Of 81 businesses receiving support from the Japanese government, 37 have decided to invest in Vietnam, while 19 have chosen Thailand.
Minister and Chair of the Government Office Mai Tien Dung
Speaking at a conference with Japanese enterprises in Vietnam on December 21, Minister and Chair of the Government Office Mai Tien Dung said Vietnam has resumed economic activities in a new normal status and that FDI continues to flow into Vietnam.
He reported that the government has instructed ministries, branches and local authorities to implement solutions to recover the economy.
Vietnam estimates a GDP growth rate of 2.6-3 percent this year, becoming one of a few economies in Asia Pacific and the only economy in Southeast Asia maintaining a positive economic growth rate. It is one of the 16 most successful emerging economies amid the pandemic.
Impressed by the high GDP growth rate and the record import and export value of $489 billion, Japanese Ambassador to Vietnam Yamada Takio said the ‘prescription’ for Vietnam to quickly recover its economy includes resuming commercial flights, improving disbursement for public investment, attracting foreign investment and reforming administrative procedures.
Takio said the Japanese government is gathering strength to recover its economy in the post-Covid-19 period with a bailout of $2.3 billion.
Of 81 enterprises receiving support from the Japanese government, Vietnam is the biggest choice for Japanese investors with 37 businesses choosing Vietnam as the destination.
Thailand is the second favorite destination, chosen by 19 enterprises. As many as 55 Japanese enterprises have decided to set up head offices in Vietnam.
The figures, according to the ambassador, shows the high expectations that Japanese enterprises have put on Vietnam and their confidence in Vietnam’s development outlook in the time to come.
However, Japanese enterprises have also complained about the difficulties they have met in Vietnam.
Hiroyuki Ishige, finance director of Hoya Glass Disk Vietnam II, complained that the Hung Yen provincial Taxation Agency refused to recognize the corporate income tax (CIT) preferences that the company should have enjoyed.
As a result, the company may have to pay additional tax of up to $50 million for the next 10 years. Meanwhile, according to the investment license, the enterprise can enjoy preferential tax rate of 10 percent for 15 years, tax exemption for four years and 50 percent tax reduction in the next five years.
Other Japanese enterprises complained that the licensing procedures are complicated, which consumes time and money of enterprises.
Some enterprises complained about the strict requirements on environmental impact assessment (EIA) reports and problems in entry/exist procedures for specialists and investors.
In the case of Hoya Vietnam, Duong Duc Huy from the General Department of Taxation (GDT) explained that the products of the enterprise are magnetic discs, which do not belong to ' computer manufacturing, so they are not subject to a preferential CIT.
Many Japanese groups are investing in Vietnamese enterprises instead of setting up their production and business facilities in Vietnam.
Foreign direct investment in supporting industries is expected to spike in the coming months as more and more foreign companies establish production facilities in Vietnam and seek to develop supply chains here, experts said.