The fresh challenge of the MINT countries

February 21, 2014

In October 2012, Newland Chase held a seminar about Global Immigration to the BRIC countries: Brazil, Russia, India and China. These economies in recent years have become, as predicted, global economic giants, albeit to different degrees. The world has seen the huge potential of these emerging economies, which have been growing at a much greater ratio than the traditional European counterpart markets. This in turn has had an effect on the UK and US economies.

In our seminar, we mentioned that whilst more and more international companies are shifting their investments from established markets, to these more promising areas, they often, forget the key ingredient in facilitating this – immigration.

In recent years we have seen major firms establishing entities and contracts in these new and challenging locations, we are now witnessing new growth areas in Mexico, Indonesia, Nigeria and Turkey – the so called “MINT” countries.

The MINT countries all benefit from a key factor – their geographical positions. Mexico sits next to USA and belongs to the North American Free Trade Agreement (NAFTA), Indonesia lies at the centre of South East Asia, Turkey is connected to both the West and East, whilst Nigeria is on the coast of Africa surrounded by future trading partners.

The MINT countries’ growth is also attributed to their primary economic sectors. Mexico, Indonesia and Nigeria have all profited from the production of commodities. Mexico has taken full advantage of its offshore oil reserves and is also transforming into a base for manufacturing due to its abundance of labour and proximity to USA. Turkey in the meantime has become known as a world leading shipbuilding nation, as well as one of the leading, most competitive and dynamic construction and contracting industries.

Larger companies recognise the need to expand into these markets quickly, however frequently fail to recognise or even consider the challenges in investing in these rapidly changing global economies which may separately have complex or inflexible immigration policies or regulations.  Companies may start to establish a presence, seek advice regarding tax liabilities, but completely neglect an essential dynamic in this process. A new entity or branch in an emerging economy is of no use without the most important element – employees that can be easily mobilised to the country to do the job. Immigration varies from country to country and governments around the world, particularly in the emerging markets have tighter controls on immigration, often with hefty penalties for breach of immigration rules.

As immigration advisors, we are often instructed once an entity has been established already and the company realises that transferring or recruiting personnel is likely to be a stumbling block to their investment.

Each of these countries has their own challenges in regards to immigration and it is important to be aware of these factors from the outset. 

Mexico

As mentioned above, the geographical location of Mexico is one reason why the country has so much growth potential. Mexico has close links to the US and fast growing Latin American countries, most notably Brazil, one of our famous BRIC countries. Over the past five years Mexico has significantly increased its exports into the US, which in turn has boosted growth. New economic reforms that have also been introduced and the Mexican Government have dramatically lowered its gas and electricity prices. This is expected to increase foreign investment into the country.

It is important to remember however that the immigration rules of Mexico are liable to sudden change and the current regulations are relatively new.

Companies wishing to hire foreign nationals who are going to undertake “Lucrative Activities” (i.e. work activities for remuneration) will need to be a Mexican-based company and the Mexican employer/sponsor will need to request the work permit or migratory form directly at the National Migration Institute (NMI) in Mexico. This process takes approximately 30 days. The company will have to provide of a variety of documents and evidence with this application (such as corporation documents and tax documentation as well as evidence of the migrant’s job role and qualifications) and so it is advisable that this process is considered from the outset in order for the documents to be collated in time.

The NMI will then send a notification confirming that the employee has 15 days to go to their nearest Consulate in order to issue the visa and make payment of fees. It then takes two working days to issue the visa.

Indonesia

The Indonesian immigration system comes across as quite bureaucratic and confusing, if you are unaware of the process. First of all, it is important to know that, just as in the case of Mexico, it is up to the employing entity to apply for the work permit in the first instance.

Before a company can hire foreign employees, they need to obtain a special work permit called an IMTA. This work permit can only be obtained if the company can prove that foreign nationals are needed to fill certain positions. The Indonesian government has a keen policy of prioritising Indonesian nationals in the job market first, so once an entity is established, the firm must collect evidence that they have a need bring in foreign workers first and the Indonesian labour market cannot facilitate the job roles required. Often companies neglect to consider this fact, which inevitably delays the process and delays the setting up and running of a new overseas entity in Indonesia.

The company must then submit an application for a limited stay visa (VITAS) on the employee’s behalf. The company will need to gain approval for the application from the Manpower Ministry, who will in turn send a letter of recommendation to the General Directorate of Immigration in Jakarta.

Once the assignee arrives in Indonesia, they will need to report to the regional immigration office in order to be fingerprinted and to exchange their visa for a limited stay permit card (KITAS). The employee will have to, once they have received their KITAS card, obtain an expatriate work permit (IKTA). Before this can be issued, the Skill and Development Fund (DPKK) fee must be paid. This is an annual fee of $1200 (USD) that companies employing expatriates must pay, the motive and purpose of which is to facilitate the training of Indonesian citizens. This fee will also need to be considered by the company and is a detail that also cannot be overlooked.

