Contributions from foreign direct investment companies to the country's economy are not commensurate with the preferential treatment that they have received from the Government, according to several ministries.
FDI enterprises have made significant contributions to the country's development, but many projects in recent years have shown shortcomings.
The ministries of Finance and Planning and Investment said as of September, Vietnam had 11,959 foreign direct investment projects, with registered capital totalling 191.8 billion USD and charter capital, 61.63 billion USD.
A recent report of the Finance Ministry said the number of newly registered FDI projects has increased annually but implemented capital is still modest.
Many FDI projects in Vietnam have a large amount of registered capital but charter capital is much smaller. Disbursed capital is also very low, it said.
The Ministry of Planning and Investment concurred with the Finance Ministry, citing the development of FDI afforestation projects from 1995 to August this year.
During the period, eight FDI afforestation projects were operational with total registered capital of 268 million USD but disbursed capital was only 22.7 million USD, or 8.43 percent.
Slow capital disbursement was also seen at FDI steel projects.
For example, the TATA steel production project in central Ha Tinh province, a joint venture between Vietnam Steel and India, has investment capital of 5 billion USD but its charter capital is only 50 million USD, or 1 percent.
From 2008-10, the FDI sector made the smallest contribution to the State Budget among the four sectors (the State-own economic sector, the FDI sector, the domestic private economic sector and the petroleum area), according to the Finance Ministry.
More FDI companies are reporting losses to Vietnamese taxation offices while they are, in fact, profitable.
According to sources from the Ministry of Public Security, the proportion of FDI enterprises suffering losses in Binh Duong southern province was 39 percent; 37 percent in Long An southern province; 25 percent in Lam Dong province in the Central Highlands; 24 percent in HCM City and 24 percent in the northern city of Hai Phong.
The HCM City General Taxation Office also revealed that the agency checked 1,154 FDI enterprises out of the total 3,400 FDI companies operating in the city and found that 708 units reported losses in their final reports.
Most FDI companies try to seek ways to get preferences, particularly those relating to taxation, from the Government's investment stimulation policies applied to newly invested projects.
These include exemptions or reductions on import taxes for goods that are to be re-exported and on corporate income tax.
When their grace period for preferential treatment ends, they establish new companies in order to continue to receive preferences, the taxation agency said.
Many enterprises report losses but still continue to expand their production scale.
The Finance Ministry said that FDI companies take advantage of loopholes in the Government's foreign investment attraction policies to benefit themselves.
The ministry said current FDI attraction policies have paid attention to the number of projects and not to investment quality.
The poor ability of authorised agencies in assessing foreign investors' financial potential, project finance, and checking the effectiveness of FDI projects after being licensed is another obstacle.
Overlapping local and central-level agencies' responsibilities in managing FDI projects have also created negative conditions for the FDI situation in the country.
According to the Finance Ministry, the Government needs to have comprehensive FDI encouragement policies that are not only uniform but also transparent in order to attract effective FDI sources into the country./.
FDI enterprises have made significant contributions to the country's development, but many projects in recent years have shown shortcomings.
The ministries of Finance and Planning and Investment said as of September, Vietnam had 11,959 foreign direct investment projects, with registered capital totalling 191.8 billion USD and charter capital, 61.63 billion USD.
A recent report of the Finance Ministry said the number of newly registered FDI projects has increased annually but implemented capital is still modest.
Many FDI projects in Vietnam have a large amount of registered capital but charter capital is much smaller. Disbursed capital is also very low, it said.
The Ministry of Planning and Investment concurred with the Finance Ministry, citing the development of FDI afforestation projects from 1995 to August this year.
During the period, eight FDI afforestation projects were operational with total registered capital of 268 million USD but disbursed capital was only 22.7 million USD, or 8.43 percent.
Slow capital disbursement was also seen at FDI steel projects.
For example, the TATA steel production project in central Ha Tinh province, a joint venture between Vietnam Steel and India, has investment capital of 5 billion USD but its charter capital is only 50 million USD, or 1 percent.
From 2008-10, the FDI sector made the smallest contribution to the State Budget among the four sectors (the State-own economic sector, the FDI sector, the domestic private economic sector and the petroleum area), according to the Finance Ministry.
More FDI companies are reporting losses to Vietnamese taxation offices while they are, in fact, profitable.
According to sources from the Ministry of Public Security, the proportion of FDI enterprises suffering losses in Binh Duong southern province was 39 percent; 37 percent in Long An southern province; 25 percent in Lam Dong province in the Central Highlands; 24 percent in HCM City and 24 percent in the northern city of Hai Phong.
The HCM City General Taxation Office also revealed that the agency checked 1,154 FDI enterprises out of the total 3,400 FDI companies operating in the city and found that 708 units reported losses in their final reports.
Most FDI companies try to seek ways to get preferences, particularly those relating to taxation, from the Government's investment stimulation policies applied to newly invested projects.
These include exemptions or reductions on import taxes for goods that are to be re-exported and on corporate income tax.
When their grace period for preferential treatment ends, they establish new companies in order to continue to receive preferences, the taxation agency said.
Many enterprises report losses but still continue to expand their production scale.
The Finance Ministry said that FDI companies take advantage of loopholes in the Government's foreign investment attraction policies to benefit themselves.
The ministry said current FDI attraction policies have paid attention to the number of projects and not to investment quality.
The poor ability of authorised agencies in assessing foreign investors' financial potential, project finance, and checking the effectiveness of FDI projects after being licensed is another obstacle.
Overlapping local and central-level agencies' responsibilities in managing FDI projects have also created negative conditions for the FDI situation in the country.
According to the Finance Ministry, the Government needs to have comprehensive FDI encouragement policies that are not only uniform but also transparent in order to attract effective FDI sources into the country./.
