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HomeSorted by levelC1 - AdvancedThe dark side of FDI in Vietnam (part III)

The dark side of FDI in Vietnam (part III)

The dark side of FDI in Vietnam (part I)

The dark side of FDI in Vietnam (part II)

[Reading level: C1 – Advanced]

Left hanging – [Vấn đề] vẫn chưa được giải quyết

It was a cold, pitch-black night in late January 2018, just less than a month before Tet, Vietnam’s Lunar New Year and the country’s biggest holiday.


Under a tarp shelter temporarily set up on a sidewalk in Ho Chi Minh City’s Tay Bac Cu Chi Industrial Park, Hanh added another dry twig to the fire as her infant son slept soundly in a nearby hammock.


The South Korean director of Hanh’s company had been missing for over a week, having taken off with the workers’ wages for December. Hanh and her coworkers had camped outside the company’s gate just in case he returned.


On sunny days, they camped under the shade of trees, and during the nights, they slept in hammocks and took turn keeping twig fires burning for warmth.


Renting price is from VND800,000-2 million ($34.2-85.5) per month per house near Tan Tao. – Giá thuê nhà rơi vào khoảng 800.000-2 triệu đồng (34,2-85,5 USD) mỗi tháng cho mỗi ngôi nhà gần Tân Tạo.

Occasionally, the sound of someone cursing or sobbing could be heard. Their plans to buy new clothes for their children or a pair of tickets to come home for Lunar New Year had all disappeared with the director.


“All 6 of us siblings and siblings-in-law work for this company so now we’re all done for. We don’t know anyone we can borrow money from to buy tickets to go home for this Tet,” Hanh said.


The South Korean director had not only taken away the Tet holiday of his 600 workers but also nearly VND30 billion ($1.28 million) in social insurance that he had been subtracting from their monthly pay.


Hanh’s baby was already nearly a year old but she had yet to receive her maternity insurance, and many of her coworkers’ maternity insurance payments still remain on paper, despite their children being 2-3 years old.


Unable to afford bus tickets to go home for Tet, Hanh and her siblings ended up celebrating the holiday with what little money they had in Saigon, hoping for better luck in the new year.


Everyone knew they were being put at a disadvantage and that the company was violating the law, but few dared to quit, as no one could be sure that the same scenario would not be repeated at a new workplace.


Hanh did not dare to risk any move as she thought her company at least did not fire old workers or make regular personnel changes.


Despite being only 25, Hanh already had enough experience as a worker to know that her rights could be taken away at any minute, having started working at a factory without any contract since she was 13.


This scenario is repeated all over the “developing” world, at most “factories of the world” like India and Vietnam.


According to incomplete statistics compiled by the Ministry of Planning and Investment (MPI), there are currently hundreds of runaway FDI company owners, many of whom still owe their workers 3-4 months’ worth of wages and many years worth of social insurance. Vietnamese officialdom and legal establishment seem helpless in pursuing such criminals and bringing them to justice.


A child waits for her parents to come home from work in Binh Tan District, Ho Chi Minh City. – Một đứa trẻ chờ bố mẹ về nhà sau giờ làm việc tại quận Bình Tân, thành phố Hồ Chí Minh.

‘Nothing changes’ – “Chẳng có gì thay đổi”

Answering the press recently, a representative of the Ministry of Labor, Invalids and Social Affairs said Vietnam’s current law provisions related to labor have been fully completed, including those regarding timely payment to workers and social insurance obligations of employers.


The representative said that workers whose employers owe them wages or fail to pay their social insurance should report these violations to the local workers’ union.


However, “nothing changes” and “no reply” are the only responses workers at the Tay Bac Cu Chi Industrial Park received when they reported their employers’ violations.


In the end, they had no other option than fight for their rights, but even in this, they are disadvantaged with authorities liable to accuse them of “causing public disorder”.


Two sides of a coin? – Hai mặt của một vấn đề

“Every coin has two sides: good and bad,” said Phan Huu Thang, former head of the MPI’s Foreign Investment Agency.


Thang was part of the first generation of officials that created a legal framework for bringing foreign investment into Vietnam, and after 30 years he generously gives an 80:20 gain-loss ratio to the FDI sector. They have brought 80 percent gain and caused 20 percent losses to the country, he estimates.


“Low labor value” is one of the frequently mentioned downsides to FDI in Vietnam.


While the country’s human capital index is the best among the “world’s factories,” according to the World Economic Forum, in terms of labor effectiveness, Vietnam’s performance is only slightly better than Bangladesh.


The reason for this, experts have argued, is that over many decades of trying to attract foreign investment, Vietnam has settled on a system of investing human capital in low-value manufacturing.


This has meant that people like Hoa, Hanh and many other youth living in the countryside would graduate from Vietnam’s general education system only to find that their only job opportunities are in factories where their education is not needed.


The per capita production value of a Vietnamese worker in 2016 was $3,683, or less than a third of the $12,362 created by a Chinese worker.


However, this is not because a Chinese worker makes three times as many shoes as a Vietnamese peer, but because the shoes made by Chinese workers have more added value because of better design licensing, sales and marketing systems.


Or simply because many Chinese workers are no longer making shoes, but instead have switched to assembling Chinese smartphones.


Importantly, the responsibility for this “low labor value” certainly does not lie with workers like Hoa or Hanh, but a flawed “free market” system and shortsighted policymakers, critics have pointed out.


After “celebrating” Tet in Saigon, Hanh chose to remain in Cu Chi. She found a new job at another textile factory in the same industrial park, which was probably the only career option available to her.


In a national project that receives foreign funding, if a Vietnamese worker’s youth can be considered counterpart funds, it is still being spent the same way it was 20 years ago. This human capital is being depleted rapidly, and there is not much in the way of replenishment.






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