VietNamNet Bridge – Export processing enterprises would have to
have no more than 10 percent of turnover from the sales of their products to
the domestic market if the draft decree on industrial zone and export
processing zone management is approved.
Following a prosperous business
period, Samsung Electronics Vietnam (SEV) earlier this year officially asked
for the permission to operate as an export processing company instead of a
domestic enterprise as currently.
SEV wants to change its operation
mode simply because as an export processing enterprise, it would not have to
pay the import tax for equipments and materials and VAT, according to Dau tu.
SEV’s export turnover has been
increasing rapidly, estimated to reach 10 billion dollars by the end of the
year.
Nokia, one of the most
redoubtable rivals of Samsung, has also registered its mobile phone factory in
Bac Ninh province as an export processing company.
Nokia Bac Ninh province, like
SEV, plans to export 90-95 percent of their products.
Not only Nokia and Samsung, but
more and more other foreign invested enterprises now attempt to turn into
export processing enterprises to be able to enjoy preferences.
The preferences would be not only
the tax incentives, but also the favorable conditions in following customs
procedures. Customs agencies have been set up right in industrial zones of
export processing zones in order to help enterprises shorten their time needed
for administrative formalities.
Especially, a lot of export
processing companies can get the permission to trade and import products from
the domestic market, or sell their products to the Vietnamese market with no
limitation in terms of quantities.
The current valid Decree No. 29,
dated in 2008, stipulates that export processing enterprises are “the
enterprises established and operating in export processing zones, or the
enterprises which export all of their products made in the industrial zones or
economic zones.”
However, the Decree No. 108 dated
in 2008 says export processing enterprises can sell the products they make to
the domestic market.
This means that only the
enterprises which export 100 percent of their products can be called “Export
processing enterprises,” but the door to the domestic market still has been
opened to them.
According to Nguyen Xuan Chinh,
Head of the Hanoi Industrial Zone Management board, very few export processing
companies export 100 percent of their products.
Meanwhile, Thoi bao Kinh te
Saigon has quoted a report by the Ministry of Industry and Trade as saying that
the sales by export processing companies to the domestic market have been
increasing.
The report showed that the
companies not only sell finished products, but also materials and accessories
that serve the domestic production.
So, what will Vietnam gain in
return for the licenses granted to export processing enterprises and offered
attractive tax incentives?
The Ministry of Planning and
Investment (MPI) is compiling a draft decree which would restrict the sales by
export processing companies to the domestic market.
Under the draft decree, export
processing enterprises would be able to sell the volumes of products worth no
more than 10 percent of their total turnover to the domestic market.
Vu Dai Thang, a senior official
of the Economic Zone Management Department under MPI, said that though the
State still can collect export tax on the enterprises’ exports to the domestic
market. However, Vietnam would have to spend big money to “serve” export
processing companies, especially in the issues relating to customs procedures.
Compiled by C. V
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