Viettel seeks equal hi-tech incentives

The proposal calls for impartial treatment towards domestic and foreign businesses to spur Vietnam’s handset manufacturing industry.

According to a Viettel source, despite reaping initial outcomes from telecom equipment manufacture to feed the domestic market (like the launching of USB 3G V1000 or V6206 handsets), the group has still grappled with numerous hardships.

 For instance, Viettel bore high tariffs when importing materials and components which could not be made in Vietnam.

“Most of components and devices for mobile manufacture in Vietnam must be imported with high import duties. This made local products more costly than similar whole-form imported items which are tax free,” said Viettel group’s general director Hoang Anh Xuan.

The import duty of handset batteries is set at 20 per cent, that of vibration motors 25 per cent and of micros at 15 per cent, for instance. 

Tax differences between whole-form imported handsets and imported devices for domestic production have made it hard for Viettel products to compete with similar items in the home market in pricing terms, Viettel claimed.

That is one reason why, company officials said, Vietnam had imported around 17 million handsets last year, surpassing 70 per cent of market’s demand.

Apart from imported handsets, local handset manufacturers also found it less advantageous compared to foreign hi-tech firms on the same footing which are operating in the Vietnamese market.

Top global handset manufacturers South Korea’s Samsung and Finland’s Nokia built assembly facilities in Vietnam with committed investment capital reaching several billion US dollars.

With huge investments and the hi-tech factor, these firms have enjoyed generous investment incentives that local firms producing the same items were not given. 

For instance, Samsung Vietnam Electronics has enjoyed bigger tax incentives is tax free when importing materials and accessories for handset manufacture in Vietnam in five years. The company even became an export processing zone business, enjoying bigger incentives, from September 2012.

In this context, Viettel asked the prime minister to entrust the Ministry of Finance for consideration of supportive policies to uphold fledging local mobile manufacture in the  initial stage.

Viettel proposed import duty exemption in five years from 2013 to entire materials, accessories and auxiliaries import serving research, design, assembly and manufacture of handsets, irrespective of the fact they could be made in Vietnam or not.

The beneficiaries would be Viettel and its wholly-owned subsidiaries. Besides, distributors shall enjoy preferential 10 per cent corporate income tax for the income derived from selling handsets made or assembled by Viettel in the domestic market.