KOREA INVESTMENT IN VIETNAM & FDI POLICIES

Transcription

1 KOREA INVESTMENT IN VIETNAM & FDI POLICIES Seoul 16th April 2015 PRESENTER: NGUYEN THI MINH HIEN- DEPUTY DIRECTOR FOREIGN INVESTMENT AGENCY- MINISTRY OF PLANNING AND INVESTMENT 1

2 I. VIETNAM IN PROFILE II. III. OVERVIEW FDI AND KOREA FDI IN VIETNAM INVESTMENT POLICIES IN VIETNAM 2

3 I. VIETNAM IN PROFILE 3

4 COUNTRY & PEOPLE Area : 331,689 sq. km. Coastline : 3,260 km. Major cities : Hanoi Capital, Danang, Hochiminh city. Population : 88.5 mil ranking: 13th in the world Natural resources: oil & gas, minerals, sea and tropical forestry. 4 4

5 FISCAL ECONOMIC REVIEW GDP: 5.98 % (GDP per capital reached 1,960 USD) Export value 150 bil USD, 13.6% increased ; Import value 148 bil USD, 12.1% increased Consumer Price Index (CPI) 4.09% Economic restructuring in 3 sectors: public investment, state owned enterprises & banking system 289 IZs and 15 EZs attracted approx; In 2014: 1,588 new FDI projects with bil USD of registered capital Source: Ministry of Planning and Investment 5

6 VIETNAM INFRASTRUCTURE 6

7 INFRASTRUCTURE ROAD NETWORK Road network: Road system 287,698 km country-wide with 39,800 bridges North-South pivot: The 1A National Highway: 2,260km through 31 cities/provinces The Ho Chi Minh Highway: 3,167km 7 7

8 INFRASTRUCTURE (cont.) RAILWAY NETWORK Total length of 2,632 km of rail network 278 stations country-wide Hanoi Ho Chi Minh City line: 1,726 km; hours; Targeting to reduce to 10 hours with new high-speed connection. Linked to China railways in two directions, one from Lao Cai province to Yunnan province and one from Lang Son province to Kwangsi province of China. Construction of the railway lines connecting with Laos and Cambodia has been included in the Government s development strategy for the Railway industry of Vietnam. 8

9 INFRASTRUCTURE (cont.) SEAPORTS and AIRPORTS Seaports: - 3,260km coastline, a strategic position close to international shipping routes and favored conditions of shpping with china, ASEAN and world wide. - Major Ports : 119 seaports in which Cai Lan (50,000DWT); Hai Phong (40,000DWT); Da Nang (45,000DWT); Quy Nhon (50,000DWT); Sai Gon (50,000DWT); Thi Vai (60,000DWT) Airports: - 10 international airports (Noi Bai 4 million passengers; Tan Son Nhat 8 million passengers; Da Nang; Cam Ranh Khanh Hoa; Cat Bi Hai Phong; Chu Lai Quang Nam; Cam Ranh Nha Trang; Phu Bai Hue; Can Tho; Phu Quoc; Long Thanh Dong Nai domestic airports 9

10 SPECIAL ZONES 289 IZs/EPZs and 15 FEZ Over 20 IZs/EPZs are developed by Joint Ventures (government & foreign investors) e.g. TLIP (Japan), Tanthuan EPZ (Taiwan), Amata (Thailand) Korea invest in IZs/EPZs mostly: s.g. Yen Phong-Bac Ninh (Samsung mobile);dung Quat-Quang Ngai (Doosan); VSIP Binh Duong; Nghison - Thanhhoa Advantages: - Higher quality infrastructure (electricity, transport, telecommunication) and available public system - Availability of land and most of IZ/EPZ in the convenient location - Simple administration procedure, expedited licensing process and convenient service for investors as mechanism one stop in IZ Management Board. - Incentives to infrastructure developers and projects inside economic zones, IPs 10

11 HUMAN RESOURCES Strengths Labor cost is still competitive in Asia (Can operate over 300 days/year (48h/week) ) Technical workforce, particularly workers with higher qualifications, have leading officials of almost all areas Abundant labor force Weaknesses Shortage of qualified technical workers due to training not tied to requirements occupations, skill levels, and production technology required Opportunities Construction of high-quality training center and high-quality multidisciplinary universities Building a specialized health center for the region is expected. Research of building high-level training center for the region Threats - The labor cost has been increasing in recent years. - The quality of work force is slowly improved therefore the company need to re- train the workers

