INVESTMENT IN VIETNAM

1

Mr. Nguyen Ba Cuong

Deputy Director of Foreign Investment Agency (FIA)

Ministry of Planning and Investment (MPI)

CONTENTS:

I. OVERVIEW OF ECONOMIC AND FDI IN VIETNAM

II. INVESTMENT POLICY

III. FOREIGN INVESTMENT AGENCY AND ITS INVESTMENT

PROMOTION CENTERS

I. VIETNAM ECONOMIC AND FDI OVERVIEW

Ten year period (2001-2010)

• GDP grow rate reached 7.26% per annum

• Economic scale increased 3 times in comparison with

the year 2000

• WTO accession in 2007

• Become an average income country since 2008

• Positive change of economic structure

In 2011:

• Impact by the world economic recession and internal factors

• GDP grow rate was 5.89%

• Agriculture, forestry and aquaculture production value increased by 5.2%; industry production value increased by 6.8%.

• Export turnover is USD 96.3 billion, increased by 33.3% as compared to the figure of 2011.

• Average CPI increased by 18.58 % as compared to the figure of 2010

In 2012:

• GDP grow rate estimate 6,0-6,5%.

• Inflation under 10%.

• Export turnover increases by 13%, trade deficit under 10%

• Overspending under 4.8% of GDP

VIETNAM ECONOMIC AND FDI OVERVIEW

5 Source: MPI 2011

VIETNAM ECONOMIC AND FDI OVERVIEW

6

• As of May 2012, nearly 13.727 projects FDI are in effect with

registration capital of more than USD 203,1 billion and implemented

capital is nearly USD 80 billion.

• FDI projects locate in 65/66 provinces and cities of Viet Nam; Ho Chi

Minh city ranks the first, second is Ba Ria - Vung Tau, ....

• Manufacturing and processing accounted for 47.8% in terms of capital,

real estate accounts for 24.2 %, construction accounted for 5.1%, and

others, vv....

Source: MPI, up to May 2012

VIETNAM ECONOMIC AND FDI OVERVIEW

FDI IN VIETNAM BY SECTOR

7 Source: MPI, as of May 2012

No. Sector Project Registered capital

1 Manufacturing and processing industry 7790 97,164,314,384

2 Real Estate 379 49,356,044,002

3 Construction 326 10,525,454,350

4 Accommodation and Food service 879 10,382,875,739

5 Production, Distribution of electricity, gas, water and air, conditioning 77 7,402,514,827

6 Information and telecommunication 751 5,718,464,886

7 Art and entertainment 133 3,603,644,524

8 Transportation and storage 325 3,439,787,463

9 Agriculture, forestry and fishing 500 3,284,375,570

10 Mining and quarrying 73 3,019,712,237

11 Whole sale and retail trade; repair of vehicles 30 2,410,084,540

12 Banking, Finance and Insurance 738 2,193,468,550

13 Health care 75 1,321,550,673

14 Professional, scientific and technical activities 77 1,084,484,749

15 Other services 1195 995,947,403

16 Water supply and waste management 114 711,481,106

17 Education and Training 156 360,554,781

18 Administrative and support services 109 189,082,821

Total 13,727 203,163,842,605

TOP TEN INVESTORS INVESTING IN VIETNAM

8

Source: MPI, as of May 2012

No. Partner Project

Total registered

investment capital

(USD)

1 Japan 1636 27,485,050,899

2 South of Korea 3020 23,927,587,924

3 Chinese Taipei 2233 23,653,515,696

4 Singapore 1031 23,013,160,390

5 BritishVirginIslands 507 15,461,514,586

6 Hong Kong 667 11,709,686,164

7 Malaysia 410 11,096,919,426

8 USA 621 10,440,570,063

9 Cayman Islands 53 7,501,825,912

10 Nerthelands 167 5,923,594,923

9

KOREA INVESTMENT IN VIETNAM

• As of May 2012, 3020 projects in effect with registered capital 23,9

billions USD, ranking 2nd within 95 nations and territories in Vietnam,

after Japan.

