VietNamNet Bridge – Vietnam has stated that it would offer high investment incentives to the investors who develop high-technology projects in Vietnam. However, involved parties still argue about how “high technology projects” means.

Right after the high technology law took effects on July 1, 2009, investors complained about the overly high requirements on investors to be recognized as running “high technology projects.”

Only a limited number of products have been listed as “high technology products,” while high-technology enterprises have to pay at least one percent of their annual revenues on the research and development (R&D) works. Besides, they need to have the number of workers with university degrees directly getting involved in R&D activities amounting to at least five percent of the total workers of the projects.

The requirements are believed to be overly high which makes it unable for even the leading groups in the worlds such as Samsung or Nokia to satisfy. They have hindered Vietnam’s efforts to attract investment into the high technology sector, though Vietnam has been looking forward the projects in the sector.

“The requirement on spending one percent of revenue on R&D proves to be overly high, and so is the requirement on five percent of the workforce to be involved in R&D activities,” said Kim Yong Seok, Planning Director of Samsung Complex.

With the regulation, with the total export turnover of $12.72 billion in 2012, Samsung Electronics Vietnam needs to spend $127 million on R&D activities.

Minister of Planning and Investment--Bui Quang Vinh, thinks that there still exist many unclear matters in the high technology law that need to be clarified, while many other unreasonable problems need to be amended to make them more suitable to the current conditions.

“We have asked the Ministry of Science and Technology to amend the provisions of the law, and it has agreed on this,” VInh said, adding that a series of policies relating to the foreign direct investment attraction would be amended in the time to come to upgrade Vietnam’s investment environment as instructed by the Prime Minister.

However, the problem is that the regulations have been stipulated in the High Technology Law, which will not be amended until 2014.

Vinh admitted that a lot of current regulations have obstacles the investment activities which need urgent amendments. However, it is nearly impossible to amend the laws until the law reconsideration is put on the working agenda of the National Assembly.

Vinh went on to say that his ministry has suggested building up a law which allows to amend many other laws, in order to ensure that Vietnam has an investment environment which is in no way less attractive than that of other regional countries.

In fact, high-technology project developers not only have to bear the investment law, the high technology law, but also the corporate income tax law.

At present, Vietnam only offers investment incentives to the newly set up high technology projects, while it does not mention the incentives to the existing projects which want to expand their investment scale.

Nguyen Xuan Thuy, a senior executive of MTEX Vietnam, has suggested that high technology enterprises can enjoy the preferential corporate income tax of 10 percent during the validity of the certificates on high technology enterprises.

Currently, high technology enterprises can enjoy tax incentives only when they get the certificates from the Ministry of Science and Technology, while the certificates have the validity of five years only.

MTEX Vietnam, a 100 percent Japanese invested enterprises, making semi-conductor IC and car parts, became the first enterprise in Vietnam that receives the certificate since the day the high technology law took effects

Compiled by Thu Uyen