12 COMPETITIVE LABOR COST

13 Strengths Ready and it will be connected to the fence of the border of each land lot. Power is supplied sufficiently and stably Two Sub-stations of 110/22kV 40 MVA. High-voltage: 22KV (+) Nomal hours : From Monday to Saturday (From 04h00 9h30) (11h30 17h00) (20h00 22h00 ); On Sunday (From 04h00 22h00) (+) Off- peak hours (From 22h 04h) in all day ELECTRICITY (+) Peak hours (From 9h30 11h30 )(17h30 20h00 )

14 ELECTRICITY COST For industrial manufacture:(unit: VND/Kwh) For business and services: (Unit: VND/Kwh)

15 To 2020, Viet Nam will be important part of international economic connection networks with more than 55 partners, in which 15 are member of G-20. TPP 15

16 AEC 2015, VISIONS & OPPORTUNITIES AEC Vision: - Free trade in goods, services - Free flow of investment, capital & skilled labor Opportunities: - Gateway to access to: + Dynamic market with 600 mil consumers mil labor + GDP scale up to 3,000 bil USD + Linking East - West, average GDP growth above 5%/year

17 WHY VIETNAM Global Integration Political & Social Security Human Resource Legal Environment Why Vietnam? Natural Resources Economic Growth & Market Potential Competitive Business Costs Geographic Location

18 II. FDI IN VIETNAM AND KOREA FDI IN VIETNAM 18

19 FDI IN VIETNAM From 1988-January, 2015: 17,579 FDI projects, total registered capital of bil USD Implemented capital per year bil USD In 2014: Registered capital bil USD; implemented capital: bil USD Resgistered capital Implemented capital Source: MPI, up to January,

20 TOP 10 FDI PARTNERS IN VIETNAM Rank Countries and Territories No of projects Total Registered Capital (Million USD) 1 South Korea 4,240 37, Japan 2,494 36, Singapore 1,359 32, Taiwan 2,373 28, BritishVirginIslands , Hong Kong , United States of America , Malaysia , China 1,092 7, Thailand 377 6, Other 91 countries and territories 3,118 46, Total 17, , Source: Ministry of Planning & Investment of Viet Nam 20

21 FDI IN VIETNAM BY INDUSTRIES Construction 5% Accommodation & Restaurant Service 4% Production and Distribution of Electric, Gas, Water and Steam 4% Real Estate 19% ICT 2% Others 10% Manufacturing & Processing 56% Source: Ministry of Planning & Investment of Viet Nam 21

22 VIETNAM-KOREA RELATIONSHIP Up to now 2015 Korea is the 1st largest investors in Vietnam with total registered capital of billion USD with 4,200 projects (Vietnam is the 3 rd largest oversea investment location of Korea after America and China). The biggest Korean companies in the FORTUNE 500 list investing in Vietnam are Samsung, LG, GS, Posco, Hyundai, SK... Investment of Korean companies has been focused in manufacturing, processing, infrastructure, construction, service... Signed Agreement on Investment Promotion and Protection (1993), Agreement on Double Taxation Avoidance (1994). Korea-Vietnam trade reaches 29 billion USD in 2014, (in 2013 its is 27.3 billion USD), FTA between two countries is in progress (In 2020 the bilateral trade will be 70 billion USD). 850 thousand Koreab visited Vietnam in 2014 Korea is the 2 nd largest bilateral donor for Vietnam with around 1,2 billion USD commitment soft loan (EDCF) in 2012 ~

23 VIETNAM KOREA, AT A GLANCE Korean FDI By Sectors Korean FDI by Provinces 23

24 III. INVESTMENT POLICIES IN VIETNAM 24

25 III. INVESTMENT POLICY IN VIETNAM 1. Investment Policy 2. Investment Guarantees 3. Investment Incentives 4. Investment procedures 25

26 UPDATES ON NEW INVESTMENT LAW Transparent regulations on investment prohibition and conditional investment sectors. 2. Improved regulation on investment guarantee and investment treatment 3. Improved investment licensing procedure 4. Improved regulations on investment incentives 5. Improved decentralization mechanism 26

