Japan to Help Vietnam Build-up Four Key Industries

Posted by Reading Time: 4 minutes

HANOI – On July 31, the Prime Minister of Vietnam approved four action plans under the framework of Vietnam-Japan cooperation through 2020 with a vision to 2030. According to these plans, the two countries will work together on the implementation of the Vietnam Industrialization Strategy.  This strategy will focus on four industries: electronics, agricultural machinery, agro-fishery processing, and environmental industry and energy conservation.

Professional Service_CB icons_2015RELATED: Dezan Shira & Associates’ Pre-Investment, Market Entry Strategy Advisory Services

Electronics

Vietnam will focus on developing support industries, increasing labor productivity, and establishing electronic industry clusters to attract leading global electronics manufacturers. By 2020, the country hopes to produce better and higher value-added products for export as well as domestic consumption.

Production value is projected to increase at least 20 percent annually and contribute about 10 percent to Vietnam’s overall industrial value. By 2030, Vietnam also expects to become a major producer of electronic equipment using advanced and environmentally friendly technology.

RELATED: Intel Builds First Made-in-Vietnam CPU

Agricultural machinery

In order to develop the country’s agricultural machinery industry, the government is developing a legal framework which will create a more favorable business environment for this industry. The government will also implement a number of support programs aimed at helping farmers obtain high quality products at reasonable prices.

According to this plan, by 2020 total agricultural output is expected to rise to US$430 billion from its 2010 level of US$220 billion. GDP per capita in the agricultural sector will also increase from US$740 in 2010 to US$2000 in 2020. By 2020, the agricultural sector is projected to make up 15 percent of Vietnam’s GDP and, due to improving technology and growing methods, the labor rate in this sector will decrease to between 30 to 35 percent of the total population.

Agro-fishery processing

Vietnam aims to become a supplier of high quality agricultural products that meet global standards. Due to their high production levels and stable quality, the main products included in the government’s plan are rubber, coffee, tea, shrimp, vegetables, and fruits.

Additionally, in order to meet the growing global demand for processed food, the government will support Vietnamese producers by helping to modernize their technology, and improve their marketing activities and brand building.

To make their products even more competitive on the world market, the Vietnamese government has also strongly encouraged local producers to produce products that meet world standards and that are able to be certified by such organizations as VietGap, GlobalGap, and Rainforest Alliance.

Environmental and energy conservation

To help build this sector, the government is encouraging the development of an environmental and energy-saving industry through the creation of preferential mechanisms and policies intended to attract both domestic and foreign investors. The government has also promised to subsidize and give multiple financial concessions to enterprises that are working in these fields.

Tax incentives

The Vietnamese government provides a range of tax incentives; these apply to investment projects in specific sectors and areas with difficult socio-economic conditions as well as those in high-tech zones and economic zones in order to encourage the development of the economy, technology, and education of these regions. For example, newly established companies investing in the high-tech sector are eligible for a preferential CIT rate of 10 percent (applicable for 15 years) and a CIT exemption for up to four years and 50 percent CIT reduction for up to nine subsequent years.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email vietnam@dezshira.com or visit www.dezshira.com.

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

Related Reading

Developing Your Sourcing Strategy for Vietnam
In this issue of Vietnam Briefing Magazine, we outline the various sourcing models available for foreign investors – representative offices, service companies and trading companies – and discuss how to decide which structure best suits the sourcing needs of your business.

 

Manufacturing in Vietnam to Sell to ASEAN and China
In this issue of Vietnam Briefing Magazine, we introduce our readers to manufacturing in Vietnam as a key part of their business strategy within the ASEAN region and beyond. Specifically, we explain the new ASEAN Free Trade Area, outline what foreign investors can look forward to when creating their manufacturing presence in the country, and introduce the country’s key tax points.