ECONOMY-VIETNAM: Global Crisis Hits Craft Villages

• by Helen Clark (hanoi)
• Saturday, April 11, 2009
• Inter Press Service

Bamboo furniture is one of the main products made in Vietnam’s craft villages for export and many exporters agree that it will take more than a fairytale miracle to save an industry buckling under the pressure of the recent financial crisis.

'Neighbouring enterprises are on the brink of bankruptcy or have shut down already,' Nguyen Vi Thong told IPS via phone. The chief of the trading division of the Ngoc Dong Company, Thong says profits are down at least 20 percent this year, and he counts his company as lucky.

Vietnam’s craft villages date back hundreds of years, each producing specialised wares from local products, such as bamboo, sea grass or silk. Often located outside a larger city, these small, often basic hamlets today produce goods shipped to the U.S., Japan, China and Europe. The domestic market makes up just 20 to 40 percent.

Like nearly every sector of the export industry, which accounts for a third of the communist nation’s GDP, Vietnam’s craft villages have progressed rapidly in recent years. According to statistics supplied by Viet Craft, which represents over 300 villages across the country, export turnover was 200 million dollars in 2000. In 2007, it was 850 million dollars.

Exports are down this year by at least 40 percent, though some estimate this figure to be as high as 60 percent. The president of the Vietnam Association of Craft Villages (VACV), Vu Quoc Tuan, estimates that five million workers are at risk, out of a total of 11 million. This figure has been oft-quoted in the local press since late last year when things started looking bleak.

Le Ba Ngoc, of Viet Craft and the Vietnam Handicraft Research and Promotion Centre, disputes it. 'The government hasn’t done a survey and I cannot provide any figures... But many companies are facing difficulties; orders have reduced by half.'

Twenty to 30 percent of household workshops have had their incomes halved. The VACV numbers villages at 2,790, other sources say the figure could be anywhere from 1,000 to 5,000 depending on criteria applied.

'Right now in Vietnam, there’s nowhere you’ll get reliable information (about job losses),' Alex Warren-Rodriguez, economic policy advisor at the United Nations Development Programme (UNDP), told IPS via phone. '(But) you do get an idea of the figure. Eleven million people, and exports down by 40 percent... It’s going to be hard.'

Vietnam earlier this year estimated 400,000 job losses for 2009. The nation has a workforce of 45 million and one million people enter the force each year.

In order to create enough jobs the country needs a growth rate of at least 6.5 percent. In its Asian Development Outlook report, released Mar. 31, the Asian Development Bank (ADB) estimated economic growth at 4.5 percent this year, higher than Asia’s overall 3.4 percent.

The report was at pains to point out that Vietnam is experiencing a 'slowdown' not a downturn and projected growth of 6.5 percent in 2010. Last year’s 6.18 percent was the lowest the nation has seen in 10 years. It is widely believed exports have driven the economy.

However, that 400,000 figure only takes account of a small number of people - those who work at foreign factories and the like (Nike announced in late March it would stop shipments from Vietnam, and Beijing). Those in cottage industries and the informal economy - much of Vietnam’s workforce - remain uncounted.

The same ADB report recommended the government 'prioritise social assistance to the poor and unemployed' rather than try to stimulate export industries, where a wait-it-out approach is the only real option.

'Last year there were about 40 workers, now there’s only 20,' says Nguyen Thi Yen, 50, squatting on her haunches glazing a ceramic bowl in an open air warehouse belonging to Vinh Thang Ceramics. 'I’m a little worried.'

Yen is a farmer, but like many makes money on the side in a craft village, about 2.25 dollars a day. She’s worked in Bat Trang pottery village for five years.

'Last year I had 10 orders from overseas. So far I’ve only had two this year. I had 80 employees before, now, look outside,' says the director, Nguyen Thi Mai Huong, gesturing towards his warehouse.

'In most villages their main work is farming,' says Ngoc. Farmers either find additional work at a nearby village, or, as is more common, craft producers run their own small workshop and farm a small rice paddy, as a safety-net measure. 'Some well-developed villages will work fulltime, but they employ many people from other provinces.'

Most craft workshops are small affairs and deal with a complicated network of intermediary sellers, often referred to as ‘collectors’, who organise capital and orders for households and then onsell to export companies.

'It’s an up and down story. They may be making a profit but the profits are so small,' explains Ngoc.

A 2007 report by SNV, a Dutch NGO that worked with craft villages in Hay Tay Province (now incorporated into Hanoi proper) to promote tourism in Phu Vinh village, suggested collusion and price fixing by collectors, keeping wages low.

The infrastructure which keeps household workshops unable to negotiate with foreign exporters directly has also led to environmental problems. Local press last month reported 10 tonnes of dead fish found in the Nhue River near a sluice gate in Van Phuc village, famous for its colourful silk products.

A 2006 report by the Vietnam Environmental Protection Agency listed craft villages as one of the main polluters of the country’s waterways, though they still lag behind factories.

'They are very vulnerable, and they’re suffering thanks to the crisis now,' Le Ngoc Bich told IPS via phone. Bich has spent the past three years motorbiking on weekends to outlying villages with his photography club to document life in the villages. 'I want other people to take this seriously; this is part of the culture of Vietnam.'

Others are less worried. 'If we lost our jobs we could go back to the fields,' Dao Thi Yen laughs as she smashes stones to gravel for Bat Trang‘s clay. 'I don’t worry too much.'

© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service

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