27 I.INVESTMENT POLICIES Investors have the rights: Doing business in all non-prohibition and conditional sectors in Law on Investment Self-decision in business, using credit, supporting fund, natural resource and land in the Law Recognize, protect asset ownership, investment capital, incomes, legal rights of investors Apply equality between investors, creating favorable condition for doing business, sustainable development of investors Respect and implement international agreements 27

28 II.INVESTMENT GUARANTEES No nationalization or confiscation of investors assets Protection of intellectual property rights Remittance of capital and assets abroad Government s guarantee in some important projects Investment guarantees in the event of changes in law or policies Resolve investors dispute in doing business in Vietnam 28

29 III. INVESTMENT INCENTIVES 1. Sectors entitled to investment incentives Production of new materials and energy; hi-tech products;bio-tech and IT, mechanical manufaturing. Cultivation and processing of agricultural, forestry and aquatic products; creation of new plant and animal varieties; Use of high technology and advanced techniques, protection of ecological environment; research, hi-tech development. Development of infrastructure facilities. Development of education, training, health care, physical education and sports. 2. Geographical areas entitled to investment incentives Areas with especially difficult socio-economic conditions. Areas with difficult socio-economic conditions. Hi-tech Zone, Economic Zone, Industrial Zones.

30 III. INVESTMENT INCENTIVES 1. Corporate Income Tax (CIT) - Standard rate (CIT) : 22% (to be reduced to 20% as from 1/1/2016) - 20% (to be reduced to 17% as from 1/1/2016): 10 yrs: areas with socio-economic difficulties; production of feeds, agricultural machinery, energy saving products, high-grade steel; traditional trades Entire operation period: (i) enterprises with aggregate revenues of less than VND 20 billion; (ii) income of people s credit fund & micro-finance institutions - 10% in 15 yrs, exemption in 4 yrs and reduction of 50% in following 9 yrs: areas with special socio-economic difficulties, Economic Zones and High Tech Zones; projects with hi-tech, R&D, hi-tech business, composit, valuable materials, recyclable, green energy, energy from waste, biological technology development, environment protection, agricultural projects with hi-tech. Production projects with minimum investment capital of billion VND (equivalent around 300 million USD) with its disbursement in 3 years and minimum revenue of billion VND at least after 3 years or using workers; (exept projects producing products with special consumption tax; mineral exploitation) Supporting semiproducts/materials for textile-garment; leather-shoe, electronics, car, mechanics satisfied EU or equivalent standards that not producing in Vietnam

31 III. INVESTMENT INCENTIVES 1. Corporate Income Tax (CIT) - 10% for income from enterprises: Socialized activities in training, education, health, culture, sport and environment Social real estate business-investment, newspaper, publication Forest planting, breeding, protecting; Agricultural, Forest, Fishing planting, breeding in socio-economic difficult areas; producing, creating new plants, animals; producing and processing salt; preventing agricultural, fishing products after crop. Cooperation organizations in agricultural, forest, fishing, salting producing. - 20% with exemption in 2 yrs and 50% reduction in 4 following yrs Producing high level steel, products saving energy, machinery, equipments for agriculture, forest, fishery, salty, irrigation; processing food for animals, poultry, seafood; traditional products development Projects in IP

32 III. INVESTMENT INCENTIVES 2. Land lease exemption Type of projects Projects in sectors of investment incentive Projects in areas with socio-economic difficulties Projects in areas with special socio-economic difficulties or in sectors of investment incentives and in areas with socio-economic difficulties Projects in sectors of investment incentives and in areas with special socio-economic difficulties Exemption 3 yrs 7 yrs 11 yrs 15 yrs

33 III. INVESTMENT INCENTIVES 3. Import duty exemption Machines, materials, dedicated transport imported to create fixed properties of investment incentive projects. Materials which are not locally produced. Commodities are imported devices for the 1 st time according to the Government s List such as projects of hotels, offices, apartments, supermarkets, golf course, hotels, resorts, clinics, training, culture, finance Raw materials, materials, components of projects of investment incentives or conditional areas with exceptionally difficult ones are exempted from import tax within 5 yrs from the beginning

