Foreign invested enterprise vietnam

Vietnam is rolling out policies to improve FDI mobilisation

After the meeting with the task force for foreign direct investment (FDI) attraction in late-May, last week, Deputy Prime Minister Pham Binh Minh, head of the task force, urged all ministries and agencies to provide more general advice and policies to lure in more investors and strengthen investment promotion activities.

Of these, the Ministry of Planning and Investment (MPI) is the focal agency in the building of Vietnam’s FDI mobilisation strategy by 2030 to be submitted to the prime minister this month. The ministry will also be forwarded all reports and recommendations related to enterprises’ difficulties and challenges sent to relevant authorities.

Based on initial feedback, tax and related issues remain a headache for investors. The deputy PM asked the Ministry of Finance to provide measures as soon as possible to remove challenges related to withholding tax (especially foreign contractor withholding tax), the conflicts of legal provisions on taxes as well as export, and import tariffs.

Meanwhile, DPM Minh asked the Ministry of Industry and Trade and relevant ministries to consider off-shore wind power projects and consider adding a new form of energy (hydrogen) to the master plan.

The Ministry of Labours, Invalids, and Social Affairs will have to make more efforts to urgently resolve all issues related to granting and extending work permits for experts working for foreign-invested enterprises; as well as accelerate the training of workers to meet the needs of large corporations for skilled, technical, and management workers in line with Industry 4.0 trends.

The efforts of the task force and the local governments have proven effective so far. A few weeks ago, Binh Duong People’s Committee handed over investment certificates to five foreign-invested companies valued at $1 billion in the midst of the fourth COVID-19 outbreak in Vietnam.

Of these, Polytex Far Eastern Vietnam (from Taiwan) had the largest capitalisation with a total investment of $600 million, followed by Cheng Loong (also from Taiwan) pouring an additional $100 million into its $1 billion local project, and Singapore’s New Motion Industrial Co., Ltd. registered a new $184 million project. This has pulled Binh Duong to the fourth position among 56 cities and provinces receiving FDI in the first five months of 2021, with the total investment of $1.1 billion.

Meanwhile, the task force has also boosted cooperation with numerous new billion-dollar projects in the first months, clinching deals like the LNG power plant in Long An and O Mon II thermal power plant in Can Tho, while encouraging others to expand.

Regent Garment Factory Ltd., a subsidiary of Crystal International Group Ltd., was approved in May to build another factory in Hai Duong with the value of $35 million. This is the fourth factory of the company which has so far registered the total investment of around $227 million in the country.

The total investment in the first five months saw a slight increase on-year to nearly $14 billion. Moreover, the average scale of newly- and additionally-registered projects has risen significantly since last year, from $2.2 million to $14.4 million, and from $7.9 million to $11.3 million per project this year.

By Nguyen Huong

Le Anh Duong, Chair of Bac Giang provincial People’s Committee

Commenting about the outbreak, Le Anh Duong, Chairman of Bac Giang provincial People’s Committee said that local people had never faced such an incident.

“Covid-19 has caused industrial production stagnation and affected the entire socio-economic life. It has coincided with the farm produce harvesting season and general elections. It has caused foreign investment momentum to slow down,” Duong said.

“This is an unprecedented big challenge. Local people for the first time feel a threat to their safety and health,” he said.

How can Bac Giang persuade the ‘eagles’ (‘eagle’ referred to big foreign investors and manufacturers) such as Apple, Samsung and Foxconn to halt their production?

When the pandemic began attacking industrial zones, what worried us the most was that it would affect production and investment, and Bac Giang’s position in the global supply chain as well.

Fighting the pandemic has been a top priority in our strategy. We decided to close the industrial zones (IZs), but not to just stamp out the outbreak.

Before closing the IZs, we had a meeting with all enterprises. Investors who were overseas at that moment also attended the online meeting.

Some said it was necessary to close IZs immediately, while others disagreed, fearing they would lose orders and clients, or would be fined for slow delivery and lose competitiveness.

I told them that it was necessary to suspend production to gather strength to fight the pandemic, to deal with the urgent problem first. During the closure time, we will join forces to design new production models. I said it would be impossible to maintain stable production amid the threatening outbreak. Investors all agreed with the solution.

