Semiconductor and AI ‘eagles’ are supported up to 50% of initial investment costs in Vietnam
The Government has just issued a decree allowing support of up to 50% of initial investment costs for businesses with semiconductor and AI industrial R&D projects.
This support level is provided in Decree 182, which was recently issued on December 31, 2024, on the establishment, management and use of the Investment Support Fund. To receive initial cost support, businesses must have no tax or budget debts. The investment project for the research and development center (R&D) must also have a positive impact on the innovation ecosystem and the development of new technologies and breakthrough new products in the country.
Another condition is that the enterprise’s R&D Center project must be on the List of prioritized high technologies and have a minimum investment capital of VND 3,000 billion and must disburse at least VND 1,000 billion within 3 years from the date of being granted the investment decision.
In addition to the semiconductor and artificial intelligence (AI) “eagles” receiving separate support for initial investment costs, other technology enterprises also receive a lot of general support. The beneficiaries of general support include high-tech enterprises, enterprises with investment projects to produce high-tech products, enterprises with high-tech application projects, and enterprises with investment projects in research and development centers.
These supports include costs for training and human resource development; research and development costs; investment costs for creating fixed assets; costs for manufacturing high-tech products; investment costs for social infrastructure works; and other cases decided by the Government.
The Investment Support Fund is a national fund established by the Government and assigned to the Ministry of Planning and Investment for management; it operates not for profit. Its mission is to receive, manage and use state budget funds and other legal sources and to support businesses.
This Decree takes effect from December 31, 2024, applicable from fiscal year 2024.
Before this decree, Vietnam had missed out on many billion-dollar investment projects from global “eagles”. The Ministry of Planning and Investment pointed out that Vietnam’s investment incentive policies were not compatible with the new context with the advent of the Global Minimum Tax, an initiative to enhance multilateral activities. Specifically, the policies were not diverse, relying only on incentives based on income (tax exemptions and reductions), land rent incentives, and there were no incentives based on costs.
In a 2024 report on the drafting of this decree, the Ministry of Planning and Investment said that many large corporations have surveyed and researched investments in Vietnam, but because there are no specific regulations, they have moved to other countries.
Intel once proposed a chip manufacturing project with an investment capital of 3.3 billion USD, asking Vietnam to support 15% in cash, but then switched to Poland. Austrian semiconductor group AT&S surveyed and planned to invest, but Vietnam did not meet the support mechanism based on costs and available high-tech labor, so it switched to Malaysia.
Not only are they shifting to other locations, some large-scale high-tech projects are also stalling, waiting for policy responses and halting new investments and expansions if there are no suitable support policies. For example, LG has suspended plans to invest in a new $5 billion electronics manufacturing project.
vnexpress.net
