Foreign companies should not take advantage of the benefits Vietnam has to offer and then just leave; they have a responsibility to accompany the Vietnamese people in the spirit of "harmonious benefits, shared risks", said Samsung Vietnam CEO Choi Joo Ho.
Speaking at a conference titled “Stronger investment partnerships for a thriving Vietnam” in Hanoi on Monday, Choi stated that Vietnam and Samsung have penned a memorable success story about win-win cooperation.
However, the global situation and rapidly changing business environment are threatening the continuation of this success, he noted.
According to the CEO, the U.S.-China power struggle is having a significant impact on Vietnam - a country that plays an important position in the global manufacturing industry, and Samsung itself.
The protracted conflict between Russia and Ukraine is leading to escalating inflation and a decline in international trade, and becoming a major barrier to world economic growth, he said, adding that the conflict has also created an unstable business environment.
On the other hand, world economic rules and order are changing. The Organisation for Economic Co-operation and Development (OECD) has applied the global minimum tax (GMT), a once-in-a-lifetime global tax reform that will apply to multinational companies with revenue of 750 million euros and more. Such companies will be subject to a minimum global tax rate of 15%.
This tax is expected to affect more than 100 multinational enterprises investing in Vietnam, thus threatening the country’s ability to attract foreign investment. In addition, the tax regime change will cause disturbances to Vietnam and FDI enterprises, he said.
In that context, Vietnam needs to improve the investment environment continuously. Since the launch of the Doi moi (reform) policy in 1986, Vietnam has ceaselessly improved its investment environment, leading to continuous investment expansion by FDI enterprises. However, these improvements must continue with a close watch on external factors and the implementation of appropriate reforms, he noted.
Choi went on to say that the GMT is a typical example of the most important 'external environmental changes' recently and the response by the Vietnamese government to this change is very important.
As a mechanism applied by an international organization, specific policies have been drawn up with the consensus of multiple stakeholders. When Vietnam applies these policies, it should significantly ease the instability of business activities among FDI enterprises, according to the Samsung official.
Global consulting firms operating in Vietnam such as Deloite and PwC, along with economic experts, have recommended Vietnam internalize GMT rules and introduce cost-based incentives to respond to the new tax, while emphasizing the need for legislation this year.
According to the CEO, the group hopes that the Vietnamese government will continue to create a stable business environment that meets global standards and recent investment environment changes.
The government has implemented the support policies it promised after Samsung's investment, and as a result, the Korean group has been continuously provided with the best business environment.
After investing in Vietnam, Samsung has also fully fulfilled its commitments such as creating stable jobs and promoting co-prosperity with Vietnamese businesses, Choi said, adding that recently, the firm realized its commitment to build an R&D center for research activities in the field of high-tech information technology.
The serious implementation of the commitments between the Vietnamese government and Samsung is based on a deep mutual trust, and the two sides have formed a positive circular relationship, he stressed.
Finally, the Samsung representative said foreign-invested enterprises need to continuously carry out social contributions in Vietnam. Vietnam is not just an investment market but has become a "land" nurturing businesses, he said.
The CEO revealed that Samsung is giving Vietnam the highest corporate social responsibility budget out of all the countries where it has invested. It is also implementing projects such as training science and technology, nurturing technological talents, and supporting disadvantaged children in learning.
Samsung officially started investing in Vietnam in 2008 with the construction of a mobile phone factory in Bac Ninh province, northern Vietnam. Its investment then expanded to Thai Nguyen, Hanoi, and Ho Chi Minh City. The group now operates six factories, one sales legal entity, and one research and development center in the country, with accumulated investment of $20 billion as of the end of 2022.
Currently, more than 50% of Samsung phones sold worldwide are made in Vietnam, making the Southeast Asian nation a key global mobile phone producer.