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INVESTMENT environmentsIN VIETNAM

INVESTMENT environmentsIN VIETNAM

Mr. Bui Trong DinhAssistant to the Head Office / in charge of investment

Taipei - October 2010

VECOVIETNAM

The Vietnam Economic and Cultural Office in Taipei

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investment Environments in Vietnam

investment Environments investment Environments in Vietnamin Vietnam

ContentsContentsI. Vietnam in briefI. Vietnam in briefII. Investment in Vietnam recentlyII. Investment in Vietnam recentlyIII. The updated Investment environments III. The updated Investment environments III. Prospects for investment in VietnamIII. Prospects for investment in Vietnam

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investment Environments i. Vietnam in brief

investment Environments investment Environments i. i. Vietnam in briefVietnam in brief

Location:Location:•• in the centre of Southeast Asiain the centre of Southeast Asia

•• bordered by China to the North, by Laos and bordered by China to the North, by Laos and Cambodia to the West, with coastline to the Cambodia to the West, with coastline to the North and SouthNorth and South

Area:Area: 331,698 sq.km331,698 sq.km. .

Coastline:Coastline: 3,260 km3,260 km

Natural ResourcesNatural Resources•• Energy resources: oil, gas, and coals and long of Energy resources: oil, gas, and coals and long of

waterways provide the basis for hydropower; waterways provide the basis for hydropower;

•• Minerals: bauxite, iron ore, lead, gold, granite, Minerals: bauxite, iron ore, lead, gold, granite, marble, etc..marble, etc..

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investment Environments i. Vietnam in brief

investment Environments investment Environments i. i. Vietnam in briefVietnam in brief

Population:Population:–– 86 million (2010)86 million (2010)–– Over 65% under 60Over 65% under 60–– Urban areas: 28%Urban areas: 28%–– Rural areas: 72% Rural areas: 72%

Ethnic groups:Ethnic groups:–– 54 ethnic groups54 ethnic groups–– Largest group: King (88%) Largest group: King (88%)

Official Language: Official Language: VietnameseVietnamese

For business: English, For business: English, French, Russian, Chinese, French, Russian, Chinese, Japanese, GermanJapanese, German

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* Convenient transportation:- Inland road

+ North-South axis:Highway 1A: 2.260kmHo Chi Minh road: 3167 km

+ National transportation network + connections with the ASEAN countrie

- Railways have a total length of 2632 k- There are 11 major seaports, 61 000 k

of inland waterways

- 3 international airports and 16 domestic

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investment Environmentsinvestment EnvironmentsI. I. Vietnam in briefVietnam in brief

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SocioSocio--economic performance for 2003economic performance for 2003--

20092009

Annual GDP average growth rate : 7% Annual GDP average growth rate : 7% --

8%8%

Annual industrial production increased by Annual industrial production increased by

14. 5%14. 5%

Average purchasing power per capita Average purchasing power per capita

mmore thanore than doubled doubled

Viet Nam in briefViet Nam in briefViet Nam in briefVECOVIETNAM

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Viet Nam in briefViet Nam in briefViet Nam in briefMajor export products:Major export products:Vietnam is the worldVietnam is the world’’s largest exporter of pepper, second largest s largest exporter of pepper, second largest exporter of coffee and rice, third largest of cashews as well asexporter of coffee and rice, third largest of cashews as well as a a major supplier of tea and seafood, crude oil, garments, major supplier of tea and seafood, crude oil, garments, handicraft and art items, etc...handicraft and art items, etc...

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Viet Nam in briefViet Nam in briefViet Nam in briefMajor import products:Major import products:

HighHigh--tech products, Materials, Pharmaceutical products, machinery, tech products, Materials, Pharmaceutical products, machinery, instrumentinstrument

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investment EnvironmentsII. Investment in Vietnam recentlyinvestment Environmentsinvestment Environments

IIII. . Investment in VietnamInvestment in Vietnam recentlyrecently

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1. FDI to Vietnam (1991-2009)

08,000

16,00024,00032,00040,00048,00056,00064,00072,000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Millio

n US

D

0

200

400

600

800

1,000

1,200

1,400

1,600

Num

ber o

f pro

jects

Registered capital Disbursed capital Number of new projects

1010

2. FDI Up - to - date July 2010VECO

VIETNAMII. II. Investment in VietnamInvestment in Vietnam recentlyrecently

-- 11,807 projects licensed with11,807 projects licensed withregistered investment US$189 billionregistered investment US$189 billiondisbursement over $96 billiondisbursement over $96 billion

-- 7 months of 2010:7 months of 2010:658 projects licensed with US$10,7 billion658 projects licensed with US$10,7 billion213 projects expanded with increased capital of 213 projects expanded with increased capital of US$US$5 5 billion. billion.

