Vietnam has missed out on multibillion-dollar investments by multinationals including Intel Corp and LG Chem Ltd because it lacks sufficient investment incentives, the Vietnamese Ministry of Planning and Investment said in a document reviewed by Reuters.
US chipmaker Intel had proposed to invest US$3.3 billion in a project in Vietnam and asked the country for “cash support” of 15 percent, but later decided to move the project to Poland, the ministry said in the document dated on June 29.
South Korea’s LG Chem also skipped Vietnam to invest in a battery project in Indonesia, after having asked the Vietnamese government to cover 30 percent of the investment cost, the document said.
Photo: EPA-EFE
“Recently, many large groups have come to explore investment opportunities in Vietnam, but have later decided to move to other countries as Vietnam lacks regulations on investment supports,” the document said.
Vietnam, which is an important manufacturing base for companies such as Samsung Electronics Co, Foxconn Technology Group (富士康科技集團) and Intel, is heavily reliant on foreign investment for growth. Companies with foreign investment account for about 70 percent of its total exports.
The ministry document also showed that Intel had shelved a planned investment in Vietnam that could have nearly doubled the US chipmaker’s operation in the Southeast Asian country.
The document added that Austria-based semiconductor manufacturer AT&S had decided to invest in Malaysia after its request for investment support in Vietnam was not met.
Samsung was also planning to move some production to India, the document said.
Multinationals have been watching Vietnam's plans to set up the investment incentive fund after the country's parliament last year approved the OECD-led global minimum corporate tax rate of 15 percent, raising the effective tax level paid by companies.
Nonetheless, Vietnam’s economic growth is accelerating and could meet or exceed the government’s 6.5 percent target this year, Minister of Planning and Investment Nguyen Chi Dung said.
Dung said economic expansion might reach 7 percent this year as improving industrial and construction sectors drive growth, a government statement said.
The IMF has forecast Vietnam’s GDP to expand 6 percent this year, up from 5 percent last year — a pace that would make it among Asia’s fastest-growing economies.
The economy is also benefiting from increasing exports and foreign direct investment (FDI), Dung said.
Pledged FDI for the year might reach US$39 billion to US$40 billion, up from last year, Deputy Minister of Planning and Investment Tran Quoc Phuong said.
The country posted pledged FDI at US$36.6 billion as of December last year.
Additional reporting by BloomberG
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