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Foreign firms major contributors to Vietnam local budgets

Friday, 25/09/2020 GMT+7

Budget collection from foreign direct investment companies accounts for over 50 percent of the total in several Vietnamese localities, a report says.

The ratio was as high as 93.5 percent and 72 percent respectively in the northern provinces of Vinh Phuc and Bac Ninh in the 2011-2019 period, according to a report compiled by the Ministry of Planning and Investment.

Several major FDI projects, including Honda Vietnam plants, are based in Vinh Phuc, while Bac Ninh has factories of the world’s largest electronics supplier Foxconn.

Other localities with high ratio of revenues coming from FDI companies are the southern provinces of Dong Nai and Binh Duong (63 and 52 percent, respectively), and the northern province of Bac Giang (60 percent).

percentageBudget collection by locality2011-201993.593.572726363606052526.56.52828373740404848FDI companiesVietnamese companiesVinh PhucBac NinhDong NaiBac GiangBinh Duong0102030405060708090100110

Nationwide, FDI companies contributed an average 28 percent of budget collection in the period.

However, the investment ministry said there was a lack of connection between FDI companies and local suppliers, and many FDI projects were focused on assembling.

The localization rate quite is low in some industries. A survey of the Japan External Trade Organization (JETRO) shows that the localization rate of Japanese companies in Vietnam was 36.3 percent last year.

Just five percent of the FDI companies in the country were using advanced technologies, the report said.

It said FDI companies contribute about 20 percent of Vietnam’s annual GDP. Last year, FDI firms’ exports accounted for 71.3 percent of Vietnam’s total.

FDI companies created 10 million jobs last year with their productivity was 2.4 times the national average.

As of August this year, there were 32,539 active FDI projects in Vietnam with a total of $233 billion of disbursed investment.

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