Hanoi's offer for damage 'far from enough'

Ships of Chinese Coast Guard are seen near Chinese oil rig Haiyang Shi You 981 in the South China Sea, about 210 km (130 miles) off shore of Vietnam May 14, 2014.

Vietnam's tax payment extension policy for enterprises affected by recent violence in the country is far from enough to restore foreign investors' confidence, especially that of Chinese companies, an expert said.

The Vietnamese government's website quoted the country's Prime Minister Nguyen Tan Dung on Wednesday as saying that a tax payment extension of up to two years will be given to the enterprises without any penalty for late payments.

Last week's deadly attacks on Chinese personnel and companies in Vietnam, causing the deaths of four Chinese employees and injuries to hundreds of others, took place after China frustrated a series of provocative moves by Hanoi to disturb drilling by a Chinese oil rig in the South China Sea.

Dung said Hanoi will reduce the special consumption tax by 30 per cent for affected companies, with the tax reduction not exceeding the total damage.

He said Vietnam will consider waiving or cutting land rents for the affected companies and will facilitate the visa process for foreign workers.

The prime minister also urged insurance companies to quickly assess the damage and pay out compensation. Vietnam hasn't announced the total cost of the riot-related damage.

However, Pan Jin'e, an analyst with the Chinese Academy of Social Sciences, said the policy is only a symbolic move by the Vietnamese government to restore foreign investors' confidence in the country.

"It's far from enough," she said.

Even if the government did not issue the compensation policy, those Chinese companies should be paid back through lawsuits, not to mention that many Chinese investors are considering withdrawing their investments in the Southeast Asian country, she said.

Chinese Assistant Foreign Minister Liu Jianchao, who is leading a group to deal with the Vietnamese authorities in central Vietnam's Ha Tinh province, strongly condemned the behaviour and expressed strong dissatisfaction with Hanoi for not taking effective measures to protect Chinese enterprises and employees, China News Service reported on Wednesday.

Vietnam's economic development largely relies on importing raw materials from China and exporting their products to Chinese market.

"Both countries' interests will be harmed with bad bilateral relations, but Hanoi will clearly suffer more than Beijing. So Vietnam should take more concrete measures to mend bilateral relations first," she said.