Their return on equity ratio averaged 26.4 percent compared to 24.2 percent for Vietnamese private companies and 17.6 percent for state-owned firms, according to the VNR Profit500, a listing of the 500 companies with the highest profits between July 2018 and June 2019 published Thursday.

Foreign firms also used their assets most effectively, with their return on assets ratio at 17 percent. It was 12.7 percent and 11.5 percent for private domestic and state companies.

This large disparity in profitability shows that the competitiveness of Vietnamese firms, despite improvement in the last few years, remains low and would see them lag further behind the more dynamic and efficient foreign enterprises if not improved further, the report warned.

In the report, done by market research firm Vietnam Report and online newspaper VietnamNet, state-owned oil and gas giant PetroVietnam held top place for the second year in a row.

It was followed by South Korea’s Samsung Electronics Vietnam Co Ltd and military telecom company Viettel.

State-owned Vietcombank, Vietnam’s largest lender by market cap, and Japanese auto manufacturer Honda ranked fourth and fifth.

Among Vietnamese private companies, Vietnam’s largest conglomerate, Vingroup, continued to hold top spot, followed by dairy company Vinamilk and Techcombank, the largest private bank by assets.

The construction and real estate industry accounted for the largest number of companies in the list, 23.9 percent, followed by food and beverage (11 percent), finance (10.8 percent), and electricity (8.6 percent).

By industry, the ICT sector recorded the highest ROE, followed by oil and gas, footwear and textiles, construction and real estate, and food and beverage.

Vietnam Report also surveyed companies on the biggest barriers and challenges to growth and profitability companies anticipate going into 2020.

The five biggest challenges were: complex administrative procedures (55.6 percent of respondents), fear of unstable economic growth, worry about rising taxes, exchange rate volatility, and difficulty raising funds.

The annual ranking is based on the Fortune 500 model.