Money from tax havens comes pouring into Vietnam

By Bach Duong   August 5, 2016 | 06:02 pm GMT+7

Foreign firms that use tax havens have accelerated their investments.

Capital from international tax havens including Singapore, Hong Kong, the British Virgin Islands, the Cayman Islands and Luxembourg is flowing into Vietnam.

In the first seven months, Singapore surpassed Japan to become the second largest foreign investor in Vietnam with an additional $1.4 billion spread across 152 projects.

An extra $1 billion also rolled in from Hong Kong while the British Virgin Islands added $447 million, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

Tax havens are emerging strongly and threaten the position of South Korea as Vietnam’s largest foreign investor ($4 billion in the first seven months of 2016 and total investment of $49 billion in Vietnam).

Last year, Singapore ranked eighth out of the countries investing in Vietnam with only $358 million, showing the rapid increase in investment from the island nation. Meanwhile, Hong Kong has total investment capital of $15.8 billion with over 1,064 projects in Vietnam. Both islands are famous for information security and preferential taxes, making them popular choices for international enterprises.

money-from-tax-havens-comes-pouring-into-vietnam

Singapore is Vietnam's second largest foreign investor.

The British Virgin Islands has total investment capital of $19.4 billion in Vietnam, while the Cayman Islands has $6.7 billion and Luxembourg has $2 billion. Even Samoa, a tiny island in the south Pacific, has $6 billion invested in Vietnam.

Not only FDI, foreign enterprises have been flocking to Vietnam to invest in local firms and get involved in the mergers and acquisitions market. The Foreign Investment Agency reported that from July 1, 2015, foreign investors have poured $2.9 billion into 3,141 domestic companies, with the real estate, retail and air transport sectors proving the most popular.

Tax havens like the British Virgin Islands, Singapore and Hong Kong create a favorable environment for international investors by offering low or zero taxes.

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