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Strikes in Vietnam no deterrent to foreign investment

Strikes in Vietnam no deterrent to foreign investment

In a report on a threatened general strike in the garment sector (Post, June 30,

2006), you quoted government spokesman Khieu Kanharith saying, "When [unions]

go on strike, garment factories will move to Vietnam where they never have strikes

and they have cheap labor as well."

Did Khieu Kanharith really say this? The international press has carried a lot of

stories about a recent strike wave in Vietnam and reactions by foreign investors.

Between December 2005 and March 2006, 201 strikes occurred throughout the country,

of which 193 were in Ho Chi Minh City and the southern provinces of Binh Duong and

Dong Nai, the two localities with large numbers of foreign-invested companies.

From the Labor Code's promulgation in 1994 through March 2006, there were 1,171 strikes.

The strikes forced the Vietnamese government to raise the minimum wage by nearly

40 percent.

There was a protest by Vietnam's Foreign Chambers of Commerce, which warned that

unless the government stopped the "recent mob action" and improved communications

with foreign firms, future investors might stay away.

But the pay rise in itself was not the issue, because salaries remain low anyway.

Alain Cany, president of the European Chamber of Commerce in Vietnam, was reported

to have said, "What foreign companies did not like was not to have been warned

before by the government; some of them had signed deals based on three-to-six-month

cost calculations and they had to work at a loss."

Amanda Tucker, head of Nike Vietnam, the country's largest employer with 130,000

staff in contract factories, was reported to have said, "I see a lot of angst,"

but that the stoppages were "a very normal part of a situation where you have

a maturing workforce that's more aware of their rights."

Strikes and wage raises have certainly not deterred foreign investors.

In March the United States giant Intel got a $605 million investment license to build

a new factory in Ho Chi Minh City.

It is not the only company stepping in. In February, Canon announced it was spending

$110 million on an ink-jet-printer factory near Hanoi. Nidec of Japan plans to build

two plants to make electronic components, at a total cost of $940 million. Fujitsu

has invested $200 million and employs 3,200 people making circuit boards for PCs

and phones. Virginia-based utility AES is negotiating to build a 1,000-megawatt power

plant that could cost as much as $1 billion. Cisco, Nortel, and Motorola are installing

telecom equipment.

Last year, approved foreign direct investment jumped 41 percent, to $5.8 billion.

Many firms praise Vietnamese workers for being highly literate and fast learners.

More than two million are now employed in more than 1,000 plants in the textile sector

alone, and some firms have started to see labor shortages.

Khieu Kanharith's warning words sound empty. He simply tried to threaten garment

workers and unions to lower their demands.

His government should instead look into its own policies, which deter foreign investors.

It needs to improve education and the legal system, lower electricity and petroleum

prices, and do something seriously about corruption.

Maud Sundqvist - Stockholm, Sweden

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