Profitable FDI enterprises account for small proportion while many enterprises suffer from large and continuous losses for years

VCN- The Ministry of Finance recently reported the results of synthesis and analysis of financial statements in 2019 of FDI enterprises to the Prime Minister.
Foreign expert believes Vietnam remains very good destination for FDI Foreign expert believes Vietnam remains very good destination for FDI
Concerns FDI investment Concerns FDI investment "hides" in the wood industry
Increase investment in R&D and its benefits Increase investment in R&D and its benefits
2325-2541-home-4-1559872814986140953808-crop-1559872823416386913992
FDI enterprises’ contribution was not commensurate with incentives given to them. Illustrative photo.

Accumulated losses up by 26%

This report is based on data of 22,603 ​​FDI enterprises, accounting for 99.9% of all 22,617 FDI enterprises and equaling 90.2% of the total 25,054 FDI enterprises at the end of 2019.

The report said the scale of production and business of FDI enterprises in 2019 continued to highly increase compared to 2018, hittingVND 7,181,000 billion, an increase of more than VND 720,000 billion year-on-year. Total assets reached VND 7,752,000 billion, a surge of more than VND 981,000 billion year-on-year.

HCM City had the largest revenue scale of FDI enterprises across the country. Followed by respectively Bac Ninh, Thai Nguyen, Dong Nai, Binh Duong and Hanoi. HCM City is also the city with the top total assets of FDI enterprises in the country.

The report shows the activities of FDI enterprises in the northern mountainous provinces such as Dien Bien, Lai Chau, Cao Bang, Bac Kan, Ha Giang, Lao Cai, Son La, Yen Bai and some Central Highlands provinces declined, and revenue in 2019 decreased by 10% year-on-year.

Also, according to areport of the Ministry of Finance, in 2019, the pre-tax profit of 22,603 FDI enterprises reached more than VND 387,000 billion, up more than VND 29,000 billion year-on-year, whileprofit after tax was more than VND 324,000 billion, an increase of more than VND 19,000 billion year-on-year.

Sectors with good profit margins included manufacturing and assembling cars, motorbikes and other motor vehicles; food processing industry; alcohol, beverages; business support services; distribution and maintenance of cars and motorcycles; and medical, education and training, science and technology

However, according to areport of the Ministry of Finance, only 9,949 of 22,603 enterprises reported profit for the year (45%), an increase of 18% year-on-year.

Up to 12,455 enterprises reported losses, accounting for 55%, although total revenue of these enterprises reached about VND 847,000 billion, up nearly 12.7% compared to 2018 and total assets decreased by 0.7% compared to 2018.

About 3,545 enterprises suffered from losses in 2019, accounting for nearly 15.7%, of which, 2,160 enterprises’ revenue still grew.

Some sectors hadcompanies with losses fortwo consecutive years and losses in the previous year higher than the next yearare production of steel and other metals, distribution and production of petroleum and petrochemical products.

Regarding FDI firmswith accumulated losses, by the end of 2019, there were 14,822 enterprises with accumulated losses ofmore than VND 520,000 billion (or 66% of 22,603 ​​enterprises) on the financial statements, or 41% of investment capital of the owners and a 26% increase in the number of businesses with accumulated losses, an increase of more than 23% in capital losses compared to 2018.

The budget payment is not commensurate with the enjoyed incentives

The report assessing the performance of FDI enterprises by country and territory showed that the FDI enterprises of investors from the EU (Denmark, the Netherlands, France, and Luxembourg) hadthe highest profit.

The enterprises of the countries with largest registered capital in Vietnam, including South Korea, Japan, Singapore, Taiwan, and the British Virgin Islands, reported reasonable profit.

However, two investors in the top 10 major investors in Vietnam ofHong Kong and China have low profit.

Regarding State budget payment, according to the General Department of Taxation, in 2019, the revenue from domestic taxes excluding crude oil of the FDI sector topped VND 210,200 billion, an increase of about 13% compared to 2018. The growth rate of the budget payment of the FDI sector in 2019 wasfaster than that of the two previous years.

