Preferential treatments including tax and land use incentives are a key factor in the Vietnamese government’s bid to attract foreign investment; however, domestic enterprises are beginning to voice their complaints.Foreign companies in Vietnam are enjoying massive tax and other incentives, giving them an advantage over already less-competitive domestic businesses.For example, Samsung, which is operating in Vietnam through various entities, topped the Vietnamese finance ministry’s list of 100 foreign companies with the biggest tax reductions in 2016.All of Samsung’s various subsidiaries in Vietnam collectively had their taxes reduced by nearly US$1 billion last year. Of these, Samsung Electronics Vietnam Thai Nguyen alone enjoyed total tax incentives worth VND10.36 trillion ($456.39 million), according to finance ministry data.A finance ministry official said that these incentives are legally granted as per Vietnam’s policy of attracting foreign investment and … [Read more...] about Are foreign-invested firms enjoying too many incentives in Vietnam?
Vietnam foreign investment
At present, 65% of small and medium-sized enterprises (SMEs) still find it difficult to seek potential foreign partners and investors due to the lack of co-ordination and a high-skilled labour force. At a recent seminar jointly hosted by Standard Chartered Vietnam and Vietnam Chamber of Commerce and Industry (VCCI), Ms Pham Thi Thu Hang, general secretary of VCCI, said that SMEs have significantly contributed to generating jobs and boosting trade activities and economic growth of Vietnam.Although SMEs make up 98% of total number of in Vietnam, they contribute a mere 20% to the country’s total revenues.Additionally, the rate of SMEs involvement in the global trade network remains low, at 21%, when compared to other Asian countries such as Malaysia where it is 34% and the Philippines where it’s 33%. This lack of impact on a global scale is the most glaring weakness of Vietnamese SMEs.As such, experts have underlined the importance of providing necessary support for SMEs in … [Read more...] about SMEs face uphill battle for foreign investment
Foreign-invested banks in Vietnam reported a considerable rise in their profits in 2011 despite the economy recession. Foreign-invested banks gained huge profit (illustrative photo) On March 29, HSBC Bank in Vietnam announced that its pre-tax profits in 2011 had risen 40% compared to 2010. Standard and Chartered Bank also announced its revenue had increased for a ninth consecutive year with revenue of USD17.64 billion and an operating profit margin of USD6.78 billion. The total profit of retail banking sector increased 26%, with profits from the institutional banking sector reached five billion. A Standard Chartered Bank representative said, "This achievement was due to strong capital, healthy liquidity and diversified revenue from emerging markets in Asia, Africa and Middle East." According to the State Bank of Vietnam in Ho Chi Minh City the business results for foreign-invested banks, foreign bank … [Read more...] about Foreign-invested banks see increased profitability
By Tu Hoang - The Saigon Times DailyHANOI - International development partners are urging the Government to settle down the macroeconomic chaos in order to put the country back to the radar screen of foreign investors as uncertainties have caused foreign investment to fall.Japan is the pioneer to do so. For the first time ever, the joint committee of the Vietnam-Japan joint initiative phase 4 has defined macroeconomic stability as the major condition for the country to improve the business environment. The initiative, being implemented from July to the end of next year, highlighted concerns over the depreciation of Vietnam dong as well as other macroeconomic uncertainties.“Vietnam dong has been continuously weakening for the past three years… Only Vietnam dong has devalued while the neighboring nations’ currencies have all strengthened against the U.S. dollar,” the joint committee said in a document issued on July 1.Japanese Ambassador Yasuaki Tanizaki, in the … [Read more...] about Instability causes foreign investment to shrink
According to Professor of Economics Tran Van Tho from Waseda University, Tokyo, FDI accounts for a higher percentage of Vietnam’s total investment in development than in other countries, including those in the fifth generation of industrialization, such as Malaysia, Thailand and China.Vietnamese industrial businesses mostly assemble industrial products or do other jobs outsourced by foreign firms. They have yet to be involved in higher stages of global value chains. Electronic components, computer components and mobile phones are now manufactured in Vietnam, but Vietnamese manufacturers only participate in stages that create low value through simple jobs, Tho said. Many domestic manufacturing facilities are foreign invested. The transfer of technologies from FDI firms to local businesses remains very weak due to a lack of vertical linkages between the two sides, the professor added.To surmount these limitations and cope with new challenges, Vietnam needs specific strategies and … [Read more...] about Is Vietnam’s foreign investment strategy misguided?
The new wave of foreign investment started entering Vietnam two years ago and produced a strong change in 2006. Vietnam Business Forum interviewed Phan Huu Thang, head of the Department of Foreign Investment, the Ministry of Planning and Investment, about the prospects of this investment. What are the most outstanding features of Vietnam’s foreign investment attraction in 2006? In 2006, foreign direct investment in Vietnam continued its high growth in volume, and also changed in quality. Statistics of the Ministry of Planning and Investment show that in 2006, both registered capital and realised capital reached record highs since the Law on Foreign Investment was launched in Vietnam in 1987. In 2006, Vietnam attracted US$10.2 billion in foreign investment, up by 49.1 per cent against the previous year. Vietnam’s foreign investment attraction in 2006 featured large projects developed by trans-national groups, such as a US$1.126 billion project of the Posco Steel … [Read more...] about Foreign Investment with a Basic Change
The Vietnamese Ministry of Finance is mulling a plan to submit to the government of Vietnam to allow the establishment of wholly foreign invested management funds, local Securities Investment newspaper said recently. The ministry move is aimed to help legalize operations of foreign funds, which are now operating under representative offices, and create a fair playing field for investors in Vietnam now, it noted. However, opening room for foreign funds means local funds will face greater pressures. To restrain this, the ministry will propose the government to apply limit on operations conditions, it said. To establish a fund in Vietnam, foreign investment funds must be three-year experienced and manage $500 million assets. The ministry said so far 505 foreign institutional investors have operated in Vietnam and hold listed shares with the market value of $8 billion. The statistics of the ministry showed 35 representative offices have received licenses to operate … [Read more...] about Vietnam Likely to Allow 100 per cent Foreign-invested Management Funds
Nhan Dan - The economy of Vietnam expanded by 5.42% in 2013, with one fifth of GDP contributed by foreign-invested companies. With pledges totalling US$21.6 billion, foreign direct investment (FDI) in 2013 far exceeded the estimate of US$13-14 billion. Recovery in FDI capital There are three core issues that an FDI recipient country needs to take into account, namely capital, technology and State management. The good news is that in 2013, FDI attraction recorded many achievements on all three of these aspects. Capital is viewed as the most important objective, because capital is the prerequisite for investment to generate revenue, create jobs, produce exports and help realise the goals of industrialisation and modernisation. In 2013, amidst a drop in investment from the State sector and a large proportion of investment from the non-State sector trapped in the property sector, investment from the foreign sector rose sharply, reflecting the irreplaceable role of FDI over the past 25 … [Read more...] about 2013: A successful year in attracting foreign investment
The Foreign Investment Agency reported that Vietnam so far has had nearly 1,200 projects invested in 70 nations and territories with the total investment capital of US$21.4 billion as of January. The most invested country has been Laos with 270 projects worth $5.12 billion, followed by Cambodia with 191 projects worth $2.9 billion.By Che Han – Translated by Hai Mien … [Read more...] about Vietnam’s foreign investment tops $21 billion so far
They say it was a good sign that the manufacturing and processing industries were drawing significant FDI sums. Statistics compiled by the Vietnam Foreign Investment Agency show that in the first quarter of this year, nearly 85 % of registered FDI, or US$6.54 billion, went to manufacturing and processing industries.According to Tran Van Tho, economics professor at Waseda University, Tokyo, FDI has a significant role to play in promoting domestic industries and driving economic growth.“However, if Vietnam does not have wise FDI policies, the economy will be at risk of depending heavily on foreign companies and domestic firms will fail to accumulate resources like technology and capacity,” Thọ was quoted by a recent Vietnam News Agency report as saying.He said this might lead to distortions in the economic structure in the long term and the industrialisation process would not be sustainable.“External force is important but it is the inner force that … [Read more...] about Foreign investment key to Vietnamese growth: experts