Thua Thien-Hue set to draw $429 million in new investments     

The central province of Thua Thien-Hue is striving to attract 15 domestic and foreign investment projects with a total registered capital of some VND10 trillion (US$428.8 million) in 2018.

Priority will be given to investments in the sectors of its strengths like tourism, real estate, IT, technology, healthcare, education, high-tech agriculture and support industries.

According to Phan Thien Dinh, director of the Investment Promotion and Business Support Centre and director of the provincial Department of Planning and Investment, by the end of this year, the province will work to attract prestigious domestic investors who are credible partners of domestic and foreign banks and investment funds.

It has held investment promotion campaigns in such traditional markets as Hong Kong (China), Japan, Singapore, Thailand, Europe, the Republic of Korea and the US, and in countries which could benefit from the free trade agreements Viet Nam has inked.

The province’s agencies have proactively evaluated market and investment trends and built a database in the service of tourism promotion, particularly for the Chan May-Lang Co economic zone, industrial parks, An Van Duong new urban area and Hue.

Along with enhancing training to improve local staffers’ investment promotion capacity, the province has paid attention to supporting businesses in understanding legal regulations and investment procedures as well as carrying out their projects after receiving an investment license.

Thua Thien-Hue has secured VND40.6 trillion ($1.74 billion) in investments so far, including more than VND3.2 trillion from domestic investors and $1.6 billion from foreigners.

Phong Dien solar power plant, with a capacity of 35MW, is one notable project. It was funded by Gia Lai Electricity JSC at a total cost of nearly VND1 trillion. The 48-hectare factory was constructed in January this year and began operating on October 5.

The plant is designed to produce 60 million kWh of electricity each year and is expected to contribute to local socio-economic development. It is set to expand its capacity by another 29.5 MW in 2019. 

Saigon Newport Corp to build seaport in Quang Ninh     

The Saigon Newport Corporation proposed constructing a port in Hai Ha Seaport Industrial Zone (IZ) in the northern province of Quang Ninh.

The proposal was made in a meeting between Saigon Newport and the provincial People’s Committee on Thursday.

The Hai Ha wharf system is included in the development plan of Viet Nam’s seaport system approved by the Prime Minister. According to the plan, the IZ was approved by the provincial People’s Committee with a total area of 4,988 hectares, with port area and port logistics accounting for 506.47ha to allow 80,000 DWT berths with a total capacity of 30-45 million tonnes per year.

At the meeting, Saigon Newport Corporation proposed investing in stages. First, the corporation will invest in an inland water wharf (a wharf for 3,000 DWT container ships) to serve cargo shipments between Hai Ha and Lach Huyen port with a total investment capital of VND171.7 billion (US$7.32 million).

The firm proposed to trade in all aspects of port operations such as general cargo handling, container cargo, bulk cargo, liquid cargo, passenger ships, logistics services, warehousing and multimodal transportation.

Nguyen Van Doc, the provincial Party Committee Secretary and Chairman of Quang Ninh People’s Committee, assigned Saigon Newport Corporation to undertake a comprehensive study of the entire IZ-port plan and make a proposal compliant with the provisions of Vietnamese law.

“Saigon Newport Corporation must be the main investor,” he said. “The province will co-ordinate closely to later invest in a number of items to improve the overall development of Hai Ha Seaport.” 

Supply chain finance helps SMEs in emerging markets     

FinTech helps small- and medium-sized enterprises (SMEs) in emerging markets like Viet Nam participate in supply chain finance, spurring company growth, speakers said at an APEC conference on supply chain finance held on Friday in HCM City.

Marcel Reymond, head of cooperation of the Embassy of Switzerland’s State Secretariat for Economic Affairs, said: “FinTech (financial technology that provides financial services through useful technologies) offers potential to elevate growth, deepen financial services and create trust among business partners.”

“For emerging markets, the importance of FinTech in trade and financial services at the global level is undeniable,” he added.

Reymond noted that low labour costs had successfully attracted FDI in Viet Nam but were no longer the driver of growth.

Sustaining growth at advanced stages of development demands a new model based on improved productivity, according to him.

“We are certain that supply chain finance offers effective solutions for local business entities to successfully link up to global supply chains,” he told Viet Nam News on the sidelines of the conference on supply chain finance.

“Yet it is critically important to engage a range of stakeholders to develop supply chain finance in Viet Nam,” he said. “Only with a joint effort among SMEs, financial institutions and services providers, as well as regulators, will we be successful.”