In this report, the Ministry of Finance assessed the growth of the owner's revenue, assets and investment capital was lower than in the previous years, but remained at a high level, showing the performance of FDI enterprises still maintains astable growth rate.

FDI enterprises play a more important role in the country's socio-economic development and increasingly contributeto the State budget, showing the steady increase in payments to the State budget and import-export tax payments over the years.

However, according to the Ministry of Finance, the efficiency of assets and investment capital in FDI enterprises is still low, and has not fully utilised their potentials, and the budget payment is not commensurate with incentives they enjoyed.

The number of profitable FDI enterprises accounts for a small proportion, only 45% while many enterprises suffer from large and continuous losses for many years.

In addition to some large projects with high economic efficiency and good budget payment, there are many projects with low efficiency and low budget payment.

At the same time, transfer pricing and tax evasion still occurred in some FDI enterprises. They always reported losses, or even continuous losses for many years, but still expanded production and business and their revenues keptincreasing years, causing lossesto the State revenue.

The Ministry of Finance also said that the analysing of the financial situation of some large enterprises in "electronic components, computers and computer peripherals, optical equipment", "electricity manufacturing, distribution and trading","production of iron, steel and other metals" show efficiency and payment to the State budget are different.

The two big companies in the sector of "production of iron, steel and other metals" are Hung Nghiep Formosa Ha Tinh Iron and Steel Co., Ltd and Posco Yamoto Vina Steel Joint Stock Company, despite the financial situation in two consecutive years impactedby the global steel and iron prices in a downward trend, the total revenue of the two companies increased from VND 77,456 billion to VND 82,741 billion, but their budget payment decreased from VND 101 billion to VND 92.6 billion.

According to the Ministry of Finance, the payment to the State budget is not commensurate with incentives given to these large firms.

By Hoai Anh/Ngoc Loan

Related News

Exchange rate risks need attention in near future

Exchange rate risks need attention in near future

VCN - Exchange rate developments in 2025 are considered to be quite complicated due to US policies related to trade and investment.
Researching and proposing amendments to 2014 Customs Law to meet the requirements of innovation

Researching and proposing amendments to 2014 Customs Law to meet the requirements of innovation

VCN - After 10 years of implementation, the Customs Law has been effective in reforming administrative procedures and protecting national sovereignty. However, in the context of innovation requirements, it is necessary to continue reforming specialized inspections and focusing on digital transformation.
Flexible and proactive when exchange rates still fluctuate in 2025

Flexible and proactive when exchange rates still fluctuate in 2025

VCN - In the last days of 2024, as many forecasts, the US Federal Reserve (Fed) continued to cut interest rates, pushing the USD index up, creating pressure on domestic exchange rates. Therefore, domestic exchange rate management policies need to continue to be flexible and appropriate, thereby supporting businesses in import and export.
Enterprises focus on Tet care for employees

Enterprises focus on Tet care for employees

VCN - Tet bonuses are always an issue that receives special attention from employees at the end of each year. This year, the economy is facing many difficulties, many enterprises in the southern provinces have announced Tet bonuses, reflecting their tireless efforts to ensure the rights of employees.

Latest News

Embracing green exports: a pathway to enter global supply chains

Embracing green exports: a pathway to enter global supply chains

This shift presents both a challenge and an opportunity for Vietnamese businesses to innovate and enhance their competitive edge in the international arena.
New policy proposed to prevent transfer pricing, tax evasion of FDI enterprises

New policy proposed to prevent transfer pricing, tax evasion of FDI enterprises

The ministry proposes to issue a decree on the establishment, management and use of the Investment Support Fund to stabilise the investment environment, encourage and attract strategic investors and multinational corporations.
Việt Nam’s durian exports to China plummet by 80%

Việt Nam’s durian exports to China plummet by 80%

This sharp decline has had a direct impact on Việt Nam’s fruit and vegetable export revenue, which stood at US$416 million in January 2025, marking a 11.3 per cent decrease month-on-month and a 5.2 per cent drop year-on-year.
Coconut exports reach 14-year high

Coconut exports reach 14-year high

In 2024, fresh coconut and coconut product exports surpassed US$1 billion, marking the highest figure in the past 14 years.

