V I E T N A M  U P D A T E


 July 25, 2002                                                       Vol. 3:2002



News Briefs:


Monthly income on the rise for Vietnamese workers

Vietnamese employees in state-owned sector earned an average of 968,500 Vietnamese Dong (VND)(US$63.3) a month in the first half of this year, a year-on-year increase of 8.6 percent, according to a latest report of Vietnam General Statistics Office.

The staff of national level state-owned enterprises (SOE's) received some VND1.28 million (US$83.7) a month while those of provincial and city level SOE's received VND742,000 (US$48.5), up 11.2 percent and 4.6 percent respectively. 

Monthly incomes topped the VND1 million mark (US$65.4) in a number of industries including banking, utilities, mining, transport and communications, investment consulting and processing industries (where wages rose by 8.1 per cent to an average of VND 1.07 million  or US$69.9).

Vietnam's strong economic performance in recent years has helped lift incomes and reduce poverty, the Ministry of Science, Technology and the Environment (MOSTE) reported.  Between 1992 and 2000, the country's poverty rate was cut in half, from 30 percent in 1992 to just 14 percent in 2000.

Fatal accidents mount during the first half

During the first half of 2002, Vietnam recorded thirteen fatalities among coal miners in the northern Vietnamese province of Quang Ninh. The thirteen miners were killed in eight separate accidents from January through June in Quanh Ninh, 250 kilometers north of Hanoi, according to local news reports.

Quang Ninh produces the majority of Vietnamís coal in an industry plagued by fatal accidents. The industry recorded some ten fatalities during the same period of last year. 

In mid July, two workers were killed in a boiler explosion which tore the roof off the Viet Nga paper mill in the northern Vietnamese province of Bac Giang.

However the leading cause of death among workers nationwide remains traffic accidents on the way to and from work. In 2001, a total of 10,548 people died and 30,175 were injured in traffic accidents.

This year the death toll from traffic accidents continues to accelerate with over 6,600 people killed and around 16,400 injured during the first half of 2002. The number of fatalities has grown by more than 30 per cent since 2000, driven by growing numbers of motorbikes on local highways.


HCM City Blacklists 260 polluters for relocation

Some 260 inner-city polluters have been targeted for relocation to industrial parks or outlying districts by 2004, Ho Chi Minh City administrators announced, with financial incentives to be offered for early relocation.

This year's top 10 target companies for relocation include Saigon Tobacco Factory, Vinh Hoi Tobacco Factory, Molding Enterprise No. 1, Binh Loi Leather Enterprise, and Hung Thai Tanning Enterprise Ba Thang Hai Pig Breeding Enterprise, Phuoc Long Pig Farming Enterprise, Vissan, Viet Long Frozen Food Enterprise and Go Vap Glass Enterprise. 

Companies relocating will be offered low-interest loans and incentives on land rental, corporate income tax, import tariffs, and given preferential treatment in land allocation. 

The city government also plans to announce a list of industries that will be banned from residential areas this year, including chemicals, paper, rubber, metals, plastic recycling, cattle farming, and food processing.

The City faces a serious pollution problem from its estimated 28,000 factories, with airborne dust content exceeding Vietnamese standards by 2.1-6 times and lead content reaching 1.4-3.4 times WHO standards. Inadequate waste and wastewater treatment systems add to the Cityís pollution woes.


Footwear Exports Boom

Vietnam exported more than US$860 million in footwear during the first five months of the year, ranking the industry among the countryís top five export earners, behind crude oil, garments and fisheries.

Footwear exports grew by more than 10 per cent year on year, Vietnam News reported, putting the country on track to beat the annual target of $1 billion in exports set by the Leather and Footwear Association.

Currently the Association includes some 233 footwear producers, including 76 State-owned, 80 private and 77 foreign-invested firms, with an estimated capacity of around 420 million pairs per year, of which foreign-invested enterprises account for almost half. 

Vietnam is now the eighth-largest shoe producer worldwide and fourth-largest exporter after mainland China, Hong Kong and Italy. 

The European Union accounts for the lionís share of Vietnamís footwear exports, with almost 80 per cent. Official news reports put footwear exports to the EU at US$741.4 million during the first half. Trade Ministry figures showed Vietnam exporting over 126.5 million pairs of footwear to the EU.


Vinatex plans 10 major new textile & garment complexes

Officials from the Vietnam National Garment and Textile Corporation (Vinatex) unveiled ambitious plans for 10 new garment and textile industrial complexes in July, calling for cooperation with foreign investors to help the country meet its target of US$4 billion in exports by 2005.

Authorities see the new complexes, stretching from the northern Hung Yen province to the southern provinces of Dong Nai, Binh Duong and Long An, as vital if Vietnam is to become a major player in international markets.

Vinatex is now seeking government backing for their industry blueprint and have called for the complexes to be given preferential treatment like that given to industrial zones as well as free land, roads and other infrastructure.

As part of this plan, the Vietnam Garment and Textile Corporation (Vinatex) recently broke ground on a major textile and dyeing complex in the central city of Danang.


The VND641 billion (US$42 million) Son Tra complex, will be among the country's largest, comprised of three facilities for textile making, dyeing and water treatment, with an installed annual capacity of 15 million meters of fabric, while the dyeing factory will turn out 25 million meters of fabric per year. 

