Up to now, British Virgin Islands (BVI), which is known as the "tax haven" is among the top five countries and territories having the largest capital investment in Vietnam with nearly US$21.5 billion.
Besides BVI tax paradise, the statistics from Foreign Investment Agency (FIA) under the Ministry of Planning and Investment also shows that other worldwide tax havens such as Singapore, Hong Kong, Cayman Islands, Bermuda, Panama, Luxembourg, etc. are also pushing up their investments in Vietnam.
Investments in every sector
Currently, numerous investment funds and firms from the tax havens have made large investments in Vietnam. Typically, Dragon Capital, established in the BVI, has poured billions of dollars into Vietnam's large firms such as Nova Real Estate Investment Corporation, Viglacera Corporation JSC, KinhBac City Development Holding Corporation, Saigon Beer-Alcohol-Beverage Joint Stock Corporation, etc.
Dragon Capital is currently managing the Vietnam Enterprise Investments Limited (VEIL), the largest investment fund in Vietnam with a net asset value of more than US$1.2 billion and other funds. The companies that VEIL have strongly invested (as of August 08, 2017) are Vinamilk, Mobile World, MBBank, FPT Corporation, ACB Bank, etc.
Also established in the BVI, the Vietnam Asset Management Company (VAM), has also made large investments in companies related to pharmaceuticals, food, beverages and biotechnology.
In addition, in recent years, other financial institutions established in tax havens have invested in Vietnam such as Indochina Capital Adviser, PXP Vietnam Asset Management Ltd., Vietnam Holding Asset Management Ltd..
Multinational corporations such as Intel, Chevron, Procter & Gamble, ConocoPhillips… have invested in Viet Nam through their branches in the tax haven.
There are numerous major projects on garment, trade centers, hotels, office buildings ... invested by companies from tax havens.
Is it ominous?
It is not worth worrying if most of the tax havens, which are investing in Vietnam, are not stated in Oxfam's list of "15 Worst Tax Havens".
According to Oxfam’s expert, about 50% of FDI in Vietnam flow through at least one tax haven. Accordingly, only a small amount of tax will be imposed on profits of these investments in tax havens while Vietnam does not earn any amount of tax.
Remarkably, the British Virgin Islands is home to more than half of the 200,000 "shell" corporations founded by Mossack Fonseca - a law firm that plays a central role in the “Panama Papers” scandal. This is the address where most individuals and organizations that have invested in Vietnam and are listed in the "Panama Papers" opened their accounts.
However, Oxfam’s expert also said that it is unable to equate all firms registered in the "tax havens" as the same.
Because Vietnam, currently, lacks capital resources for construction of infrastructure projects..., the diversification of FDI in Vietnam, according to Oxfam, is necessary. However, Vietnamese government must have appropriate management mechanisms to prevent improper allocation of capital and retain the profits in Viet Nam.
In a different perspective, Dr. Le Dang Doanh, former director of the Central Institute for Economic Management said: "That tax havens have made large investments in Vietnam shows the attractiveness of Vietnam’s market."
"We do not reject investments from tax havens and are not satisfied, either. Viet Nam has to attract investments from technology companies other than investments in real estate sector and other services," he added.