Mar 22, 2018 / 17:20

Nearly 40% FIEs reported losses in 2017

The rate of foreign invested enterprises (FIEs) stays profitable in 2017 has been down to an all-time low of 54.3%, while 37.9% of FIEs - a new record, reported losses, according to a recent report of the Vietnam Chamber of Commerce & Industry (VCCI).

The growing number of loss-making FIEs, as VCCI stated, could not be concluded as a temporary or a long-term trend. However, high business expenditure has caused negative impact on FIEs' profitability, VCCI assessed. 
Illustration photo.
Illustration photo.
In 2017, middle-sized FIE's average revenue reached US$2.43 million, 3 times higher than previous years, however, the growing revenue was partly offset by the increase in expenditure of US$2.02 million in average. 

According to the report, FIEs are having the tendency of scaling down, both in terms of the total workforce and equity. 

Specifically, FIEs with less than 5 employees have increased from 5.9% to 7.4% in 2016 - 2017, while 10.9% of the current FIEs have from 5 to 9 employees. 

FIEs with equity less than VND500 million (US$22,150) are 7.9%, while those with from VND500 million - 1 billion (US$22,150 - 44,300) are 5.7%, and from VND1 - 5 billion (US$44,300 - 221,500) are 16.7%. Comparing to 2012, the rates were 2.3%, 4.2% and 14.8%, respectively. 

However, a survey conducted by VCCI showed that foreign investors remain optimistic over Vietnam's business outlook, in which 13.2% enterprises have increase its capital investment in 2017, a slight increase compared to 11% in 2016, and 60% FIEs plan to expand business in Vietnam, 10% higher than in 2016 and the highest rate since 2011. 

The optimistic view, VCCI stated, is thanks to improvement in business environment. "Under the administration of new government, the overall business sentiment at FIEs are the significant lower of non-related business expenditures."

The view is added up with 53% enterprises admitting of paying non-related business expenditures to facilitate custom clearance, 13.5% lower than in 2015. Similarly in procedures related to land issues, with the rate of enterprises paying non-related business expenditure going down from 22.6% in 2016 to 17.5% in 2017.