Vietnam has now become an alterative option for leading US investors, who are investing in China, thanks to its great competitive advantages; a US newspaper quoted Alex Bryant, President of the East West Associates as saying.
“Vietnam is a viable alternative to China for setting up manufacturing and distribution centers, particularly for export”, Alex made the comment in an article, entitled “Vietnam: The Asian alternative to China,” which was published on the “IndustryWeek.com” website on June 6.
Vietnam’s favorable business incentives with cheap and abundant labor encourage foreign investors to shift their investment from China, where witnesses a sharply rising labor costs.
In Vietnam, factory operators are paid only US$200 per month, key managers and senior engineers are paid US$1,500 per month, Alex said, adding that laborers worked 48 hours a week. The government-mandated social programs are account for 25 per cent of salary costs. Meanwhile, counterparts in China worked 40 hours a week and social costs are 50 per cent-60 per cent of the operator's salary
Vietnam has a relatively flexible tax policy for foreign companies, which are exempted from corporate income tax for the first four year operation. The tax rate will be halved that of the nominal tax rate for a period of up to seven years. The nominal tax rate can be 10 per cent, 15 per cent, or 20 per cent - depending on different sectors, investment classification and location. The standard tax rate is 28 per cent.
The Vietnamese Government is paying more attention to the infrastructure development, the paper said, noting that an investment capital making up 10 per cent of the county total GDP for the past two years.
Regarding meeting intellectual property (IP) and legal requirements for WTO admission, the Vietnamese government has worked out strong measures to protect IP and enacted laws providing specific protection for investors.
With more than 130 industrial zones and exports processing zones, Vietnam promises a potential destination for foreigners, especially the land lease rates are generally cheaper than China.
Currently, more South Korean enterprises are seeking to increase their investment into, or shift representative offices from China to the very fast growing economy of Vietnam, as up to 51.8 per cent of South Korean firms operating in China reported losses due to expensive labor, according to a Vietnamese newspaper. (Pioneer)
Vietnamese
