Goalposts move for local players

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Binh Duong province’s Truong Thanh Furniture Corporation (TTF) chairman Vo Truong Thanh said scores of foreign firms have recently jumped into wood processing in southern locations like Binh Duong and Dong Nai.

This had disadvantaged local firms as foreign players enjoyed lower borrowing costs abroad and might not face corporate income tax if their Vietnamese operations incurred losses, said Thanh.

Reality shows that a number of foreign-invested enterprises (FIEs) in Vietnam have deliberated claimed they incurred losses through transfer pricing, which sees enterprises raising the prices of materials bought from parent companies abroad to evade taxes.

Statistics indicate that the export value of wood products by local firms accounted for 56 per cent of Vietnam’s total wood product export value in 1997. The figure slid to 44 per cent now and the remainder was held by FIEs.

“Firms can hardly embrace technology innovations or in-depth investments to modernise production and equipment with current high lending rates averaging 18-20 per cent, per year,” said Thanh.

Intimex Import-Export Joint Stock Company’s chairman Do Ha Nam said local coffee trading firms were also being squeezed due to a shortage of bank loans.

Vinacafe deputy general director Nguyen Cong Hoang said: “The coffee industry just wants local banks to provide coffee firms with long-term loans to help them stabilise material sources for production.”

Many local firms said they could not compete with FIEs in procuring agricultural products for export because FIEs enjoy 3 per cent, per year interest rates when local firms face 8 per cent, per year dollar lending rates.

They hoped the dollar lending would be eased to 6-7 per cent, per year.