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Investment in Vietnam

Investment in Vietnam. September 17, 2008 Maria, Kwak. Contents. 1.Introduction 2.Research Results and Analysis (a) Economic and Political Situation (b) Infrastructure (c) Business Climate (d) Tax Incentives 3. Conclusion. 1. Introduction. 1. Introduction.

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Investment in Vietnam

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  1. Investment in Vietnam September 17, 2008 Maria, Kwak

  2. Contents 1.Introduction 2.Research Results and Analysis (a) Economic and Political Situation (b) Infrastructure (c) Business Climate (d) Tax Incentives 3. Conclusion

  3. 1. Introduction

  4. 1. Introduction • Nationality: The socialist Republic of Vietnam • Weather: North-Subtropics South-Tropical Monsoon • Ethnic group: Kinh 89%,Tai 2%,Thai 1.6%,Hoa 1.5% • Size: 330,000km2 • Major Cities: Ho Chi Mihn City, Hanoi • Population: 84million • Religion: Buddhism 60%, Catholic 20%, Christian 5%,etc • Currency unit: Vietnamese Dong (VND) 16,010VND=1US$ • Neighboring Countries: China, Lagos, Cambodia

  5. 2. Research Results and Analysis

  6. 2-(a) Economic Situation • Strengths • One of the fastest-growing economies in Asia (8%) • Economic boom • Poverty rate decreased from 58% in 1993 to 20% in 2004‏ • Weaknesses • Shortage of skilled labours • One of the world’s most corrupt countries

  7. 2-(a) Economic Situation • Opportunities • Member of WTO and APEC • Transition from a centrally planned economy to a market oriented one • Returning labours from overseas • Threats • Bureaucracy and corruption • Slow speed of domestic reforms‏

  8. 2-(a) Political Situation • Strengths • Government determination to push ahead with the market-oriented reforms • Good relations with the US • Weaknesses • Corruption among government officials • Public dissatisfaction with the handling of political dissent

  9. 2-(a) Political Situation • Opportunities • Public recognition of corruption as the threat to legitimacy • Political leaders responsive to private business • Threats • Tensions with ethnic minority groups • Possibility of ending of one-party-state

  10. 2-(b) Infrastructure • Strengths • Investment in transport infrastructure • $9.1bn during 2004-2010 • Airport upgrade and construction in HCM City • Scheduled construction of two ports near the HCM City by 2010 • Construction of 880 km express railway route, Hanoi-HCM City • 25% Increase in power production from 2005 to 2015 • Plentiful supply of water in Mekong River: very cheap

  11. 2-(b) Infrastructure • Weaknesses • Construction relying on foreign import • Private participation for only 15% of construction investment • Surging prices of construction steel and loan interest rates • Barriers exist in entry for foreign constructors • Most of large construction companies are state owned • Outbreak of bird flu • In run-down-state, but gradually improving

  12. 2-(c) Business Climate: Investment Licence • Strength • Foreign Investment Agency (FIA) provides One Stop Shopping to Foreign Direct Investors (FDIs) • Easy to get licence in HCM City • If investment amount is less than US$18.5mil • Register with People's Committee and Management Boards of Industrial Zones in HCM City Source:FIA

  13. 2-(c) Business Climate: Corruption • Weaknesses • Vietnam's transparency ranking = No.111/164 in 2006 • One of the most corrupt nations in Asia • Corruption = “A daily event” “endemic problem” • Private sector and government officials • Average “unofficial payment” =bribe is 1.8mil dong = $108. • Government efforts to fight corruption • Anti-corruption law passed in 2005 • Takes a long time to be practically effective

  14. 2-(d) Tax Incentives • Strengths • Corporate tax rate is 28% in Vietnam • Generous tax incentives for high-tech FDIs: • 10% Standard tax rate • Tax exemption for 4 years and 50% reduction (5% effective tax rate ) for 9 years

  15. 3. Conclusion

  16. 3 Conclusion These grades are based on our subjective opinion

  17. 3 Conclusion • In conclusion, • We recommend Ho Chi Minh City as a favourable investment opportunity

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