VietNamNet Bridge – Economists are concerned about the special investment incentives given to Samsung for its Samsung Display project by the Bac Ninh provincial People’s Committee.
The committee has signed a decision to give financial support to build technical infrastructure in the Yen Phong 1 Industrial Zone, where Samsung is carrying out the Samsung Display project.
The financial support package is valued at VND298.9 billion, which includes 50 percent support for the infrastructure use fee on an area of 46.28 hectares (VND286.9 billion), and for the local worker training program (VND12 billion)
Under the Corporate Income Tax Law, Samsung Display will enjoy exemption of corporate income tax for four years and a 50 percent tax reduction in the following nine years.
After the grace period stipulated by the law ends, Samsung Display will still continue enjoying a 50 percent tax reduction for another three years.
Nguyen Quoc Chung, director of the Bac Ninh provincial Planning and Investment Department, confirmed that Samsung was the only investor receiving such high investment incentives in the province.
He said the investment incentives had been approved by the government even before the Bac Ninh provincial authorities signed the decision.
Chung went on to say that the local authorities agreed to offer the high investment incentives because they expect the project to have a major impact on the local economy and the “Bac Ninh brand”.
“The tax remissions will not influence the province in a big way. Meanwhile, Bac Ninh hopes it will become an electronics manufacturing center of the country, which will help it attract more investors, especially ones in the support industries,” he said.
“This will also help build up the Bac Ninh brand as a major foreign direct investment attractor,” he added.
Samsung now employs 4,000 workers, while Bac Ninh authorities hope Samsung Display reaches its highest production capacity. It would employ up to 20,000 workers.
In the latest news, Samsung has revealed it will develop a $1 billion project in HCM City and expects the same big investment incentives from city’s authorities.
Dr. Dang Dinh Dao, former head of the Economics Research Development Institute, while agreeing that it is necessary to offer attractive investment incentives to lure more investors, has voiced his concern that unprecedented high incentives given to Samsung would prompt other investors to claim special treatment and significant preferences.
“Once Bac Ninh authorities sacrifice local benefits in exchange for investment projects, this will create an unhealthy competition for investors in Vietnam,” Dao said.
“Other investors may act like Samsung and dictate their conditions when developing their projects in Vietnam,” he said.
An analyst, who declined to be named, noted that more and more foreign investors were making unreasonable claims.
“The ‘overindulgence” by local authorities towards investors is the reason why investors have become too demanding,” he noted.
Kim Chi