Riots in Vietnam threaten foreign investment

The violent protests targeting mainly Chinese companies in Vietnam this week have damaged 400 factories and forced 1,100 others, including South Korean, Japanese and Singaporean factories, to shut down, threatening future investment in the country.

The protests in Binh Duong province, some 1,120 km south of the Vietnamese capital of Hanoi, turned violent Tuesday when thousands of protesters broke into foreign factories, looting and burning assets and facilities, workers and businessmen from Chinese mainland and Taiwan told Xinhua.

The Chinese Foreign Ministry has lodged a solemn protest Thursday with Vietnam and voiced strong condemnation of the attacks after the violence has left a Chinese national dead and more than 100 others injured.

As of Wednesday, about 100 Chinese factory staff had fled to the Vietnam-Cambodia border, and a larger number of Chinese people in southern Vietnam took shelter in Ho Chi Minh City.

Losses caused by damage to foreign-owned companies in Vietnam's southern industrial parks was estimated at billions of U.S. dollars.

The Vietnamese government blamed the deadly riots on "extremists" and warned they could seriously affect the investment environment in a country that relies heavily on foreign investment.

Industrial output from foreign-owned industries has been growing, and accounting for 46 percent of the country's overall industrial output in 2012, according to official data.

Chinese factories, particularly those from China's Taiwan, were hit hard by the riots with more than 200 looted or burned down by rioters, a Taiwan trade representative in Ho Chi Minh City was quoted as saying.

Taiwan is the fourth biggest source of foreign direct investment (FDI) in Vietnam, with a total investment of 28.05 billion dollars since 1988.

Joseph Wong, chairman of China's Hong Kong small- and medium-sized enterprises forum, said Hong Kong trade groups were deeply worried by the riots. Many Hong Kong manufacturers and exporters said they had no immediate plans for investment because of the volatile situation in the country.

Hong Kong is the sixth largest source of FDI in Vietnam, focusing mainly on the textile and garment industry.

Meanwhile, at least 10 Japanese factories also suffered damage to their facilities, including broken windows and security cameras, the Japanese Business Association said.

According to the South Korean embassy in Vietnam, 55 South Korean companies have reported damage to their factories.

Singapore on Wednesday also expressed serious concern about the security situation at the Vietnam-Singapore industrial parks in Binh Duong province, and the attacks on foreign companies in the two industrial parks.

South Korea was the biggest investor in Vietnam followed by Japan in the first four months this year. Its investment totalled 1.1 billion dollars, Vietnam's Planning and Investment Ministry said.

The anti-China looting and arson came after Vietnamese ships and personnel repeatedly harassed the normal operations of a Chinese oil company in waters only 17 nautical miles (27 km) from China's Xisha Islands in the South China Sea and about 150 nautical miles from Vietnam

The operations of Chinese companies in waters off the Xisha Islands fall completely within China's sovereignty. However, the Vietnamese Foreign Ministry said Vietnam "cannot accept China's illegal drilling rig" and "it is an infringement of Vietnam's sovereignty."