VIETNAM Emerging Land for Business and Investment

Transcription

1 VIETNAM Emerging Land for Business and Investment Dr. Phan Huu Thang Director General Foreign Investment Agency (FIA) Ministry of Planning and Investment (MPI)

2 Contents I. Land for Opportunities II. FDI in III. Post-WTO Investment Climate IV. Legal Framework on Investment V. FDI promotion policies on infrastructure VI. Government policy to facilitate PPP 2

3 I. VIETNAM Land for Opportunities 1. At a glance 3 Geography - Centre of Southeast Asia - Area: 331,698 sq. km - Coastline: 3,260 km Infrastructure - National highways: 86,327km - Railways: 3,219 km - Int l airports: Hanoi, Da Nang and HCMC (To be constructed in Phu Quoc, Dong Nai, Lao Cai, Quang Ninh) - Int l seaports: 11 (Cai Lan, Da Nang, Van Phong, etc.) IPs with area of 31,436ha - 8 EZs with area of 323,940ha Society - Population: 84 mil. - Growth rate ( 06): 1.2% - Under 30 yrs old: >60% - Literacy rate: >90% Economy - GDP ( 06): US$61 billion - GDP per capita ( 06): $724 - Growth rate ( 01-05): 7.5% - Export turnover ( 06): US$40bil (66% GDP) - Economic structure ( 06): - Industry: 41.52% - Service: 38.08% - Agriculture: 20.40%

4 I. VIETNAM Land for Opportunities 2. Why do invest in? Political and socio-economic stability Brisk and steady economic growth Transportation hub of Southeast Asia Abundant young labor force at low price Member of WTO, APEC, ASEAN, ASEM Favorable FDI promotion policies Rapidly improving infrastructure GDP Growth rate (%)

5 II. Foreign Direct Investment in 1. FDI inflows to US$ mil , , Investment inflows 2000 Disbursement

6 II. Foreign Direct Investment in 2. FDI distribution by sector ( ) 6 New urban area, 1.6% Other services, Office, apartment, 1.8% 5.1% IZs infra, 7.3% Oil & gas, 3.3% Culture, health, education, 1.4% Banking, finance, 5.4% Hotel, tourism, 5.6% Transport, ICT, 2.5% Aquaculture, 0.5% Agriculture, forestry, 5.9% Construction, 6.9% Food industry, 5.4% Light industry, 16.0% Heavy industry, 31.2%

7 II. Foreign Direct Investment in 4. Top ten countries investing in (as of end of 2006) No. Country / Territory No. of projects Investment capital Legal capital Disbursed capital 1 Chinese Taipei 1,550 8,112,354,485 3,576,897,836 2,972,198,558 2 Singapore 452 8,076,009,191 2,982,218,453 3,685,788,524 3 Korea 1,263 7,799,430,566 3,228,946,556 2,606,054,765 4 Japan 735 7,398,914,136 3,276,997,470 4,823,542,650 5 Hong Kong 375 5,279,515,576 1,952,512,945 2,132,563,617 6 British Virgin Islands 275 3,225,637,154 1,133,749,844 1,366,200,997 7 Netherlands 74 2,365,339, ,029,343,440 8 France 178 2,197,723,735 1,339,935,010 1,128,417,648 9 United States 306 2,111,463,152 1,151,237, ,249, Malaysia 200 1,647,851, ,165, ,619,991

8 II. Foreign Direct Investment in 6. Major objectives by GDP growth rate : 8% p.a. GDP per capita: US$1,050 1,100 Economic structure: Agriculture, forestry & fishery: 15-16% GDP Industry & construction: 43-44% GDP Services: 40-41% GDP Investment capital for development: US$140 bil. FDI: US$23-24 bil. Investment demand for infrastructure: US$15 bil.

