Vietnam misses out on Intel, LG Chem investments due to lack of incentives, ministry document shows

Vietnam has missed out on multi-billion dollar investments by multinationals including Intel and LG Chem because it lacks sufficient investment incentives, the country’s investment ministry said in a document reviewed by Reuters.

U.S. chipmaker Intel had proposed to invest $3.3 billion in a project in Vietnam and asked the country for « cash support » of 15%, but later decided to move the project to Poland, the ministry said in the document dated June 29.

South Korea’s LG Chem Ltd also skipped Vietnam to invest in a battery project in Indonesia, after having asked Vietnam to cover 30% of the investment cost, the document said.

The two companies did not immediately respond to requests for comment on the assessment by the Ministry of Planning and Investment, which was due to present plans for an investment incentive fund to the central government on Friday for approval.

« Recently, many large groups have come to explore investment opportunities in Vietnam but have later decided to move to other countries as Vietnam lacks regulations on investment supports, » the ministry document said.

Vietnam, which is an important manufacturing base for companies such as Samsung Electronics, Foxconn and Intel, is heavily reliant on foreign investment for growth. Companies with foreign investment account for about 70% of its total exports.

The ministry document confirmed a November report by Reuters that Intel had shelved a planned investment in Vietnam that could have nearly doubled the U.S. chipmaker’s operation in the Southeast Asian country.

The document added that Austria-based semiconductor manufacturer AT&S had decided to invest in Malaysia after its request for investment supports in Vietnam were not met, and said Samsung Electronics was moving some production to India.

AT&S and Samsung Electronics could not immediately be reached for comment.

Multinationals have been watching Vietnam’s plans to set up the investment incentive fund after the country’s parliament last year approved the OECD-led global minimum corporate tax rate of 15%, raising the effective tax level paid by companies.

By Khanh Vu – Reuters – July 5, 2024