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Dinh Vu

Int'l Cooperation

Last updated: Wednesday, September 19, 2018


Preserving and Developing Corporate Investment Flows

Posted: Monday, October 02, 2017

One of Vietnam's strongest appeals to investment flows is a stable political regime, fiscal policies that are increasingly accessible to international standards, and protect and develop corporate capital flows. This makes investors feel confident of investment in Vietnam. Our reporter has an interview with Mr Dinh Tien Dung, Minister of Finance, on this issue. Le Hien reports.

Could you please tell us about Vietnam's initiatives in the framework of the APEC Finance Ministers’ Process (FMP) 2017?
In addition to assessing global and regional economic and financial developments and reviewing financial cooperation processes, as the Chair of the APEC Finance Ministers' Meeting 2017, Vietnam's Ministry of Finance proposed four priority themes for cooperation in the APEC Year 2017, including finance for infrastructure; erosion of tax bases and transfer of profits; finance and disaster risk insurance, and inclusive finance. These topics are based on the APEC 2017 overarching theme of “Creating New Dynamism, Fostering a Shared Future” while continuing the long-term orientations of the Cebu Action Plan (CAP) that APEC Finance Ministers adopted in 2015.

These cooperation themes are geared towards new financial solutions, especially linked to national pillars of promoting sustainable, innovative and inclusive growth and deepening regional economic integration. In addition, these themes are linked to concerns and interests of APEC member economies with efforts to address common regional issues such as seeking financial resources for infrastructure development, enhancing tax administration capacity and improving tax systems to cope with challenges of global tax, seeking new financial instruments to sustainably improve the financial response to natural risks, and strengthening access to financial resources for disadvantaged people, especially those in agricultural and rural areas, so as to foster sustainable and inclusive growth.

Vietnam is putting a strong focus on developing infrastructure. So, could you please talk about Vietnam’s solutions to attract investment capital for infrastructure?
According to a report by the Asian Development Bank (ADB), Vietnam will need US$480 billion for infrastructure construction and upgrading till 2030. In recent years, the country has focused its resources on infrastructure investment, with an annual investment value tantamount to 5.7 per cent of its GDP, a relatively high rate compared to other countries in the region. However, the State Budget can currently afford only 20-30 per cent of the capital needed to fund infrastructure development. Therefore, it is important to mobilise private capital, especially foreign sources, to invest in infrastructure system development.

Vietnam is perfecting the legal system towards transparency and approaching international practices. At present, the Government is studying the upgrade of Decree 15/2015/ND-CP dated February 14, 2015 on public - private partnership (PPP) investment into the Law on PPP. It will give priority to raising the quality of investment preparation, publicity and transparency in the selection of qualified and experienced contractors and investors so as to minimise investment risks; give priority to allocating public investment funds for inter-regional and inter-provincial infrastructure projects that work to promote socio-economic development. One of the most pressing concerns to infrastructure investors is ground clearance. Thus, in the coming time, we will pledge to ensure the delivery of clean premises to investors in line with project progress. In some necessary cases, we will arrange State funds for site clearance, resident resettlement or construction of support works for PPP projects.

We will continue to reform tax, fee and pricing policies to align interests of the State, investors and people, and provide more favourable conditions for investors to carry out infrastructure projects. According to the Law on Fee and Charge, which was effective on January 1, 2017, many public services have been shifted from a fee mechanism to a pricing mechanism that has facilitated the private sector to recover investment capital and take reasonable profits when they provide infrastructure and public services. The reform of tax-related administrative procedures continues to be promoted in a simple, transparent manner to facilitate investors to import equipment and machinery for their infrastructure investment projects. We will study and formulate policies that call on foreign investment institutions to invest in infrastructure in various forms, including public-private partnership.

To make the Vietnamese investment environment attractive and competitive with others of similar advantages, the most important factor is the financial strategy that helps businesses stabilise their cash flows and secure investments. Could you please talk about the general strategy of the financial sector? What are administrative procedure reforms related to tax and customs?
The objective of ensuring a transparent and stable investment environment for enterprises to secure business investment is one of top priorities of the Government of Vietnam. At the Government meeting on socio-economic performance in the first six months and solutions for the second half of 2017, the Prime Minister asked ministries and agencies concerned to promote measures to improve the performance of the private sector, especially step up administrative reform and simplify administrative procedures. To carry out the Prime Minister's instructions, the Ministry of Finance formulated action plans to firmly execute Resolution 19-2017/NQ-CP dated February 6, 2017 on continued implementation of main tasks and solutions to better the business environment and enhance the national competitiveness in 2017 and towards 2020, deploy e-Government in accordance with Resolution 36a/NQ-CP dated October 14, 2015 with the aim of further improving the business environment and national competitiveness and carrying out PAR solutions to tax and customs fields.

In the coming time, to reform administrative procedures relating to tax and customs, we will focus more strongly to bring Vietnam’s tax and customs advantages to the par of ASEAN+4 nations in 2020; and strengthen information and communications on tax and customs policies. At the same time, we will continue reviewing, updating and supplementing information on business households to publicise information on business households on websites of relevant tax authorities; and strongly apply information technology to tax and customs reform. The customs sector is focusing on carrying out the National Single Window (NSW) and the ASEAN Single Window (ASW). Over 416,600 administrative records from about 12,700 companies had been processed at the NSW as of June 30, 2012, thus helping reduce clearance time for import and export goods. The tax sector is further building and upgrading information technology applications to meet professional requirements and disclose information on the website of the General Department of Taxation; maintaining and upgrading information technology applications to serve 95 per cent of companies declaring and paying taxes at Level 4; applying information technology to serve 95 per cent of enterprises getting tax refunds online at Level 4; and applying information technology to settle 100 per cent of tax complaints on time.

An issue that APEC economies are facing is tax policy on transfer of profit and transfer pricing. How will the upcoming APEC Finance Ministerial Meeting discuss and settle this issue?
One of the priorities of the APEC Finance Ministers' Process (FMP) 2017 is the discussion on the Base Erosion and Profit Shifting (BEPS) initiative to increase cooperation and technical assistance among APEC members in enhancing their capacity to cope with tax evasion by transferring profits, committing transfer pricing and taking advantage of gaps in e-commerce management regulations and in tax treaties among member countries.

Ministers will hear reports on cooperation results relating to BEPS in 2017 and APEC cooperation orientations in 2018. A mutual assistance cooperation programme among APEC economies is expected to be adopted to carry out BEPS actions to focus on a number of issues addressed by APEC member economies, thus promoting the implementation of BEPS actions in APEC developing economies, including tax administration measures and international cooperation of tax authorities to implement BEPS action plans.

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