The Mercedes Benz factory in Ho Chi Minh City is facing an uncertain future with its project licence coming to an end in 2025 but a number of challenges getting it extended, Tuoi Tre has reported.
The project was originally approved in 1995 and given a 30 year lifespan. The operators of the plant, a joint venture between Mercedes-Benz Group AG and Saigon Transport Mechanical Corporation have requested a five-year extension, however, current regulations dictate that at the end of the licence the land must be reclaimed by the city. There does not appear to be regulatory provisions for an extension without interruption.
This speaks to the vast breadth of regulations in Vietnam that often overlap and contradict each other, as well as create unnecessary burdens for foreign businesses in Vietnam. These challenges do, however, go hand in hand with wages among the lowest in the region and a number of generous tax breaks.
Of note, in the Provincial Competitiveness Index 2023, Ho Chi Minh City, which ranked 27th overall, scored lowest on the ‘access to land’ criteria.
See also: Vietnam’s Automotive Industry: Foreign Investor’s Guide 2024