Taiwanese companies are seeking cash compensation and interest-free loans from Vietnam’s government after hundreds of factories were damaged last month in violent anti-China protests in the Southeast Asian nation.
“For the factories which lost a lot, they are looking for more critical compensation,” Serena Liu, chairwoman of the Council of Taiwanese Chamber of Commerce in Vietnam, said in an interview in Hanoi today. “The government has to work harder. They have already showed their sincerity to solve the problem.”
Attacks on foreign-owned factories in southern and central Vietnam, following China’s placement of an oil rig in disputed waters off the Vietnamese coast, left three people dead and at least 140 injured and caused Chinese workers to flee. Companies including Formosa Chemicals & Fibre Corp., Headway Advanced Materials Inc. and Advanced International Multitech Co. had halted output then, raising concerns the riots would crimp global supply chains and hurt Vietnam’s economic growth.
The benchmark VN Index (VNINDEX) fell 0.4 percent at the close today. It dropped 2.8 percent in May, the biggest monthly decline in nine months. The dong has slipped 0.5 percent this year.
Vietnam Prime Minister Nguyen Tan Dung had on May 21 ordered government agencies to delay collection of taxes from companies that were hurt by the riot, and also exempt the firms from rent. Taiwan’s cabinet has said 408 of its companies were ransacked by protesters and 24 facilities set on fire, with total losses estimated at as much as $500 million.
South Korean companies are also asking for low-interest loans and exemption of tariffs on raw-material imports as compensation, said Kim Jung In, chair of the Korea Chamber of Business in Vietnam, at an investor conference in Hanoi today.
Vietnamese authorities acted quickly and “we can assure that there won’t be a similar incident in future,” Dung said today. “Vietnam is still a safe country” for investors.
The riots caused “serious disruptions,” especially to export-related industries which have driven the country’s growth, said Fred Burke, co-head of Vietnam Business Forum’s investment and trade working group. While the measures announced so far are welcome, “they do not go far enough to account for the damages, much less restore the sector to its previous competitiveness.”
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