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 › FIEs grumble about labor shortage, power cuts
 Updated: 7 / 16 / 2010

apanese investors say they have been impressed by the changes in Vietnam’s investment policies, but they are also worried about labor shortages and electricity cuts across the country.

“After last year’s fact-finding trip to Vietnam, many businesses have considered investments in Vietnam,” revealed Investment and Tourism Division of Aichi province Director Masanori Ito.

Production recovery in foreign-invested enterprises can be seen in the export revenue increase of 39.5 percent in the first six months of 2010.

Labor shortage

Vietnam has clearly become a destination for many Japanese investors. In the first half of 2010, Japanese investors registered investment capital totaling 1.22 billion in Vietnam. Japan now ranks fourth among foreign investors in terms of disbursement, according to Foreign Investment Agency Head Do Nhat Hoang.

While “believing in the policies of Vietnam,” Ito admitted that Japanese investors still have many worries.

“The labor shortage is the most burning issue, occurring not only in the southern provinces, but also the north,” commented Koichi Takano from the Japan External Trade Organisation (JETRO).

Labor shortages do still pop up across Vietnam, even with 48 million people of working age and 1-1.2 million people joining the labor force every year.

“It is necessary to establish more vocational centres and set up policies to encourage workers to move from villages to big cities,” Mr Takano suggested.

In response, Le Xuan Thanh, a senior official from the Ministry of Labour, War Invalids and Social Affairs, argued that Vietnam has been very ‘open’ in allowing workers to move from rural to urban areas for work. The State has also spent 10 billion dong on a long-term program to train laborers.

The number of labor disputes has also risen.

“It is a real problem that the number of strikes has not decreased. As far as I know, in the last several months, 5-6 strikes occurred, especially in June,” estimated Koichi Takano.

“Some large strikes in China recently caused big losses for Japanese companies and the country’s Government worries that enterprises will move to other countries to make investment,” the JETRO’s representative said, implying that any such moves would be to Vietnam.

Electricity cut – the burning issue

Japanese enterprises have most especially complained about power cuts.

“They (EVN) said they would cut power, but they did not. Then, several days later, they cut power without giving advance notice,” Mr Takano criticized, citing the many complaints sent to JETRO.

“As a production company, we need to be informed in advance about power outages so that we can form reasonable production plans. The Ministry of Planning and Investment needs to have a say in this,” he protested.

Kazuo Sato from Inuoe Vietnam Company calculated that the total time of power outages thus far is about 200 hours.

Deputy Director of the Foreign Investment Agency Nguyen Noi pointed out that the volume of commercial electricity has increased by two-fold in comparison with the GDP growth rate, but Vietnam still lacks enough electricity for production firms.

“The Government is trying to settle the problem. It is now calling for investment under the mode of BOT (built-operation-transfer) for power sector projects,” he revealed. “Some power plants with very big investment are being considered, and once they become operational, they will help reduce the difficulties caused by the power shortage.”

TBKTVN

apanese investors say they have been impressed by the changes in Vietnam’s investment policies, but they are also worried about labor shortages and electricity cuts across the country.

“After last year’s fact-finding trip to Vietnam, many businesses have considered investments in Vietnam,” revealed Investment and Tourism Division of Aichi province Director Masanori Ito.

Production recovery in foreign-invested enterprises can be seen in the export revenue increase of 39.5 percent in the first six months of 2010.

Labor shortage

Vietnam has clearly become a destination for many Japanese investors. In the first half of 2010, Japanese investors registered investment capital totaling 1.22 billion in Vietnam. Japan now ranks fourth among foreign investors in terms of disbursement, according to Foreign Investment Agency Head Do Nhat Hoang.

While “believing in the policies of Vietnam,” Ito admitted that Japanese investors still have many worries.

“The labor shortage is the most burning issue, occurring not only in the southern provinces, but also the north,” commented Koichi Takano from the Japan External Trade Organisation (JETRO).

Labor shortages do still pop up across Vietnam, even with 48 million people of working age and 1-1.2 million people joining the labor force every year.

“It is necessary to establish more vocational centres and set up policies to encourage workers to move from villages to big cities,” Mr Takano suggested.

In response, Le Xuan Thanh, a senior official from the Ministry of Labour, War Invalids and Social Affairs, argued that Vietnam has been very ‘open’ in allowing workers to move from rural to urban areas for work. The State has also spent 10 billion dong on a long-term program to train laborers.

The number of labor disputes has also risen.

“It is a real problem that the number of strikes has not decreased. As far as I know, in the last several months, 5-6 strikes occurred, especially in June,” estimated Koichi Takano.

“Some large strikes in China recently caused big losses for Japanese companies and the country’s Government worries that enterprises will move to other countries to make investment,” the JETRO’s representative said, implying that any such moves would be to Vietnam.

Electricity cut – the burning issue

Japanese enterprises have most especially complained about power cuts.

“They (EVN) said they would cut power, but they did not. Then, several days later, they cut power without giving advance notice,” Mr Takano criticized, citing the many complaints sent to JETRO.

“As a production company, we need to be informed in advance about power outages so that we can form reasonable production plans. The Ministry of Planning and Investment needs to have a say in this,” he protested.

Kazuo Sato from Inuoe Vietnam Company calculated that the total time of power outages thus far is about 200 hours.

Deputy Director of the Foreign Investment Agency Nguyen Noi pointed out that the volume of commercial electricity has increased by two-fold in comparison with the GDP growth rate, but Vietnam still lacks enough electricity for production firms.

“The Government is trying to settle the problem. It is now calling for investment under the mode of BOT (built-operation-transfer) for power sector projects,” he revealed. “Some power plants with very big investment are being considered, and once they become operational, they will help reduce the difficulties caused by the power shortage.”

TBKTVN


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