When FIEs fled and refused to pay debts

Foreign invested enterprises (FIEs), in the past, were always considered “big clients”. Therefore, banks did not think much when providing big loans to them. However, many of them were not “big clients” at all. A lot of businessmen from Taiwan and South Korea have fled and left huge debts of tens of millions of dollars.

The northern province of Phu Tho, for example, has tasted the bitterness from the deal with four South Korean investors.

Four investors hurt the whole province

A credit officer whom Tien phong’s reporters met, related that in the years from 2002 to 2005, a lot of local banks fell into the trap raised by the four South Korean investors and lent them a lot of money. Of these banks, Agribank Phu Tho was the biggest creditor.

Nguyen Manh Hung, Head of the Phu Tho provincial management board of industrial parks, believes that the Phu Tho Planning and Investment Department must take responsibility for the running away of the South Korean investors, because the department was assigned to control the industrial workshops and factories outside industrial parks.

Hung has confirmed the information that South Korean investors have fled and taken away the money they borrowed from banks. “No once could imagine before that the foreign investors, who looked generous, would fall into big difficulties and then escape from the country with such big sums of money,’ Hung said.

“They have caused a big pain to the whole Phu Tho province,” he added.

The South Korean investors – who were they?

Tien phong’s reporters met a lot of workers who once worked for the South Korean invested enterprises. The investors turned out to be not so generous as initially thought.

Nguyen Thi Huyen was one of the tens of workers who once worked for Tasco Polycon, one of the four South Korean companies that borrowed 12 million dollars from Agribank Phu Tho.

Huyen related that the works at Tasco Polycon were simple, but she had to work hard and earned 350-400,000 dong a month. During the two year working period at the company, the laborers never got extra money for sickness, or maternity leave, and never got bonuses.

“When we were working as usual, we heard that the South Korean boss had escaped from Vietnam because he fell into insolvency. We did not get any compensation or allowances,” Huyen said.

Nguyen Manh Thang said that he was working for Tasco when he was told that the business’ owner fled. After a short time, another South Korean came and took over the workshop. However, the new boss also has fled, leaving a big unpaid debt.

“Now I am working for Robe, a Vietnamese invested enterprise. The owner of the enterprise is renting the workshop premises from a bank – the creditor of Tasco. The job has been stable. I have been working here for three years,” Thang said.

10 million dollars vanished into the air – who to blame?

Tasco Polycon and Tasco Industry are the two out of the four companies which still have not paid debts to Agribank Phu Tho. The other two are Tasco Vietnam and Tasco Material. All the four companies have factories located in the Dong Lang industrial factory cluster in Viet Tri City.

The workshops of the companies are mostly one-floor buildings with corrugated iron roof. The companies mostly made simple products, such as packs, ropes, and none of the products had high values.

Therefore, no one could explain why the South Korean investors, who had out of date machines with low capacity, and only made simple products, still could borrow such big sums of money from local banks.

Agribank Phu Tho is trying to exploit the workshops left by South Korean investors by renting them to domestic producers. However, to date, the bank has only recovered 59,000 dollars and 103 million dong, while experts believe that it will take the bank tens of years to take back the sum of money it once lent to the South Korean businesses.

Source: Tien phong

Tags: FIEs, Vietnam companies, Vietnam enterprises