Nguyen Hoa Cuong, deputy general director of the Agency for Enterprise Development under the Ministry of Planning and Investment, said that SMEs would continue to play a major role in the country’s resilient economy.

“Promoting SME development is critical for inclusive economic growth,” he said, adding that lack of access to finance was a key challenge facing SME growth.

Vuong Thi Huyen, deputy CEO of Viet Nam International Bank, told Viet Nam News: “Given the diverse nature of SMEs, there is no one-size-fits-all solution for SME finance” and that finance for local SMEs mainly came from local banks at a high interest rate, making the sources more difficult to obtain.

In addition, most financial reports submitted by SMEs did not show the reality of their business operations (the revenue and profits were much lower than reality). And as a result, banks could not give them loans.

Huyen explained that most SMEs still used cash transactions instead of banking services, and to avoid taxes, lowered the figures in their financial reports.

A World Bank Enterprises Survey conducted in 2015 found that about 57 per cent of SMEs did not have access to loans from formal financial institutions. In reality, the ratio could be between 65 and 72 per cent.

SMEs in most emerging markets lack access to credit and liquidity because the credit risk of such businesses is difficult to assess and their working capital needs are unpredictable, according to a World Bank report.

In most countries, SMEs operate primarily in the retail and wholesale trade segments, and banks have generally not done enough to finance their domestic or international trade operations, especially open account transactions.

Supply chain finance structures offer an alternative solution to finance the trade flows of these enterprises, with benefits for all stakeholders, including large enterprises, their SME trading counterparts, and financial institutions, the World Bank report says.

Supply chain finance is a partnership solution between the buyer (mostly multinationals) and a commercial bank, which allows suppliers (mostly SMEs) to join a programme to sell their receivables to the bank which is delivered to and accepted by the buyer.

This financial structure is an ideal solution that leads to twin advantages: it reduces the average day sales outstanding (DSO) of the supplier, and increases the day pay outstanding (DPO) of the buyer.

SMEs account for 97 per cent of all enterprises and employ more than half of the workforce across APEC economies. They account for 20 - 50 per cent of GDP in most APEC economies.

Established in 1989, APEC comprises 21 economies, with Viet Nam joining in 1998. In Viet Nam, SMEs employ more than 50 per cent of the workforce, contributing more than 40 per cent of GDP. 

Factory processing export coffee opens in Sơn La     

Phuc Sinh Group started operations at the Phuc Sinh Son La coffee processing factory in Son La Province on November 8 to serve domestic and foreign markets.

This is Phuc Sinh’s sixth coffee processing factory in Viet Nam. The factory is located in Ban Mat, Mai Son District on a total area of 45 hectares. The first phase was completed after eight months of construction with an investment of about VND100 billion (US$4.3 million) and with an annual processing capacity of 20,000 tonnes of fresh coffee beans.

It is the first coffee processing factory that meets BRC (British Retail Consortium) global standards to be developed in Son La, although the province is one of the three largest Arabica coffee growing areas in Viet Nam. The province also has the first coffee farm to meet the UTZ coffee standards.

Phuc Sinh factory has Colombian modern washed coffee processing technology to process coffee for export to the key markets of the US, Brazil, France, Switzerland and Italy, as well as for domestic consumption.

Hoang Van Chat, Secretary of the Son La Provincial Party Committee, said Son La has nearly 18,000 hectares of agricultural land growing Arabica coffee, with an annual output of about 60,000 tonnes of coffee beans.

The Son La Phuc Sinh Coffee Factory can process about 15 per cent of the province’s coffee output, and will help the province send its coffee products to more international markets through Phuc Sinh’s distribution system and foreign partners.

Chat said it will also serve to attract more investors in agricultural processing to the province.

Phan Minh Thong, chairman of Phuc Sinh Group, said the firm will work with the province to raise the value of the coffee it produces by building trademarks of Blue Son La for the province’s coffee products.

Phuc Sinh exports about 20,000 tonnes of coffee per year, earning $350 million. It also holds about 6 per cent of the world’s pepper export market. 

Dak Nong international trade fair set for December     

The Central Highlands province of Dak Nong will organise a Viet Nam – Cambodia International Trade Fair from December 13 to 19, the province’s Department of Industry and Trade announced on November 7.

The fair is designed to promote border trade in the Cambodia-Laos-Viet Nam Development Triangle, as well as celebrate the 15th anniversary of the founding of Dak Nong Province (January 1, 2004).