9 III. Post-WTO Investment Climate 1. s commitments to the WTO 9 Schedule of concessions and commitments on goods: Bound rates for 10,600 tariff lines An average cut from 17.4% to 13.4% phased over 5-7 years since Largest reduction applied to garments & textiles, fish & fish products, wood & paper, other manufactured goods, machinery, electrical and electronic items. Committed to be member (fully or partially) to initiatives for IT products, garments & textiles, medical equipment, aircraft, chemicals, construction equipment Tariffs cut phased over 3-5 years since Schedule of specific commitments on trade in services: Open the door in 11 out of 12 service sectors (or 110 out of 115 sub-sectors), including: business services, communication, construction and related engineering, distribution, health, insurance, education, tourism, environment, finance, entertainment, transport etc. Commitments put in force right after WTO accession. In some cases, they are phased over years since 2007.

10 III. Post-WTO Investment Climate 2. Investment-related obligations 10 TRIMS (effective from 11 Jan 2007): Eliminate the application of requirements on trade balance, foreign exchange control on imports, export performance, export restrictions, local contents Intellectual Property Rights: Comply with TRIPS Agreement upon accession Transparency: Make public draft WTO-related legal instruments for public comments; Make public all legal documents; Provide WTO members with annual reports on equitisation program

11 III. Post-WTO Investment Climate 3. Investment Opportunities entitled to Incentives Preferential sectors: - Manufacture of new material and production of new energy, manufacture of high-tech products, biotechnology, information technology and mechanical manufacturing; - Breeding, rearing, growing and processing of agricultural, forestry and aquaculture products, production of salt, creation of new plant and animal varieties; - Utilization of high technology and advanced techniques, protection of the ecological environment and research, development and creation of high-technology; - Labor intensive industries; - Construction and development of infrastructure facilities and important industrial large-scale projects; - Professional development of education, training, health, sports, physical education and ese culture; - Development of traditional crafts and industries; and - Other manufacturing and service sectors which require encouragement. Regions entitled to Incentives: - Regions with specially difficult socioeconomic conditions; - Regions with difficult socio-economic conditions; and - Industrial zones, Export processing zones, High-tech zones and Economic zones. 11

12 III. Post-WTO Investment Climate 4. Incentives on Corporate Income Tax 12 Standard rate: 28% Preferential rates of 10%, 15% and 20% for a period of 15 years, 12 years and 10 years are available depending on the scope of activities and location of the investment. Tax holidays: A complete exemption from CIT for a certain period (4 yrs at maximum), followed by a period where tax is charged at half rate (9 yrs at maximum) Losses: Carry forward losses for 5 years Other incentives: Exemption or deduction of land use tax, land use fee, land rent, and water surface rent

13 III. Post-WTO Investment Climate 5. Import Duty Exemption and Reduction 13 Exemption applied to projects in investment encouraged sectors and regions on: - Machinery & equipment, specialized means of transportation and construction materials (which cannot be produced in ) comprising the fixed assets of certain projects; - Raw materials, spare parts, accessories, other supplies, samples, machinery and equipment imported for the processing of goods for export and finished products imported to stick to the processed goods. Preferential rates applied to imported goods from countries that enjoy MFN with (89 countries). Rates vary by the category of goods. Special preferential rates applied to imported goods from countries that signed special agreement with (e.g. ASEAN). Ordinary rates are 150% of preferential rates.

14 III. Post-WTO Investment Climate 6. Forms of Investment % foreign-owned enterprise Limited liability company Joint stock company Partnership Holding company Joint venture Business cooperation contract Capital contribution, purchase of shareholding, M&A

15 IV. Legal Framework on Investment 7. Licensing and Registration Procedures Projects fall in conditional sectors Investment Registration Procedures N o Yes Yes Investment Evaluation Procedures 15 Respond within 15 working days Investment capital is more than VND300 billion (approx. US$19 million) Respond within 45 working days

