Investment Climate of Major Cities In CLMV Countries. Masami Ishida Bangkok Research Center, JETRO

Transcription

1 Investment Climate of Major Cities In CLMV Countries Masami Ishida Bangkok Research Center, JETRO 1

2 Composition of Presentation I. Questionnaire Survey on Investment Climate 1. Outline of Survey 2. Bottlenecks of Respective Cities 3. Successful Cases Cleared II. Business Cost 2

3 Outline of Survey 3

4 1. Investment Climate Survey of CLMV Countries 4 Samples of Foreign-related Firms Cambodia: Phnom Penh (P.P.) 62 Sihanouk Ville (S.V.) 6 Babet (B.V.) 8 Lao PDR: Vientiane (V.N.T.) 30 Savannakhet (S.V.K.) 31 Myanmar: Yangon (Y.G.) 30 Mandalay (M.D.L.) 20 Myeik (M.Y.K.) 10 Vietnam: Ho Chi Minh (H.C.M.) 35 Danang (D.N.) 30 Source: Website of ADB.

5 2. Analytical Methodologies of Questionnaire Survey 71 five-point scale questions 1 = Very poor 3 = Fair 5 = Excellent 2 = Poor 4 = Good The number of averaged scales (Av.) 71 questions 10 Cities n.a. = 665 responses Average of all averages = 3.15 S.D. = 0.53 Category of bottle necks 2.1(2σ) < Av. < 3.0 Av. 2.1 Category of successful cases 3.7 (1σ) Av. < 4.2 (2σ) Av. 4.2

6 Bottlenecks of Respective Cities 6

7 1. Bottlenecks of Macro Economy, Land and Financial Matters Macro Economy and Domestic Market Cambodia Lao PDR Myanmar Vietnam P.P. S.V. B.V. V.E.N. S.V.K. Y.G. M.D.L. M.Y.K. H.M.C. D.N. Macro Economy Domestic Market Size Local Purchasing Power Land Use and Land Ownership Rent-free or subsidized land Financial Matters Finance Access to Loan Access to Low Cost Finance Governance Matters Quality of Policy Implementation Corruption Source: ERIA Investment Climate Questionnaire Survey of CLMV Countries in 2009 (hereinafter the same apply in this).

8 2. Bottlenecks of Trade-related Matters & Investment Climates Trade Related Matters Cambodia Lao PDR Myanmar Vietnam P.P. S.V. B.V. V.E.N. S.V.K. Y.G. M.D.L. M.Y.K. H.M.C. D.N. Trade Regulation Exemption from Trade Restriction Tariff Barrier Tariff Barrier Non-tariff Barrier Smuggling Control GSP Uncertainty of GSP Information on Local Suppliers Quality of Local Supplier Other Investment Climates One Stop Service Investment Regulation Intellectual Copy Right Tax Rate Tax Incentives Subsidies n.a. n.a. n.a. Foreign Ownership Regulation Drawback of Import Duty and VAT

9 3. Bottlenecks of Labor and Infrastructure Related Matters Labor-related Matters Cambodia Lao PDR Myanmar Vietnam P.P. S.V. B.V. V.E.N. S.V.K. Y.G. M.D.L. M.Y.K. H.M.C. D.N. Quality of Workers Recruitment of workers Labor Turnover Infrastructure Electricity Transportation Telecommunication Industrial Estates Cost of Land Transport n.a. n.a. Efficiency of Land Transport n.a. n.a. Reliability of Land Transport n.a. n.a. Cost of Air Transport n.a. n.a. n.a. Efficiency of Air Transport n.a. n.a. n.a. Reliability of Air Transport n.a. n.a. n.a. Cost of Telecommunication n.a. n.a. Efficiency of Telecommunication n.a. n.a. Reliability of Telecommunication n.a. n.a. Source: ERIA Investment Climate Questionnaire Survey of CLMV Countries in 2009.

10 Successful Cases Cleared 10

11 1. Successful Cases: Land, Finance and Governance Land Use and Land Ownership Cambodia Lao PDR Myanmar Vietnam P.P. S.V. B.V. V.E.N. S.V.K. Y.G. M.D.L. M.Y.K. H.M.C. D.N. Land Regulation Financial Matters Finance Regulations Remittance Restriction Governance Matters Governance Quality of Policy Implementation Regulation of License & Permit Customs Clearance Source: ERIA Investment Climate Questionnaire Survey of CLMV Countries in 2009.

12 2. Successful Case: Trade-related & Investment Climates Trade Related Matters and Investment Climates in General Cambodia Lao PDR Myanmar Vietnam P.P. S.V. B.V. V.E.N. S.V.K. Y.G. M.D.L. M.Y.K. H.M.C. Exemption from Trade Restriction Tariff Barrier Export Procedure Export Tax Customs Clearance GSP Uncertainty of GSP Information on Local Suppliers Access to Foreign Supplier Foreign Procurement Collecting Business Information Collecting Information on Regulation Obtaining Licenses and Permits One Stop Service Investment Regulation Intellectual Property Right Tax Rate Tax Incentives Prioritized Supply of Utility Services Accommodation for Foreigners D.N.

13 3. Bottlenecks of Labor and Infrastructure Related Matters Labor-related Matters Quality of Workers Quality of Middle Managers Cambodia Lao PDR Myanmar Vietnam P.P. S.V. B.V. V.E.N. S.V.K. Y.G. M.D.L. M.Y.K. H.M.C. D.N. Recruitment of Workers Labor Turnover Labor Relation (Strike, etc.) Infrastructure Electricity Water Gas/Fuel Transportation Telecommunication Industrial Estates Efficiency of Land Transport n.a. n.a. Reliability of Land Transport n.a. n.a. Cost of Sea Transport n.a. n.a. Efficiency of Sea Transport n.a. n.a. Reliability of Sea Transport n.a. n.a. Reliability of Air Transport n.a. n.a.

14 Reasons of Good Evaluation of Bavet Advantages of Lower Income Countries Lower wage of labor Generalize system of preferential tax Advantages of Higher Income Countries Better Electricity Infrastructure Better Transport Infrastructure Supporting Soft Policies One Stop Service Bonded cross-border customs clearance Can Enjoy Both Advantages Working visas of both countries for foreign managers These policies are effective for remote areas along corridors

15 Business Cost 15

16 Minimum Wage Local Currency US$/month 2) Source Cambodia 1) US$ 55.0 Original Statement Lao PDR Kip 626,000 US$ 78.3 JETRO Correspondent Vietnam 1 st VND 2,000,000 US$ 97.6 JIJI Press 2 nd VND 1,780,000 US$ 86.8 JIJI Press 3 rd VND 1,550,000 US$ 75.6 JIJI Press 4 th VND 1,400,000 US$ 68.3 JIJI Press Bangkok Baht 300/day 4) US$ 260 BOI, Thailand (Notes)1) Minimum wage in Cambodia is a case for garment, textile and shoe making industries. 2) Calculated with Kip 8,000, VND 20,800 and Baht 30 per US$. 3) One month is assumed to be equal to 26 working days. 4) The new minimum wage is implemented from April 1, 2012.

17 Average Wage & Education Level Worker Middle Manager Engineer Av. Wage Edu. Av. Wage Edu. Av. Wage Edu. Cambodia Lao PDR Myanmar Vietnam Thailand , Note: Edu. means education level of employees. The indicator of each level is: 1=No formal schooling 2=Complete elementary school 3=Complete junior high school 4=Complete high school 5=Complete vocational school 6=Graduate college/ university 7=Complete Graduate school Source: Average wage is based on JETRO Censor, June 2011 and Education level is based on Banomyong and Ishida (2010) A Study on Upgrading Industrial Structure CLMV Countries, Jakarta: ERIA.

18 Land Price of Industrial Estates Price(m 2 ) Source Phnom Penh SEZ (99 years) US$ 55 Phnom Penh SEZ Manhattan SEZ (99 years) US$ Manhattan SEZ Vientiane along Major Rd. US$ ASEAN-Japan Centre Savannakhet (30 years) US$ ) Sawan Park SEZ (75 years) US$ ) Sawan Park SEZ Yangon (Mingaladon IP) US$ 38 JETRO Censor, June Greater Hanoi (43 50 years) US$ JETRO Censor, June Greater Ho Chi Minh (34 years) US$ 85 JETRO Censor, June Danang (Hoa Khanh: 30 years) US$ 13.5 JETRO Censor, June Greater Bangkok (Amata Nakhon) US$ 92 JETRO Censor, June (Notes)1) The cases enumerated are just examples. The facilities are different among industrial estates. 2) Calculated based on monthly price. The land price is reduced in the first 12 years in case that the investor operate for more than 29 years.

