Sustainable Development Impacts of Investment Incentives

The report examines how Vietnam's investment incentives, particularly tax breaks, influence foreign direct investment (FDI) and sustainable development in the mining and quarrying sector. It finds that while FIEs outperform domestic firms economically, incentives are not the primary driver for investment decisions nor for sustainable behavior. Social and environmental commitments are often passive, driven by parent company policies or basic legal compliance rather than government incentives.

• Investment incentives are an important factor but not a prerequisite for foreign investors' decisions to invest in Vietnam's mining and quarrying sector; a transparent investment environment and legal enforcement are equally crucial.
• Corporate income tax (CIT) incentives are the most utilized and lucrative tools, but they result in significant state budget losses, accounting for 0.5 to 0.7 percent of the sector's total industrial turnover from 2001 to 2006.
• Government incentives do not primarily drive the sustainable development behavior of FIEs; instead, such behavior is mainly determined by the policies of parent companies and the effectiveness of the host country's legal framework and enforcement.
• FIEs in the mining and quarrying industry significantly outperform domestic enterprises in economic indicators such as productivity, technology level, and profit before tax, which was approximately 19 times higher than domestic firms between 2001 and 2006.
• While FIEs provide higher average employee incomes than domestic firms, they show a lack of active commitment to long-term social welfare, such as vocational training and social insurance.
• Environmental protection efforts by FIEs are largely reactive and performed to satisfy legal requirements rather than a proactive stance; many firms possess pollution treatment equipment but do not operate it frequently.
• Local governments have used performance commitments, such as Environmental Impact Assessment (EIA) reports and local labor use, to direct investors toward sustainability, but monitoring is irregular and sanctions for non-compliance are light.

APA

Nguyet, V. X., Tuan, H. N. M., & Hoa, H. C. (2009). Sustainable Development Impacts of Investment Incentives. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/sd_incentives_vietnam.pdf

Chicago

Nguyet, Vu Xuan, Hong Ngo Minh Tuan, and Ho Cong Hoa. Sustainable Development Impacts of Investment Incentives. International Institute for Sustainable Development, 2009. https://www.iisd.org/system/files/publications/sd_incentives_vietnam.pdf.

Wikipedia

{{cite report |last1=Nguyet |first1=Vu Xuan |last2=Tuan |first2=Hong Ngo Minh |last3=Hoa |first3=Ho Cong |title=Sustainable Development Impacts of Investment Incentives |publisher=International Institute for Sustainable Development |date=2009 |url=https://www.iisd.org/system/files/publications/sd_incentives_vietnam.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{nguyet2009sustainable, author = {Nguyet, Vu Xuan and Tuan, Hong Ngo Minh and Hoa, Ho Cong}, title = {{Sustainable Development Impacts of Investment Incentives}}, institution = {International Institute for Sustainable Development}, year = {2009}, url = {https://www.iisd.org/system/files/publications/sd_incentives_vietnam.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }