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Province suggests incentives for new auto assembly plant

Update: March, 28/2012 - 10:00

HA NOI — Quang Nam Province has called for special incentives for the Chu Lai-Truong Hai Automobile Engine Manufacturing Plant which is expected to be established in Chu Lai Open Economic Zone.

The US$206 million plant is planned to receive technology transfer from the South Korea-based Hyundai Group.

Huynh Khanh Toan, vice chairman of the Quang Nam People's Committee, told Dau Tu (Vietnam Investment Review) newspaper that the Government was considering incentives in taxation, land lease and loans for the project.

Under the province's proposal, the plant is set to enjoy a series of incentives among preferential policies from the Key Mechanical Programme.

Specifically, the province suggested that the project should be allowed to borrow State investment loans from the Viet Nam Development Bank by up to 85 per cent of its total investment capital during a 12-year period.

In case the investors borrow loans from foreign countries, the Government should guarantee the loans for the plant, the proposal said.

In terms of import tax policies, the province proposed a zero import tax rate applied for imported materials, accessories or semi-products that domestic manufacturers were unable to produce. The province also proposed the State Bank of Viet Nam make foreign currencies available to help projects import equipment and machines easily.

It suggested a 10 per cent corporate income tax rate should be applied for the plant's life and it should be exempt from corporate income tax during the first four years of profit and half the suggested corporate income tax thereafter for nine years.

It was proposed the project should receive support for trade promotion expenses in foreign countries for at least five years.

A peppercorn rental of $1 for 10ha of land with upgraded infrastructure is proposed to apply during the life of the project estimated at 70 years.

If approved, the plant would become the first ever project receiving first priorities.

Last year, Quang Nam proposed a plan to establish a national auto manufacturing hub in Chu Lai Open Economic Zone with a total investment capital of $500 million. However, several incentives for the project were rejected by the Ministry of Finance (MoF).

In November last year, the MoF rejected a proposal from Quang Nam Province to offer special incentives to Hyundai Motor Co in the zone. — VNS

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