V I E T N A M      U P D A T E


October  30, 2002                                                      Vol.5:2002

Global Standards accredited WRAP monitors

Global Standards - Toan Tin has become the newest accredited Independent Monitor for WRAP (Worldwide Responsible Apparel Production).  As the first local monitors for WRAP in Vietnam, we will be working to raise awareness among local factories of how WRAP Certification can help to improve working conditions and meet the compliance standards of US buyers.

WRAP Certification offers local factories an opportunity to be proactive in implementing compliance and documentation systems to meet international norms and compete in global markets supplying to US and multinational brands. WRAP Certification is supported by more than 700 member companies of the American Apparel and Footwear Association.

For Global Standards WRAP Certification offers a chance to work more closely with local factories interested in improving standards in the workplace. These efforts are intended to expand on and complement our ongoing work in Independent Monitoring for the Fair Labor Association (FLA) and providing training and consulting.


Global Standards to attend BSR Conference

Global Standards will attend the annual BSR Conference in Miami, November 5th to 8th. 

We will also attend the parallel Fair Labor Association Open Forum on November 7.

We are looking forward to the opportunity to meet with FLA stakeholders and other attendees. 

For those who have not had a chance to visit our office in Vietnam or meet face-to-face, if you would like to schedule time to meet during BSR, please drop us an email at BSR@Global-Standards.com.


News Briefs

HCM City shopping center blaze kills at least 59, injures 120

At least 59 people were killed and 120 injured when a blaze broke out at a five-story shopping center in downtown HCM City on Tuesday afternoon.

Witnesses said the fire broke out at 1.45pm on the second floor of the Saigon International Trade Center at 95-101 Nam Ky Khoi Nghia Street in District 1, when the building was crowded with visitors. 

Many people were injured when they tried to escape the inferno by jumping out of the building.

Despite the large number of fire-fighters, strong winds helped the flames to spread quickly to the upper floors of the building and the fire was not brought under control until 5pm.

According to lieutenant colonel Le Tan Buu, deputy chief of the Fire Police Division and chief of the HCM City Fire-fighting Force, three police rescue teams were sent to the site to conduct search and rescue activities shortly after the fire was extinguished. He said he feared the death toll could rise following the search. 

The cause of the fire is not yet known, but initial reports point to a short circuit.

At the time, an American life insurance company, AIA, was holding a training course for about 147 people on the fifth floor. 
Some 56 fire engines and ambulances were sent to the site, including a 34m ladder and fire engines from Tan Son Nhat Airport and the city’s military units. 

The trade centre (called the Crystal Palace before 1975), was opened in 1996 and houses hundreds of shops, representative offices, restaurants and night-clubs.

The fire is the largest in HCM City this year. The city has had 147 fires this year, killing 14 people and causing about VND21 billion (US$1.36 million) in damage. 

Statistics from the HCM City Fire Department showed that electrical problems were the main cause of at least 50 per cent of the fires.

Buu said many of the fire victims had not paid heed to fire regulations and their properties had housed large volumes of flammable materials such as paper and wood. 

A recent department survey found that about 50 percent of houses in HCM City are vulnerable to fire, especially in districts 6,8, 11, Tan Binh and Binh Thanh. 


Korean companies warned to avoid strikes

Meeting with representatives from the consulate general of the Republic of Korea in HCM City last week, the Vice President of the HCM City Confederation of Labor, Mai Duc Chinh said Korean enterprises must strictly abide by Vietnam’s Labor Code to avoid worker strikes. 

So far this year, workers have gone on strike at three Korean-owned enterprises, saying their employers have repeatedly violated the labor law by not signing labor contracts, misappropriating social securities, extending shifts without overtime payment and delaying payments of salaries and wages. 

The Korean Consul for Labor, Jeong Soon Min, proposed regular meetings with the Labor Confederation to exchange information and find ways to prevent labor disputes at Korean-owned enterprises.


Hundreds poisoned in incident at footwear factory

One worker died and more than 150 others were hospitalized for poisoning following an incident at the Nam Kang Shoe Factory in Binh Duong last week.

Local media reported that the worker who died was a 24-yeal-old woman from Binh Phuoc Province, who had recently suffered from hepatitis. Other workers suffered from symptoms including dizziness, nausea, burning eyes and difficulty breathing.

