Nokia adds to nation’s mobile credentials

Vietnam is a lucrative market for global mobile phone makers

The $302 million factory, located in northern Bac Ninh province’s Vietnam-Singapore Industrial Park, will be Nokia’s 11th in the world and is a part of its plan to increase competitiveness in the diverse global mobile device market.

The new factory will recruit about 10,000 local workers. Nokia announced its Vietnam plan in March, 2011. It followed nearly nine months of negotiations, in which the Vietnamese government agreed to recognise the mobile phone-maker’s project as “a high-tech project”.

That allowed it to enjoy the highest tax and land incentives under Vietnam’s High-Tech Law as its rival South Korea’s Samsung Electronics is enjoying. Pham Cam Ly, communications manager of Nokia in Indochina, said the incentives were an important factor supporting Nokia’s factory plan in Vietnam. Being recognised as a high-tech enterprise, Nokia will have an equal competitive advantage with its rival Samsung Electronics in terms of tax policies.

The incentives include 10 per cent corporate income tax (CIT), instead of the 25 per cent imposed on normal foreign invested enterprises. A high-tech enterprise also enjoys tax exemption in its first four years of operation and pays half of this 10 per cent rate in the following nine years.

In return, Nokia pledged to meet criteria of localisation rate and employment of skilled workers within the first three years of operating. Nokia’s investment further adds Vietnam into the  global chain of mobile phone manufacturing.

At present, Samsung is also operating a $670 million mobile phone factory in Bac Ninh. This factory manufactures the firm’s latest products like Galaxy S II and Tablet Tab 10 and Tab 7.

The South Korean manufacturer is also planning to expand investment in Vietnam from $670 million to $1.5 billion, making Vietnam its largest manufacturing production base in the world.