No enterprise had a negative response on the night the official decision was released (May 18, 2021). Investors told international press agencies that they agreed with the solution put forward by the local government.

Foxconn, for example, issued a press release, affirming its support for the Bac Giang authorities’ solution and said that production capacity would not be affected by the temporary production suspension.

Bac Giang has been implementing its commitments that it made to investors It established a taskforce that joined forces with them to examine and check production scale, and Covid prevention capability of each enterprise in accordance with certain classification criteria.

The classification allows them to adjust the production model and restore production. Soon after the decision on resuming production in accordance with Plan 213, the provincial authorities set up a unit that defined the requirements for people going to work, and picking up workers going to work.

We give support to what businesses need. All enterprises answered our call and were unanimous in implementing the solution. This is unprecedented, if noting that the foreign investors in Bac Giang provinces have different nationalities, and different cultures and personalities.

Brainstorming moment

You signed two decisions related to production activities just within one week. The first was the one on closing six enterprises in Van Trung IZs, and the second was the closure of four IZs. Bac Giang has lost VND2 trillion for each day of closure. Did you have to think carefully before making such decisions?

Bac Giang province has been gathering strength to fight the Covid-19 outbreak for one month, vowing to stamp out the outbreak by the end of June.

All of these were extremely important decisions. I and the leadership had to discuss very thoroughly before making decisions. We even had to ask for the Prime Minister’s opinion and the National Steering Committee for Covid-19 Prevention and Control.

At first, the new hotspot only involved six small companies leasing workshops in Van Trung IZ. So, it was obviously necessary to close the enterprises, and there was no difficulty with the decision.

However, we had to carry out a large-scale testing campaign and screen all workers in the IZ. Our testing capability could not meet the high number of 90,000 workers in the IZ.

It was much more difficult to make the second decision – closing four IZs at the same time. At that time, the outbreak, after occurring in Van Trung and Quang Chau IZs, began spreading to nearby IZs. Meanwhile, infections were not found in Dinh Tram and Song Khe – Noi Hoang.

Before releasing the decision, we had to think about many things, including the benefits of investors and enterprises, the benefits of workers, and the benefits of the entire province. There were many things to weigh, but I put the safety of workers as a top priority and persuaded enterprises with that principle.

A Foxconn vendor in Hong Kong via Zoom said that businesses’ priorities were fighting against the pandemic and stabilizing the economic situation, while putting businesses’ benefits at a lower level of priority.

However, we anticipated that a lot of problems could arise after the decision was released. If 67,000 migrant workers had left Bac Giang province for their home villages after factories suspended operation, they could have brought the virus everywhere.

Therefore, just one day later, the provincial authorities called on workers to stay in Bac Giang. The province also sent a document to enterprises telling them to keep their workers there and cooperate with local authorities to have medical tests. The province promised to ensure their normal lives.

On the afternoon of the same day, we had a meeting with enterprises and reported to the Prime Minister at night. At 0 am, we declared isolation for the entire Viet Yen District and 4 IZs.

This was the most difficult decision.

Keeping promises

So, the released Plan 213 on the resumption of the production activities after 10 days of closing four industrial zones can be seen as Bac Giang’s promise to investors?

Yes. When deciding to close four IZs, we did not say exactly when the IZs would become operational again. When investors asked about this, I said we aimed to reopen them after two weeks. And we kept the promise. After two weeks, the enterprises began operating again in accordance with a roadmap.

Kien Trung

To be continued…

The meeting between Minister of Industry and Trade Nguyen Hong Dien and Ambassador Giorgio Aliberti, head of the EU Delegation to Vietnam (Photo: VietnamPlus)

Hanoi (VNA) – Minister of Industry and Trade Nguyen Hong Dien and Ambassador Giorgio Aliberti, head of the EU Delegation to Vietnam, had a working session in Hanoi on June 11 to discuss bilateral cooperation and the enforcement of the EU – Vietnam Free Trade Agreement ( EVFTA ).

