Foreign firms major contributors to Vietnam local budgets

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).

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 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 5 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 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.