FIEs warn power cuts worsening Vietnam’s investment environment

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Hanoi Times English - 39 month(s) ago 10 readings

FIEs warn power cuts worsening Vietnam’s investment environment

The Hanoitimes - The consequences of the power cuts have become so serious that foreign invested enterprises (FIEs) have lodged complaints to the government and local authorities, warning that the power cuts are worsening the investment environment in Vietnam.

The meeting between many foreign invested factories and the leaders of Bac Ninh province, where many industrial zones are located, was filled with a lot of complaints from foreign invested enterprises (FIEs) that the regular power cuts have made their production stagnant.

Representative of Samsung Electronics Vietnam said the company is planning to build up a production complex which makes information technology (IT) products in Bac Ninh province by expanding the operational factory. However, the regular power cuts have made the managers of the companies worried stiff, because the power cuts may cause the business plan to fail.

Shim Won Hwan, General Director of Samsung Electronics Vietnam, recently sent a letter to Deputy Prime Minister Hoang Trung Hai, complaining about the power cuts. The letter wrote that the company’s mobile phone production factory in Yen Phong Industrial Zone has become operational with the capacity of six million products per month, while the output may increase to 11 million products per month. The turnover of the company is 10 million dollars per day. However, the operational factory is troubled because of the insufficient power for daily production. The prolonged and unexpected power cuts in peak production hours have caused many troubles, including computer errors, jammed materials or automatic equipment problems, thus reducing the quality of the products. The general director has complained that the production of the company has been severely affected by the power cuts.

Many other FIEs have also sent letters to the Bac Ninh People’s Committee, requesting to release clear power cut schedules, so that they can take initiative in their production plans. Sachio Kageyama, general director of Canon Vietnam has said that the power cuts have upset the production at two Canon’s factories in Tien Son and Que Vo Industrial Zones.

A manager of Toyo Ink has also expressed their worry about the power cuts. He has warned that while Bac Ninh is trying to call for foreign investment, the serious electricity shortage may keep investors away.

In fact, FIEs well understand that power cuts are unavoidable. They just ask local authorities and power companies to announce the power cut plans and follow the announced plans.

“We want the power companies to notify us about the power cut plan o­ne week, or o­ne month in advance, so that we can reasonably arrange our production plans,” the manager of Toyo said.

Samsung SDI Vietnam has also sent a document to the Bac Ninh provincial authorities recently, requesting to change the rotate power cut schedule, which has been seriously affecting its production.

There are 15 industrial zones in Bac Ninh province which cover an area of 7000 hectares. The zones have attracted 480 investment projects with a registered capital of 3.54 billion dong, including 245 operational projects.

Lai Dac Binh, Deputy Director of Bac Ninh Power Company, said that in 2011, the province is allocated a high volume of power but the volume is insufficient for the high demand. At times the power consumption in March was 320MW, while the biggest allocated consumption capacity is 257.53 MW. This has forced the company to cut down consumption by 20 percent.

Power cuts are not o­nly a problem for enterprises in Bac Ninh province, but of enterprises nationwide. The Vietnam National Textile and Garment Group (Vinatex) o­nce expressed its worry about the power cuts in the three summer months. “The garment production areas are moving to the central region, where power cuts occur regularly. Power cuts are our big worry for the coming months,” said Le Tien Truong, Deputy General Director of VInatex.

VNN

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