The number of foreign-invested enterprises (FDI) in Vietnam reporting losses, accumulated deficits, and negative equity has continued to rise over the years, with total accumulated losses reaching 908.2 trillion VND (approximately 36.3 billion USD). Despite this, many of these companies continue to expand their investment scale.

Deputy Prime Minister Bui Thanh Son recently directed ministries, agencies, and local authorities to review the Ministry of Finance's latest report on the financial status of FDI enterprises in 2023. Based on this review, relevant bodies are expected to take appropriate action and report any issues beyond their authority to the Prime Minister.

The 2023 financial report on FDI enterprises was compiled using data from the General Department of Taxation, provincial Departments of Finance, and customs import-export records from the General Department of Customs. A total of 28,918 foreign-invested enterprises with complete financial data were included in the analysis.

Over 16,000 FDI firms report accumulated losses

The Ministry of Finance's statistics on FDI firms' financial performance for 2023 reveal concerning figures:

As of December 31, 2023, 16,292 FDI enterprises reported losses, marking a 21.2% increase compared to the previous year.

18,140 enterprises had accumulated losses, up 15% from 2022.

5,091 companies had negative equity, representing a 15.2% increase.

The total losses for 2023 amounted to 217.5 trillion VND (approximately 8.7 billion USD), reflecting a 32% rise.

The total accumulated losses reached 908.2 trillion VND (36.3 billion USD), up 20% from the previous year.

The total negative equity stood at 241.6 trillion VND (9.6 billion USD), an increase of 29%.

"The number of FDI enterprises reporting losses, accumulated deficits, and negative equity has shown a persistent upward trend over the years," the Ministry of Finance cautioned.

Financial overview of the FDI sector

As of December 31, 2023, the total assets of FDI-dominated enterprises exceeded 9,957 trillion VND (398 billion USD), marking a 6.8% increase compared to 2022.

The total equity stood at 4,192 trillion VND (167.7 billion USD), up 5.5%, while the direct capital investment from foreign owners reached 3,040 trillion VND (121.7 billion USD), reflecting an 11.5% rise.

However, undistributed accumulated profits decreased by 15.3% to 890.6 trillion VND (35.7 billion USD), indicating a downturn in financial performance.

The Ministry of Finance noted that business results in the FDI sector weakened in 2023 compared to the previous year. While foreign direct investment inflows continued to grow, most capital was directed toward small- and medium-sized projects, particularly in industries focused on assembly and processing rather than high-value production.

Revenue in the FDI sector dropped by 4.3% to 9,416 trillion VND (376.8 billion USD), while post-tax profits declined 15.7% to 337 trillion VND (13.5 billion USD). As a result, corporate tax contributions from FDI firms fell slightly from 197.1 trillion VND (7.9 billion USD) in 2022 to 193.2 trillion VND (7.7 billion USD) in 2023.

Concerns over tax contributions and investment expansion

The Ministry of Finance highlighted an unusual trend: many FDI firms report continuous losses but still expand their investment scale.

The industries most affected by persistent losses include:

Manufacturing and processing industries

Wholesale and retail trade, automotive repair

Professional, scientific, and technological services

Some FDI enterprises, despite having large investments, high revenues, and significant pre-tax profits, contribute relatively little to the state budget compared to smaller domestic enterprises with lower revenue and profits.

Government calls for stricter oversight of FDI enterprises

Based on the financial assessment of FDI enterprises in 2023, the Ministry of Finance has recommended several measures to the Prime Minister, including:

Policy review and reform – Ministries and local authorities should re-evaluate investment policies and propose timely amendments to ensure investment efficiency.

Performance-based evaluation – Establish criteria to assess the economic, social, and environmental impacts of FDI projects, helping to prevent potential risks.

Stronger inter-agency cooperation – Strengthen coordination between tax authorities, customs, and financial regulators to combat transfer pricing, tax evasion, and other financial irregularities.

Increased audits and inspections – Expand oversight of FDI projects, focusing on firms that report persistent losses or show signs of tax avoidance. Enterprises with inefficient operations or those causing environmental and economic harm will face stricter management.

The Ministry of Finance emphasized the importance of transparency and accountability in managing FDI enterprises, calling for enhanced measures to protect state revenue and prevent financial misconduct.

Binh Minh