Foxconn still dragging the chain

Foxconn, the world’s largest electronic outsourcing manufacturer, has asked Vinh Phuc People’s Committee to extend the construction deadline for its $200 million mobile phone factory in the province till the end of 2011’s second quarter, according to provincial Industrial Zones Management Authority.

A senior official from the authority said Foxconn was completing construction designs for the factory despite having received an investment certificate two years ago. “We thought the firm would push investment in Vietnam after facing labour issues in China, but Foxconn executives said the firm was facing difficulties mobilising funds because of the impact of the economic recession,” the official said.

No construction was seen on the 485 hectare site where Foxconn is to build the mobile phone factory. But Vinh Phuc Industrial Zones Management Authority reported Foxconn already spent about $4 million on land compensation and site leveling.

The official said the province authorities could revoke Foxconn’s investment certificate as it had failed to start project construction within one year of receiving its investment certificate.

“But Foxconn is really a large investor, which could attract more foreign suppliers to invest in Vietnam. Thus, we want to create favourable conditions for it,” he said.

Foxconn representatives in Vietnam were unavailable for comment.

In 2007, Foxconn signed cooperation agreements with the Ministry of Planning and Investment and also made written commitments with six cities and provinces in Vietnam,  Bac Ninh, Bac Giang, Vinh Phuc, Haiphong, Binh Dinh and Ho Chi Minh City. It said it would set up a chain of hi-tech cities in these areas to accommodate factories to produce computers, LCDs, communication devices and electronic appliances.

Foxconn once announced it would pump about $5 billion into Vietnam within five years to make the country one of its largest manufacturing bases.

During a visit to Vietnam early this year, Foxconn chairman Terry Gou told local authorities that the firm would keep its promise to invest in Vietnam, adding that it would resume investment in the second quarter of this year.

However, no Foxconn projects have resumed, despite the firm being forced to raise wages for Chinese workers by nearly 100 per cent  this year.

In addition to Vinh Phuc, northern Bac Giang, about 60 kilometres north of Hanoi, is experiencing delays with a Foxconn project.

The firm early this year put two electronic component manufacturing factories, which were built during 2008-2009, into operation. But, Foxconn had not yet disbursed the entire $38 million registered capital at these two factories, said Bac Giang’s Department of Planning and Investment deputy director Do Quoc Tuan. Another Foxconn project in Bac Giang, Van Trung Industrial Park and Township, is also delayed. Tuan said the investor had cleared only 200 out of 400ha.

“Foxconn promised to keep on investing in this project, but we don’t know when it will resume. They cited low demand on the international market and difficulties mobilising funds as the main reasons for delay,” said Tuan.

Also, in Haiphong, Vietnam’s third largest city, Foxconn pledged to continue pursuing a 1,000ha hi-tech township project in Hai An district, totaling an initial $200 million. The project is to be jointly developed with local Saigon Invest Group.

“They promised to make investments but it was just a promise. We are still waiting for specific actions by Foxconn,” said Le Thanh Son, director of Haiphong’s Department of Planning and Investment.