Authorities Struggle To Solve Problem Of Delinquent Owners Of Foreign-invested Companies

The investor has run away, leaving unpaid debts

In Dong Nai province, KL Texwell Vina, the foreign owner of a foreign-invested enterprise, disappeared just days before Tet, leaving an unpaid debt of VND30 billion in social insurance premiums and wages. Nearly 2,000 Vietnamese workers of the company still have not received pay for January.

An analyst said that state management agencies don’t know how to deal with the cases. 

As for KL Texwell Vina, local agencies first reported the case to the Ministry of Planning and Investment (MPI) and asked for help. Explaining their actions, the planning and investment department in Dong Nai, Thai Binh and Binh Duong provinces, where such foreign invested projects were discovered, attributed the problem to an unclear legal framework.

Lawyer Nguyen Thanh Ha, chair of SBLAW Firm, said that the 2014 Investment Law deals with ‘ownerless’ foreign invested projects. 

However, there are still many problems. Local authorities don’t know what to do if foreign investors flee, remain out of contact, owe money to social insurance and tax agencies, or owe salaries to workers.

Analysts say the increase in the number of ‘ownerless’ FIEs reflects inadequate post-licensing management.

They pointed out that Vietnam’s agencies examine projects before licensing but do not keep watch over them after the licensing. As a result, they have no information about the operation of FIEs and their problems.

Ha of the SBLAW Firm said that post-licensing control over FDI (foreign direct investment) projects must be strengthened. 

Local agencies should be asked to periodically provide information about enterprises to set up inspection schedules. It would be better to classify FIEs into groups and pay special attention to enterprises which are slow in paying taxes and salaries to workers, he said.

"It’s necessary to closely monitor the activities of these types of enterprises,” he said.

Nguyen Mai, chair of the Vietnam Association of Foreign Invested Enterprises (VAFIE) said the new CPTPP trade agreement includes provisions that protect workers’ benefits. This again shows the urgency of completing the legal framework on FDI.