Vietnam authorities throw in the towel as foreign firms flee with debts

Vietnam authorities throw in the towel as foreign firms flee with debts

An increasing number of foreign businesses have abruptly fled their Vietnamese units and defaulted on worker salaries, while the local legal system is not tight enough to sanction the fugitive investors.

In 2013, five foreign-invested businesses based in Ho Chi Minh City vanished into thin air, according to the municipal labor union.

In the southern province of Dong Nai, 60 foreign direct investment (FDI) projects have ceased operations in the year to date, and one of the investors is nowhere to be found, according to the management board that oversees the industrial parks province-wide.

The management board has also revoked the investment license of 22 FDI projects, which were shut down for more than 12 months while their investors could not be contacted.

Around 100 workers of Bach Hop Co, a textile business based in Ho Chi Minh City’s District 6, were put into a tough spot as the company’s board of directors has disappeared for more than a month, while its owner, Australian national Harald Biebl, also fled the country.

Bach Hop Co still owes its employees VND310 million (US$14,591) of July salaries, and VND586 million ($27,582) of social insurances, according to the district’s labor union.

Local authorities have sealed the company’s headquarters, but there are not a single valuable item left at the facility.

Similarly, the managers of Kien Tuong Co Ltd, Lam Thi Hanh and Nguyen Tu Tri, a German national, also abandoned their company and defaulted on two months of salaries of the employees.

Tri had promised to pay workers on August 15, but on that very day, he and Hanh were nowhere to be seen.

An official from the labor bureau in District 12 said it is not easy to handle cases related to fugitive foreign investors.

“It takes time for us to complete myriad procedures to seal the assets of the businesses,” he said.

Nguyen Van Luc, head of the Ho Chi Minh City’s legal execution department, said there is a low rate of success when it comes to taking foreigners to a civil court.

“We call on foreign investors to do business in Vietnam, but as our law is not strict enough, local employees and businesses will be disadvantageous when the foreign firms disappear,” Luc said.

“Even when we release judgments, the verdicts are only valid in Vietnam, and it is difficult to execute it in other countries.”

Economic expert Huynh The Du said it has become a common phenomenon for both local and foreign investors to flee their projects.

“The best possible solution, to me, is to carefully assess the investors before granting a license to them,” he said.

“We have to create mechanism to oversee the ‘health’ of the businesses, as it will be too late to take any action once they have vanished.”

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