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How is the foreign-invested sector performing in Vietnam?

Last update: 16:00 | 14/05/2018

VietNamNet  Bridge - As the leading economic sector in Vietnam’s economy, foreign invested enterprises (FIEs) make only modest contributions to the state budget.


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By the end of 2017, Vietnam had attracted $318.72 billion worth of FDI capital



According to the Foreign Investment Agency (FIA), by December 20, 2017, Vietnam had attracted $318.72 billion worth of FDI registered capital. Of this, $172.35 billion worth of capital had been disbursed.

FIEs’ contribution proportion in Vietnam’s GDP has been increasing steadily, from 2 percent in 1992 to 12.7 percent in 2000, 16.98 percent in 2006 and 18.97 percent in 2011, while the figure rose to 20 percent in 2016.

FDI capital increased from $20.67 billion in 1991-2000 period, or 24.32 percent of total investment capital, to $69.47 billion, or 22.75 percent in 2001-2011.

FIEs’ contribution proportion in Vietnam’s GDP has been increasing steadily, from 2 percent in 1992 to 12.7 percent in 2000, 16.98 percent in 2006 and 18.97 percent in 2011, while the figure rose to 20 percent in 2016.

Until 2001, FIE exports had amounted to 45.2 percent of total export turnover, including crude oil. Since 2003, FIEs’ exports exceeded exports by Vietnamese enterprises, becoming the major export sector, making up 64 percent of total export turnover in 2012.

In 2017, Vietnam earned $213.8 billion from exports, of which $145 billion was created by FIEs, an increase of 21.1 percent over the year before. This means that 71 percent of Vietnam’s exports were from FIEs.

Making a great contribution to Vietnam’s GDP growth, the tax collections from the enterprises remain very modest.

A report of the General Statistics Office (GSO) showed that in 2016, FIEs created VND327.4 trillion worth of profit, up by 17.3 percent compared with 2010-2016. However, they only paid VND250.9 trillion to the state budget.

By contrast, while non-state enterprises generated VND197.4 trillion worth of profit only, they paid a high amount of VND434.7 trillion to the state budget.

The report by the Ministry of Finance (MOF) on tax collections showed the same situation.

The budget collection in 2017 was 5.9 percent higher than estimates, or VND71 trillion, while the total collection was VND1.283 trillion. The majority was from domestic sources.

FIEs’ high earnings and low payments of tax are attributed to tax incentives the enterprises can enjoy.

The tax amounts that Samsung Thai Nguyen and Samsung Bac Ninh have to pay in their first 30 years of operation just account for 10 percent. 

They can enjoy tax exemptions in the first four years and 50 percent reduction in the following nine years. The provinces where their factories are located also offer additional incentives.

Bui Trinh, an economist, pointed out that Vietnam doesn’t get much from FDI in three areas – workers’ income, gross production surplus, and indirect taxes.

In 2016, because of tax incentive policies, FIEs did not have to pay VND35.3 trillion.

US$1=VND22,000


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Thanh Lich

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