Hence, it’s urgent for Dong Nai province which has the biggest number of FDI enterprises and industrial zones in Vietnam to soon have rules regulating FDI enterprises without representatives.
Hence, it’s urgent for Dong Nai province which has the biggest number of FDI enterprises and industrial zones in Vietnam to soon have rules regulating FDI enterprises without representatives.
Escaping foreign-invested enterprises are leaving southern Dong Nai province authorities and bankers with splitting headaches. According Dong Nai Industrial Zone Authority (Diza), from 2004 to date, 42 foreign direct investment (FDI) projects capitalised at $141 million and hiring 3,848 labourers have “no owners”.
In 2012’s first half, Dong Nai province witnessed three vanishing foreign-invested enterprises (FIEs), namely British Virgin Island-based candle and candle holder manufacturing King May Craft Company Limited, Korean-invested indoor furniture of sofas manufacturing Brandon Miles Design Company Limited and Korean-based partition manufacturing Fine Cubicle Company Limited.
“We cannot contact owners of these firms,” said Diza director Vo Thanh Lap. He added the disappearances had left big debts and financial disputes for guaranteed creditors, banks and industrial park developers.
Not only taxation bodies and customs agencies have been trying to chase for the FIEs to ask to pay debts, but commercial banks are also worried because of the big debts. They are asking the court for auctioning debtor’s assets.
However, even when the court can find the successful bidder, the bidder cannot implement administrative procedures to identify assets on land and register investment in the same position of the old enterprise.
For example, the third party Interior Decoration and Construction Company Limited 7 could not conclude the deal to buy Vinh Phu Corporation’s factory because the factory had previously been bought from Bien Hoa II Industrial Zone-based Dong Nam Company Limited which has not completed the contract with authentication and whose owner disappeared.
Hence, Vinh Phu Corporation does not have enough conditions to transfer the factory to the buyer.
Besides that, Dong Nam Company also left tax and insurance debts to national budget of VND307 million ($14,700) and another debt of $155,800 of Corporation for the Development of Bien Hoa Industrial Zones (Sonadezi).
Because of these debts, the province cannot release the decision to stop the operation of Dong Nam and revoke its investment license.
Currently, Vietnamese law does not regulate a solution for FDI projects which have no representatives in Vietnam.
According to Lap, Diza had sent six petitions to the Ministry of Investment and Planning (MPI) since 2008, but still had no detailed instructions.
“In the future, there could be more similar cases to Dong Nam. Hence, it’s urgent for Dong Nai province which has the biggest number of FDI enterprises and industrial zones in Vietnam to soon have rules regulating FDI enterprises without representative in Vietnam in order not to waste land and asset for a long time,” said Lap.
In case of Dong Nam, he pointed out that the open regulations of the Import-Export Tax Law and the Tax Management Law have been exploited to evade tax.
During the period when FIEs enjoyed tax exemptions, many FIEs imported goods in big quantities. After that, they stop operation, while the business owners quietly left Vietnam. As a result, customs agencies cannot collect the tax arrears from the enterprises. Meanwhile, enterprise owners have run away.
Apart from Dong Nai, Vung Tau and Binh Duong provinces also face with the same situation.
Tran Hao Hung, head of the MPI’s Department of Legislation, said a draft decree amending Decree 108/2006/ND-CP detailing and guiding the implementation of a number of articles of the Investment Law will include principles to address situation of projects lacking of representative in Vietnam.
Accordingly, the draft decree will have scenarios for solutions based on the progress of implementing projects.
For those projects which generate no debt, the investment certificate issuer revokes the investment licence and announces the news to relevant agencies. The provincial industrial park authority will be responsible for storage, maintenance and handling of assets of the project in align with civil law.
For those projects which have been deployed and has must-liquidate debt or must-dispose asset, state bodies will be replaced the enterprise to be responsible to solve rights for third parties including authority, partners and labourers.
(Source: VIR)