• Korean FDI projects locate in 47 cities and provinces of Viet Nam, in

which Ha Noi, Hochiminh city, Ba Ria – Vung Tau, Dong Nai and Binh

Duong respectively are the biggest recipients.

• Investment focuses on manufacturing and processing industry, real estate,

construction.

KOREAN FDI BY SECTORS

Source: MPI, as of May 2011

No. Sector Project Registered capital

1 Manufacturing and processing industry 1844 11,620,494,665

2 Real Estate 77 6,763,077,330

3 Construction 389 2,098,949,028

4 Accommodation and Food service 22 930,517,665

5

Production, Distribution of electricity, gas, water and air,

conditioning 48 908,239,102

6 Information and telecommunication 76 482,766,445

7 Art and entertainment 104 271,356,213

8 Transportation and storage 19 218,762,835

9 Agriculture, forestry and fishing 195 121,343,334

10 Mining and quarrying 2 112,000,000

11 Whole sale and retail trade; repair of vehicles 7 95,789,473

12 Banking, Finance and Insurance 93 91,392,332

13 Health care 43 89,123,160

14 Professional, scientific and technical activities 22 46,506,842

15 Other services 33 28,202,000

16 Water supply and waste management 13 18,906,000

17 Education and Training 9 18,750,000

18 Administrative and support services 23 9,411,500

Total 3,020 23,927,587,924

II. INVESTMENT POLICY

1. FDI attraction orientation

2. Forms of investment

3. Investment incentives

4. Investment incentives in infrastructure.

5. Investment in the form of PPP

1. FDI ATTRACTION ORIENTATION

Selected and oriented foreign investment attraction:

1. Hi-technology;

2. Supporting industries;

3. High value added service industries

4. Developing infrastructure , human resources and environment

treatment.

5. Agriculture, aquatic products and food processing;

6. Economical and efficient resources utilization and saving energy;

7. Health care, pharmaceutical production

• Roads, bridges, railway, tunnels,

• City transport

• Airports, seaports

• Clean water supply and waste water treatment .

• Power plants.

• Health care (hospitals).

• Environment treatment

• Other infrastructure projects and public services in accordance with PM

Decisions.

Calling foreign investment in infrastructure

FDI ATTRACTION ORIENTATION

FDI ATTRACTION ORIENTATION BY AREAS

• Areas with especially difficult socio-economic

conditions.

• Areas with difficult socio-economic conditions.

• Hi-tech Zone, Economic Zone.

CAPITAL DEMAND FOR PERIOD 2011 - 2020

• The Resolution 13-NQ/TW on January 16, 2012 on development

of comprehensive infrastructure system to turn Vietnam to the

industrialized country in 2020.

• Period 2011 – 2015: need USD 110 – 115 billion, in which USD

57.5 billion for roads, ports, airports, railway.

• Period 2016 – 2020: need USD 185 – 190 billion, in which USD

105 billion for roads, ports, airports, railway.

• Capital source is from national budget, government bond, ODA,

and FDI (BOT, BTO, BT, PPP).

2. FORMS OF INVESTMENT

• 100% foreign invested capital company

• Joint venture company

• Business cooperation contract

• Build – Operate – Transfer (BOT)

• Build – Transfer – Operate (BTO)

• Build – Transfer (BT), and

• Private – Public Partnership (PPP)

3. CORPORATE INCOME TAX (CIT)

General Policy: Tax exemption up to 4 years and Tax reduction of 50% up to 9 years, applied for

preferential sectors and locations.

Special Incentives:

- 10%:

• 15 years applied to projects in areas: especially difficult socio-economic conditions,

Economic Zones and High Tech Zones

• 15 - 30 years applied to projects in sectors: hi-tech, scientific research and

technology development, soft ware production, development of specially important

infrastructure projects.

