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Cheating and overexploitation of workers are among the myriad of negative impacts FDI has had on Vietnam.
Large corrugated metal roofs, small corrugated metal roofs and farmland.
Satellite images of Tan Vinh Hiep Commune in the southern province of Binh Duong don’t show much more, but on the earth, these pictures are worth more than the proverbial thousand words – they tell a thousand stories, and counting.
The commune stands just an hour’s drive north of Ho Chi Minh City in Tan Uyen Town, and the satellite images are typical of Vietnam’s economy in the 21st century.
The large corrugated metal roofs are those that cover factories spanning thousands of square meters. Such factories have been the core economic component of both Tan Uyen and the whole Binh Duong Province for decades. And most of these factories belong to foreign direct investment (FDI) companies.
Surrounding the factories are the small corrugated metal roofs, just over 2 meters wide, dozens of meters long, branching out from the roads and alleyways around the factories. These are the roofs of dormitories for migrant workers – the main workforce component in industrial parks across the country.
The large and the small roofs are set against the background of patches of farmland – reminders of a not-too-distant rural, agricultural past.
Huge swathes of farmland across rural Vietnam have been sacrificed to set up hundreds of industrial parks, attracting massive investments looking to exploit cheap labor made available by such sacrifices.
Oppressed workers
Truong T.A, a 22-year-old man from a coastal district in the Mekong Delta’s Soc Trang Province, is one such rural worker.
In the recruitment announcement of the South Korean garment firm that T.A had applied for, which can still be found online, the promises are alluring: Dynamic, professional working environment; Promotion opportunities for dedicated, long-term committed employees; and most importantly, full entitlement to laborer’s benefits and rights in accordance with the Labor Code.”
These were the promises with which T.A. started working for the ironing unit of E.V, a South Korean-invested garment firm in Vietnam, on April 24, 2017.
He received a monthly salary of VND4.4 million ($190) and got to sign an official one-year employment contract on July 1, 2017. However, just six months later, he was dismissed for “repeated violations over many days of failing to meet ironing productivity during pay-rise period.”
T.A was not alone. On January 22 this year, the E.V company dismissed several workers of the ironing unit, citing the same reason.
However, the workers did not accept these dismissals, arguing that they couldn’t have committed “repeated violations” since they’d never received any disciplinary notice prior to being fired.
They sued the company.
In the lawsuit filed by the workers against the company at the Tan Uyen People’s Court, all plaintiffs are migrant workers from the Mekong Delta provinces of Long An, Bac Lieu, Soc Trang and An Giang. All of them received monthly salaries of around VND4 million ($171) and lived in dormitories near the company before being fired for “repeated violation over many days of failing to meet ironing productivity.”
The workers demanded that they be paid their salaries for the remaining months of their contracts, which they argued was illegally terminated without justification.
Lee Sang S., director of the company with the self-proclaimed “professional working environment” and his legal representatives did not attend any court hearing and the company did not reply to any of the court’s summons.
In the absence of the defendant – a multinational company just 20 minutes from the courthouse, the Tan Uyen People’s Court in May and June this year ruled that E.V.’s dismissals were illegal and ordered the company to compensate the workers.
Whether the workers will get their compensation or not remains to be seen. It depends on how the judgment is executed, and whether a lengthy battle with foreign employers ensues.
The series of lawsuits against E.V are not the only ones on illegal dismissal of workers that the Tan Uyen court has received this year.
Tan Uyen, with a population of just under 200,000, has repeatedly made headlines for workers being fired illegally, the spread of illegal gambling games, a food poisoning case in a local factory with 300 victims and several cases of company owners disappearing without paying workers.
While the flow of FDI has brought to Vietnam in general and Binh Duong in particular undeniable achievements, they are accompanied by problems that have become inherent.
Conflicts, contradictions
The story of “old” workers at industrial parks being fired, a common occurrence among FDI companies, was a topic hotly debated in National Assembly meetings and in media accounts throughout July 2017.
While the labor ministry suspected that the companies “intentionally dismissed old workers,” the Dong Nai Province People’s Committee reported that “the businesses and workers agreed on the dismissals in the spirit of mutual agreement” and the Vietnam General Confederation of Labor said workers were “forced to quit their jobs due to productivity pressure and high labor standards.”
The workers, of course, have seen it differently, as oppression that ignores their legitimate right to reasonable pay and good working conditions.
In another case handled by the Tan Uyen court earlier this year, the workers claimed that their South Korean employer had demanded that they sign resignation letters instead of firing them. They refused, and took the employer to court.
However, most workers of companies in industrial zones do not have the “luxury” of taking their employers to court, steeped as they are in poverty and dependent on their salaries to feed their families. They quietly endure their employers’ unfair conditions and treatment.
