​Vietnam to support large FDI, domestic firms with cash

May 25th at 10:24
25-05-2024 10:24:01+07:00

​Vietnam to support large FDI, domestic firms with cash

The Vietnamese government will provide cash support for large FDI enterprises and domestic firms leading key economic sectors in the country during the 2024 fiscal year.

​Vietnam to support large FDI, domestic firms with cash

Danish toy manufacturer LEGO’s $1.3-billion factory in Binh Duong Province, southern Vietnam, its first-ever carbon-neutral plant. Photo: T.T.D. / Tuoi Tre

The government offered the support in a draft decree on the establishment, management, and use of investment support funds which will be issued next month to respond to the Organization for Economic Cooperation and Development’s initiative of a global minimum corporate tax rate of 15 percent for multinational firms with turnover above a 750-million-euro (US$780-million) threshold from early this year.

The global minimum tax imposition and the global investment shift have forced the governments of countries to come up with support policies to retain large investors.

Many large FDI firms have surveyed and studied investment opportunities in Vietnam over the past few months.

However, many of them have shifted to other markets due to Vietnam’s shortage of detailed regulations on investment support.

The expansion of large hi-tech investment projects of giants, such as Samsung, LG, SMC as well as producers of accessories for Apple, IBM, Sisco, Foxconn, Compal, and Quanta has shown signs of stagnancy as they await clarification on Vietnam’s policies.

As a result, the Ministry of Planning and Investment said measures were needed to respond to the impact of the global minimum tax, retain tech giants, and attract new projects.

The government’s support policies also aim at strategic local enterprises which are responsible for cementing the country’s economic position.

In November last year, the lawmaking National Assembly issued a resolution asking the government to stabilize the investment environment and attract strategic investors and multinational groups.

LEGO is completing the factory as scheduled and has plans to recruit personnel for the factory's operation. Photo: T.T.D. / Tuoi Tre

LEGO is completing its factory as scheduled and has plans to recruit personnel for the factory's operation. Photo: T.T.D. / Tuoi Tre

Nguyen Van Toan, vice-chairman of Vietnam's Association of Foreign Invested Enterprises, said foreign investors play diplomatic roles, besides studying investment opportunities in Vietnam.

Therefore, solutions to support investors and improve the local investment environment should be employed faster and more effectively, Toan added.

For high-quality FDI investors that are making large investments, the country should use revenue from the global minimum tax to support them.

The country may call on domestic firms to provide auxiliary products in a bid to serve FDI partners.

To lure new investors, Vietnam should focus on offering tax incentives and training human resources for key sectors, such as the semiconductor industry.

It is important to develop local economic groups strong enough to cooperate with FDI firms, Toan suggested.

Moreover, Vietnam needs to help local enterprises develop research and development centers.

Production lines at Samsung Electronics Vietnam Co. Ltd. in Bac Ninh Province, northern Vietnam. Photo: Duc Anh / Tuoi Tre

Production lines at Samsung Electronics Vietnam Co. Ltd. in Bac Ninh Province, northern Vietnam. Photo: Duc Anh / Tuoi Tre

According to Dr. Pham Hung Tien, deputy director of the Friedrich Naumann Foundation in Vietnam, only Vietnam’s textile and garment sector is capable of competing in the global market.

Its strengths are the connection among enterprises and the support of localities, universities, and research units.

This is a key for the sector’s success and a lesson for other sectors.

It will be hard to get success if the country just focuses on the benefits of some enterprises. It is more important to establish value chains or increase the number of phases in existing value chains of which Vietnamese firms can take charge.

The country should focus on not only FDI firms’ investment models but also local enterprises’ cooperation demands, the expert suggested.

Rolling out red carpets for foreign investors is not enough, Tien noted, adding that Vietnam needs to set up hi-tech industrial parks and clusters which will operate like ecosystems in certain sectors, such as mechanical engineering, automaking, and semiconductors.

Do Thien Anh Tuan, a lecturer at Ho Chi Minh City-based Fulbright University Vietnam, said investment support funds should be accessible to all eligible domestic groups and FDI firms.

Vietnam should not rely solely on enterprises' investment capital to offer preferential policies and may consider revoking incentives if investors fail to meet their commitments.

Investors need to pledge to create value for Vietnam, Tuan added.

Tuoi Tre News



RELATED STOCK CODE (1)

NEWS SAME CATEGORY

​Vietnam’s deputy premier offers suggestions for regional growth at Future of Asia Forum

Vietnamese Deputy Prime Minister Le Minh Khai assessed Asia as a dynamic and stable region, putting forward three assurances and three enhancements for regional...

Small business confidence high as Vietnam expects robust economic growth

Small businesses in Vietnam are confident of a positive 2024, with 86 per cent projecting they will grow on the back of robust economic growth, improving on the...

Opportunities there for businesses embracing strong ESG practices

Investing in Environmental, Social and Governance (ESG) involves effort, but the rewards for businesses which embrace it, make those investments worthwhile...

Đà Nẵng, German state ink MoU on cooperation

The central city of Đà Nẵng and Thuringia, a state in central Germany, signed a memorandum of understanding (MoU) on Wednesday establishing cooperation in the...

Vân Phong Economic Zone struggles to attract investment

Vân Phong Economic Zone (EZ) is facing strong headwinds in attracting investment due to roadblocks related to planning, Lê Hồng Phương, Deputy Head of the EZ's...

Taiwanese firms highly evaluate Hải Phòng’s business environment

The Hải Phòng Economic Zone Authority (HEZA) on May 23 organised an investment promotion conference with the Taiwan Electrical and Electronic Manufacturers'...

Small businesses show confidence as VN expects strong economic growth

Small businesses are confident that 2024 will be positive, with 86 per cent projecting they will grow on the back of robust economic growth, improving results from...

Vietnamese games aim to earn billions of dollars

Việt Nam is in the top five countries in the world for game publishing, with 4.2 billion downloads.

Top 50 public companies ranking released

Vietnam Report JSC has announced its ranking for the top 50 most prestigious and effective public companies in 2024 (VIX50), which has undergone some significant...

Criteria for assessing FDI announced

Criteria for appraising Foreign Direct Investment (FDI) projects and for assessing their quality and effectiveness at the provincial level were announced at a...


MOST READ


Back To Top