Gold price index

105.21

109.59

105.74

105.30

USD price index

109.28

102.40

100.91

108.72

(Source: Website of General Office of Statistics)

Graph 1:

Looking at data for monthly CPIs (Graph 1), we can see that CPI reduces after high peak during Tet, but from 2008, due to economic crisis and uncertainties, the amplitude is much broader.

Legal framework and human resources management

Personal Income Tax (PIT): to implement the Government’s policy to stimulate the (consumers’) demands, for period Jan-May 2009, personal income tax payment is deferred. It is stipulated by Circular 27/2009/TT-BTC dated 6 February 2009 of Ministry of Finance (MoF). In line with this Circular, PIT is still calculated and reported to the tax office but not yet deducted from the employee’s salary payroll. The employee will be responsible in front of the tax authority for her/his PIT (annual) reconciliation if leaving the organisation in period Jan-May 2009. Other guides from MoF explaining the procedures are Official Letter No. 1823 and Official Letter No. 1845 dated 18 Feb 2009.

Unemployment Insurance (UI): On 11 Feb 2009, Hanoi Social Insurance issued the Official Letter numbered 103/BHXH-PT, guiding the process of collecting social, health and unemployment insurance. There are also updated forms to facilitate the collection of UI. Companies in other provinces should contact the Social Insurance office in their area for guiding documents.

Government’s support to individual employees who lost job in enterprises that suffered from difficult economic contexts: Formalities are explained in the Joint Circular 06/2009/TTLT-BLĐTBXH-BTC issued by MOLISA and MoF guiding the implementation of Prime Minister’s Decision number 30/2009/QĐ-TTg dated 23 Feb 2009.

HRM in Current Macro Context

It is important to balance the interests of the Company and the employees, when the company passes its different phases on the business cycle, and the employee also moves along her/his career cycle. It is not always an easy process and each company has its own approach, affected by the company culture (and vision, mission etc). We have seen strikes happened in many enterprises, and so balancing the stakeholders’ interests is a field that the company management and HR department should pay high attention to.

Salary review and salary increment is important in each company, as remuneration is always a hot topic. So in February 2009, DTK Consulting made a mini survey on the tendency for salary increment in 2009. The survey result shows an overview on various practices and factors that a company needs to base on when doing salary review. The public version of the report is in Vietnamese, but we will translate it into English, should there is a need from our Clients.

Table 3: Time for salary review in 2009 (already done or just planned)

Time	% of companies
Quarter I	38
Quarter II	8
Quarter III	16
Quarter IV	0
No plan yet	38
Total, %	100

One finding from the survey is that 38% of the respondents already done, or plan to have, a salary review in the first quarter of 2009. The same portion of respondents has no plan yet for salary review this year, looking at economic uncertainty. It is logical that none have a salary review planned for the last quarter. We recommend that each company can apply different time and approach for the annual salary review, but should not forget the competitive position in the labour market.

DTK Consulting's Recruitment Service

For several months by now, DTK Consulting has recruited key personnel for Minda Vietnam Ltd, in various functions: from part production, assembly, QC, maintenance, tool room to HR, IT, accounting, and admin staff. Minda is an Indian FDI company with newly built factory in Binh Xuyen Industrial Park, Vinh Phuc. The company provides shuttle bus for employees coming from Hanoi. We consider this a model for cooperation to replicate with other (new) FDI companies ■