The incident is under investigation, but has been linked to the use of the chemical formaldehyde, which had been sprayed on leather stocks earlier that day. Dr. Le Minh Hao, vice director of Binh Duong Center of Preventive Medicine, said formaldehyde can cause poisoning in high concentrations when used with poor ventilation.


Social Insurance enforcement tightened as new rules debated

HCM City authorities have called for greater powers to raise fines and punish businesses which do not make social insurance payments for workers. As part of a crackdown on delinquent businesses, a work team has launched a seven-month inspection program of 61 enterprises in the city.

"It’s important to check social insurance payments. The Ministry of Labour, Invalids and Social Affairs has demanded that severe violations of social insurance regulations must incur stricter punishment," said Nguyen Kim Ly, deputy director of the municipal Department of Labour, Invalids and Social Affairs and head of the working team.

Among the 28 enterprises caught avoiding payments, 19 have pledged to pay off their debts, worth up to VND3.2 billion (US$210,000), by this month, according to HCM City Social Insurer.

The insurer said some enterprises have begun to pay their debts, but some of the more severe violators have not paid social insurance for several years.
Social Insurance has received more attention of late as the government has sought feedback on a new draft Social Insurance Law. 

At a recent seminar on the topic hosted by the Vietnam Chamber of Commerce and Industry in HCM City, Bui Ngoc Thanh, deputy head of the National Assembly Commission for Social Issues, said the social insurance issue had become a major concern for the most workers.

The insurance fund set up from workers’ and employers’ contributions has grown, from VND2,570 billion in 1996 to VND5,115 billion last year. This fund is expected to reach VND6,000 billion this year.
Thanh said social insurance helped provide financial stability to workers’ lives, particularly since 1995 when Vietnam instituted a State-run social insurance organization.

But the participants noted that the number of social insurance participants remains low. Only 4.1 million workers out of an estimated workforce of 39 million participate in social insurance.

"We should have clearer regulations on subsidies for workplace accidents," said Mai Van Hien, director of X32 Shoe Making Company, complaining it was unfair to make enterprises pay subsidies for workers who were injured on the way to and from work. "We should decree that ‘workplace accidents’ are accidents that happen at work, not accidents that happen on journeys to and from work."

Nguyen Duc Hoan, chairman of the HCM City Textile-Garment Embroidery-Knitting Association, said: "In my opinion we should temporarily exclude insurance for unemployment from the Social Insurance Law because our labor management situation is not very stable."

Hoan also proposed a change in the fee structures for each enterprise. Under current regulations, employers contribute 15 per cent and employees pay 5 per cent of the insurance fee.


Vietnam shows commitment to health and safety at APOSHO 18

Vietnam’s occupational safety and hygiene procedures are improving, according to the director of International Labor Organisation (ILO) office in Hanoi, Rosemarie Greve.

Speaking at the recent 18th Asia-Pacific Occupational Safety and Hygiene Organisation (APOSHO 18) in Hanoi, she said Vietnam and other Asian countries faced many problems in occupational safety and hygiene, including safety in agricultural production and pneumoconiosis.

She said the annual Week of Labor Safety and Hygiene had effectively helped employees, employers and the Government to pay more attention to ensuring labor safety and hygiene. Greve said Vietnamese Vice-President Truong My Hoa’s attendance at APOSHO-18 illustrated the Government’s commitment to health and safety.

Greve also praised Vietnam’s information database and CD ROMs about occupational safety and hygiene - developed by the Ministry of Labor, War Invalids and Social Affairs, the Health Ministry and the Vietnam General Confederation of Labor. In support of these efforts, the ILO will be introducing its occupational safety and hygiene management system to Vietnam to assist local businesses. 

Founded in 1985, APOSHO gathers 31 non-governmental organisations and non-profit agencies from over from 25 countries and territories. Vietnam’s Labor Protection and Science Technology Institute, under the General Confederation of Labor, joined APOSHO in 1994.


Gas cylinder blasts cause more casualties

Despite doctors’ best efforts, Mai Van Liem exhaled his last breath just one day after being caught in the blast from an exploding gas cylinder.

His co-worker Tran Van Han also lost his life to the explosion, which happened earlier this month at their workplace, an electric repair shop in HCM City’s District 5.

