Over half of foreign-invested enterprises in the red

The Ministry of Finance has just sent a report to the prime minister outlining the results of an analysis of the financial statements of foreign-invested enterprises (FIEs) in 2022. The report covers more than 26,000 businesses to illustrate the overall financial picture of foreign direct investment (FDI) in Vietnam.

Accordingly, 14,293 FIEs reported losses, accounting for 55 per cent of all businesses with a total value of $7.2 billion. A total of 16,258 FIEs, or 62 per cent of all businesses, have accumulated losses, an increase of 8 per cent from 2020. Meanwhile, 4,402 enterprises, or 7 per cent of businesses, lost their equity, a rise of 15 per cent from 2020.

FIEs have total assets of up to $375 billion, 13 per cent higher compared to 2020. The equity of FIEs stood at $153 billion, an increase of 12.3 per cent. Meanwhile, liabilities amounted to $222 billion, up 14.7 per cent against 2020.

Although the size of assets increased, the growth rate of liabilities was higher than that of equity. This shows that the expansion of assets came more from debt than from the investor's capital. Growth in capital for FIEs mainly came in the form of external funding. The profitability indicators in some fields remain negative and have yet to improve.

The amount paid to the state budget by FIEs is not commensurate with the total investment. The number of FIEs reporting losses, accumulated losses, and capital losses tended to increase in both quantity and value.

Foreign investors mainly export processed and assembled goods that are low-tech and labour-intensive with a low localisation rate and little added value.

Foreign direct investment (FDI) inflow from China to Vietnam is expected to rise as China is to reopen its doors and resume flights between the two countries, according to Agribank Securities Company (Agriseco).

The southeast continues to take the lead in attracting overseas investment despite the increasing problem of land availability.

Despite headwinds caused by geopolitical tensions, Vietnam has seen solid overseas investment, laying the ground for the country to boost inflows and realise its socioeconomic goals.