Lawmakers should detail conditions, criteria and procedures for investors to benefit the country’s investment incentives, aiming to ensure the implementation of the policy more transparently and effectively.

Vietnam will review 30 years of FDI attraction

According to the Chamber of Commerce and Industry of Vietnam (VCCI), the government has so far issued some investment preferential policies, but it hasn’t detailed conditions, criteria and procedures to enjoy the incentive treatment. This fact has caused difficulty for firms in getting certification of beneficiaries. 

As a result, preferential policies do not work and discourage those who want to invest in the areas that are encouraged, VCCI noted.

VCCI has recently sent the proposal to the National Assembly’s Economic Committee after receiving recommendations from associations of enterprises, the business community and investors.

According to Kim Heung Soo, chairman of the Korea Chamber of Business in Vietnam, investors are very concerned about an unannounced stop of incentive policies though the investors are still entitled to enjoy the treatments.

Kim cited the case of Vina Pioneer, which manufactures and trades plastic bags in Hung Yen province, as an example. Business performance of the Korean company has been smooth until recently when it suddenly received notice of terminating the incentives unilaterally, though the treatment is still valid.

Although Vina Pioneer has been confirmed by the Ministry of Planning and Investment as still being the beneficiary of the incentives, the provincial competent agencies have insisted that the firm is not eligible to enjoy the treatment, Kim said, adding that such administrative decisions caused a great negative impact on foreign investors.

Such case is not a matter of Vina Pioneer itself as all Korean businesses see this as a very serious problem, Kim noted, adding that it causes foreign businesses to shrink their operation in Vietnam and affect their intention to cooperate with local businesses.

Incentive policies in new stage

Experts also said though Vietnam's investment incentive policies have been highly appreciated and helped Vietnam succeed in attracting FDI inflow in the past years, the inconsistence of the policies and the differences in the implementation of the policies have caused difficult for investors.

According to Bui Ngoc Tuan, deputy general director of audit and advisory firm Deloitte Vietnam, the changes in investment incentives and tax policy are the issues of greatest concern for foreign investors in Vietnam.

The factors impacting FDI activities often include the fluctuation of the tax rate through the years, available incentives in the country, flexibility in the application of incentive schemes, time for investment procedure and advantages and disadvantages of administrative investment procedures, Tuan said.

Vietnam is preparing to review 30 years of FDI attraction in the country and the Ministry of Planning and Investment (MPI) is mapping out a new strategy for FDI in the next decade with amendment related investment incentive policies to make the strategy more effectively.

There have been many proposals related to the investment incentive policies that will be applied in the new strategy. According to VCCI, investment incentive policies need to pay close attention to ensuring transparency with detailed conditions, criteria and procedures for enjoying preferential treatments.

Investors also agreed, saying that the most important thing that they want is that the policies must be transparent, consistent and predictable. On the contrary, it will affect the ability of investors to forecast their future production plans in Vietnam and thus will discourage them.

MPI’s Deputy Minister Vu Dai Thang said that recommendations for the new FDI policy approach, which will be included in the MPI Summary of 30 years of FDI in Vietnam, will be submitted to the government due next month.

Hanoitimes