A view of Formosa Ha Tinh, a foreign-invested company which reported a huge loss in 2019 (Photo: cafef.vn) Accordingto the ministry’s recent report to the Prime Minister analysing financialreports of FDI companies, among a total of 25,054 FDI enterprises in Vietnam asof the end of 2019, 22,603 had reported adequate data for analysis.
Statisticsshowed that FDI enterprises had a total revenue of 7.1 quadrillion VND in 2019,720 billion VND higher than the previous year, with a total pretax profit of 387trillion VND.
In2019, 9,494 enterprises, or 45 percent, reported profits worth around 518.5trillion VND in total, representing an increase of 18 percent against theprevious year.
Thetop destinations for FDI were HCM City, Hanoi, Thai Nguyen, Bac Ninh, Binh Duongand Dong Nai.
Thegroup of FDI companies from Europe had the highest profitability while thosefrom the Republic of Korea, Japan, Singapore, Taiwan and the BritishVirgin Islands had reasonable profitability.
Meanwhile,Hong Kong and China, which were in the top 10 biggest FDI investors in Vietnam,had low profitability.
Accordingto the Ministry of Finance, Samsung Electronics Vietnam (SEV Bac Ninh) andSamsung Electronics Thai Nguyen (SEV Thai Nguyen) were the two largestenterprises among 967 operating in electronics with efficient operation in Vietnam.
SEVBac Ninh and SEV Thai Nguyen accounted for 48 percent of the total revenue ofFDI enterprises in the electronics industry. They reported a total pre-taxprofit of 85.91 trillion VND.
Atthe other end, 12,455 FDI enterprises, or 55 percent, reported losses worth 131.445trillion VND in 2019.
Theproblem was that the revenue of loss-making FDI enterprises in 2019 increasedby 12.7 percent against the previous year to 846.8 trillion VND.
Taiwan-investedHung Nghiep Formosa Ha Tinh Steel Company, with had estimated assets of 286.8trillion VND, reported an aggregated loss worth about 25.38 trillion VND in2019.
In2019, Formosa Ha Tinh reported a revenue of 72 trillion VND, a loss of morethan 11.5 trillion VND which was more than four times higher than 2018. The companypaid a modest sum of 51.6 billion VND to the State budget in 2019.
Sectorswith FDI enterprises reporting increasing loss were steel and iron production,oil and gas, petrochemical production, telecommunications and software.
Notably,the finance ministry’s report showed that 14,822 FDI enterprises reportedaggregated losses for many years with a total loss worth about 520.7 trillionVND.
Besidespositive impacts of FDI brought, the ministry said that there wereproblems.
Theministry said that the FDI inflow mainly focused on Southeastern and Red RiverDelta provinces while the northern mountainous and Central Highlands provinceswere not very attractive to FDI, which demonstrated that the Government’spolicies to encourage the investment flow into difficult areas did not work aseffectively as expected.
Inaddition, the capital efficiency of FDI enterprises remained low. FDIenterprises’ contribution to the State budget was not commensurate with theincentives they enjoyed with a majority of FDI enterprisesreporting losses over many consecutive years.
Transferpricing also occurred in some firms which reported losses for many years, butkept expanding production and business with increasing revenue.
Inorder to attract high-quality FDI flow, the finance ministry proposed incentivepolicies based on investment scale and location should be revised.
Itwas also necessary to improve the legal system and the coordination mechanismamong local and central authorities in licensing and managing FDI projects.
Theinspection against transfer pricing should also be increased, the ministry said.
Thelatest updates of the Ministry of Planning and Investment showed that Vietnamattracted 28.5 billion USD worth of FDI from January 1 to December 20, a dropof 25 percent against 2019./.
VNA
