MOF, in reply to Samsung’s tax incentive claims, pointed out that Samsung wants to go beyond the framework stipulated in law.

Nguyen Quang Thai, secretary general of the Vietnam Economics Science Association, said that MOF’s response showed that the state budget is tight and cannot tolerate any further tax remissions.

“Samsung has received all the preferences Vietnam can offer,” he commented, emphasizing that Samsung, like any other investor, must follow the law.

Phuong Ngoc Thach, deputy chair of the HCM City Economics and Management Science Association, said MOF ‘has taken the right move’.

Thach went on to say that the MOF’s decision will help regain fairness for private Vietnamese enterprises which have been put at disadvantage against foreign invested enterprises (FIEs) which enjoy many investment incentives.

Developing economies highly appreciate foreign direct investment (FDI) in their early stages of development when domestic resources remain limited. However, in the long term, the economies can only develop in a sustainable way if they are led by powerful domestic enterprises.

Therefore, Thach said, Vietnam needs to  make the development of domestic enterprises as the top priority.

Nguyen Ngoc Son from Ton Duc Thang University commented that the ministry’s refusal shows Vietnam’s consistent policies which aim to create a leveling playing field for investors. 

CIEM, in a report released recently, warning about the investment incentives Vietnam offers to foreign investors, urged to take action to restrict the ‘foreign investors’ rights to haggle about investment incentives’.

Son said that if Vietnam gives the right to foreign investors to haggle about investment incentives today, it will have to pay a heavy price for this tomorrow – the destruction of domestic enterprises which serve as the pillar of the national economy. 

However, Vu Si Cuong from the Finance Academy warned he can see big difficulties in restricting foreign investors’ rights related to investment incentives.

The problem lies in decentralization which encourages local authorities to offer more investment incentives to compete with other provinces in attracting foreign investment.

“I think the long term problem is in the local authorities, rather than the central authorities,” he said. “Local authorities, which want to have higher income and more jobs, tend to lure investors by offering more preferences to them.”

“The incentives may bring benefit to localities but not to the economy in a whole,” he said.

Dat Viet