Lawmaker stands tall as Vietnamese firms lose out to foreign incursions on home turf

By Vi Vu   November 15, 2017 | 08:06 pm GMT+7
Lawmaker stands tall as Vietnamese firms lose out to foreign incursions on home turf
A worker checks copper rods at a cable factory in northern Vietnam. Vietnam is losing out on land, resources, tax revenue and cheap labor to attract foreign businesses, but their contribution to the economy does not stack up, an prominent Vietnamese lawmaker said Wednesdya. Photo by Reuters/Kham

Taking a leaf out of Trump’s 'America First' policy, he questioned what foreign investors have really done for the domestic economy.

Vietnam’s plans to revise its Competition Law were applauded by a lawmaker on Wednesday, who said foreign businesses are taking over the domestic market and not contributing their fair share to the economy.

Truong Trong Nghia, an established lawyer from Ho Chi Minh City, said Vietnam is losing out on land, resources, tax revenue and cheap labor to attract foreign businesses, but their contribution to the economy does not stack up.

“Vietnamese businesses are being elbowed out of the domestic market while authorities have failed to stop  tax evasion tricks such as transfer pricing and M&As,” Nghia said at a meeting with the legislative National Assembly in Hanoi, as cited by local media.

He said that some foreign businesses are continuing to report losses to evade taxes, but managing somehow to expand their businesses. 

Nghia said Vietnamese firms are losing market share in many areas, including retail, healthcare and cinema, the latter now dominated by South Korean investors.

He said an open market and integration should be about making the Vietnamese economy stronger, but it was “painful” to see the economy losing out at home.

Referring to U.S. President Donald Trump’s “America First” policy, Nghia questioned the actual contribution of hundreds of billions of dollars of foreign investment in Vietnam.

“What have they really done to strengthen the Vietnamese economy?” he said, as cited by Nguoi Lao Dong (Laborer) newspaper.

Nghia was not the first to call for the protection of Vietnamese firms, with lawmakers expected to finalize revisions to the Competition Law in June 2018.

Last month, other lawmakers also said Vietnam should cut incentives for foreign invested companies, saying that although the foreign sector now accounts for more than 70 percent of total export revenue, its contribution to the state coffers is only around 15 percent.

An Oxfam report last December said that developing countries, including Vietnam, lose around $100 billion annually as a result of corporate tax avoidance schemes.

Vietnam Customs reported a $1.23 billion trade surplus in the first 10 months of this year, but foreign businesses enjoyed a $17.63 billion trade surplus while local firms suffered a $16.4 billion trade deficit.