Footwear firms – who foots the bill?
The last few decades of the 20th century saw state-owned companies and family businesses dominate Vietnam’s textile and footwear sectors.
However, as the 21st century dawned, the proportion of FDI companies in these sectors began skyrocketing. It was the first significant sign of the coming flow of FDI and of a new era as Vietnam opened up its economy to the world.
The turn of the century was also when Hoa, then just a 17-year-old girl, packed up her belongings and left her home in central Nghe An Province to work for a Taiwanese factory in Saigon.
Nearly two decades have passed, enough time for Hoa’s company to grow into the world’s largest footwear manufacturer, but she has never changed her job.
Having witnessed the risks in the life of a worker, she believes that only staying with a big company would keep her safe.
“As long as the factory and machinery are still here, the owner wouldn’t dare to run away; and seeing that there are lots of workers, they wouldn’t dare to play dirty,” she explained.
In just the Tan Tao Industrial Park, where Hoa works, the number of workers employed by her company has already crossed 90,000 people.
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Textile Act-2018 which was passed recently made it mandatory for the textile owners to get registration from the Department of Textile for running their business.
As per the act, all sub sectors of textiles including primary textile, readymade garment, allied textile, packaging and accessories manufacturers and buying house, would remain under the control of the Department of Textiles under the textile ministry.
Textile Bill was passed by the parliament on September 12 and the act, which took effect on October 1, declared the Department of Textile as the ‘Sponsoring Authority’ for the textile and clothing industry.
It says that the authority would provide all-out support to the industry and the operation of any textile and clothing industry would not be allowed without registration of the authorities.
As per the new act, buying house owners would also have to come under the registration of the sponsoring authorities to run their business.
Under the textile act, the government would establish a one stop service centre so that entrepreneurs and investors get required services including approval, clearance and licence within the shortest possible time.
The proposed OSS centre would also help implementing projects or moves related to textile and clothing industries.The formation and activities of the proposed OSS centre would be administered by the rules.
It also said that the director general of the Department of Textiles would act as textile registrar and the textile owners would get registration within 60 days after filling applications.
The act empowered textile registrar to suspend or even cancel registration for giving wrong or false information while getting registered.
The law states that authorised officer of the department would inspect textile industries to oversee whether the industries are running as per the condition of the registration.
The law has been enacted to meet the domestic demand of apparel, increase export, generation of new employment, attract foreign direct investment, facilitate the clothing industry for gaining global competitiveness and to introduce need-based curriculum for the textile sector.
To achieve the target of the new act, the government would take initiative to establish required number of educational institutions including university, college, fashion institute and textile training centre.
The designated officers of the DoT would be responsible to inspect quality and standard of various elements used in textile products including paint and other chemicals.
Mohammad Ismail, director general of DoT, told reporters that his department would not act as the controlling authorities rather it would facilitate the textile sector.
For three days, Oct. 12-14, the HABI Fair held at the Glorietta Activity Center in Makati City showcased Philippine-made textile products, traditional woven native materials, and cotton.
More than 80 exhibitors participated in the trade fair, the most number since the HABI Fair started several years ago. Also, for the first time, textile exhibitors from the ASEAN region (Brunei, Laos, Indonesia, Myanmar, Malaysia, and Vietnam) took part.
Co-founded by Maribel Ongpin and HABI The Philippine Textile Council, the fair is designed to show the craftsmanship of the country’s indigenous weavers from Kalinga, Ifugao, Mindoro, Ilocos Region, Samar, and Basilan’s Yakans.
Metro Manila consumer market, long conditioned to the use of synthetic fabrics, got updated on the many ideas and possibilities locally woven textiles could turn into.
But the fair wasn’t all about selling the displayed products, it was also a way to impress upon the public’s awareness the utilization of earth-friendly resources and their sustainability, as well as the primacy of preserving the traditions of many generations past.
A fashion show featuring clothes made of natural materials proved the unlimited extent to which style and elegance could feel and look.
A highlight of the fair, aside from the workshops and lectures on sustainability, was the first Lourdes Montinola Prize for piña weaving. Montinola wrote “Piña,” a book that aims to substantiate the pineapple cloth as a national treasure.
The contest was open to all artisans who weave, dye, embroider, or embellish the fabric in the most innovative way. The winners—Arlene Tumbokon of Heritage Arts and Crafts, Ursulita de la Cruz of the De La Cruz House of Piña, and Ana Legaspi of La Hermania Atelier—and their winning pieces would make any Filipino proud.