The same week, a gas cylinder explosion in the southern province of Binh Phuoc, Bu Dang District, injured another six people, all suffered serious burns and were later rushed to HCM City’s Cho Ray hospital. 

Doctors at the hospital reported that fatal accidents caused by exploding gas cylinders were on the rise. In most cases, the victims are either killed or permanently disabled. An industrial-sized gas cylinder blast at an electric welding shop recently killed five people and seriously injured 10 others.

According to Lieutenant Colonel Le Dinh Dung, from HCM City’s Fire Fighting Police Department, the major cause of most explosions was the reuse of second-hand cylinders. Also many operators are not trained in the safe use of gas cylinders, particularly industrial-sized cylinders.

Officials at HCM City’s Labor Protection Research Institute said industrial-sized gas cylinders are governed by official labor safety regulations. A circular from the Ministry of Labor, Invalids, and Social Affairs from November 1996 stipulates operators should receive safety training, but regulations requiring operators to get a permit from the ministry have not been enforced. 

Tran Hong Hai, the deputy head of the municipal labor safety inspection board said the number of people using second-hand gas cylinders without safety checks was alarming, but that his board didn’t have enough staff to investigate the matter.

Second-hand gas cylinders are available for sale in Tan Binh District’s Ly Thuong Kiet Street. Often these are refurbished and resold as new. 

A recent survey by the HCM City Safety Verification Centre found that a third of gas cylinders used in the city are not checked every five years, as required by government safety regulations. The centre’s director, Nguyen Ba Kiet, warned of increasing explosions unless the Government exercises tighter control over sales and use of the cylinders.


Vietnam Coffee Growers find hope in OXFAM Fair Trade campaign

Improvements in the price of coffee beans are giving hope to Vietnamese farmers who have suffered steady losses over the last five years. 

Coffee growers faced lean times last year as oversupply on world markets saw prices plunge but Vietnam's coffee growers say their fate is changing thanks, in part, to a campaign by Oxfam America. 

Oxfam is calling for the adoption of a new plan put forward by the International Coffee Organization to take some lower-grade beans off the market and require the top four coffee roasting multinationals, which dominate the world market, to pay a fair price for the beans. 

It says world coffee prices are at a 30-year low because 8 percent more coffee is being produced than consumed. It says multinational coffee companies are making large profits by charging consumers in rich countries 1,500 percent more than farmers in poor countries are paid for their beans. 

Coffee prices on the world market average $1.10 a kilogram, while production cost is around $1.76. 
"The worst may be over for embattled coffee growers like us, with prices finally rising off record lows," said Nguyen Trong, owner of nearly 20 hectares of coffee plantation in Dak Lak province in the country's central highlands. 

"The surging prices are due to the increase of coffee prices in the world market and the decrease of the country's coffee output," said Chairman of the Vietnam Coffee and Cocoa Association (Vicofa) Doan Trieu Nhan. 

He added that the increase of coffee prices in the world market could be seen as early signs that Oxfam's campaign to tackle low prices is working. 

"The Oxfam scheme is positive as it truly reflects the current coffee market situation, taking into account the livelihoods of farmers and producers," Nhan said, adding that Vietnamese coffee growers have heartily welcomed the scheme. 

For farmers who have made the switch from farming low-grade Robusta bean to high-grade high-yield Arabica, the investment is now beginning to pay off. But for many others who still farm low-grade beans, the pick up in world coffee price has still some distance to go before they see their fortunes turn around. 
Vietnam is today the world's second largest coffee grower and the largest grower of Robusta. 

"Farmers in developing countries such as Vietnam are now selling their coffee beans for much less than they cost to produce, and they deserve more of the industry's profits,” Nhan said. 

The 2001-2002 crops have recorded the highest output ever reached in Vietnam, but coffee prices were on average half of those of the 1999-2000 crops. Although production rose 40 percent, export turnover is less than 70 percent of the 1999-2000 crops. The Ministry of Agriculture and Rural Development has offered coffee growers extra funding and exemption from paying land-use taxes. 