The two sides affirmed that they attach importance to the Vietnam – EU comprehensive partnership, especially in economy, trade, and energy, pledging to keep coordinating more closely and effectively to promote cooperation activities and programmes and deal with bilateral issues in a timely manner.

Minister Dien lauded the EU’s efforts and active moves that have helped it initially contain the pandemic and push back against risks to the bloc’s economy.

With many economic indexes bouncing back well along with support packages and mass vaccination campaigns carried out, the EU economy is believed to recover rapidly and regain growth, he noted.

He also expressed his optimism about the prospect for trade and investment ties between Vietnam and the EU in the context of the global economy and trading still struggling with numerous difficulties caused by the COVID-19 pandemic.

Bilateral trade posted encouraging growth in the first months of 2021, which is largely attributed to the EVFTA that came into force on August 1 last year, Dien went on.

Between January and April, trade turnover between Vietnam and the EU stood at 18.26 billion USD, up 20.1 percent year on year, according to the General Department of Vietnam Customs.

At the session, the two sides had candid discussions on orientations for strengthening the Vietnam – EU cooperation and effectively implementing the bilateral FTA in the time to come so as to bring about practical benefits to the business community.

Minister Dien expressed his hope that the EU will continue supporting joint programmes and projects, particularly in energy and energy transition such as the EU – Vietnam Sustainable Energy Transition Programme (SETP) and the Vietnam Energy Partnership Group (VEPG).

As the EU boasts strengths in the high-tech industry, renewable energy, automation, and mechanical engineering, Vietnam expects to attract investment and technology transfer from the bloc, especially in terms of processing, manufacturing, and supporting industries, innovation, and technology transformation, to as to help develop a strong and modern industry for the country, the official added.

For his part, Ambassador Aliberti said the EVFTA is a significant milestone in the Vietnam – EU cooperation and also a great success the two sides have obtained during their efforts to foster economic and trade links.

He held that over the 10 months since it came into effect, the deal has generated highly positive results.

Challenges during the pact implementation are inevitable, he said, adding that relevant agencies of the EU, including the European Parliament, have been keeping a close watch on the enforcement process.

Via discussions, these challenges will be surmounted, the diplomat noted./.

Inside Vinfast’s automobile processing plant in Cat Hai, Hai Phong City. – The carmaker is considering an IPO in the US. – Photo vingroup.net

Successful IPOs in foreign markets will provide additional capital for these enterprises to improve and expand their businesses, services and products. By doing that, they can attract even more investments from other international organisations or institutions, said the State Securities Commission of Viet Nam.

Overseas IPOs also help to promote these companies’ images in international markets.

“When a company files for an IPO in a foreign stock market, it can raise strong cash flows, build confidence in foreign investors, enhance its position and image, and expand markets,” Nguyen Thanh Ha, President of SBLAW Limited Liability Company, told Vietnam News Agency.

With strong economic development, some of Viet Nam’s leading enterprises are planning IPOs as they aim at bigger ambitions which also translate into greater capital.

Ha said that the capitalisation level in Viet Nam’s stock market maybe not strong enough or saturated, resulting in top enterprises seeking new resources from international markets with a target of brand internationalisation, business expansion and fundraising.

The wish to file for IPOs abroad also demonstrates that Vietnamese enterprises’ legal capacity is improving, and they are able to meet requirements of international stock exchanges and legal systems.

Caution on legal issues and other risks

Pursuant to Article 71 of the Government’s Decree No.155/2020/ND-CP on detailing the implementation of a number of articles of the Law on Securities, a prerequisite for an international listing is to meet the foreign ownership ratio in accordance with the law. Viet Nam still restricts the participation of foreign investors by industry or even does not allow them to invest.

Companies with higher proportion of foreign ownership will have smaller chances in raising capital through international listings.

In addition, companies must comply with the law on foreign exchange management. Therefore, listings on foreign stock markets are also subject to the Ordinance on Foreign Exchange 2005, which was amended and supplemented in 2013, and the Government’s Decree No.70/2014/ND-CP on detailing the implementation of some articles of the Ordinance on Foreign Exchange and the Ordinance on amending and supplementing some articles of the Ordinance on Foreign Exchange.

