South Korean firms present business woes at HCMC dialogue

Samsung and other Korean businesses spoke of the difficulties they are facing like tax entanglement at a dialogue with the city's leaders on Wednesday.

At the event, organized by Ho Chi Minh City's Investment and Trade Promotion Center (ITPC) and the South Korean Consulate General, Choi Bun Do, chairman of the Korea Association of Commerce and Industry (Kocham) in central and southern Vietnam, stated that 13 out of 21 subjects discussed in the 2022 dialogue had been handled.

The city had found solutions to the South Korean firms' issues, particularly with regard to the quick resolution of port infrastructure charges, he noted.

Along with the eight issues carried over from 2022, Kocham noted 15 more issues that South Korean businesses have faced in 2023, such as regulations on imports and exports, work permits for foreigners, and delays in VAT returns.

Regarding VAT refunds, Youn Chel Woon, general director of Samsung Electronics HCMC CE Complex (SEHC), said that the factory in HCMC High-Tech Park (SHTP) has an export proportion of 90%. In 2020, they applied for permission to convert the company to an export processing enterprise (EPE), and this was approved on May 1, 2021.

However, there were difficulties with VAT refunds both before and after converting the business. SEHC, in particular, has yet to be repaid $24 million for the time preceding the changeover to EPE. Furthermore, $20 million was not refunded from June 2021 to December 2022. The total amount of VAT owed is up to $44 million.

Youn Chel Woon noted that in July 2022, the Tax Department of HCMC spent two months assessing the refund and sent two dispatches to the General Department of Taxation. The General Department of Taxation met with the parties on July 3 to address the problem, but no decision has been made.

There has been no settlement for the firm even though it has been two years since the issue was raised. Samsung urged that the People's Committee of HCMC to take a more active role in resolving this case.

In a reply, Nguyen Tien Dung, deputy director of the Tax Department of HCMC, said that the issue of Samsung CE Complex Electronics Co., Ltd. has been reviewed and reported to the General Department of Taxation. The Ministry of Finance is currently considering implementing tax refunds from tax authorities or customs offices.

Concerning on-the-spot imports and exports, a representative of Hansoll Vina., Ltd. said that, according to draft modifications to Vietnam's legislation, foreign-invested firms will no longer be eligible for tax breaks. However, businesses have previously benefited from such breaks through on-site import and export tied to export processing activities.

Many issues have arisen for firms as a result of this, including greater tax burdens, decreased competitiveness of foreign-invested enterprises in Vietnam due to rising input material costs, and increased operating costs. As a result, businesses urged that before making changes to existing import and export restrictions, the competent authorities evaluate the problems the firms may experience.

In this regard, the General Department of Customs has been holding consultations with pertinent organizations in order to amend and supplement Clause 1 and Article 35 of Decree No. 08/2015/ND-CP (Detailing regulations and measures to implement the customs law on customs procedures, inspection, supervision, and control).

Meanwhile, the representative of GS Engineering & Construction Corp., Lee Jin Seop, said that GS E&C's issues include revisions to the land price of the new urban area in Nha Be district, HCMC.

Noting the comments made by businesses, HCMC Chairman Phan Van Mai stated that the issues raised by South Korean enterprises within the jurisdiction of the city will be promptly resolved. He proposed a meeting with Samsung and South Korean enterprises to learn about each other's demands, capabilities, standards, and laws in order to reduce bottlenecks.

The city will form a working committee to address the concerns of the South Korean investor community, Mai said, adding that by sitting together and learning from each other's perspectives, the problems will be resolved.

South Korea is ranked fourth among 120 nations and territories regarding direct investment in the city. The country has 2,135 projects in HCMC to date, with a total investment of more than $5.5 billion focusing on automobiles, motorcycles, and motorcycle repairs; processing; manufacturing; science and technology; and information and communications.