Business

Transfer pricing among FDI firms in Vietnam at alarming rate: State Audit

Published

3 years ago

June 10, 2020

While FDI firms continue to report losses, they keep expanding operations in the country.

Transfer pricing among foreign-invested firms operating in Vietnam is increasing at an alarming rate, evidenced by the fact that while foreign-invested companies report losses, the majority of their Vietnamese peers in the same fields are generating profits, especially in garment and footwear, according to Doan Xuan Tien, deputy State Auditor General.

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Deputy State Auditor General Doan Xuan Tien says transfer pricing among FDI firms operating in Vietnam is increasing at an alarming rate. Photo: VGP.

So far, nearly 50% of foreign direct investment (FDI) firms in Vietnam said they are operating at a loss, said Tien at a conference on June 9, for which he attributed transfer pricing, among other reasons, to this issue, the governmental portal reported.

The issue causes losses of up to hundreds of millions of US dollars to the state budget, Tien stressed, adding FDI firms make up 20% of GDP, 25% of total social investment, 40% of industrial production value, and 50% of external trade.

Many investors are looking for ways to transfer obsolete machines and equipment to recipient countries, including Vietnam, Tien added.

The consequence is that it is very difficult to evaluate the real value of these machines. This practice implies environmental pollution, low product quality and high costs, he stated.

Tien attributed the growing trend of transfer pricing to Vietnam’s shortcomings in managing FDI projects, including a lack of consistency between the target and action to attract FDI; the country’s incentive policies to attract FDI do not base on competitive advantages of each province and city; ambiguity in administrative process to apply for such policies; among others.

Notably, in Ho Chi Minh City, nearly 60% out of 3,500 FDI firms have been reporting losses for many years, and in Binh Duong province, the rate is 50% in the 2006 – 2011 period.

Tien, however, noted while FDI firms continue to suffer losses, they keep expanding operations here.

Tien pointed to an example of Coca-Cola, saying since its first presence in Vietnam in 1992, the US firm has reported an accumulated loss of VND3.76 trillion (US$162.93 million) by December 2012, exceeding its original investment capital. In fact, Coca-Cola’s production capacity has been growing at an average pace of 20% annually.

Another case is Metro Vietnam, which has increased its registered capital to US$301 million after 12 years operating in the country. However, the firm reported accumulated losses of VND1.65 trillion (US$71.5 million), and a profit of VND173 billion (US$7.5 million) in 2010. Nevertheless, Metro Vietnam has expanded nationwide with 19 retail supermarkets.

Nguyen Mai, chairman of the Association of Foreign Invested Enterprises (VAFIE), commented outdated machines and technologies used by FDI firms are causing overuse of energy and severe level of pollution.

Deputy State Auditor General Tien suggested it is essential for State Audit of Vietnam to enhance efficiency during the auditing process, while there should be more clarity in legal framework regarding the audit.

Nguyen Thi Phuong Hoa from the National Economics University suggested government agencies could disclose the audit results related to cases of transfer pricing, as a warning to those violating transfer pricing regulations.

Hoa referred to UK experience in dealing with Starbuck’s act of transfer pricing for 13 years. The publication of the audit results led to a widespread boycott by UK customers towards Starbuck and this business eventually had to repay the tax arrears of between US$6.3 and US$7.6 million in 2012. Hanoitimes

Hai Yen

Source: https://vietnamnet.vn/en/business/transfer-pricing-among-fdi-firms-in-vietnam-at-alarming-rate-state-audit-647929.html

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Travel giant Saigontourist expects $146 mln gross profit in 2023

Saigontourist Group, Vietnam’s leading travel company, is targeting a gross profit of VND3.43 trillion ($145.69 million), up 22.5% year-on-year.

Published

6 hours ago

March 27, 2023

TienphongNews

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The corporation is aiming for a revenue of VND14 trillion ($594 million) in 2023, up 22% year-on-year, according to data released at its business review meeting on Tuesday.

In 2023, Saigontourist Group expects to welcome 1.68 million visitors, up 62.3% compared to 2022.

Truong Duc Hung, deputy CEO of Saigontourist, said that in order to achieve those targets, the group will focus on synchronously and flexibly deploying solutions to recover domestic and international markets.

“We will build a synchronous and unique ecosystem of products through its strengths in accommodation, travel, cuisine, entertainment, conferences, and seminars,” he said.

In 2022, Saigontourist served 1.12 million visitors, up 199% year-on-year and up 13% compared to the target.

The group’s revenue reached VND12.2 trillion ($518.2 million), up 104.8% year-on-year and up 17.3% compared to the target. Its gross profit hit VND3 trillion ($127.43 million), up 368.7% and 48.1%, respectively.

Established in 1975, Saigontourist is managing more than 100 hotels, resorts, restaurants, tour operators, amusement parks, tourism training schools, exhibition areas, conference and seminar centers, golf courses, and cable TV etc.

Source: The Investor

Source: https://e.nhipcaudautu.vn/companies/travel-giant-saigontourist-expects-146-mln-gross-profit-in-2023-3351468/

Business

Vietnam Airlines restarts air services between Hanoi and Beijing

Published

8 hours ago

March 27, 2023

TienphongNews

Vietnam’s national flag carrier Vietnam Airlines has resumed its regular flights linking Hanoi and Beijing after a three-year pause due to the COVID-19 pandemic.

The airline’s flight VN513 departed from Beijing at 3:30 pm and landed in Hanoi at 5.55 pm on Sunday.

Before the resumption of the Beijing-Hanoi flight, Vietnam Airlines held a welcoming ceremony for the passengers on board at Beijing International Airport, with the participation of Vietnam and China’s competent agencies and enterprises and over 100 passengers.

The air carrier is operating the Hanoi-Beijing air route with a frequency of three round-trip flights a week.

The airline will start increasing its frequency from mid-2023, while planning to open an air route connecting with Beijing’s Daxing International Airport.

China is one of Vietnam Airlines’ biggest international source markets. The air carrier has reopened most of its air routes linking Vietnam to China, said a representative of the airline.

The airline will resume four air routes connecting Da Nang in Vietnam’s central region with China’s Guangzhou, Shanghai and Chengdu, and between Hanoi and Chengdu in the coming months.

Vietnam Airlines is set to use wide-body Airbus A350 and Boeing 787 aircraft for its routes with China.

The resumption of air services between the two countries will contribute to speeding up the post-pandemic tourism recovery and driving up bilateral trading activities, apart from helping fulfill Vietnam’s target of attracting international tourists in 2023.

Vietnam looks to serve 110 million tourists in 2023, with some eight million from abroad and 102 million domestic visitors. The country is also expected to earn about VND650 trillion (US$27.5 billion) in tourism revenue this year.

In 2022, over 3.66 million international tourists traveled to Vietnam, a year-on-year surge of 23.3-fold, according to data from the General Statistics Office of Vietnam.

Over 89 percent of the total arrived in Vietnam by air, up 29.5-fold against 2021, local media reported.

After China added Vietnam to its list of approved countries for group tours on March 15, Vietnamese airlines are racing to transport passengers between the two destinations.

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