-- Contribute 20% to GDP, 54.6% to export volume Contribute 20% to GDP, 54.6% to export volume (crude oil included), 35% to industrial output(crude oil included), 35% to industrial output-- Create 1.5 million employeesCreate 1.5 million employees

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FDI By Sector3% 16%

31%5%7%6%1%3%6%

5%1%2%5% 7% 2%

Oil & gas Light industryHeavy industry Food industryConstruction Agriculture, forestryAquaculture Transport, ICTHotel, tourism Banking, financeCulture, health, education New urban area constructionOffice, apartment construction IZs infra contruction

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II. II. Investment in VietnamInvestment in Vietnam recentlyrecently3. FDI Distribution by COUNTRIES

Japan10%

Malaysia10%

Taiwan12%

Cayman Islands4%

United State of America8%

ritish Virgin Islands7%

Hong Kong4%

Singapore9%

Other21%

Thailand3%

Republic of Korea12%

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II. II. Investment in VietnamInvestment in Vietnam recentlyrecentlyTop Ten Foreign Investors in the

period 2001 – 2010 (projects in operation)

NoNo Countries & Countries & TerritoriesTerritories

No. of No. of projectproject

Registered Registered CapitalCapital

(million USD)(million USD)1.1. South KoreaSouth Korea 25702570 2299122991

2.2. TaiwanTaiwan 21302130 22586225863.3. JapanJapan 12441244 19585195854.4. MalaysiaMalaysia 362362 1807118071

5.5. SingaporeSingapore 832832 1779617796

6.6. AmericaAmerica 545545 15673156737.7. British Virgin IslandsBritish Virgin Islands 475475 13450134508.8. Hong KongHong Kong 594594 770077009.9. Cayman IslandsCayman Islands 4848 71787178

10.10. ThailandThailand 235235 57125712

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II. II. Investment in VietnamInvestment in Vietnam recentlyrecently4. FDI OF TAIWAN TO VIETNAM

Manufacturing 82.2%

Real estaed 6.2%

Others6.3%

Construction 5.3%

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III. Foreign Investment environments III. Foreign Investment environments 1. Major objectives by 20201. Major objectives by 2020

* GDP growth rate 2010-2015: 7.5% - 8% p.a.

* Economic structure:- Agriculture, forestry & fishery: 15-16% GDP- Industry & construction: 43-44% GDP- Services: 40-41% GDP

* Investment capital for development: US$140 bill.

* FDI: US$23-24 bill. (35%)Investment demand for infrastructure: US$14.9 bill.

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III. Foreign Investment environments III. Foreign Investment environments 2. Investment law2. Investment law

* Fair and equitable treatment to both domestic and foreign enterprises in all economic sectors

* Investment sectors expanded to foreign investment

* Foreign investors are eligible to set up types of investment in conformity with Law on Enterprises

* Simplification of investment procedures

* Compliance with international practices

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III. Foreign Investment environments III. Foreign Investment environments 33. Investment Opportunities entitled to Incentives. Investment Opportunities entitled to Incentives

3.1 Preferential sectors:- Manufacture of new material and production of new energy, manufacture of high-tech products, bio-technology, 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 Vietnamese culture;- Development of traditional crafts and industries; and- Other manufacturing and service sectors which require encouragement.

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III. Foreign Investment environments III. Foreign Investment environments 33. Investment Opportunities entitled to Incentives. Investment Opportunities entitled to Incentives

3.2 Regions entitled to Incentives:- Regions with specially difficult socio-economic conditions,;

- Regions with difficult socio-economic conditions; and

- Industrial zones, Export processing zones, High-tech zones and Economic zones.

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III. Foreign Investment environments III. Foreign Investment environments 44. Incentives on Corporation Income Tax. Incentives on Corporation Income Tax

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 athalf rate (9 yrs at maximum)

Additional tax reductions available for investment expansion, increase in export turnover, engaging in R&D, employing disabledpeople, etc.

Losses: Taxpayers may carry forward their losses for five years

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III. Foreign Investment environments III. Foreign Investment environments 55. Import Duty Exemption and Reduction. Import Duty Exemption and Reduction

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 Vietnam) 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 Vietnam (89 countries). Rates vary by the category of goods.Special preferential ratesapplied to imported goods from countries that signed special agreement with Vietnam (e.g. ASEAN).Ordinary rates are 150% of preferential rates.

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III. Foreign Investment environments III. Foreign Investment environments 66. Advantages for investments in . Advantages for investments in IZsIZs, , EPZsEPZs, , EZsEZs

- 140 IZs and EPZs and 8 Economic Zones

- In 2010, 500 projects with registered capital of US$14.4 billion

* Favorable incentives- One-stop administrative procedures- Better infrastructure facilities- Custom services included

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III. Foreign Investment environments III. Foreign Investment environments 7. 7. Licensing and Registration ProceduresLicensing and Registration Procedures

Investment Registration Procedures applied if:- Projects not fall in conditional sectors; and

- Investment capital is less than VND300 billion (approx. US$19 million)

- Respond within 15 working days

Investment Appraisal Procedures applied if:- Projects fall in conditional sectors; or

- Investment capital is VND300 billion (approx. US$19 million) or above

- Respond within 45 working days

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III. Foreign Investment environments III. Foreign Investment environments 8. 8. Investment Licensing BodiesInvestment Licensing Bodies

