Tran Duy Dong - Deputy Minister of Planning and Investment
Entering a new era with numerous changes, Vietnam actively attracts and selectively cooperates with foreign investment, and considers quality, performance, technology, and environmental protection as the main evaluation criteria. Projects with advanced or new, high, clean technologies, modern management, high added value, spillover effects, and connecting production and supply chains worldwide will be prioritised.
Vietnam has initially received new overseas funding flows in high technology like Intel and Samsung. The entrance of global technology giants has developed the domestic market rapidly. However, to retain them, in addition to maintaining macroeconomic stability and appropriate taxes and incentives, we have to build synchronous technical infrastructure like industrial zones, factories, electricity, water supply, social infrastructure, and high-quality local human resources.
Foreign-invested enterprises (FIEs) are also accelerating productivity and technology improvement of local businesses, through competitive pressure, and applying new production models to develop and adapt amid globalisation. More local businesses are participating in supply chains of large FIEs.
However, there are still some shortcomings. Machinery, equipment, and production lines in FIEs are more advanced than in domestic enterprises and funding in this area has been low. Technology transfer goals have not been met. Tech spillovers from FIEs to local enterprises is still limited.
Therefore, it is necessary to develop policies and mechanisms to link the two groups of businesses, including the development of supporting industries, links in product supply chains, and technology transfer.
Domestic enterprises should proactively look for tech transfer channels through contracts on purchasing inventions, copyrights, commercial rights, research cooperation with local agencies, organisations, and through FIEs.
Choi Joo Ho - CEO, Samsung Vietnam
We highly appreciate the support of the Vietnamese government in terms of incentive policies for technology corporations. However, there is stagnation of the global economy and a decline in consumption leading to negative revenue growth, along with the upcoming effects of the global minimum tax (GMT).
In Vietnam, we have been struggling with power supply problems recently, an additional payment of corporate income tax at the Bac Ninh factory, and a VAT refund at the factory in Ho Chi Minh City that we have yet to overcome.
If Vietnam does not carefully manage the effects of the GMT, foreign investors will have to think carefully about changing destinations. We especially recommend the government to build special incentives for major FIEs with large contributions to national socioeconomic development, and to develop an industrial ecosystem so they can ensure continued investing and expansion of operations here.
Currently, we are working with the Ministry of Industry and Trade to support local suppliers in approaching and applying high technologies. For example, a consulting initiative with 400 local businesses between 2015 and 2021 achieved impressive results of raised productivity, lower defect numbers, and reducing inventory by 40-50 per cent.
Nguyen Hai Minh - Vice chairman European Chamber of Commerce Vietnam
In our recent surveys on the business investment environment, Vietnam was chosen in the top five destinations globally, and the majority of European businesses would like to maintain and expand their investment scale here.
To spread knowledge and technologies from foreign-invested groups to local suppliers here, policies related to both investment and technology should be loosened and transparent, which are the regulatory framework, and orientation for businesses to develop.
In fact, there are numerous issues such as incentive packages applied to high-tech enterprises, and policies for R&D funds. Businesses spend almost a year applying for confirmation, and numerous companies got discouraged and gave up.
If a business invests in R&D and fails, which is common, and cannot create new products or solutions for commercial business, this failed cost will not be deductible for the business, according to current regulations. They are unnecessary and complicated procedures. We propose to amend and simplify to make them easier to implement.
We have also seen new trends such as establishing R&D centres. Almost all businesses in Europe are small or medium-sized. If they establish an R&D centre in Vietnam to share and spread knowledge, it is quite hard to receive incentives because current regulations require investing at least $50 million in R&D to receive tax incentives.
So Vietnam should lower the requirements for enterprises to enjoy incentives. We cannot expect to attract both much investment capital and a lot of brainpower.