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Government urged to reduce VAT to stimulate economy



The world economy is speeding up while Vietnam’s growth is slowing down. Economists believe that the VAT (value added tax) should be reduced to stimulate demand, because it could result in immediate benefits.

Government urged to reduce VAT to stimulate economy

Small and medium sized enterprises in Vietnam account for 98 percent of total enterprises, making up 40 percent of GDP every year with 5 million jobs. They desperately need money and support to maintain operation.

Dau Anh Tuan from Vietnam Chamber of Commerce and Industry (VCCI) said the government programs aiming to help enterprises have been poorly executed and organized.

A quick survey by VCCI on 500 enterprises in August 2021 found that most support packages are ineffective and some of them are not feasible.

Regarding the tax support package (delay of tax payment and reduction of corporate income tax (CIT), personal income tax (PIT), VAT and other kinds of taxes and fees), only 35.3 percent of enterprises said the package was accessible. The high percentage of businesses unable to access the package reflects problems in implementation.

Of these enterprises, only 15.69 percent said it was easy to access the packages, while nearly 20 percent said it was ‘difficult’ and ‘very difficult’.

Only 9.3 percent of them said the support packages could satisfy their requirements, while 21.57 percent said the packages could partially satisfy them and 10.46 percent said ‘very little’.

Asked about the impact of the support packages on their operation, more than 24 percent of enterprises said the impact was at a ‘medium level’, while 7.84 percent said ‘low level’ and only 3.27 percent said ‘high level’.

Vu Tien Loc, Chair of the Vietnam International Arbitration Center (VIAC), said that tax remission, especially Corporate Income Tax, doesn’t have much significance, because enterprises don’t have to pay CIT if they take a loss. The number of beneficiaries from the CIT reduction policy is not high.

He said that a VAT reduction would have an impact on a large scale. This would help stimulate consumption, helping enterprises overcome difficulties.

Jay Roop from the Asian Development Bank (ADB) said Thailand and Vietnam have a common characteristic in that 98 percent of enterprises are small and medium enterprises (SMEs) and create 40 percent of annual GDP. These are the most vulnerable in the pandemic. The Thai Government has applied solutions to support enterprises, including a VAT reduction and a co-payment program.

The program in Thailand has helped to stimulate demand, boosting sales and improving business revenue.

Reducing taxes

Tuan from VCCI said VCCI has strongly suggested a VAT reduction. The Government reduced the VAT by 30 percent for businesses in fields hardest hit by the pandemic (tourism, transportation).

The support has been useful, but the number of beneficiaries remains modest. For tourism firms with zero revenue, the 30 percent reduction does not have much significance.

He said the VAT should be cut by 2 percent, and on a large scale, in all business fields. The solution would bring many benefits and is easily implemented.

“As both enterprises and people can enjoy preferential taxes, both demand and supply will be encouraged,” he explained.

The World Bank (WB), in its Vietnam’s macroeconomy report in December, also recommended that with the current fiscal space and the difficulties recognized, the Government should consider measures related to budget collections to support domestic demand. This could be a VAT reduction in 2022, which would support private consumption.

James Villafuerte, from ADB, stressed that in current difficult conditions, businesses need capital and support to maintain their operations. Along with monetary policies, the Government should cut taxes to stimulate demand.

Tuan from VCCI said many other countries launched big bailouts at an early stage. The world’s economy is speeding up, while Vietnam’s GDP is slowing down. Vietnam needs solutions to promptly bring direct benefits to people and businesses. Reducing the VAT is a feasible solution.

Nguyen Minh Cuong, Chief Economist at ADB in Vietnam, said the time to implement support packages for economic recovery still exists, but there isn’t much time left. He stressed that it will be too late if Vietnam begins a bailout package when other countries begin their recovery period.

Vietnam’s GDP is predicted to grow by 2 percent this year, lower than the targeted 6.5 percent. 

Tran Thuy



US-based SSA Marine partners with Gemadept to build $6.7-billion logistics centre

The US-based SSA Marine and Vietnam’s Gemadept are collaborating to build the Cai Mep Ha Logistics Center in Vietnam, which is expected to be worth $6.7 billion.



According to local media on September 12, the agreement focuses on the southern Vietnamese port region, particularly the construction of the Cai Mep Ha logistics center.

“The establishment of the Cai Mep Ha logistics center represents not only a leap for Vietnam but for global logistics,” an SSA Marine source stated. “The vision is grand, and the potential is limitless.”

When completed, the complex would span over 2,200 hectares and serve as Vietnam’s top logistics hub. The venture, located in the gorgeous surroundings of Phuoc Hoa district in Phu My town, has a dual-focused blueprint: a cutting-edge logistics center paired with the strategically positioned Cai Mep Ha downstream port.

SSA Marine, the largest US-owned and privately held container terminal operator and cargo handling company in the world, handles 35 million container TEUs per year at its marine and rail terminals and also operates cruise, auto- and Ro/Ro logistics, and IT Solutions.

