Vietnam is experiencing a loss of billions of dollars in investments from major multinationals like Intel and LG Chem due to a lack of sufficient investment incentives, according to a document from the country’s investment ministry. Intel had proposed a $3.3 billion investment in Vietnam and requested 15% “cash support,” but ultimately decided to move the project to Poland. Similarly, LG Chem Ltd also chose to invest in Indonesia for a battery project after asking Vietnam to cover 30% of the investment cost.
The Vietnamese government is now under pressure to provide more attractive incentives for foreign investors to stem the outflow of potential investments. The country, which hosts major manufacturing operations for companies like Samsung Electronics, Foxconn, and Intel, heavily relies on foreign investment for economic growth.
The ministry document also revealed that Austria-based semiconductor maker AT&S opted to invest in Malaysia after failing to receive investment support in Vietnam, and Samsung Electronics was shifting some production to India. Multinationals are closely monitoring Vietnam’s plans to establish an investment incentive fund following the country’s implementation of the OECD-led global minimum corporate tax rate of 15%, which may impact the effective tax rate paid by companies.
These developments underscore the competitiveness of countries in attracting foreign direct investments, and highlight the importance of providing attractive incentives and a favorable investment climate. The Vietnamese government’s efforts to enhance its investment incentives and attract foreign investments will be crucial for sustaining economic growth and retaining multinational companies in the country.
In conclusion, the loss of investments from major multinationals like Intel and LG Chem emphasizes the need for Vietnam to improve its investment incentives and create a more attractive environment for foreign investors. The country’s heavy reliance on foreign investment for economic growth underscores the significance of addressing these challenges to ensure continued prosperity and competitiveness in the global market.
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https://wtaq.com/2024/07/05/vietnam-misses-out-on-intel-lg-chem-investments-due-to-lack-of-incentives-ministry-document-shows/