16 IV. Legal Framework on Investment 8. Investment Licensing Bodies Provincial People s Committee Management Boards of IPs, EZs DPI Projects outside IPs and EZs Projects inside IPs, EZs Projects for infra dev t of IPs, EZs 16

17 V. FDI promotion policies on infrastructure 1. Overall policies for development of infrastructure Call for investment from private sector by offering the most favorable incentives Mobilize investment from TNCs, commercial banks Take advantages of ODA source 17 Issue State-guaranteed bonds for specific construction work Sectors calling for private investment: 1. Transportation 2. Seaport and airport terminals 3. Water supply, irrigation 4. Market, school, medical station 5. Office, houses and apartments 6. Infrastructure in IZs, EPZs, EZs 7. Power & energy 8. Telecommunications Source Demand for investment Total ODA 9,630 53,106 62,736 State Budget (incl. State bond) 2, ,769 FDI 653 2,125 2,778 Domestic private sector Unit: US$ mil. 1,968 2,555 4,523 Total 14,870 57,936 72,806

18 V. FDI promotion policies on infrastructure 2. Incentives for investment in infrastructure 18 Most favorable incentives applied to BOT, BT and BTO projects CIT: 10% for 15 years CIT holidays: Exemption for 4 years, and half reduction for 7 successive years Land lease up to 70 years; rental fee exemption for years (or for the whole life of the projects invested in regions with difficult conditions) Duty exemption applied to goods imported to form fixed assets

19 VI. Government policy to facilitate PPP 1. Need for PPP model in infrastructure development Total demand is huge, overweighing significantly capacity of the State budget (SB) Limited SB for infrastructure development (ID). Lack of sufficient and integrated set of policies Need to fill in financial gap between demand and supply of infrastructure Full membership of in WTO 19

20 VI. Government policy to facilitate PPP 2. Legal framework for PPP in infrastructure development Law on Investment, Enterprise Law, Law on Construction and others Government Decree on BOT, BTO and BT contracts 20

21 VI. Government policy to facilitate PPP 3. Major sectors suitable for PPP Transportation Seaport and airport terminals Water supply, irrigation Market, school, medical station Office, houses and apartments Infrastructure in IZs, EPZs, EZs Power & energy Telecommunications 21

22 VI. Government policy to facilitate PPP 4. Incentives for BOT, BTO and BT contracts Tax incentives Incentives relating to land rentals Guarantees for the performance of contractual obligations Right to mortgage property and buy foreign currencies Assurance of provision of public services 22

23 VI. Government policy to facilitate PPP 4. Issues to be considered in PPP implementation Unclear role sharing between public and private sectors in PPP Underdevelopment of the legal system for PPP Lack of leadership for PPP implementation Limited financing methods in the private sector Limited involvement of local government in PPP Lack of know-how and ability to implement PPP of implementing organizations 23

24 VI. Government policy to facilitate PPP 5. Facilitations of PPP for ID Gov. promulgates policies, mechanisms and legal framework Expand bond markets and admit entry of enterprises into bond market Issue Decree on private sector participation into infrastructure development Further decentralize 24

25 VI. Government policy to facilitate PPP 5. Facilitations of PPP for ID Diversify and extend development models Develop legal basis for a decentralized market Complete a set of policies to support development of capital, land market, commercial investment credits, human resource development Strengthen investment promotion activities 25

26 VI. Government policy to facilitate PPP 5. Facilitations of PPP for ID Consider reduction and exemption of taxes Establish urban development funds Strengthen participation of private sector in infrastructure development Provide more incentives for infrastructure development projects 26

27 FIA Your Gateway to Functions of Foreign Investment Agency: Providing information about investment climate and investment-related policies; Facilitating the operations of investors by helping solve the problems related to land, utilities, manpower, administration, etc. 27

28 Looking forward to seeing you in! Foreign Investment Agency Addr.: 2 Hoang Van Thu St., Hanoi, Tel. (84-4) / 759 / Fax: (84-4) fiavietnam@mpi.gov.vn