Vietnam will continue to be prime destination for FDI: VinaCapital

The global corporate minimum tax is unlikely to impede Vietnam’s FDI inflows given the fact that tax incentives are not the primary attraction for setting up a factory in Vietnam, said Michael Kokalari, chief economist at investment fund VinaCapital.

In the latest analysis, VinaCapital chief economist said FDI had been one of Vietnam’s most important economic growth drivers over the last decade.

Vietnam had significantly outperformed its regional peers in attracting FDI since the US-China trade war emerged, but there were potential risks to its future FDI inflows.

A new global corporate minimum tax scheme would reduce Vietnam’s relative attractiveness as an FDI destination by limiting the tax incentives offered to prospective investors.

However, low tax rates are far from the most important factor in a company’s decision about where to establish a new factory. Considerations such as political stability, ease-of-doing-business, workforce and physical infrastructure are all more important factors.

“We fully believe that Vietnam will continue to be a prime destination for FDI,” he said./.