According to the Vietnam Chamber of Commerce and Industry (VCCI), FDI projects exhibit many limitations aside from their positive contributions. There are many cases of FDI enterprises being engaged in transfer pricing activities and evading taxes, while others ignore legal regulations.
The Ministry of Finance has reported that, although their assets have increased, the growth of liabilities is higher than of equity, which means the expansion of assets more likely comes from debt than from investor capital. Growth in the capital of FDI enterprises is mainly from external funding. Profitability indicators in some fields are still negative and have not improved.
The number of liabilities of FDI enterprises in 2021 increased 14.7 per cent compared to 2020. Some sectors have large debt-to-equity ratios, such as media, which is above four times, finance, banking, and insurance, at 3.85 times, and the production and distribution of electricity, gas, hot water, steam, and air conditioning, at 2.93 times.
Vietnam had more than 14,200 FDI enterprises reporting losses in 2021, accounting for 55 per cent of the total and up 11 per cent compared to the previous year. Total losses amounted to more than $42.6 million. The number of enterprises with accumulated losses was more than 16,000, accounting for 62 per cent of enterprises and up 8 per cent compared to 2020. At the same time, more than 4,400 businesses lost equity, an increase of 15 per cent.
Their contributions to the State budget by FDI enterprises have not been commensurate with the investment. The number reporting losses is rising both in number and value. Products exported by foreign investors are mainly processed and assembled goods, with low added value, are labor intensive, use limited technology, and have low localization rates.
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