Incentives are among the vital tools to make Vietnam more attractive to foreign investors The Ministry of Planning and Investment (MPI) is now working on the latest draft of the next-generation foreign direct investment (FDI) strategy towards increasing investor confidence and the added value to the economy. The most important highlight of the strategy is the shift in the focus of FDI attraction from attracting investors suitable for products to attracting investors for products and kinds of investment that Vietnam needs in the future, thus contributing to maximising FDI influence and added value. To this end, investment incentives are among the vital tools to make the country more attractive to foreign investors, amid growing competition and changes in key global trends, while low salaries will no longer be an advantage. According to international experts, Vietnam relies heavily on profit-based incentives, like time-limited tax exemptions and tax reductions, as well as on preferential tax policies and import duty exemptions. Though the current tax regime facilitated first-generation investment activities during a period when investors bet on such incentives and cheap labour costs as the main factors for their investment decisions, it is now starting to lag behind in a new era, which has the country focusing on attracting FDI which brings with it innovation and advanced technology, requires a highly skilled workforce, and increases business competitiveness. “Given Vietnam’s interest in growing FDI in more innovative, high-tech fields, the use of tax exemptions and concessionary rates is likely to create a higher cost… [Read full story]
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