Chinese investment wave raises concerns
Chinese investment wave raises concerns
With the United States and China locked in a trade war, investment inflows from China to Vietnam have surged, raising concerns among local experts about their efficiency, and social and environmental issues.
According to the General Statistics Office, Hong Kong and China were Vietnam’s biggest investors in the first six months of 2019. During the period, the country attracted a total of US$7.5 billion in fresh investments from China and Hong Kong.
Of the total investments, US$5.3 billion was pledged by investors from Hong Kong and US$2.2 billion from mainland China.
At a seminar to announce the findings of a study on Chinese investment in Vietnam, held in Hanoi on July 22, Associate Professor Dr. Nguyen Duc Thanh, director of the Vietnam Institute for Economic and Policy Research (VEPR), said Chinese firms do not invest heavily in certain sectors in Vietnam, like those from northeast countries, such as South Korea and Japan. For instance, South Korean firms have invested heavily in Vietnam’s production and real estate sectors.
The total investment from China is not higher than other ASEAN countries, Thanh added.
Dr. Pham Sy Thanh, director of VEPR's Chinese Economic Studies Program, said that Chinese investment in Vietnam has increased annually, but remains lower than that from Japan and South Korea.
However, Chinese investments have a bearing on Vietnam’s environment, society, and labor market, Thanh noted.
He cited the Cat Linh-Ha Dong urban railway project in Hanoi as an example, saying that the investment capital for the project, whose contractor is China-based Bureau 6 China Railway Corporation, had been estimated at US$522.86 million.
However, the project has yet to become operational, and construction costs have surged to US$868.04 million, which is US$315.24 million higher than estimated.
Moreover, multiple violations of the Labor Law were found at the project. According to findings of investigators from the Ministry of Labor, Invalids, and Social Affairs, announced in 2015, the Chinese contractor had set a minimum wage of VND3 million, which is VND100,000 lower than the minimum regional wage.
The contractor did not check the safety of eight kinds of equipment as required.
In addition, the project is behind schedule. The project should have been completed within 48 months from 2010.
However, in November last year, it was still incomplete, which makes it four years behind schedule.
Multiple labor accidents have occurred at the construction site, including one fatal scaffolding collapse in late 2014, which left three people injured and one person dead.
Experts participating in the seminar proposed increasing the supervision of Chinese enterprises’ investment activities in Vietnam.