The event, held by the Viet Nam Trade Promotion Agency (Vietrade) and Dak Nong’s Department of Industry and Trade, is expected to host about 400 booths. The centrepiece of the fair will be an exhibition of socio-economic achievements and specialties of Dak Nong Province, other Vietnamese localities and countries like Cambodia, Laos, Thailand and the Republic of Korea. An area will be reserved for products of craft villages, cooperatives and small industry businesses nationwide.

Bui Huy Thanh, director of the provincial Industry and Trade Department, said the organisers will work with relevant agencies to create optimal conditions for businesses, especially foreign firms, in completing procedures to participate in the fair.

Annual Vietnam – China trade, tourism fair to be held in Dongxing

A press conference on the annual Vietnam – China International Trade and Tourism Fair 2018 opened in Ha Long city, the northern border province of Quang Ninh, on November 9. 

It is the 13th time the fair has been held between Quang Ninh and China’s Guangxi province. This year, it will take place in Dongxing city from December 21-27. 

Speaking at the event, Vice Secretary of Dongxing Party Committee Dai Lan Hua said the city will strive to become the first ASEAN city of China in the near future. 

This year, the event attracts over 800 stalls, including 700 ones by Chinese enterprises and the remaining, by Vietnamese firms. It is significant to developing trade, tourism and investment in Mong Cai – Dongxing economic area, towards becoming a model area in bilateral comprehensive partnership. 

As part of the fair, a seminar on investment, tourism and trade promotion, a seminar on ASEAN fruit and vegetable cooperation, border tours, friendship football matches, a swimming competition and a singing festival on river will also be held. 

Vice Chairman of the Mong Cai City People’s Committee Nguyen Tien Dung said the event will facilitate border trade and improve the competitiveness of Mong Cai – Dongxing border gate.

Ha Nam licenses 60 million-USD project

Taiwan’s Gemtek Technology company received its licence to run a 60 million-USD project in the northern province of Ha Nam at a ceremony on November 9.

The project, located in the Dong Van II industrial park in Duy Tien district, will focus on the design and production of wireless communications devices.

Speaking at the ceremony, Truong Quoc Huy, Vice Chairman of the provincial People’s Committee, said that it is the eighth biggest foreign-funded project in Ha Nam to date and will greatly contribute to the local socio-economic development.

The official requested the company to mobilise resources to soon put the facility into operation.

He said that local authorities will create all favourable conditions possible for the implementation of the project and promptly clear hurdles for the company.

Howard Chen, Chairman of Gemtek Technology’s Board of Directors, ensured that his company would commit to the construction schedule.

Vietnam Foodexpo to take place this November

The Vietnam Foodexpo 2018, the biggest of its kind serving the agro-fishery and food industry in Vietnam, will run in Ho Chi Minh City from November 14 to 17.

The expo will feature 600 stalls, operated by 450 firms from 31 Vietnamese localities and 23 foreign countries and territories across the globe. It will showcase fruit-based products, beverages, food materials, processed food, and food processing machines.

On the sidelines, there will also be the Vietnam Food Forum 2018, a seminar promoting investment in the food processing industry, and an international cooking event, among others.

Dutch Consul-General in Ho Chi Minh City Carel Richter said that, as guests of honour, enterprises from the Netherlands will bring farm produce and specialties of their homeland to the expo. 

The diplomat added that an expert delegation from the Netherlands’ Food and Consumer Product Safety Authority will pay a working visit to the event, sharing their experiences in IT application in farm produce trade, food supply chain-building, and food safety management.

During its course, the expo will open for commercial guests during the first three days and for all visitors on the final day.

Ba Ria-Vung Tau to develop logistics sector

The southern province of Ba Ria-Vung Tau has set a goal to develop logistics into a major service sector with a focus on seaport development.

The Vung Tau Shipbuilding and Oil Services Joint-Stock Company will invest in the new logistics centre and container port.

Located in Phu My commune, the Cai Mep Ha logistics centre will have a total area of 1,200ha, with an estimated investment of 40 trillion VND (1.72 billion USD).

The Cai Mep Ha container port will be developed on an area of 86.6ha with total investment of 10 trillion VND (430 million USD).

As a sea-based economy, the province wants to increase the current capacity of its seaports, improve international transshipment services, and achieve throughput capacity of more than 100 million tonnes in coming years. 

The province will also continue to upgrade roads to improve connectivity and enhance goods and service circulation, local authorities have said.

By 2020, the province is expected to have 18 port operators and 219 logistics companies, contributing around 94 trillion VND (4.04 billion USD) to GDP and 47.1 percent to the service sector. 

