FDI businesses continue production despite losses
A government inspection revealed that a number of foreign direct investment (FDI) enterprises declared major losses but still expanded production.— File Photo
HA NOI (VNS) — A government inspection revealed that a number of foreign direct investment (FDI) enterprises declared major losses but still expanded production.
At export processing businesses and zones in Ha Noi, HCM City and southern Binh Duong and Dong Nai provinces, 125 of 399 businesses declared losses during 2009-11, according to vneconomy.vn online newspaper.
For three years in a row, 36 businesses lost more than VND2.8 trillion (US$133.3 million), while 69 others lost at least VND1,8 trillion ($87 million) in two years.
Vietnam Sumitomo Bakelite Company Ltd, a wholly Japanese-invested business in Thang Long Industrial Park, reported losing more than VND777 billion ($37 million) for three years in succession.
Vietnam Meiko Electronics Company Ltd lost more than VND300 billion, an especially surprising result because the company’s Ha Noi factory was one of the ten biggest FDI businesses and, in 2006, the project with the most FDI capital in Viet Nam. It officially received an investment licence in Ha Noi’s Thach That-Quoc Oai Industrial Park at the end of 2010.
In southern Dong Nai Province, four businesses reported major losses, especially Toshiba Industrial Product Asia Company Ltd, which lost over VND430 billion in three years.
It was followed by Vietnam Fujitsu Company Ltd, which lost more than VND292 billion in two years, after 13 years operating in Viet Nam with investment of $200 million. In 2006-07, the company reported export turnover of nearly $500 million, but since then revenue has significantly decreased.
Two other companies in Dong Nai also suffered losses. Vietnam Olympus Company Ltd lost VND256 billion in two years and Vietnam Kurela Company Ltd lost VND264 billion in three years.
In HCM City and Binh Duong, Vietnam Freetrend Industriala Company Ltd lost more than VND222 billion in two years and Saigon Stec Company Ltd lost VND218 billion in three years.
However, Government inspectors found that despite these reported losses, many enterprises saw high annual revenue and expanded their business and production, while others had losses that exceeded their ownership capital.
Export processing enterprises were unsuccessful due to many reasons, including alleged pricing transfers in business transactions, a situation that not only caused losses for the State budget but also impacted the investment environment and brought about imbalances in paying taxes as well as unhealthy competition. — VNS