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Investor interest restores in Vietnam as peace returns

About 3,000 Chinese nationals were evacuated from Vietnam, following deadly rioting sparked by anger over Chinese oil drilling in a disputed area of the South China Sea. The geographical tension erupted after China deputed a $1 billion oil rig in a part off the South China Sea. It was considered the worst breakdown in ties between the two Communist neighbours since a short border war in 1979. Investors from Hong Kong and Taiwan had warned the Vietnamese government to take speedy action in controlling the protestors.

However, now that the unrest is under control, experts claim that business will continue to flourish with investments pouring into the country’s clothing and footwear industry. By the time, the Vietnamese Army stepped in to control the riots on May 15 almost 351 factories were damaged in the province. Sources claim that around 20,000 workers participated in the protests that broke off around the Vietnam-Singapore Industrial Parks (VSIPs) I and II in Binh Duong. And violence has since spread to the central province of Ha Tinh, with a number of people said to have been killed.

The intention of the protestors was to attack Chinese companies but they mistook Taiwanese and South Korean factories for Chinese plants and damaged their office buildings and plant facilities. Companies like Taiwan's Thong Dung Footwear and Kingmaker Footwear, China's Far Eastern Apparel Company and Texhong Textile, some Li & Fung suppliers, and Hong Kong-listed shoe maker Yue Yuen Industrial Holdings were forced to stop production in Vietnam, due to workers’ protest.

Taiwanese textile investors had decided to stop their expansion in Vietnam. And Taiwanese textile firms are among the biggest investors in Vietnam, while the country is also Taiwan's second-largest export market for textile products. According to Taiwan Customs statistics, Taiwan exported textile products worth $1.9 billion to Vietnam in 2013, accounting for 16 per cent of Taiwan's textile exports. According to the Footwear Distributors and Retailers of America (FDRA), geographical tensions around the South China Sea could also have a negative impact on footwear and apparel imports into the US. After Taiwanese investors, now Hong Kong investors in Vietnam have threatened to hold their expansion plans if Vietnam. Businessman and lawmaker Felix Chung Kwok-pan has said that at least one investor has already taken steps in the direction. One Hong Kong businessman who has invested $300 million in Vietnam is holding his plans of injecting another $100 million dollars for now.

However, now the Taiwanese and Korean textile production firms in Vietnam have decided not to withdraw their capital. Taiwan textile businesses that have suffered losses in the riots will quickly restore operations in Vietnam, facilitated by prompt insurance payments, Huang noted. Also firms and investors from Hong Kong will continue to remain invested in Vietnam.


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