The Vietnamese issuer has to open a foreign currency account at an authorised credit institution in Viet Nam to receive any foreign currency earned from the listing, without requiring the issuer to open an account in the country where the stocks are listed.

This means foreign investors who purchase shares cannot transfer money to the Vietnamese issuer’s account, if the bank serving this organisation does not have a branch or a transaction office in the listed country.

On the financial and accounting standards front, Vietnamese companies also face challenge as they must apply the accounting book system according to Vietnamese Accounting Standards (VAS), while the international exchanges adapt global standards or standards accepted by many countries like Generally Accepted Accounting Principles (GAAP), International Financial Reporting Standards (IFRS) or International Accounting Standards (IAS).

Enterprises must also obey the regulations of international exchanges, including strict conditions for joining, profit before tax, shares distribution, financial status and liquidity.

As companies are listed in foreign markets, risks of being acquired or merged are rising, and costs for complying with regulations on listing, reporting, disclosing information and corporate management in the international markets are higher.

VNS

The design of Long Thành International Airport in Đồng Nai Province. — Photo courtesy of ACV

HÀ NỘI — The State-run Airports Corporation of Việt Nam (ACV) has said it wants to borrow US dollars from local banks for the country’s largest airport project, Long Thành International Airport in Đồng Nai Province.

ACV’s chairman, Lại Xuân Thanh, sent a report to the Economic Committee of the National Assembly, asking them to support the plan of borrowing and paying in US dollars in order to maximise benefits and efficiency.

Thanh said as the interest rate in the foreign currency was lower than the Vietnamese đồng , it would help the firm to save on costs.

According to ACV’s leader, phase one of the investment project, estimated to cost about US$2.5 billion, was being focused on, but the COVID-19 pandemic had a great impact on economies around the world and in particular the aviation industry.

As all international commercial flights were stopped in Việt Nam, it affected ACV’s main source of foreign currency revenue, while the outbreaks in some localities also significantly reduced domestic passenger volume.

Thanh also said the pandemic has made it difficult to negotiate and sign contracts with partner companies as foreign experts had to undergo quarantine.

Moreover, the ACV representative said, the soaring price of raw materials, especially steel prices, was causing difficulties for the project’s implementation.

To deal with all the factors, ACV proposed to the Prime Minister to allow it to accumulate money from production and business activities for investment.

The firm also proposed the PM consider and approve the plan to allow ACV to borrow from domestic state-owned banks in USD and pay in USD to save on interest.

ACV’s representative said: “The lending interest rate in USD is always significantly lower than that in VND, while ACV has direct and indirect USD revenue from business activities in international airports such as NộI Bài, Tân Sơn Nhất and Phú Quốc to pay interest on foreign currency loans.”

Thanh said: “At present, domestic state-owned banks that have a surplus of USD need to find reliable lending partners and bring higher interest rates than deposit rates at foreign banks,” adding such a lending option could ensure benefits for the State and improve project efficiency while preserving and developing state capital in ACV as a state-owned enterprise.

Also to ensure the progress of Long Thành Airport project in the context of the pandemic, ACV suggested the National Assembly direct the relevant authorities to soon apply measures to stabilise the price of materials as well as support the plan of borrowing and paying in USD to ensure maximum efficiency.

In April this year, ACV, which is the investor of the expensive and ambitious transport hub project in the southern province of Đồng Nai, committed to start construction of Long Thành International Airport’s passenger terminal early next year.

As Long Thành International Airport is one of the breakthrough projects of the national transport sector in the 2021-25 period, deputy transport minister Lê Anh Tuấn urged all parties to coordinate and facilitate the progress of all components of the project and disburse the allocated State capital.

According to ACV, Long Thành International Airport will be built in three phases over three decades. In the first phase, one runway with a length of 4,000m, taxiways, an apron, and a passenger terminal with other auxiliary works sprawling 373,000sq.m will be built to serve 25 million passengers and 1.2 million tonnes of cargo each year.

The airport, which was expected to cost VNĐ336.63 trillion ($14.5 billion), is designed to have four runways, four passenger terminals, and other auxiliary facilities to ensure a capacity of 100 million passengers and 5 million tonnes of cargo a year by 2040. — VNS