Analysts have predicted that the global textile machinery market may grow at about 11-14 per cent by 2020, said the head of Mario Crosta, an Italian firm which is a leader in design and production of machinery and plants for dry finishing. Countries like China, Italy, Germany and Switzerland export finishing machines worth about €580-600 million every year.
“Our competency is a mix of tradition and newest technology application. We are recognised in the market for our high degree of heavy-duty machinery and the longevity and low maintenance of our machines. For more than 93 years, we have been in the first line in the development of new technologies to be applied to our production machines,” Marco Crosta, the owner of the company told Fibre2Fashion in an exclusive interview.
Mario Crosta manufactures all of its machines in its two factories located in Busto Arsizio, close to Milan. All of its suppliers are also Italian.
Talking about the major challenges faced by the Italian textile machinery manufacturers, Crosta said, “Big difficulties come from our Italian system, which is not helping small and medium enterprises to be in the global market, at least at the same level as the competitor countries are in. We have always faced competition from countries such as China, India, Korea and Taiwan, which offer low-priced products to the market.”
The company’s future plans include developing its service network, developing technology for better and efficient output and investing in Industry 4.0
The China International Import Expo (CIIE), starting from November 5 in Shanghai, will widen the country’s market further on a global level and many Pakistani exporters plan to utilise this unique opportunity. A look at China’s market reveals that it is the world’s largest destination for agricultural products including grains, cotton, sugar, meat and milk and Pakistan abundantly produced almost all these commodities, according to an article published by media website Chin.org.cn on Monday. The CIIE will help Pakistan in exploring new trade avenues. Just a few years ago, China was the second largest buyer of Pakistan’s non-basmati rice. Nonetheless, traders and governments of both countries have recently shown willingness to engage in high-volume trade.
The Government of Sweden and the International Trade Center (ITC) have announced a new program aimed at strengthening the international competitiveness of textiles and clothing producers in Egypt, Jordan, Morocco and Tunisia.
The program targets boosting exports, creating jobs and raising incomes across the Middle East and North Africa region, the ITC website reported on Monday.
The three-year program is intended to support the four countries to build sustainable export-oriented sectors with increased sales to traditional markets in Europe and North America along with new markets in sub-Saharan Africa.
To achieve lasting improvements in the sector’s export competitiveness, the project will focus on bolstering the capacities of national institutions such as textile and clothing business associations and training centers to help better support local businesses to export.
The project ‘Strengthening the International Competitiveness of the Textile and Clothing Sector in selected Middle East and North African Countries’ (MENATEX), is funded with SEK 42 million ($4.63m) from the Swedish government and will be implemented by the Geneva-based ITC in close collaboration with the Swedish International Development Cooperation Agency .
Coimbatore: The availability of cotton in the country would be comfortable in the 2018-19 season (October-September), according to the Indian Cotton Federation (ICF).
The area under cotton has been pegged at 122.38 lakh hectares as against 122.53 lakh hectares reported during December 2017 as per the first advance estimates released by the Department of Agriculture, Cooperation and Farmers Welfare
“The area is expected to increase by few more lakh hectares and the country would have higher acreage under cotton than the previous year.
The favourable monsoon weather conditions and preventive action taken to control the pink boll worm and other pest attacks is expected to result in higher production and better quality of cotton,” said J Thulasidharan, president, ICF.
“As per field information, the availability of cotton in terms of quantity and quality would be much better than 2017-18 (season) during the current season,” he said. Cotton production for the 2017-18 season is estimated to be around 373 lakh bales (a bale is 170 kgs), an 8.11% growth compared to the previous season.
Cotton production had increased due to the rise in area under cultivation by almost 13% i.e. from about 108.5 lakh hectares around to 122.5 lakh hectares. Though in certain areas damages have been reported due to pink boll worm, the ICF president said that the impact would be much lower when compared to the last year. Certain states like Maharashtra had taken measures to control pink boll worm and advocated late sowing, he said. “Prices would further taper down once the arrival picks up,” Thulasidharan stated. He however said that the arrival might be delayed due to late sowing. Taking advantage of 26% to 28% increase in the minimum support price announced by the union government for the 2018-19 season and favourable monsoon conditions, farmers have sown more cotton. Pointing out that the trade had projected very tight closing stock for the 2017-18 season, but in reality the industry had comfortable stock position, which helped cotton prices to decrease from Rs 48,500 to Rs 46,500 per bale during the end of the season, he said that textile mills should not panic over the stock situation.
To address concerns on input tax credit; ‘but move comes after deadline lapsed’
The government on Sunday extended the deadline for the filing of GST form 3B returns for September from October 20 to October 25.