But growers in the largest coffee-producing province, Daklak, say the industry's problems can only be solved if bean prices rise above production costs, which currently stand at $530 to $600 per tonne. Hit by a worldwide drop in coffee prices, Vietnamese companies are exporting coffee at $300 per tonne which means farmers are getting an even lower price when export companies buy their produce. 

In the past decade, Vietnam has become one of the world's largest coffee exporters and the largest producer of low-quality Robusta beans, and for this reason rival coffee producers point to Vietnam's growth in Robusta exports as triggering the world price fall. 

To save the failing coffee market, Oxfam has called on coffee companies to pay farmers a higher price for their crops by reducing the supply and stocks of coffee on the market. Oxfam is also asking for the creation of a fund to help poor farmers shift to alternative crops and livelihoods. 

"Governments, companies and producers should manage the market to ensure supply does not overshoot demand and support producers to process their crops so they get more money," said Oxfam in its report, "Mugged: Poverty in Your Coffee Cup," released last month. 

According to Oxfam, 25 million families worldwide depend on the income that farming coffee brings in. 
Local economists forecast that Vietnam's coffee prices will increase only slightly this year because of large stockpiles, but prices are expected to rise quickly after 2003 due to a sharp reduction in coffee output and productivity. 

"We are not too optimistic, although the hard times are over," said Nguyen Trong. "Prices rises are encouraging, but they depend too much on the world markets that remain volatile and complex," he concluded. 


VBLI promotes worker safety in the footwear industry

The Vietnam Footwear Industry-Business Links Initiative is the first programme to address worker safety in the footwear industry and is a joint effort between the Vietnam Chamber of Commerce and Industry, the Prince of Wales International Business Leaders Forum and 21 domestic, International and non-government organisations. Supporting companies include Adidas, Nike and Pentland. Vietnam News interviewed the project's technical adviser, Niall Middlehurst, Adidas-Salomon's senior manager of social and environmental affairs.

  Q: What is the objective of the project?

Initially, our objective was to deal with the use of hazardous and harmful chemicals in the footwear industry in Vietnam. We have since gone into more general health, safety and other issues such as noise, pollution, dust and worker training.
One of the things we wanted to do was to co-ordinate some form of documentation or standard we could use in many factories in Vietnam that wasn't tied to any one brand or way of thinking.

The second objective was to provide training. This sort 'of project will never work unless senior management is committed, so we sculpted our training from factory management down to line leaders and developed a training package along those lines.
We conducted research to see what is happening in the industry, to get some facts and find out what other things need to be done.

It was a three-pronged attack really: looking at documents, training and research, as well as visiting factories and developing pilot projects.

  Q: Have you achieved the objective of the project?

We have the manual for the management support system, which covers various aspects of occupational health and safety from handling chemicals, extraction systems, handling materials and machinery guarding, to electricity.
We have conducted some training courses in Hanoi, Hai Phong and HCM City.

Now we're at the level of training line leaders and supervisors, and we have gone from trying to introduce a system to having factories ask us to come and provide training on basic health and safety.

Several research projects have been carried out. They've come up with some very interesting information and increased people's awareness about health and safety, particularly for foreign companies and buyers.

It's not just the company these days, but the consumer. If they think factories are badly managed, they will stop buying.

  Q: How do the health and safety aspects of Vietnam's leather and footwear industry compare to the rest of the world?

A lot of issues need to be corrected in the footwear industry. There are a lot of older factories that have old equipment and old machinery, which do not have the safeguards of modern machinery.

The country has health and safety legislation but people are not very aware of it.

There are not enough people from the Government to monitor the industry or watch the factories and the standard of working conditions. One of the problems with the legislation is that it is not very clear, and a lot of laws are hidden within other documents.

Managers just don't have the time to search around in all these documents.

There is also a lack of awareness among the workers themselves. Everybody has the right to know the dangers of their work and what is being done to protect them.

Workers saying "This is dangerous, how can we change it?" is one of the bases of a lot of Western worker health and safety law.

  Q: What is the best way for Vietnam to improve its health and safely conditions?

We need to turn everybody into health and safety experts. There is a world of risk most people face on the street every day, and we need. to raise the awareness of danger to develop a safety culture within the factories.
Many people who are in contact with machines, electricity and chemicals can become unsafe because nobody believes an accident will ever happen to them.

