Workshops left idle

The Chuong Duong Steel Mill in the IZ was also seen quiet and deserted with just four or five workers. Representative from the mill said that the mill has been operating perfunctorily as it cannot get many orders.

Located near the Chuong Duong steel mill is Figra, a 100% Japanese-owned wooden furniture producer. There was no security officer at the entrance. The door of the workshop was seen locked. The plate with the name of the company was removed. Nam said that the investor has decided to withdraw and the final procedures to terminate the contract on workshop premises leasing have nearly been completed.

Figra arrived here four years ago, specializing in exporting woodwork products to Japan. With the global economic recession, the company could not get any contract for 2009, while it still has to pay for the workshop premises and salaries to workers. This is the first business in the IZ that was dissolved due to the crisis.

Production at a standstill

The gloomy picture can be seen in many other IZs in Hanoi. Nguyen Van Chinh, Director of the Management Board of the Hanoi IZ and Export Processing Zones, said that a series of production lines that make electronic components and computer components in big factories all have halted production due to the lack of orders. He said that only the workshops making consumer products can maintain the normal operation.

The plan by 200 enterprises to expand production or put new factories into operation in 2009 in IZs has been canceled. Of these 200 enterprises, 100 of them have finished the workshop construction and production line installation. However, the production lines have been left idle as there are no orders.

As the production lines have been left idle, companies have to see their capital buried. The idle production lines also mean no job opportunities for labourers. Chinh related that the Japanese Meiko Company initially planned to employ 2,000 workers for the new workshop, but it finally got 1,000 due to the changes in the production plan.

Turnover down

Hoya Glass Disk Vietnam in Thanh Long IZ has reported the exports of the next months just equal to a half of the previous months. In February, the company exported US $6.1 million worth of products, down by nearly 39% from the turnover of US $9.9 million in January. Meanwhile, the export turnover in January saw a sharp decrease of 48% in comparison with US $18.8 million in December 2008.

Canon, which has workshops in three IZs, Thang Long, Que Vo and Tien Son, all have seen the exports decreasing. The three workshops’ export turnover was US $49.9 million in January 2009, down by 23% over December 2008 (US $64.7 million). Canon in Que Vo IZ saw the sharpest export decrease of the three, obtaining only US $10.7 million in January, just 42% of the export turnover in December 2008 (US $25.3 million).

Chinh said that the foreign invested export enterprises, which export 100% of their products and the links of the production chains of multinational groups, prove to bear the heaviest impacts from the crisis. The number of orders of the enterprises depends on parent companies. The enterprises will only recover when their parent groups in foreign countries recover.

With 400 enterprises located in IZs accounting for 40% of the export turnover of Hanoi, the export turnover decreases of the enterprises will surely badly affect the economic performance of the city.

Thuong Dinh Shoes Company, a 100% Vietnamese-owned business, has also been struggling in the difficulties. The production lines of the company are running to fulfill the orders for May and June, while the company has not received any new contracts for Q3 yet.

Le Tuyet Mai, Assistant to the Director of the Thuong Dinh Shoes Company, said that previously, clients ordered several hundreds of thousands pairs of shoes for each contract, while the number is just several tens of thousands pairs of shoes. In February, the company’s productivity reduced by 40% in comparison with the same period of last year.

Thuong Dinh plans to export 75,000 pairs of shoes in March.

There has been no official statistics about the number of businesses which have become dissolved or have been operating perfunctorily released by state agencies. However, it is clear that more and more enterprises will pushed against the wall until the crisis is settled.
Source: Vietnamnet