Seaports in Vung Tau city by 2030 will be capable of handling 140 to 275 million tonnes of goods, according to authorities. 

Under a master plan for the logistics industry, the province will create favourable conditions for seaport and logistics service providers to meet regional standards. 

The master plan calls for businesses in service and market development sectors to join the supply chains of key products like oil and gas, energy, industrial equipment, supporting industries, and building materials, among others.

Ba Ria-Vung Tau province is a major gateway for international shipments in Southeast Asia, especially because of the Cai Mep-Thi Vai port complex, one of the key ports in the region.

The port system is one of only 19 in the world capable of handling 190,000 deadweight tonnage (DWT) vessels.

Container ships from the port complex are capable of transporting goods to Europe and North America. In addition, the province is only 70km from HCM City’s Cat Lai port.

To improve connectivity, efficiency and port capacity, the province also plans to increase investment in terminals and road infrastructure.

Infrastructure investments in recent years have increased connectivity within the province and with neighbouring economic hubs like HCM City and Dong Nai province.

By the end of last year, the province had 315 foreign direct investment (FDI) projects with total registered capital of 27 billion USD, and 450 domestic projects with total registered capital of more than 11 billion USD.

Last year, FDI flow reached 1.5 billion USD in 29 new and seven existing projects.

In the first seven months, the province emerged as the third largest destination of foreign investment, just behind Hanoi and HCM City. 

Total registered capital reached 2.15 billion USD, accounting for 9.4 percent of total FDI investment in Vietnam. The province aims to attract 4 billion USD in FDI by 2020. 

To meet its target, the provincial government plans on more investor-friendly reforms in many areas. 

In addition, it also plans to increase investment in distribution networks, technology transfer, skill development, and funding for small- and medium-sized enterprises.

The four key sectors in the province include seaport logistics, high-tech industrial production, tourism, and high-tech agriculture. 

Other areas of opportunities for investors include food processing, shipbuilding, traffic infrastructure, and metallurgy-mechanical engineering.

Located in the southern key economic zone, which contributes nearly 8 percent to the national GDP and 10 percent to State revenues, Ba Ria-Vung Tau is one of the country’s major investment destinations. 

In the last decade, rapid economic growth has resulted in the province having the highest GDP per capita and the third highest living standard in Vietnam.

HCM City refines customs procedures

Customs inspection paperwork will be reduced, while procedures and services will be improved to aid firms’ operational activities, experts said at a conference in Ho Chi Minh City this week.

There have been changes to reduce the number of types of goods that need to be inspected, and to invest in high quality facilities and a skilled workforce for better inspections and other procedure changes to aid firms.

Dang Vu Thanh, Deputy Chairman of the Vietnam Logistics Business Association, said that despite ongoing changes to improve customs and inspections, inspections were too frequent and too lengthy.

Indiscriminate inspections of imported goods have wasted resources and goes against Vietnam’s goal of promoting global trade, he said.

Thanh said inspections of imported goods should take into account the firms’ reputation to prioritise businesses that have adhered to regulations. Customs officials should consider the types of goods involved and identify risk potentials. More criteria for exemptions should also be considered.

Nguyen Quoc Thanh, Deputy Head of General Department of Customs’ IT and Custom Statistics Department, said the department would “reduce paperwork and applications in favour of online channels like websites and mobile apps to save cost.” This tactic would gather user feedback to improve online services and raise awareness of the benefits of online channels.

Customs staff training and acquiring hi-tech equipment for inspections would also improve the situation.

The Ministry of Finance would work with relevant departments and look into further reducing the list of goods that are subject to inspection to only include products that pose environmental or economic threats. The department would also remove unnecessary steps from the customs process.

Binh Thuan province seeks solar policy extension

ome provinces have called for preferential solar power prices to be extended to the end of 2020 instead of June 30, 2019.

Most recently, the southern province of Binh Thuan sent a proposal to the Prime Minister asking for such an extension to remove difficulties and create favourable conditions for investors of solar power projects.

To encourage the development of renewable energy in Vietnam, the Prime Minister issued Decision 11/2017/QĐ-TTg dated April 11, 2017, about mechanisms to encourage solar power projects, which took effect on June 1, 2017 and lasts until June 30, 2019.

Accordingly, for solar power projects which were connected to the national power grid before June 30, 2019, Vietnam Electricity (EVN) would buy the entire power output at 2,086 VND (9.35 US cents) per kWh for 20 years.

This means that if solar power projects are not connected to the grid before the June 30, 2019 deadline, the purchasing price of electricity could be lower and won’t be fixed for 20 years.