More News

Shrimp exports grow in the first month of 2025

Shrimp exports grow in the first month of 2025

According to data from the Việt Nam Association of Seafood Exporters and Producers (VASEP), shrimp products recorded a 13 per cent increase in export value in January 2025, reaching a total of $273.3 million.
Rice export prices drop, but decline expected to be short-term

Rice export prices drop, but decline expected to be short-term

Việt Nam’s rice export prices have declined, reaching their lowest level in three years.
Key agro products expected to maintain export growth this year

Key agro products expected to maintain export growth this year

At present, agricultural exports, such as rice, coffee and seafood, have steadily secured a stable place in major global markets.
EU issues 12 warnings against Việt Nam’s food and agricultural exports

EU issues 12 warnings against Việt Nam’s food and agricultural exports

The Việt Nam SPS Office has reported that some Vietnamese export products failed to meet the EU’s stringent standards.
Việt Nam to impose VAT on low-value express-imported goods

Việt Nam to impose VAT on low-value express-imported goods

Việt Nam will end a previous policy that exempted imported goods valued under VNĐ1 million (US$39.4) from taxes when shipped via express delivery.
Vietnam kicked off the year with a strong start in trade, exceeding US$63 billion in the first month

Vietnam kicked off the year with a strong start in trade, exceeding US$63 billion in the first month

VCN - Data from the General Department of Vietnam Customs indicates a softening of both exports and imports in January 2025, relative to the same month in 2024.
Import and export turnover reaches about US$29 billion in the second half of January 2025

Import and export turnover reaches about US$29 billion in the second half of January 2025

VCN - Vietnam's total import and export turnover in the second half of January 2025 (January 16-31, 2025) reached US$28.9 billion, the latest preliminary statistics of the General Department of Vietnam Customs reported.
Market edges up slightly as liquidity remains low

Market edges up slightly as liquidity remains low

Market breadth remained positive, with 161 gainers outnumbering 144 decliners.
Business regulations must be trimmed for development of enterprises: Experts

Business regulations must be trimmed for development of enterprises: Experts

The General Statistics Office (GSO)'s socio-economic report for January 2025 reveals that while over 33,400 newly established or resumed businesses entered the market - marking a 15% increase compared to January 2024 - more than 58,300 businesses withdrew from the market, representing a growth of 8.1% on year.
Read More

Your care

Latest Most read
Embracing green exports: a pathway to enter global supply chains

Embracing green exports: a pathway to enter global supply chains

This shift presents both a challenge and an opportunity for Vietnamese businesses to innovate and enhance their competitive edge in the international arena.
New policy proposed to prevent transfer pricing, tax evasion of FDI enterprises

New policy proposed to prevent transfer pricing, tax evasion of FDI enterprises

The ministry proposes to issue a decree on the establishment, management and use of the Investment Support Fund to stabilise the investment environment, encourage and attract strategic investors and multinational corporations.
Việt Nam’s durian exports to China plummet by 80%

Việt Nam’s durian exports to China plummet by 80%

This sharp decline has had a direct impact on Việt Nam’s fruit and vegetable export revenue, which stood at US$416 million in January 2025, marking a 11.3 per cent decrease month-on-month and a 5.2 per cent drop year-on-year.
Coconut exports reach 14-year high

Coconut exports reach 14-year high

In 2024, fresh coconut and coconut product exports surpassed US$1 billion, marking the highest figure in the past 14 years.
Shrimp exports grow in the first month of 2025

Shrimp exports grow in the first month of 2025

According to data from the Việt Nam Association of Seafood Exporters and Producers (VASEP), shrimp products recorded a 13 per cent increase in export value in January 2025, reaching a total of $273.3 million.
Mobile Version