“It has been brought to notice that there have been apprehensions by trade and industry relating to the last date for availment of ITC [input tax credit] for the period July 2017 to March 2018,” the government said in a statement. “In order to remove doubts, it was clarified that as per the law, the last date for availing ITC in relation to the period from July 2017 to March 2018 is the last date for the filing of return in the form GSTR-3B for the month of September 2018.”
“In view of the said apprehensions and with a view to give some more time to the trade and industry, the last date for furnishing return in the form GSTR-3B for the month of September 2018 is being extended up to October 25, 2018,” it added.
‘Too late’
However, tax experts say that the deadline extension has come too late as it was announced a day after the original deadline elapsed.
“While the businesses, who could not file the return by the 20th, can avail the extension, this doesn’t really help most large firms who would have already filed their return by working overtime,” Pratik Jain, partner and leader, indirect tax, PwC India, said.
“Since there is no facility for amendment of the return, these firms cannot claim the credit which they might have missed,” he noted. “To provide relief to industry, the government should at least extend the due date till November 20, so that credit can be claimed in October return,” Mr. Jain added.
Ten local exporters may face anti-circumvention duty on export of synthetic yarn to Turkey as the companies did not respond to an investigation initiated by the country in this connection. Turkish ministry of trade has recently issued the final notification report on circumvention investigation into alleged export of China-made synthetic yarn from Bangladesh and Nepal.
According to the report, 10 companies which are resident in Bangladesh or associated with the investigation did not respond to the investigation questionnaire in a duly and timely manner.
Only Well Mart Ltd provided necessary information and documents, and made cooperation, the report said.
Bangladesh Textile Mills Association leaders, however, said that the companies under investigation were not genuine spinners in the country. Turkey a few years back imposed anti-dumping duty on synthetic yarns and artificial staple fibre originated from China and some other countries.
In December 2017, the country initiated the anti-circumvention investigation against some traders of Bangladesh and Nepal who exported allegedly Chinese synthetic yarn and fibre using Bangladesh and Nepal as country of origin to avoid anti-dumping duty on the Chinese product imposed by Turkey.
In the investigation into the allegation, Turkey found that export of the product from Bangladesh increased to 3,510 tonnes in 2017 from 1,150 tonnes in 2015. The investigation team in an on–the-spot verification in July 9-10 this year found the information provided by the Well Mart Ltd authentic and did not perform any act to invalidate the measure. On the other hand, the remaining companies did not cooperate in the investigation and did not provide any information stating that they performed manufacturing, the report said.
The investigation team forwarded the report to the Board of Evaluation of Unfair Competition in Importation of Turkey to take final decision on the issue.
Members and officials of the Bangladesh Textile Mills Association said that Turkish authorities did not provide the names of the companies to the association. They said that they had information that some four to five China and Hong Kong-based companies having business in Bangladesh were doing such fraudulence. They don’t have spinning mills in Bangladesh but are exporting the product to Turkey after importing it from China, they said. No one of them is member of BTMA, they said. BTMA director, also managing director of Little Star Spinning Mills Ltd, Mohd Khorshed Alam told New Age that genuine Bangladeshi exporters were conducting export activities after taking endorsement from Turkey embassy in Dhaka, Bangladesh commerce and foreign ministries. So, the Turkish move will not hamper business of any guanine spinners in Bangladesh, he said.
According to the report by Kotak Economic Research, the focus of the Monetary Policy Committee (MPC) remains purely on inflation print, which is expected to remain benign ( 3-4.4 percent) in the second half of 2018-19.
The Reserve Bank of India is expected to keep key policy rates unchanged in the remaining 2018-19 fiscal as inflation may stay ‘benign’ in the range of 3 to 4.4 percent, says a report.
According to the report by Kotak Economic Research, the focus of the Monetary Policy Committee (MPC) remains purely on inflation print, which is expected to remain benign ( 3-4.4 percent) in the second half of 2018-19.
“We thus see limited scope for rate hikes in the rest of 2018-19,” the report added.
In the policy review meet earlier this month, majority of RBI’s six-member MPC, including Governor Urjit R Patel, favoured to keep the key repo rate unchanged as part of “calibrated tightening” to keep retail inflation at 4 percent.
The minutes reaffirmed our view post the October policy and the September CPI inflation print, that the RBI will possibly stay on hold for the rest of 2018-19,” the report said.
It however added that upside risks to inflation still exist owing to pass-through of MSPs, elevated crude oil prices, volatility in global financial markets, hardening of input prices amid rupee weakness and staggered impact of HRA increases by states and its second-round impact.
“However, the seemingly structurally benign food inflation along with softening growth should help in capping the upside pressures, thereby providing RBI the comfort of staying on pause mode in the foreseeable future,” it said. During its October monetary policy review, RBI kept the key repo rate unchanged at 6.50 percent.
