Flight of owners of FDI firms repeated in Vietnam

  • November 07, 2018

Many owners of foreign direct investment (FDI) firms continue to flee the country, leaving behind large debts owed to domestic banks and firms and other obligations, Tuoi Tre Online newspaper reported.

Workers seen at an FDI firm

Although the State has taken action to prevent this continuing, as it had some years ago, the flight of foreign owners has recurred, causing losses to laborers.

An example is Metacor Vietnam Co. Ltd., located in Vung Tau Province's Phu My 1 Industrial Zone, which suspended operations after its investor took flight.

According to fiscal reports, the firm incurred a loss of VND82 billion in 2016, while showing a VND3.5 billion profit in 2017. It, however, had difficulties again in mid-2018. To date, Metacor has been burdened with social insurance, tax debts and other debts of a combined VND150 billion.

The Ba Ria-Vung Tau Industrial Zones Management Board sent three notices in June to the general director of the firm, Dennis Piches, asking him to work with the board. In fact, Peches had fled Vietnam in early June.

Quatron Steel Joint Stock Company in My Xuan B1 Industrial Park in Ba Ria-Vung Tau Province, which was established by Jordanian, Greek and Canadian nationals, had a similar story. In mid-2014 the firm owed salary and social insurance debts. Later, a legal representative of the firm was absent from Vietnam, even from trials set to ask the firm to pay their debts. As such, banks and Vietnamese firms have failed to collect debts owed to them. Debts of Quatron reportedly amounted to VND100 billion, and the investors have fled the country.

As of mid-2018, Ba Ria-Vung Tau Province saw more than 100 FDI enterprises leaving behind a tax debt of over VND110 billion.

Another owner to withdraw from planned projects is Solovakias’ BTG Holdings, which was an investor in two FDI projects, including the Tiep Beer Factory and Lac Thinh Industrial Zone. In March, the Industrial Zones Management Authority of Hoa Binh Province issued a document to the investor asking it to resolve the long-delayed projects. Its beer factory suspended operations in October 2017, the authority said, adding that the investor’s current location remains unknown.

Over the first six months of 2018, some localities in northern Vietnam revoked FDI projects’ investment certificates when authorities failed to contact investors.

Also, the Ha Nam Industrial Zones Management Board revoked investment certificates of three FDI projects, with total registered capital of US$2.6 million, as two of them were suspended by investors and the remainder delayed its deployment, leading to the expiration of the certificate.

Nguyen Minh Cuong, deputy director of Ba Ria-Vung Tau Tax Department, said that some enterprises took advantage of relaxed policies and worked on the Internet, resulting in their ability to easily flee.

Meanwhile, a leader of the Ba Ria-Vung Tau Industrial Zones Management Board said that according to prevailing regulations, owners of foreign firms are not allowed to be absent from Vietnam for more than 30 days, though, in reality, only export-import agencies find such rules enforced.

The leader also said that management of FDI firms and their owners remains lax, resulting in flights of owners and difficulties in resolving the consequences.

Nguyen Thi My Trang, head of the business management division under the Ba Ria-Vung Tau Industrial Zones Management Board, said that some enterprises announced losses after their preferential time ran out, while others transferred losses to next year. These were typical loopholes in the current policies, Trang added.

Moreover, Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises, attributed rising flight of foreign owners to loose supervision and a slowdown in resolving debts with FDI enterprises whose owners ran away.

Source: Vietnamnet

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