Samsung Vietnam rejects rumor of cellphone production relocation over tax break expiration

A representative of the electronics firm told Tuoi Tre (Youth) newspaper that there is no such thing as moving its existing production base to Thai Nguyen, another northern region, following the expiration of tax incentives offered by Bac Ninh.

Though the revenue generated by the Bac Ninh plant, which is located in the Yen Phong Industrial Park 1, went down in the first quarter of this year, it would not be the reason for any relocation, the representative said.

The main reason for the revenue decrease is that Samsung Bac Ninh is the investment stage with a large number of machines and equipment being assembled so that plant can produce premium phone lines like the Galaxy S6 and Galaxy S6 Edge with metal frames, he said.

"Even though there are some fluctuations, the revenue the plant is expected to earn until the end of this year will remain equal to that of 2014 or only slightly fall," the representative added.

According to the People's Committee of Bac Ninh, a drop in production at the Samsung plant has shrunk the value of the province’s industrial production in 2014 compared with 2013, the first time ever.

Moreover, the reduction is expected to last through 2015, the local government said.

Data from the local Customs Department also showed a difference between the growth rate of export and import of Samsung’s plants in Bac Ninh and Thai Nguyen.

In the first quarter of this year, Samsung Vietnam posted over $3.6 billion in exports from Bac Ninh, down nearly 40 percent year on year, while imports hit more than $3.1 billion, down 39 percent year on year.

Meanwhile, the exports and imports at the Samsung plant in Thai Nguyen reached $3.6 billion and $3.7 billion, a whopping 4,600 percent and 1,400 percent surge year on year.

The Samsung Bac Ninh project has been operational since April 2009, enjoying a corporate income tax exemption in the first four years.

The facility has paid corporate income tax since 2013.

In March 2013, Samsung invested $2 billion in building the Samsung Thai Nguyen high-tech complex with similar incentives as those the Samsung Bac Ninh plant has enjoyed.

In 2014 the South Korean electronics giant continued to pour $3 billion more into the Thai Nguyen facility.

The Bac Ninh Customs Department said Samsung will consider focusing its production in a place with the lowest cost to maximize profit, and the large-scale Samsung Thai Nguyen facility is still enjoying a zero percent corporate income tax rate.