55% of foreign-invested firms report losses in 2021: finance ministry

As many as 14,293 foreign-invested enterprises, or 55% of the total, reported losses of VND168,330 billion ($7.18 billion) in 2021, according to the Ministry of Finance.

In a report sent to the Prime Minister, the Finance Ministry noted 4,402 foreign-invested enterprises (FIEs) made losses to the point that they saw their equity lost, or 17% of the total, with losses mounting to VND162,233 billion ($6.92 billion).

In 2021, FIEs posted a total revenue of VND8,568 trillion ($369.55 billion), up 19.3% year-on-year, earning a post-tax profit of VND83,585 billion ($3.56 billion), up 29.6%. They paid VND179,630 billion ($7.66 billion) into the state coffers, up 9.3%.

“Though FIEs have contributed to the country’s economic growth, the growth in state budget contribution is slower than those of capital, revenues, and post-tax profits, showing that FIEs’ state budget contributions have yet to match their investments and performances,” the finance ministry stressed.

“The number of businesses with losses exceeding the number of firms with profits and the increase pace being fast showed that a majority of FIEs have yet to efficiently use their assets and investments. As a result, Vietnam should be more critical in selecting and assessing FDI projects to improve FDI quality,” it added.

The finance ministry also asked the Ministry of Industry and Trade to boost the ratio of economic sectors with high-technology and high localization rates, replacing industries of simple assembly or processing.

By the end of 2021, the total assets of FIEs reached VND8,857 trillion ($377.62 billion), up 13.1% year-on-year.

Their equity and liablities went up 12.3% and 14.7% to VND3,641 trillion ($155.23 billion) and VND5,261 trillion ($224.32 billion), respectively.

Such a big number of loss-making FIEs, as also reported many times before, often appeared as a surprise as FIEs are known for good corporate governance and business efficiency. Another point is while many made a loss, they continued to expand agressively.

This has raised doubts that some of them have used tactics like transfer pricing to avoid paying taxes or pay lower taxes.