Vietnam threatened with loss of Hong Kong business unless order is restored
Lawmaker representing textile and garment sector says firms may withhold further investment until protests are quelled
Hong Kong investors in Vietnam may put their expansion plans on hold until Vietnamese authorities show that they have the ability to maintain order in the light of anti-China protests there, businessman and lawmaker Felix Chung Kwok-pan said on Monday.
And at least one has already done so, the lawmaker representing the textile and garment sector told a radio show.
Chung said that one Hong Kong businessman who has invested US$300 million in Vietnam is holding off on injecting another US$100 million to see how the situation unfolds. But Chung did not provide any more details about the business in question.
About 3,000 Chinese nationals have already been evacuated from Vietnam, following deadly rioting sparked by anger over Chinese oil drilling in a disputed area of the South China Sea.
The violence was triggered by China’s positioning of a US$1 billion oil rig in a part of the South China Sea claimed by Hanoi. It is the worst breakdown in ties between the two Communist neighbours since a short border war in 1979.
“In the short term, I believe that whether businessmen will expand their investments there will depend on how the government handles [the protests],” Chung said.
Many Hong Kong businesses started to open up factories in Vietnam a decade ago because wages there were cheap – and they still are.
At present, a worker in Vietnam gets paid an avergae of US$200 to US$300 a month, compared to US$600 to US$700 on the mainland.
Manufacturing and exports accounted for 75 per cent of Vietnam’s economy in 2012, up from 56 per cent in 2009. The bulk of that manufacturing was funded by foreign investment.
China was the ninth largest foreign investor in Vietnam last year, putting in US$6.94 billion, mostly in manufacturing and infrastructure, according to Vietnam’s ministry of finance. Taiwan is the fourth biggest investor, while Hong Kong is sixth.