HO CHI MINH CITY WILL QUICKLY RESOLVE OBSTACLES FOR KOREAN BUSINESSES

South Korea is currently one of the major trading partners of Ho Chi Minh City, ranking fourth out of 120 countries and territories with direct investment on the city's territory. Some Korean businesses have reported numerous issues regarding value-added tax refunds, customs clearance, land valuation, and investment licenses…

INVESTING OVER $5.5 BILLION IN HO CHI MINH CITY

The relationship between Ho Chi Minh City (HCM City) and South Korea continues to witness strong development in various fields, especially in the areas of economy, trade, investment, and tourism. In the past year, there have been 125 direct investment projects from Korean investors in the city, with a total investment of over $60.6 million, accounting for over 10% of the total foreign investment in HCM City. So far, South Korea has had 2,135 projects with a total investment of over $5.5 billion, accounting for 9.6% of the total foreign investment in the city.

Korean businesses are particularly interested in investing in wholesale and retail, automobile repair, processing and manufacturing industries, specialized activities, science and technology, information and communication. These four sectors make up over 75% of the total number of Korean investment projects in the city, with construction, real estate business, and processing and manufacturing industries accounting for over 76% of the total investment capital.

During the conference "Dialogue between Ho Chi Minh City Government and Korean businesses" on August 16, 2023, Mr. Choi Bun Do, Chairman of the Korea Chamber of Commerce and Industry in Central and South Vietnam (KOCHAM), stated that the People's Committee of Ho Chi Minh City had resolved 13 out of 21 proposed issues faced by Korean businesses in 2022, especially addressing the timely handling of port infrastructure fees.

Currently, Korean businesses are facing 15 obstacles in 2023 and hope that Ho Chi Minh City will promptly resolve them. Some Korean companies in Ho Chi Minh City are experiencing difficulties in value-added tax refunds, which are affecting their business operations.

For example, Jungwoo Vina Co., Ltd is facing difficulties in customs clearance due to changes in regulations regarding on-site import and export plans. Furthermore, changes in regulations on on-site import and export activities have led to additional unnecessary costs such as external warehouse rental fees and double transportation fees.

Regarding the current obstacles, Mr. Cho Sung Yol, CEO of GS E&C Company in Vietnam, mentioned that the company is facing difficulties in reassessing the land value for the Nhà Bè Metrocity GS new urban area project. Previously, the company had advanced compensation costs for land clearance, which were deducted from the project's land financial obligations. Currently, city authorities are reassessing the land value for the project. Therefore, the company requests that the Ho Chi Minh City authorities promptly complete the land reassessment and provide guidance to investors to fulfill their financial obligations.

In addition, the company is experiencing delays in settling construction costs for the Tan Son Nhat - Binh Loi - Outer Ring Road project. GS E&C hopes that Ho Chi Minh City will promptly resolve administrative procedures, licensing issues, and permit investors to strongly promote the implementation of new urban investment projects and infrastructure development.

WILL BE RESOLVED THIS YEAR

Listening to opinions from Korean businesses, Mr. Phan Van Mai, Chairman of the People's Committee of Ho Chi Minh City, stated that the city is always striving to create an investment-friendly environment, providing favorable conditions for both foreign investment in general and Korean businesses in particular to operate stably, long-term, and efficiently.

This is not only the success of the businesses but also the success of Ho Chi Minh City, which serves as the motivation for the city to continuously improve the investment environment and accompany the business community. 

However, during this process, there have been various issues and some lingering challenges. The city has made great efforts in regular meetings and exchanges to find solutions to these issues. Regarding the case of GS E&C Company, Mr. Mai believes that there are issues carried over from before. The valuation assessment is a difficult problem and hasn't reached a final outcome. When establishing the valuation appraisal team, investors should be invited to contribute their opinions. 

Regarding the payment for the Tan Son Nhat - Binh Loi - Outer Ring Road project, the Ministry of Finance recently conducted inspections on multiple projects, including this one. Ho Chi Minh City has worked with the inspection team from the Ministry of Finance to determine the orientation for resolving the issues faced by businesses. 

According to the Chairman of the People's Committee of HCM City, the city highly values the opinions of investors and aims to prepare and hold discussions with Korean investors at a suitable time for further progress. 

"With this spirit, we have assigned the Ho Chi Minh City Investment and Trade Promotion Center (ITPC) as the focal point for receiving opinions and coordinating with relevant departments under the guidance of the Standing Committee of the People's Committee. By the end of August, we will compile and address each specific issue, determining who will be responsible for resolving each issue and how it will be resolved... We strive to address these outstanding issues within this year," said Mr. Mai.

For any questions or comments, please contact:

OTIS AND PARTNERS LAW FIRM

Office address: K28 - Group K, Lane 68 Trung Kinh, Yen Hoa Ward, Cau Giay District, Hanoi

Email: [email protected]

Hotline: 0987748111