With regard to the results of production and business activities and profitability, the report indicates that activities of FDI enterprises throughout northern mountainous and central highlands provinces suffered declines, with their revenue in 2019 falling by 10% compared to 2018.
According to statistics compiled by the Ministry of Finance, the effective use of assets and use of investment capital in FDI enterprises remains low, while this potential has yet to be fully exploited. Indeed, the budget contribution of FDI enterprises is not commensurate with the incentives they have enjoyed.
Most notably, the number of profitable FDI enterprises makes up only a small proportion, only 45% of the overall number of firms, with many companies reporting large losses and continuous losses over the course of many years, the report stated.
Along with a number of significant projects with high economic efficiency, and strong budget contribution, there remains many projects with low efficiency and a low level of budget contribution. Hong Kong (China) and China are two players in the top 10 major investors in the nation who both have low profitability.
As a means of attracting a greater number of foreign-invested projects with high efficiency and improving the efficiency of state management over foreign investment activities, the Ministry of Finance has made proposals to the PM. In line with these proposals the Ministry of Planning and Investment will be asked to continue cautiously evaluating investment incentive policies according to the size of investment projects and socio-economic development regions. Simultaneously, it will be necessary to study and propose appropriate policies in order to attract foreign investment moving forward.
Meanwhile, the Ministry of Finance will continue to direct the General Department of Taxation and local Tax Departments in order to intensify the inspection and examination of FDI enterprises who show signs of transfer pricing in an attempt to avoid losses for the state budget revenue.