19 Monthly Office Rental Price Price(m 2 ) Source Phnom Penh (First Class) US$ CDC, Cambodia Phnom Penh (Second Class) US$ 8-13 CDC, Cambodia Vientiane (Central Area) US$ ) ASEAN-Japan Centre Vientiane (Out of Central Area) US$ ) ASEAN-Japan Centre Yangon (Central Area) US$ 18 JETRO Censor, June Hanoi (Central Area) US$ JETRO Censor, June Hanoi (Embassy Area) US$ 24 JETRO Censor, June Ho Chi Minh (1 st District) US$ 38 JETRO Censor, June Danang (Central Area) US$ 16.5 JETRO Censor, June Bangkok (Silom) US$ 22 JETRO Censor, June (Notes)1) The cases enumerated are just examples. 2) Calculated based on the price per 50m 2.

20 Electricity Price for Industry Use < Cambodia, Lao PDR and Myanmar > Phnom Penh Bavet Lao PDR Yangon Bangkok Low Point 22:00-4:00 Price Source 19.3/kWh Phnom Penh SEZ 12.65/kWh Manhattan SEZ 6.1~7.2/kWh Japan-ASEAN Centre 8/kWh JETRO Censor, June 12/kWh JETRO Censor, June (Note) It is said that electricity generator is needed in Myanmar even though the electricity situations have been much improved. < Vietnam > Normal Point 4:00-9:30 11:00-17:00 20:00-22:00 Peak Point 9:30-11:00 17:00-20:00 Source Hanoi City 2.5/kWh 4.5/kWh 9.1/kWh JETRO Survey

21 Price of Mobile Phone Cambodia Yangon Vietnam Bangkok Price US$ 10/Month /Minute (in case of IDD: 7-50/Minute) US$ 1,806+US$ 600/Month + 30/Minute US$ US$2.51/Month + 4.5~5.0/Minute US$ 33.0/Month + 5/Minute (a Case of Package) Source JETRO Censor, June CDC-JICA MPT JETRO Censor, June Case of Mobifone JETRO Censor, June Case of AIS JETRO Censor, June (Note) The cases enumerated are just examples.

22 Corporate Income Tax Rates in Mekong Cambodia Lao PDR Myanmar Vietnam Thailand Tax Rate 20% of profit 28% of profit 30% of profit 25% of profit 30% of profit Tax Incentive in Cambodia Qualified Investment Project: QIP Incentive for Corporate Tax Exemption Deficit Period + 3 years + Additional 3-6 years (max 3 years) (depends on project)

23 Tax Incentives in Lao PDR Corporate Tax Reduction & Exemption 1 st Zone (with poor infra) 2 nd Zone (partly with poor infra) 3 rd Zone (with better infra) Without incentive 0% 5% 7 years 0% 7.5% Exemption of Import, Commodity & Trade Tax 1) Machinery, parts & production facilities 2) Domestically non-existing or scarce raw materials 3) Imported half-finished products processed for exports 0% 5 years 3 years 2 years 2 years 10% 15% 20% 20%

24 Tax Incentives in Savan-Seno SEZ Manufacturing Sectors 70 Export 30 Export 69% Export < 30% 0% 7 years 0% 5 years 10 years 0% 8% 8% 8% Service Sectors US$ 2,000,000 Invest US$ 500,000 Invest 1,999,999 US$ 300,000 Invest 499,999 US$ 150,000 Invest 299,999 US$ 50,000 Invest 149,999 6 years 0% 4 years 0% 2 years 0% 10 years 0% 8 years 0% 8% 8% 10% 10% 10%

25 Tax Incentive in Myanmar Under the existing law Normal case 3 years 0% 30% Special treatment under new SEZ Law in 2011 Locating in SEZ 5 years 0% 10~20% 5 years 5 years 10~20% 30%

26 Tax Incentives in Vietnam Investors in general Investors in poor area 2 years 4 years 25% 4 years 0% 10% 20% 25% Agriculture cooperative or people s credit fund Investors in especially poor area Investors in hi-tech, R & D, infrastructure & software Investors in education, vocational training, medical and culture 20% 4 years 9 years 2 years 0% 5% 10% 25% 4 years 9 years 2 years 0% 5% 10% 25% 4 years 5 years 0% 5% 10% 2) 2) (Notes)1) Tax or exemption period begins with the first year which yield profit in three years. If the firm does not yield profit, it starts at the 4 th year. 2) the incentive period (10%) can be extended for further 15 years.

27 Thank you. 27