The tax payment extension policy and other special accommodations that Vietnam’s Prime Minister Nguyen Tan Dung offered to companies affected by riots in Vietnam is not at all sufficient to win back the confidence of foreign investors, more so that of Chinese investors, according to an expert.

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In the government’s website, the prime minister said on Wednesday that extensions of up to two years will be granted to affected companies and no late payment penalties will be imposed.

Dung said Vietnam will also implement a 30 percent reduction in consumption tax on condition that the tax reduction will not exceed cost of damages.

Vietnam would likewise look into the possibility of waiving or reducing land rental costs for affected companies.

Dung also promised that his government would take action to facilitate the processing of visas for foreign workers.

In the same statement, the prime minister called on insurance companies to lose no time in assessing cost of damage and to quickly compensate affected companies.

Pan Jin’e, an analyst with the Chinese Academy Social Sciences, commented that the newly announced policy is merely a symbolic act of Hanoi to win back the confidence of foreign investors.

Pan however said that Vietnam’s attempt is far from adequate.

Even if the Vietnamese government did not issue the compensation policy, Chinese companies affected by the riot should be fairly compensated through lawsuits, according to Pan.

Pan added that many Chinese companies are now contemplating on pulling out their investments from Vietnam.

China’s Assistant Foreign Minister Liu Jianchao, who is heading a group dealing with Vietnamese authorities in Ha Tinh province, said she is very dissatisfied with Vietnam’s failure to take steps to protect Chinese companies and employees.

With Vietnam economically dependent on China for raw materials and as a market for their finished products, Vietnam should put effort in restoring good bilateral relations with China. A rift between the two countries will hurt Vietnam more than it would hurt Beijing, Liu said.

TagsVietnam Riots