Local authorities vye for Samsung investments
Local authorities vye for Samsung investments
Economists have repeatedly called on local authorities to give preferential policies to Samsung, one of the biggest investors in Vietnam.
Phan Huu Thang, former head of the Foreign Investment Agency (FIA), and now deputy chair of the Vietnam Foreign Invested Enterprises’ Association, said that Samsung has proposed to enjoy three additional investment incentives – the import tax exemption on import building materials, no taxation on imported materials and accessories for five years, and incentives related to customs procedures.
The three incentives are beyond the general investment incentives offered to foreign investors.
The South Korean investor has been enjoying many incentives for its projects in Vietnam, including common incentives stipulated by the government and additional incentives offered by local authorities.
“The incentives offered to later investment projects are higher than those to previous projects,” Thang wrote in an article on Thoi Bao Ngan Hang.
“It seems that there is a rivalry among local authorities to offer investment incentives to the foreign investor,” he wrote.
At first, Samsung planned to invest $670 million in Vietnam with one project in Bac Ninh province, but later, the project’s capital was raised to $2.5 billion.
It also decided to develop projects in Thai Nguyen province, totaling $5 billion, and in HCM City, $1.4 billion. The figures show Samsung has had a great success in Vietnam.
Nevertheless, an analyst said, though enjoying attractive investment incentives, Samsung said it would make no concessions when considering Vietnamese enterprises’ capability to join its global production chain.
It said it would not make any suggestions on assisting Vietnamese businesses to upgrade their production to help Vietnam increase locally-made content in products.
“Local authorities seem to be too excited when receiving such a ‘big guy’ like Samsung,” he noted.
“This explains why they tried to offer as many investment incentives as they could, while they did not dare to make any claims against Samsung,” he said. “Meanwhile, haggling and negotiating is the principle of all transactions.”
Dr. Vo Tri Thanh, deputy head of the Central Institute for Economic Management (CIEM), said that if Vietnam offers such incentives to Samsung, it should expect benefits in exchange.
“Samsung, and other high-technology enterprises, which enjoy huge incentives offered by the government of Vietnam, need to make commitments about what they will do to help develop Vietnam’s production,” Thanh noted.
Dr. Le Dang Doanh, a renowned economist, noted that Vietnam needs to develop its inner strengths, not foreign investment, because neither Samsung nor any other foreign investor will be “together with Vietnam forever”.
“That is just an illusion,” he said.