According to the People’s Committee of Binh Thuan province, there were 113 areas in the southern province with the potential for developing solar power projects over a total area of 14,198 hectares and potential output of 11,648 MWp.

While Binh Thuan province’s solar power development planning project to 2020 was waiting for approval from the Ministry of Industry and Trade, some 90 solar projects were registered in the province with total output of 5,341 MWp, total area of 6,720 hectares and total capital of 137.2 trillion VND (5.97 billion USD).

Of them, 28 projects with a total capacity of 1,475 MWp were added to the national and provincial power development plan. Twenty-three projects were granted licences and investors pledged to start construction by the end of 2018 and generate power before June 30, 2019.

For other projects, investors were preparing for their investment licences.

The province, however, said that it was difficult for solar power projects in the province to be completed and generate power before the June 30, 2019 deadline because many of them were located in areas of national titanium reserves and must wait for approval from the Prime Minister before implementation.

Thus, Binh Thuan province asked that the deadline be extended to the end of 2020 to give investors time to complete the projects.

Binh Thuan province’s proposal was raised after the Prime Minister agreed to extend the deadline to the end of 2020 for solar power projects with capacities of more than 2,000 MW in Ninh Thuan province.

Energy experts were concerned that other provinces, like Khanh Hoa and Binh Phuoc, could also ask for the extension.

Khanh Hoa province now has 17 solar power projects to be developed with a total capacity of 700MWp and Binh Phuoc has 22 projects with capacity of 2,500 MWp in total.

The Ministry of Industry and Trade in September required localities to evaluate the compliance with planning of 205 registered solar power projects with a total capacity of 16,500 MWp nationwide.

These projects did not include more than 70 others with a total capacity of 3,000 MWp already approved to be added to the power development planning and pledged to be put into operation before June 30, 2019.

As of the end of September, EVN signed 35 power purchase agreements with solar power investors with a total capacity of 2,271 MW.

Taiwan firms show water treatment expertise     

Taiwanese companies shared their experience and information about advanced water treatment technologies at a seminar in HCM City on Thursday.

“Innovation in the Shape of Water: Towards a Sustainable Future,” part of the Vietwater exhibition, was organised by Taiwan Excellence and Taiwan External Trade Development Council (Taitra) to provide an overview of emerging trends in and insights into water industry projects from Taiwan and all over the world.

Delegates said that both Viet Nam and Taiwan faced a water quality crisis and shared many similarities and also increased investment in water supply and wastewater treatment.

Taiwanese experts said technology, “considered the main engine for the growth of the Taiwanese economy, also enhances its leading position in the water industry with exports of pumps, valves, pipes, water filters, and measuring and control equipment worth US$2 billion each year.”

Business executives taking part in the seminar provided updates on intelligent and environment- and user-friendly water technologies for adoption in key industries in Viet Nam.

Taiwanese companies said they were seeking more partners in Southeast Asia and Viet Nam was one of the key markets in their expansion strategy.

Within the framework of Vietwater, Taiwanese companies showcased many advanced technologies at the Taiwan Excellence pavilion.

HDBank wins J.P. Morgan award for outstanding international payments processing
     
The Ho Chi Minh City Development Joint Stock Commercial Bank (HDBank) received the 2018 Elite Quality Recognition Award from J.P. Morgan Chase Bank for its outstanding achievement of 100 per cent MT202 STP Rate.

The award underscored HDBank’s exceptionally high quality of electronic payment transactions.

STP (Straight-Through Processing) is the automated process of payments without manual intervention which increases processing speed, minimises routing errors, lowers operation and transaction costs while resulting in efficient, rapid payment execution and credit to the bank and the customers it serves.

This award is given to leading financial institutions which have state-of-the-art STP electronic payment services and meet JP Morgan’s stringent processing accuracy criteria.

The MT202 STP Award is based on the number of electronic transactions requested and the ratio of international electronic payment execution meeting JP Morgan’s standards, with the ratio set at 80 per cent for banks around the world and 90 per cent for banks in Asia.

With an STP rate of 100 per cent during the assessment year of 2017, HDBank was one of the few global units to win the top prize.

MT202 STP Award is a confirmation of the prestige and quality of HDBank’s international payment service. Customers’ international payment transactions through the HDBank system were executed quickly and accurately, saving time and cost and minimising risks.

