NA delegate Pham Trong Nhan said despite accounting for more than 70 per cent of total export revenue, the sector’s contribution to State budget is estimated at 15-17 per cent.Nhan was also concerned about transfer pricing by FDI firms in Vietnam, which hurts the State budget.
According to Nhan, though business is booming in Vietnam, up to half of foreign-invested enterprises announced losses between 2007 and 2015.
Nhan quoted a report of Oxfam, a global charity that fights inequality, as saying that Vietnam faces annual losses of US$170 billion due to transfer pricing.
Germany’s B.Braun Vietnam factory in Thanh Oai Industrial Zone, Ha Noi.
|
Though admitting foreign direct investment (FDI) capital have contributed significantly to Vietnam’s economic growth, NA delegates were concerned that the undue dependence on overseas investors may pose risks to the country’s economy.
NA delegate Truong Trong Nghia said under international norms, foreign direct investment (FDI) should account for only 5 per cent of gross capital formation, but in Vietnam it now makes up 25 per cent.
“Economic development cannot rely on foreign firms, only local ones,” Nghia said, explaining that foreign investors could leave Vietnam for other markets when the country no longer has a competitive advantage.
Echoing Nghia, Nhan said that it is worrisome when GDP growth depends on FDI enterprises.
According to the latest report from the Ministry of Planning and Investment’s Foreign Investment Agency, FDI capital registered in Vietnam reached a record US$28.24 billion in the first ten months of this year, up 37.4 percent year-on-year.
Of the sum, $16.3 billion came from 2,070 new projects, up 32.9 percent year-on-year. Another $7.27 billion was added to 1,001 existing projects, 35.9 percent higher than the same period last year.
The FDI firms invested in 19 industries and sectors in the period, of which manufacturing and processing industries remained the top sector, receiving $13.75 billion, accounting for 48.7 percent of the total registered FDI capital.
The electricity production and distribution sector ranked second with $5.63 billion, making up 19.9 percent of the total FDI. The property trading sector was in third place with $2.04 billion, representing 7.2 per cent.
During the reviewed period, FDI disbursement also saw a positive yearly increase of 11.8 percent to $14.2 billion, according to the data.
FDI inflows are expected to hit $16 billion in 2017.
