INVESTMENT IN VIETNAM

Mr. Nguyen Ba Cuong

Deputy Director of Foreign Investment Agency (FIA)
Ministry of Planning and Investment (MPI)

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 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
VIETNAM ECONOMIC AND FDI OVERVIEW

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

Source: MPI 2011 5

 VIETNAM ECONOMIC AND FDI OVERVIEW

• 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

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 FDI IN VIETNAM BY SECTOR
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

Source: MPI, as of May 2012

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 TOP TEN INVESTORS INVESTING IN VIETNAM

Total registered
No. Partner Project 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

Source: MPI, as of May 2012

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 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.

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 KOREAN FDI BY SECTORS
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
Production, Distribution of electricity, gas, water and air,
5 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

Source: MPI, as of May 2011

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

FDI ATTRACTION ORIENTATION

Calling foreign investment in infrastructure

• 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.
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

Education, Agricultural
Hi-tech, Particularly
vocational service co-
Technology, infrastructure, difficult area,
training, operative, Difficult
Tax Rate Term infrastructure, software, economic
public health, People’s area.
software (more Zone, Hi-tech
culture, Credit
incentives). Zone.
sports. Fund.

20% 10 years X

Implementation
20% X
duration

X
10% 15 years X

10% 30 years X

Implementation
10% duration X
 CIT Exemption & Reduction

Training,
Socialization in Socialization not Implemen
Hi-tech, vocation,
Exemption Reduction difficult areas EZS, in difficult areas tation in
infrastructure, public health,
(years) 50% or particularly HTZS or particularly difficult
software culture &
difficult ones difficult ones areas
environment

X
4 9 years X X X

X
4 5 years

X
2 4 years

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• 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.
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 Projects Exemption
In the list of investment encouragement sectors; new
3 yrs
business development bases
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 11 yrs
investing in
difficult socio-economic areas
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 15 yrs
encouragement sectors investing in the areas of specially
difficult socio-economic conditions

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 4. INCENTIVES FOR INFRASTRUCTURE PROJECTS

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
5. PRIVATE PUBLIC PARTNERSHIP (PPP)
III. FOREIGN INVESTMENT AGENCY AND
INVESTMENT PROMOTION CENTERS

Foreign Investment Agency (FIA)

6B Hoang Dieu Street, Hanoi
Tel: 84.8048340 Fax: 844.37343769
Website: http://fia.mpi.gov.vn

Investment Promotion Center – North Vietnam

(IPCN)
65 Van Mieu, Hanoi
Tel: 844.38458149 Fax: 844.38437927
Website: http://ipcn.mpi.gov.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 – South

Vietnam(IPCS)
178 Nguyen Dinh Chieu, Ho Chi Minh City.
Tel: 848.39306671 Fax: 848.39305413
Website: http://sfic.vn 24