Nigeria

Nigeria’s economy is largely chained to its oil sector. Most foreign investment in Nigeria is in the oil and mining industries. However, there is also a growth in the Nigerian banking, telecommunications and construction industries.

Taking up employment in Nigeria involves a fair bit of red tape. Employers hiring foreign workers must obtain an Expatriate Quota and a Business Permit from the Ministry of Internal Affairs.

To work in Nigeria, the assignee will firstly need to apply for a STR visa. To obtain this visa, the company must again produce a variety of documentation, such as employment offer letters, the worker’s qualifications, certificate of incorporation of the Nigerian entity, proof of the Nigerian Immigration quota approval and Nigerian Business Permit. The worker must subsequently attend their local Nigerian embassy in their home country.

The STR visa alone does not entitle the worker to take up employment in Nigeria right away. The employing entity must apply for the regularisation of the worker’s stay after they arrive in Nigeria. Once the STR visa has been obtained, the worker will still need to apply for a CERPAC, a combined residence and work permit for foreign workers, which is valid for two years.

It is important to start the immigration process as early possible, simply because of the amount of documentation and evidence required to be produced. It is also essential to consider that the overseas established company, prior to setting up a Nigerian entity, must also obtain approval under the Nigerian Immigration Approval Quota to employ foreign nationals, as well as obtain a Business Permit. 

Turkey

Above we mention that Turkey is fast growing ship building nation, as well as a growing competitor in the construction industry. In addition, Turkey’s energy sector has also been thriving for some time and foreign companies have capitalised on the hydro, natural, gas and coal resources, resulting in highly skilled foreign workers being employed more frequently.

In spite of this, the Turkish government has a keen policy of encouraging companies to employ local workers as much as possible, to keep the reliance of expats to a minimum. This is of course is bound to create problems for foreign investors setting up an entity in Turkey if they have to jump hoops in order to mobilise non-Turkish nationals.

The employment of at least 5 Turkish Citizens is mandatory in workplaces that request a work permit. In the case of requests of work permits involving more than one foreigner worker, an additional 5 Turkish citizens will be required for each foreign worker that is issued with a work permit. In the case that the foreigner is also the partner in the company, the condition of employing 5 persons is only required for the last six months of the work permit to be issued by the Ministry.

The process for obtaining a Turkish work visa is extremely document intensive, and much too complicated to summarise. For an engineering role, the procedure is even more complex. Amongst the documents required to be produced by the Turkish entity include – an employment contract, job description, Tax Certificate of the entity, Social Security Payment record and an extract from the Trade Gazette showing that the company is listed as an official company in Turkey. The extra complication is that for engineers, the entity must obtain Chamber of Engineers (COE) Approval.

If the applicant has a qualification in engineering, the Ministry of Labour will forward the application to the Chamber of Engineers (COE). The COE will give their opinion as to whether the applicant will be carrying out engineering activities in Turkey. If this is the case, the Ministry of Labour will request additional documents, at their discretion. The purpose is to ensure that the engineer’s qualifications are recognised in Turkey as on a par with Turkish Engineering Qualifications. 

Further requirements include that the paid capital of the company have to be at least 100,000 TL or its gross sales have to be at least 800,000 TL or its export amount for the last year have to be at least 250,000 USD. The capital share of the foreigner who is a company partner requesting a work permit should be at least 20% while not being less than 40,000 TL. There are also mandatory monthly wage thresholds that need to be adhered to when hiring foreign workers, which must be in accordance with the job and the competency of the foreign person.  

In our experience the process for obtaining a Turkish work permit can take up to a year. The Turkish government is trying to improve this process at the moment and have started to issue temporary residence permits to enable engineers to come to the country sooner. This process is still in its’ early starts and we urge companies intending to invest in Turkey to consider the immigration factors and complications at the outset, as it can be extremely frustrating to have to wait up to a year to employ a migrant worker, as well as ensuring to employ 5 Turkish workers for each expat. 

Conclusion

The MINT countries are a very exciting prospect for companies looking to expand into promising areas. Particularly with the fact that Turkey is the gateway between Europe, Asia and Russia; Indonesia is in the hub of South East Asia; and Mexico and Nigeria have perfect geographical locations for trade partners. However companies looking to expand and invest in these markets may find themselves disappointed early on if they do not consider at the outset the immigration complications. Immigration problems can cause an entity too lose out on productivity and finances if a company has to wait a year in order to employ a migrant worker suitable for the role, as in the example of the Turkish Immigration system.

We urge companies looking to invest in the MINT countries to not leave immigration as a final and unimportant administrative consideration, but a main and essential factor in setting up business. 

If you are considering expanding your business internationally, please contact us for up to the minute advice on global immigration requirements.