34 III. INVESTMENT INCENTIVES 4.Personal Income Tax Tax Bracket Tax Rate (%) Portion of Annual Assessable Income in million VND (equivalent USD at 1USD=16,480VND) Portion of Monthly Assessable Income in million VND (equivalent USD at 1USD=16,480VND) 1 5 Up to 60 (3,640) Up to 5 (303) 2 10 Over 60 to 120 (~7,300) Over 5 to 10 (~600) 3 15 Over 120 to 216 (~13,100) Over 10 to 18 (~1,100) 4 20 Over 216 to 384 (~23,300) Over 18 to 32 (~2,000) 5 25 Over 384 to 624 (~37,800) Over 32 to 52 (~3,100) 6 30 Over 624 to 960 (~58,200) Over 52 to 80 (~4,800) 7 35 Over 960 Over 80

35 III. INVESTMENT INCENTIVES 5. VALUE-ADDED TAX (VAT) All business establishments are subject to VAT VAT rates: 28 categories of goods and services are VAT- exempt, including medical services, education, goods in transit or under temporary admission, life insurance or capital goods that cannot be produced locally. Exports of goods and services: 0% 21 categories of goods and services: 5%, including medical equipment, basic chemicals, fresh foodstuff and metallurgical products. All other goods and service: 10%. 35

36 LABOR REGULATION 8 hours/day, 6 days/week; Overtime: 4h/day, 200h/year Health Insurance Fund: Employers: 2%; employees: 1% of gross wage Social insurance fund: Employers: 15% of gross wages; employees: 5% of their wage. Minimum wage scales (monthly wage) for employees in foreign invested companies, depending on location: (lowest in SEA) VND920,000 ($54) VND950,000 ($56) VND1,080,000 ($63) and VND1,200,000 ($74). 36

37 IV.ADMINISTRATIVE PROCEDURE REFORM No. Items Before reform After reform Target in Tax payment procedures 537 hours/year 201 hours/year 171 hours/year (at the same level of the ASEAN 6) 2 Custom procedures 126 hours/year 63 hours/year At the same level of the ASEAN 6 3 Social Insurance Procedures 335 hours/year 108 hours/yea 49.5 hours/year (At the same level of the ASEAN 6) 4 Electricity supply Procedures: - High voltage electricity - Middle voltage electricity - Low voltage electricity 180 days 132 days 90 days 70 days 33 days 15 days 5 Enterprise Establishment Procedures 32 days (from 2005 until 2008) 5 days (from 2008 up to now) 2-3 days Asean 6: Singapore, Malaysia, Thailand, Brunei, Indonesia and Philippines

38 Investment and Enterprise Registration Procedure Domestic investors Enterprise Registration Foreign Investors Investment In-Principal Approval Project Implementation Enterprise Registration Investment Registration Certificate 38

39 FOREIGN INVESTORS COMPANY ESTABLISHMENT PROCEDURE FOREIGN INVESTOR DEPARTMENT OF PLANNING&INVESTMENT/EZ,IP MANAGEMENT BOARD - Max 15 working days for nomal projects - Max 40 working days for projects renting state land - Max 60 working days for projects having PM s opinion - Following the time of Nat Assembly Meeting for projects reporting to National Assembly INVESTMENT REGISTRATION CERTIFICATE ENTERPRISE REGISTRATION CERTIFICATE Max 3 working days in Business Registration Agency DOING BUSINESS

40 REFERENCE WEBSITES: No Website Administrative Offices 1 Government web portal of Vietnam 2 Ministry of Planning and Investment 3 Foreign Investment Agency 4 General Statistics Office of Vietnam 5 Vietnam Industrial Parks 6 Public Procurement Information 7 Ministry of Industry and Trade 8 Ministry of Finance 9 Investment Procedures in Vietnam 40

41 FOREIGN INVESTMENT AGENCY CONTACTS: Foreign Investment Agency 6B Hoang Dieu Street, Hanoi Tel: Fax: Website: Investment Promotion Center North Vietnam 65 Van Mieu, Hanoi Tel: Fax: Website: Investment Promotion Center Central Vietnam 103 Le Sat, Hai Chau, Da Nang Tel: Fax: Website: South Foreign Investment Center 178 Nguyen Dinh Chieu, Ho Chi Minh City. Tel: Fax: Website: Ms. NGUYEN THI MINH HIEN Investment Counselor / Vietnam Embassy to Korea hienmpivn@yahoo.com / minh_hien@mpi.gov.vn Mobile: 82-(0) / Tel (Fax):

42 THANK YOU!