Handicraft villages face job cuts, bankruptcy

Eleven million workers in the country’s 2,017 handicraft villages lack steady jobs and a stable source of income.

60% of handicraft villages were operational, but 20% operated on a weekly basis and the rest were verging on bankruptcy.

Chairman of the Viet Nam’s Handicraft Villages’ Association Vu Quoc Tuan said 60 per cent of handicraft villages were operational, but 20% operated on a weekly basis and the rest were verging on bankruptcy.

He said enterprises in handicraft villages were facing many difficulties. Products were selling slowly and production was delayed, causing a lack of employment.

These enterprises include families, working groups, co-operatives and all enterprises that produced and traded handicraft products, including fine art. As the country’s economy was hit by the global economic recession, the villages were also experiencing difficulties in terms of market and capital, the two main causes of reduced production.

Enterprises were having difficulty taking out bank loans and their domestic and foreign markets had fallen because of the crisis.

Bank loan procedures were complicated and many enterprises are hesitant to borrow.

Few can borrow

Among the 193 enterprises and thousands of workshops in Dong Ky wooden handicraft village in the northern province of Bac Ninh’s Dong Quang Commune, only 30 workshops and a few enterprises were eligible to borrow new capital from banks.

Others are forced to pay off outstanding loans via swap funding, where banks agreed to put up one stream of cashflow against another, allowing them to take out new loans to pay off their old ones.

Deputy chairman of the Dong Quang Commune People’s Committee, Phan Dinh Luong, said this was the worst crisis Dong Ky Village had ever faced.

“In the past, this village earned around VND300 billion (US$17.1 million) and created jobs for 12,000 people in the region. But this year, income sharply dropped and many labourers were left without jobs,” he said.

The country has 713 rattan ware villages which employ 350,000 people, but 40 per cent of workshops in these villages may be disbanded.

According to the Ministry of Labour, Invalids and Social Affairs, this year 300,000 people, 0.65 per cent of the country’s 45 million workers, may lose their jobs or have their work reduced.

Job shortage

People in rural areas are currently facing a major shortage of jobs.

At a working session with Minister of Agriculture and Rural Development Cao Duc Phat, the Viet Nam Handicraft Villages’ Association and other representatives of handicraft villages agreed with the Government’s finance and credit solutions, which included a reduction of the enterprise income tax and a tax extension for some handicraft enterprises.

Chairman Tuan said that this year would be a year of challenges for handicraft villages.

He said the association was focusing on finding outlets for fine-art products, especially a domestic market.

The association would also guide handicraft villages to take into account market demand for their products and replace ones that weren’t selling well.

Tuan said that helping enterprises become solvent again was an urgent task.

Banks should allow enterprises to borrow capital easily, and give enterprises nearing bankruptcy an extension on paying off their debts, he added.

He said it was necessary to establish funds to guarantee credit in each locality and that capital sources should be from enterprises, banks and the State budget.

Give priority

The association said the Government could help sectors facing sudden difficulties by eradicating debts or giving priority interest rates.

It also said the Government should pay part of the expenses of job training for village workers. Vocational training for rural labourers should be greatly increased. (VNS)

Tags: Vietnam business news, Vietnam Handicraft