Steel production at a factory of Formosa Ha Tinh in central Vietnam.
Photo courtesy of the company. 

Steel manufacturers were some of the worst performing foreign invested enterprises in 2019, a new finance ministry report says. 

Major steel producers Formosa Ha Tinh Steel Corporation (Formosa Ha Tinh) and Posco Yamoto Vina had unhealthy financials for two consecutive years of 2018 and 2019, according to a report submitted by the Ministry of Finance (MoF) to the PM last week, analyzing financial statements of over 22,600 foreign-invested enterprises (FDI) in Vietnam.

Taiwanese-invested Formosa Ha Tinh, infamous for dumping toxic waste killing over 100 tons of fish and devastating the environment and economies of four central provinces in 2016, had accumulated post-tax losses of more than VND25.38 trillion ($1.11 billion) by 2019, and is having difficulty repaying its debt, the report says.

From net revenues of VND72 trillion, Formosa Ha Tinh reported a loss of VND11.5 trillion in 2019, 4.2 times the loss it reported the previous year.

Formosa's current solvency ratio is low, indicating that the company is using short-term capital to invest in long-term assets.

Similarly, South Korean-Japanese invested steel producer Posco Yamoto Vina reported a loss of VND2.78 trillion in 2019, almost three times the VND1 trillion it reported the previous year. It is also having difficulties repaying its debt.

In contrast to the steel industry, 976 FDI enterprises in the electronics, computers, optics and components sectors have been doing good business.

In this group, Samsung Electronics Vietnam (SEV Bac Ninh) and Samsung Electronics Thai Nguyen (SEV Thai Nguyen), belonging to South Korean conglomerate, accounted for 48 percent of total industry revenues last year, the report says.

In 2019, SEV Bac Ninh posted pre-tax profits of more than VND37.36 trillion, paying the state budget nearly VND2.86 trillion. SEV Thai Nguyen’s pre-tax profit was more than VND48.55 trillion and it paid nearly VND2.08 trillion to the state budget, 60 percent higher than the previous year.

Over VND210.2 trillion was collected from FDI businesses last year as domestic taxes, excluding crude oil, marking a 13 percent fall over 2018, according to the ministry’s General Department of Taxation.

The report says many businesses are still not very effective at using resources and capital accessed through FDI, and issues like tax evasion and transfer pricing continue to inflict losses on the state budget.