Prime Minister:- Projects regardless of capital source or capital amount within specific sectors (airports, seaports, mining, oil & gas, TV broadcasting, casinos, cigarette manufacturing, universities, development of IZs, EPZs, HTZs and EZs- Projects regardless of capital source with capital amount over VND1,500 billion within specific sectors (electricity, metallurgy, alcohol & beer production, trading etc.)- FDI projects regardless of capital amount within specific sectors (sea transportation, post, telecom & internet networks, printing & publication etc.)Provincial People’s Committee:- Projects outside IZs, EPZs, HTZs and EZs and not within PM approval authority- Projects for development of infrastructure in IZs, EPZs, HTZs and EZs in localities withno management authorities of zones

Management Boards of IZs, EPZs, HTZs and EZs:- Projects in IZs, EPZs, HTZs and EZs and not within PM approval authority- Projects for development of infrastructure in IZs, EPZs, HTZs and EZs

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III. Foreign Investment environmentsIII. Foreign Investment environments9. Policies for development of infrastructure9. 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- Issue State-guaranteed bonds for specific construction work

Sectors calling for private investment:

1. Transportation2. Seaport and airport terminals3. Water supply, irrigation4. Market, school, medical station5. Office, houses and apartments6. Infrastructure in IZs, EPZs, EZs7. Power & energy8. Telecommunications

Source Demand for investment2006-10 2010-20 Total

ODA 9,630 53,106 62,736

State Budget (incl. State bond) 2,619 150 2,769

FDI 653 2,125 2,778

Domestic private sector 1,968 2,555 4,523

Total 14,870 57,936 72,806

Unit: US$ mil.

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III. Foreign Investment environments III. Foreign Investment environments 10.Incentives for investment in infrastructure10.Incentives for investment in infrastructure

Most favorable incentives applied to BOT, BT and BTO Most favorable incentives applied to BOT, BT and BTO projectsprojects

CIT: 10% for 15 yearsCIT: 10% for 15 years

CIT holidays: Exemption for 4 years, and half reduction CIT holidays: Exemption for 4 years, and half reduction for 7 successive yearsfor 7 successive years

Land lease up to 70 years; rental fee exemption for 10Land lease up to 70 years; rental fee exemption for 10--15 years (or for the whole life of the projects invested in 15 years (or for the whole life of the projects invested in regions with difficult conditions)regions with difficult conditions)

Duty exemption applied to goods imported to form fixed Duty exemption applied to goods imported to form fixed assetsassets

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III. Foreign Investment environments III. Foreign Investment environments 10.Incentives for investment in infrastructure10.Incentives for investment in infrastructure

Cleared ground shall be provided to Cleared ground shall be provided to investors in infrastructure projects;investors in infrastructure projects;Support expenses incurred for ground Support expenses incurred for ground clearance, compensation and resettlement;clearance, compensation and resettlement;Support usage fees in regions with difficult Support usage fees in regions with difficult conditions for investors to draw back their conditions for investors to draw back their capital;capital;Support expenses related to designing, Support expenses related to designing, survey, and feasibility study creation.survey, and feasibility study creation.

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VietnamVietnam1. Why invest in Vietnam1. Why invest in Vietnam

Political and socioPolitical and socio--economic stabilityeconomic stabilityRapid and continuous economic growthRapid and continuous economic growthTransportation hub of Southeast AsiaTransportation hub of Southeast AsiaAbundant educated labor force at low priceAbundant educated labor force at low priceMember of WTO, APEC, ASEAN, ASEMMember of WTO, APEC, ASEAN, ASEMFavorable FDI promotion policiesFavorable FDI promotion policiesBeautiful and Promising landBeautiful and Promising land

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IV. Prospect for invest in Vietnam IV. Prospect for invest in Vietnam 2. Address for information and contact2. Address for information and contact

11. The Vietnam Economic & Cultural Office in Taipei. The Vietnam Economic & Cultural Office in TaipeiAddressAddress: 2f, 65 Sung Chiang Road, Taipei: 2f, 65 Sung Chiang Road, TaipeiTel: (02) 2 5166626/ ext 203; fax: 02Tel: (02) 2 5166626/ ext 203; fax: 02--25041761; 25041761; EE--mail: mail: btrongdinh@yahoo.combtrongdinh@yahoo.com; Mobile: 0955203559 ; Mobile: 0955203559

2. 2. Foreign Investment Agency Foreign Investment Agency --Ministry of Planning Ministry of Planning and Investment and Investment

AddressAddress : 02 Hoang Van Thu Str, Hanoi, Vietnam,: 02 Hoang Van Thu Str, Hanoi, Vietnam,Tel: 84Tel: 84--44--7343758, Fax: 847343758, Fax: 84--44--7343769,7343769,EE--mail: mail: fiavietnam@mpi.gov.vnfiavietnam@mpi.gov.vnwebsite: website: www/mpi.gov.vn/fdiwww/mpi.gov.vn/fdi3. 3. Relevant ministries Relevant ministries 4. Provincial Planning & Investment Department 4. Provincial Planning & Investment Department 5. Board of Management for IZs and EPZs5. Board of Management for IZs and EPZs

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VECOVietnam Welcome to VietnamWelcome to Vietnam

THANK YOU FOR YOUR ATTENTION!THANK YOU FOR YOUR ATTENTION!