Textile and garment products, which yielded $990 million in the past six months, rank as the countryís second biggest foreign currency earner, after crude oil.


Vietnam currently imports between 400-500 million meters of fabric per year.



Vietnam establishes fund for redundant workers at SOEs

The Vietnamese government has announced the establishment of a fund to support workers laid off or retired from state-owned enterprises in the course of restructuring.

The fund is capitalized at an estimated VND6 trillion (US$400 million) from the state, organizations and individuals, the VNA reported. The fund will provide financial support for redundant workers and assist them in finding new jobs. 

It will provide funds for enterprises targeted for restructuring and cover allowances for redundant employees. The fund will also finance vocational training centers to retrain the laid-off workers. The fund will also assist workers from dissolved and bankrupt enterprises employed before April 26, 2002.

There are currently some 5,655 state-owned enterprises under various ministries and provinces and 487 under political and social organizations. Of these, less than 40 percent are reported to be profitable.


World Bank studies CSR in VN's footwear industry


Following a mission to Vietnam in early June, as part of a multi-country technical assistance program, the World Bank has drafted a program to review progress on Corporate Social Responsibility (CSR) in Vietnamís footwear industry and use this as a model for other industries and other countries.  The program is scheduled to start in September.

The following are some excerpts from the draft report, ďCorporate Social Responsibility in Vietnam: The athletic shoe industry and labor issues.Ē

...The mission focused on the footwear industry as an entry point to the CSR debate in Vietnam, because consumer concern over poor working conditions in the global footwear industry in the past has led to improvements by manufacturers working with the high profile global brand companies. The mission wanted to explore whether these improvements could be extended to domestic enterprises that are not yet linked into global markets, and what this industryís experience implies for other priority export sectors in Vietnam.

The missionís purpose was to undertake a preliminary diagnostic of 1) labor issues in the footwear industry, 2) national legislative responses to those issues and the role that public authorities might play in encouraging related CSR activities, and 3) the potential broader application of these lessons to national development strategy. 

The mission listened extensively to the views of stakeholders: the public authorities, vendor factories, footwear multinational corporations and relevant business associations, relevant NGOs and mass organizations, official donor representatives and multilateral organizations active in this area...

...The CSR debate in Vietnam is especially focused on foreign companies and their supply chains, on corporate codes of conduct and certification processes, such as SA 8000 and FLA. The focus of domestic firms vying for business with foreign firms is therefore not on compliance, but on which code or standard they should adopt. The world of CSR codes and certification is competitive, with companies able to choose the standard they will seek, based on their estimation of the market benefits that may accrue. 

The standards embodied in these codes largely conform to Vietnamís labor law, providing an opportunity to create a dynamic link between the aspirations underpinning national legislation on the one hand, and CSR incentives for improvement on the other. Failure to comply with relevant CSR standards has a potential market sanction. Public authorities should not seek to impose one particular CSR standard, but can instead encourage this range of market-driven mechanisms and identify incentives to help ensure that its own legislative standards are implemented in cost-effective ways, and even ratcheted up as a result of market incentivesÖ

...More detailed understanding of evidence from Vietnamís footwear industry will undoubtedly have relevance for other export sectors and for FDI strategy. 

The proposed technical assistance over a 12 month period is intended to generate evidence of the benefits of encouraging CSR, and to deepen understanding of optimal government roles in creating an enabling CSR environment. Government can use that footwear sector experience to look more broadly at CSR across the economy, and the role it can play in boosting national competitiveness. 



Vietnam Business Links Initiative (VBLI)


A program that has been active for several years in raising standards in health and safety in the footwear industry in Vietnam is the Vietnam Business Links Initiative (VBLI) sponsored by the International Business Leaders Forum (IBLF) and Britain's Department for International Development (DFID).  


Working in conjunction with the Vietnam Chamber of Commerce and Industry (VCCI) and participating companies including adidas, Nike and Pentland, VBLI has worked to raise awareness and improve the work environment in factories across the footwear industry.


For more information on VBLI and IBLF and their programs and activities, please visit the following links:


IBLF & VBLI:   http://www.iblf.org/csr/csrwebassist.nsf/content/f1c2b3a4b5a6.html


VCCI & VBLI:  http://www.vcci.com.vn/vbli/



Labor Code Amendments Online


The full text of the amendments to Vietnam's Labor Code, which will take effect from January 2003, is now available in an English translation provided by the law firm Phillips Fox.  This is available online courtesy of the US Vietnam Trade Council web site at the following location:


Vietnam Labor Code Amendments, April 2002 (pdf format) :



Also on this site, is a background report prepared by the Congressional Research Service (CRS), which will likely serve as a springboard for debate on the Garment and Textile Agreement between the US and Vietnam and the potential linkage of quota with labor standards.  This report is available at:

Vietnamís Labor Rights Regime: An Assessment (pdf format) :


Additional resources on this topic are available on the USVTC web site at http://www.usvtc.org/Labor/labor_issues.htm.


Links to other reports and resources are available from the Global Standards web site at http://www.global-standards.com/Links.htm.




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News Briefs are compiled from news reports and dispatches.  While the information they contain comes from published news sources, Global Standards cannot verify the accuracy of all information contained.


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