Bizlive cited a report from the Foreign Investment Agency (FIA) as showing that the British Virgin Islands alone registered $1 billion worth of FDI in the first seven months of the year, raising its total accumulative investment capital to $21.4 billion, ranking fifth among countries and territories with the highest FDI in Vietnam.

Analysts noted that the $1 billion includes $850 million through capital contributions and stake purchases, a kind of investment foreign investors have favored recently. British Virgin Islands is the biggest foreign investor in this investment mode.

The British Virgin Islands is one of the tax havens about which Oxfam has issued warnings. 

Many investment funds and businesses from British Virgin Islands have made big investments in Vietnam. These include Dragon Capital, the fund that has poured billions of dollars into large enterprises such as Vinamilk, Vietjet and Novaland. Most recently, Dragon Capital became a big shareholder of Ban Viet Securities Company and injected money into PNJ, a jewelry company.

The British Virgin Islands alone registered $1 billion worth of FDI in the first seven months of the year, raising its total accumulative investment capital to $21.4 billion, ranking fifth among countries and territories with the highest FDI in Vietnam.

Besides Dragon Capital, many other large foreign investment funds including Vietnam Asset Management Ltd, PXP Vietnam Asset Management Ltd and Vietnam Holding Asset Management Ltd have registered their investments in Vietnam with addresses in British Virgin Islands. And so have international conglomerates P&G and Intel.

FIA’s report also shows big investments from other tax havens like Singapore, Hong Kong, Cayman, Bermuda, Panama, Luxembourg and Bahamas.

In the first seven months of 2017, investors from Singapore registered $3.8 billion worth of FDI, Hong Kong $885 million. The former has invested $41.6 billion in Vietnam so far, while the latter $17.3 billion. The figures are $6.6 billion for Samoa and $6.3 billion from Cayman Islands.

Dau Tu quoted an Oxfam report as warning that if Vietnam doesn’t have reasonable management policies, profits from investments from tax havens may not be retained in Vietnam.

Lawyer and economist Bui Quang Tin, CEO of BizLight business school, commented that the transfer pricing skills in tax havens are very good, while Vietnam’s capability is limited, while loopholes exist in the legal framework. 

Tin said in an open market which operates with trade rules, Vietnam cannot refuse investments from other countries, including tax havens. 

But it it cannot control investment flows, it will incur consequences, including loss of revenue from tax collections and, when transfer pricing cannot be discovered and punished, a distorted business environment.

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