The bank has won a number of awards in recent years from Euromoney and Asiamoney, including for Best Cash Management in Asia-Pacific in 2018 and Best Managed Company in Asia for two consecutive years, Best Bank in Vietnam in 2017, and Best Cash Management in Vietnam for five consecutive years until 2016.

It also won the Platinum Award at the 2017 Vision Awards Annual Report Competition organised by the League of American Communications Professionals and made it to the list of Best Companies to Work for in Asia compiled by HR Asia.

HDBank is one of the largest lenders in Viet Nam. It is part of a privileged eco-system that also included aviation and consumer finance.

It now has 280 banking transaction points across the country and nearly 14,000 financial transaction points, and has established relationships with over 400 major global financial institutions.

As of September 30 the bank had total assets of nearly VND200 trillion and equity of nearly VND16 trillion.

Its pre-tax profit in the first nine months of 2018 rose by 51 per cent year-on-year to VND2.9 trillion.

The bank has achieved 73.3 per cent of its full-year profit target for 2018 of VND3.93 trillion.

The high profits have helped the bank keep its return-on-equity ratio above 20 per cent.

The bank has efficiently controlled its operating costs with cost-total income ratio (CIR) falling to 48 per cent in the first nine months from 52.4 per cent at the end of the third quarter of 2017.

HDBank also reported that risk provisioning is 14.7 per cent down year-on-year since the quality of lending improved this year.

Its non-performing loans are only 1.39 per cent and bad debts ratio is 1 per cent, the lowest in the industry.

Moody’s Investors Service last month upgraded the long-term local and foreign-currency deposit and issuer ratings for HDBank to B1.

The baseline credit assessment rate has gone up one level.

The long-term counterparty risk rating and counterparty risk assessments have been kept at B1.

This upgrade by Moody’s reflects HDBank’s big improvements in capacity, capital and profits.

Since 1997 J.P. Morgan Chase has been giving awards to selected US dollar clearing clients for achieving best in-class level of operational excellence. The awards are given to clients who achieve outstanding straight-through results by properly formatting their SWIFT payments.

Transfer pricing not always tax evasion

The misconceptions about transfer pricing being a tax avoidance or violation in Việt Nam are creating challenges for multinational enterprises, said Adam Sitkoff, executive director of the American Chamber of Commerce in Việt Nam (Amcham).

In his opening speech at a workshop held to gain clarity on the changing world of transfer pricing, he expressed his concerns regarding the widespread perception of transfer pricing as a tool for tax evasion and a violation of laws. 

He told the workshop held in Hanoi yesterday, that in the context of Việt Nam’s increasing integration into the global economy, transnational transactions would start to become more and more frequent.

The misconceptions about these types of transactions would create challenges and barriers for transnational investors when they decide to invest in Việt Nam, Adam said. 

He stressed that measures should be taken to determine appropriate prices, including tangible and intangible transactions, services, financial or cost/share distribution.

Wayne Barford, senior advisor of the International Tax and Investment Center (ITIC) and an expert with extensive international experience in taxation and transfer pricing, said pricing is defined by the valuation for internal transactions or between enterprises of the same ownership or control system. 

As cross-border transactions can alter taxable income, tax authorities in many countries may apply different pricing methods to conventional methods based on market prices among independent enterprises, according to the advisor. 

"Transfer pricing is not an illegal activity", he said, noting that it is only fraudulent pricing or the abuse of transfer pricing for tax evasion that is illegal.

Nguyễn Văn Toàn, vice chairman of the Việt Nam Foreign Investment Business Association (VAFIE), highlighted the role and contributions of foreign enterprises in promoting the country’s economic development. 

Toàn also said the concept of transfer pricing had many different understandings.

“In Vietnam, transfer pricing is considered as an act of tax evasion and avoidance, but it should be understood that associated transactions are very normal transactions. Especially for multinationals, it is more reliable than other companies. The transactions make it easier for businesses’ operation,” he said.

He added that "not only can foreign companies transfer prices, but also local firms".

“It would not be accurate when only mentioning foreign companies for the transfer pricing”.

He expressed his wish that the Government and the business community could concede on a more comprehensive and objective view of foreign firms’ business, especially in terms of legal internal transactions between enterprises in multinational corporations, in order to avoid creating negative effects on the investment climate in Vietnam. 

Experts pointed out popular misconceptions about transfer pricing in Việt Nam due to the lack of knowledge on international standards and business practices.

Currently, tax authorities are drafting tax administration law to tighter control over tax evasion. In the first nine months of the year, the tax authorities retrieved and issued fines worth more than VNĐ1.2 trillion to businesses with associated transactions.