In a safety culture, people will realise that accidents can happen to them and they will begin handling chemicals correctly. As it's the government that creates the law, they really should be the permanent and principal monitoring agent.

In the UK, unions are heavily involved in health and safety, and we have representatives who do special training courses to learn health and safety by heart.

This means you have another channel of information in the workplace, apart from workers and managers.
And finally we have the factory itself, which has a duty to look after workers.

  Q: Do you think overseas companies with factories in Vietnam take advantage of our weak occupational health and safety laws?

I won't say they take advantage of Vietnam's weak occupational health and safety conditions, but some do nothing to change it.

Some companies come in and think exactly the opposite, they buy more equipment of an overseas standard and in some cases they are forced to improve the standard of health and safety by themselves.

Things could change very rapidly if there were inspections of occupational health and safety. There is no pressure for them to improve the situation, and many foreign companies may not understand what the laws are here.


Oxfam campaigns for Fair Trade in Coffee

The full report Mugged: Poverty in your coffee cup on the global coffee industry and Oxfam’s Fair Trade initiatives (mentioned in News Briefs above) is available online at: http://www.maketradefair.com/stylesheet.asp?file=16092002163229.

ADB-ILO Workshop on Labor Standards in Asia

The ADB and ILO held a joint Regional Technical Workshop on Labor Standards last month at the ADB Headquarters, in Manila, Philippines. Representatives from the Governments of Bangladesh, Nepal, Philippines, and Thailand, labor and employer organizations, labor/research institutes, social accountability/standard organizations, NGOs, international aid agencies, ILO and ADB staff participated.

Participants discussed the role of labor standards in broad based development, namely, those related to child labor, occupational health and safety and gender discrimination at work. 

The workshop recommended that Governments, ADB, and ILO:
·  highlight labor standards in policy dialogue with governments 
·  improve labor standards by designing projects to address child labor, occupational safety, workplace discrimination and eliminate bonded labor 
·  strengthen monitoring of working conditions in the region 
·  develop capacity building and awareness raising activities to improve labor standards 

More information on the workshop and a collection of reports and presentations are available at:


UNIDO Report on CSR in Developing Countries 

UNIDO has published a report entitled Corporate Social Responsibility: Implications for Small and Medium Enterprises in Developing Countries which is available on their web site.

Corporate Social Responsibility (CSR) is a process that has been driven by globalization, deregulation and privatisation. For Trans National Corporations (TNCs) it is an outcome of public pressure arising from their operations in developing countries in relation to human rights, environmental pollution and labour issues. CSR is now being discussed and debated in the public policy sphere - the UK has a Minister for Corporate Social Responsibility. 

To date, CSR has been a Northern phenomenon in terms of its language and strategy. However, according to a UNIDO study entitled Corporate Social Responsibility: Implications for Small and Medium Enterprises in Developing Countries, "there is an abundance of evidence that ‘silent’ CSR is thriving in developing countries, albeit under a different name and with a different approach. There are some concerns that CSR has not focused enough on addressing issues of poverty, but the emergence of new partnerships with aid agencies, the UN and NGOs offers the opportunity to refocus that approach. In particular the role of business associations, both mainstream and those from the CSR movement, have an important part to play in creating a multiplier effect. 

In his foreword to the study, UNIDO Director- General Carlos Magariños, says "It would seem to me that it is the task of the UN system to turn CSR from a Northern preoccupation into a truly global agenda; from a potential dividing force into a unifying framework for development. Generating wealth in a manner that is socially and environmentally responsible, and thus sustainable, must be a common goal of the international community". The Director- General also refers to a question the study holds as central to the future of CSR in the developing countries: "Is there a business case for smaller companies to adopt good CSR practices?”

UNIDO’s CSR Agenda for Action can be viewed at  http://www.unido.org/doc/511808.htmls

The full report is available for download at  http://www.unido.org/userfiles/PuffK/corporate%20social%20responsibility.pdf


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


Resources on CSR, labor standards and the Vietnamese Labor Code are available at http://www.global-standards.com/DownloadResources.htm.  


This newsletter is sent free of charge to clients, friends and subscribers by Global Standards.

It is intended for informational use only and should not be relied upon as legal advice.  Should you have questions about specific situations or the application of particular laws, regulations or standards, please contact Global Standards or your legal counsel.  

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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