VND2 trillion planned for supporting industries fund

Thien Thanh Sanitaryware joint company

VND2 trillion planned for supporting industries fund

The Government is expected to set aside VND2 trillion for a fund to financially assist individual and corporate producers and suppliers of products and services for supporting industries. The Ministry of Industry and Trade is collecting comments from relevant agencies on a draft Government decree about the fund and development of supporting industries, and the decree will be issued by the Government if everything goes smoothly.

Under the draft decree scheduled to be presented to the Government later this year, the fund for supporting industries will have VND2 trillion sourced from the State budget in the first three years from the year when the decree is issued, with VND500 billion planned for each of the first two years and VND1 trillion for the third year.

In addition to setting up the fund, the draft decree consists of a series of solutions and incentives to fuel development of supporting industries. For example, import tax exemption is mulled for the goods which are used directly in research and development activities in supporting industries but are not made by domestic firms.

Besides, the ministry proposed a preferential corporate income tax of 10% for 15 years, tax exemption for a maximum of four years and a 50% tax reduction in the nine following years. If enterprises do not have taxable incomes in the first three years, they will enjoy tax exemption and reduction from the fourth year.

The enterprises operating in industrial zones and supplying supporting industries will be subject to the same tax incentives. New investors in large-scale projects in supporting industries are suggested to enjoy a tax rate of 10% for longer periods but not longer than 30 years.

The ministry said the limited supply of products for supporting industries is reflected via the current small number of supporting industries enterprises in the country. Therefore, major enterprises must count on overseas suppliers and this is one of the reasons for trade deficit in industrial production.

In related news, the HCMC University of Economics last week coordinated with the Party Central Committee’s Economic Commission to hold a seminar on situations and solutions to Vietnam’s supporting industries.

According to Truong Thanh Hoai, deputy director of the Heavy Industry Department, supporting industries do not play a supporting role but has a key role in creating competitive industrial products and increasing the country’s competitiveness. The country would have no engineering sector if supporting industries are nowhere to be found.

Professor Vo Thanh Thu from the university said supporting industries in Vietnam should focus on the industries that attract huge foreign direct investments and have high demand of supporting industries products like textile, garment, engineering, electronics and assembly.

Thu stressed the urgent need to train high-quality laborers and modernize technology, which would require huge spending. The Ministry of Finance and the central bank should build a mechanism to facilitate enterprises’ access to preferential long-term loans.

At the seminar, the HCMC Department of Industry and Trade proposed many solutions and incentives in terms of tax and infrastructure to woo foreign investors as well as credit guarantee policy for supporting industries enterprises.
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