• Entire operation period (education, training, health care, culture, sport and the

environment…)

- 20%:

• 10 years applied to projects in areas of socio-economic conditions

• Entire operation period applied to projects in agricultural service co-operatives,

people’s credit fund

Standard rate (CIT) : 25%

CIT INCENTIVES

Tax Rate Term

Technology,

infrastructure,

software

Hi-tech,

infrastructure,

software,

(more

incentives).

Education,

vocational

training,

public health,

culture,

sports.

Agricultural

service co-

operative,

People’s

Credit

Fund.

Difficult

area.

Particularly

difficult area,

economic

Zone, Hi-tech

Zone.

20% 10 years X

20% Implementation

duration X

10% 15 years X X

10% 30 years X

10%

Implementation

duration

X

Exemption

(years)

Reduction

50%

Socialization in

difficult areas

or particularly

difficult ones

EZS,

HTZS

Hi-tech,

infrastructure,

software

Training,

vocation,

public health,

culture &

environment

Socialization not

in difficult areas

or particularly

difficult ones

Implemen

tation in

difficult

areas

4 9 years X X

X X

4 5 years X

2 4 years X

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CIT Exemption & Reduction

20

• Machines, materials, special transportation means,… imported to create

fixed assets of projects in the list of investment encouragement sectors.

• Materials that are not locally produced.

• Commodities that are imported for creating fixed assets of the

encouraged investment projects and the projects that stipulated in the

appendix I, II, III of the Decree 149/2005/ND-CP.

• Raw materials, materials, components of projects in the list of specially

investment encouragement sector or invest in areas of specially socio –

economic conditions are exempted from import tax within 5 yrs from

the production.

21

Projects Exemption

In the list of investment encouragement sectors; new

business development bases 3 yrs

Invest in areas of difficult socio-economic conditions 7 yrs

Invest in areas of specially difficult socio-economic

conditions; in specially investment encouragement sectors;

projects in the list of investment encouragement sectors

investing in

difficult socio-economic areas

11 yrs

Projects in the list of specially investment encouragement

sectors investing in in areas of difficult socio-economic

conditions or projects in the list of investment

encouragement sectors investing in the areas of specially

difficult socio-economic conditions

15 yrs

1. Corporate Income Tax

- Preferential corporate income tax: tax rate of 10% within 30 years

- CIT exemption for 4 years and 50% reduction for 9 years

2. Import tax

- Import tax exemption for goods imported to form fixed assets of investment projects.

- Tax exemption for imported goods can be applied to the projects and the project

contractor.

3. Land rent

- For projects implemented in the form of BTO, BOT and PPP: Project enterprises are

exempted from land use fees for the land granted by the State or is exempted

from land rent fee for entire duration of the project.

- For projects implemented in the form of BT: BT enterprises are exempted from land

rent fee and land use fees for the area that is used to

build BT works during construction.

4. Right to buy hard currency

4. INCENTIVES FOR INFRASTRUCTURE PROJECTS

5. PRIVATE PUBLIC PARTNERSHIP (PPP)

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III. FOREIGN INVESTMENT AGENCY AND

INVESTMENT PROMOTION CENTERS

Investment Promotion Center – South Vietnam(IPCS) 178 Nguyen Dinh Chieu, Ho Chi Minh City. Tel: 848.39306671 Fax: 848.39305413 Website: http://sfic.vn

Investment Promotion Center – Central Vietnam (IPCC)

103 Le Sat, Da Nang

Tel: 84511.33889689 Fax: 84511.33889679

Website: http://centralinvest.gov.vn

Investment Promotion Center – North Vietnam (IPCN) 65 Van Mieu, Hanoi Tel: 844.38458149 Fax: 844.38437927 Website: http://ipcn.mpi.gov.vn

Foreign Investment Agency (FIA) 6B Hoang Dieu Street, Hanoi Tel: 84.8048340 Fax: 844.37343769 Website: http://fia.mpi.gov.vn