With 73 years of existence, the firm operates over 250 ports throughout the US, Canada, Panama, Mexico, Chile, Costa Rica, Colombia, Asia, and New Zealand.

This modified plan, according to the province’s Department of Transport and consultants, increases the total area from 1,763ha to nearly 2,204ha. The core project space is approximately 1,687ha, including both the logistics center and the downstream port of Cai Mep Ha.

Moreover, the water surface area has been reduced to about 202ha. In addition, land initially reserved for clean energy storage will be repurposed for logistics and port functions.

The strategic planning adjustment aims to extend the port to handle 250,000-ton ships. Logistics and port operations will be redefined on the 198 ha of land, together with possible water surface areas.

Gemadept and SSA Marine are the leading investors, although seven others are interested. Geleximco, ITC, and Besix-Boskalis-Hateco, a Vietnam-EU collaboration, are said to be involved.

Upon completion, this hub will optimize import and export transportation costs across road, sea, rail, and air transit nodes. It aims to receive, store, process raw materials, package, label, and distribute commodities for adjacent industrial zones, notably the CM-TV port cluster, Vung Tau Port, and the southeast coastal port region.

Source: VIR


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Vietnam’s Hai Phong City attracts extra $1.4 billion in foreign investment



Several enterprises from South Korea and Japan were granted investment certificates on Friday to develop FDI projects at industrial parks in the northern port city of Hai Phong, with a total pledged capital reaching nearly US$1.4 billion.

The investment certificate handover ceremony was attended by Le Tien Chau, secretary of the municipal Party Committee.

The Hai Phong Economic Zone Management Board presented an investment certificate to Ecovane, a subsidiary of the South Korean chemicals maker SKC, to develop a hi-tech biodegradable material factory project worth $500 million.

Other key projects receiving the certificates at the event included a BW ready-built factory worth $60 million and a $40-million auto parts manufacturing plant by China’s CCTY Bearing Company.

Besides, Japan’s Kyocera Document Solutions Inc was approved to pour an additional $237.5 million into its machine and equipment manufacturing plant project, raising the project’s total investment to $425 million.

The municipal Economic Zone Management Board also finished the selection of investors for two social housing projects worth a combined $400 million, whose work is expected to begin this year.

Once completed, the social housing projects will offer more than 8,000 apartments to around 22,000 people, contributing to the city’s efforts to ensure social security and stable accommodations for low-income employees.

Hai Phong City in northern Vietnam attracted an additional US$1.4 billion of foreign capital in September 2023. Photo: Tien Thang / Tuoi Tre
Hai Phong City in northern Vietnam attracted an additional US$1.4 billion of foreign capital in September 2023. Photo: Tien Thang / Tuoi Tre

In the year to September 20, industrial parks and economic zones in Hai Phong had attracted roughly $3.1 billion of investment, reaching 120 percent of its 2023 target, said Le Trung Kien, head of the city’s Economic Zone Management Board.

Up to now, over 1,000 FDI projects worth a combined $28 billion have been developed in this northern port city, which granted investment certificates to 45 FDI projects with a total pledged capital of nearly $2.1 billion and 11 DDI (domestic direct investment) projects with a total cost of some $600 million last month.

The city’s Economic Zone Management Board previously had a working session with South Korea’s Chungbuk Free Economic Zone, which sought to cooperate with businesses active in Hai Phong as well as support them in technology transfers and human resources training.

The investment in semiconductor technology in Hai Phong is expected to advance further as SKC, the chemical unit of South Korea’s SK Group, inked a memorandum of understanding with Hai Phong to study the investment environment for advanced semiconductor materials, secondary batteries, and some other eco-friendly materials.

SK Group is the second-largest conglomerate in South Korea, just after Samsung, focusing on four main areas including energy and chemicals; telecommunications; semiconductors and other advanced materials; pharmaceuticals and logistics services, according to the Hai Phong Economic Zone Management Board.

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VinFast’s 5th electric vehicle costs under $30,000



VinFast’s 5th electric vehicle costs under $30,000

VinFast VF 6 is introduced in an even in Ho Chi Minh City on Sep. 29, 2023. Photo by VnExpress/Thanh Nhan

Vietnamese automaker VinFast has launched its fifth electric car, the VF 6 crossover in the small-car segment, with base prices starting at VND675 million ($27,800).

The Plus version, which offers a range of 399 kilometers compared to the base’s 381 kilometers, costs VND765 million.

The battery costs VND90 million for each version.

Any customer who does not buy the battery can lease it for VND1.8 million a month, with a maximum monthly distance of 1,500 kilometers.

Sales begin October 20 and deliveries will be scheduled for the end of this year.

The VF 6 is in the same price range as the Hyundai Creta (starting at VND640 million) and the Kia Seltos (from VND599 million).

The B-segment (European classification’s smallest-car category) is rife with competition in Vietnam thanks to offerings by Japanese, South Korean, German and Chinese brands all seeking a bigger share.


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