Vietnam demands commitment fulfillment report from Nokia

Nokia Vietnam Co. Ltd., now known as Microsoft Mobile Vietnam Co. Ltd., began production at its manufacturing plant in the northern province of Bac Ninh in June 2013, according to the investment ministry.

Under its investment license, the company will be able to enjoy tax incentives only if it fulfills its commitments in Vietnam.

One of the commitments is to follow the highest standards in terms of business ethics and local laws, according to Hai Quan (Customs) newspaper, which is run by Vietnam Customs.

Nokia Vietnam must also ensure that it can provide invoices and receipts of its suppliers and cooperate with Vietnamese agencies in the event that the latter wants to check the transparency of its anti-transfer pricing policy.

The phone maker also promised to increase the localization rate, or the amount of materials that can be locally sourced, to 30-50 percent after three to four years of production in Vietnam.

It is also committed to only deploying modern technology and production lines imported from Europe at the Vietnam facility, and to posting profits with a reasonable ratio after the first year of operation, according to Hai Quan.

Nokia Vietnam will be able to enjoy the highest incentive in paying corporate tax if it meets these commitments.

The Nokia Bac Ninh plant exported 10 million products worth more than US$193 million in 2013. By the end of that year, Nokia had invested more than $157 million into its Vietnamese operations.

Nokia phone making facilities around the world have been transferred to Microsoft after the U.S. software titan bought the Finnish company’s devices and services unit in April 2014 for $7.2 billion.

Microsoft is reportedly shutting down two such handset plants it inherited from Nokia in China and relocating part of the manufacturing to Vietnam, media reports said Friday.

Mobile phones that bear the erstwhile Nokia brand name are still among the best-selling devices in Vietnam in terms of sales volume thanks to their affordable prices, according to Vietnamese retailers.