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FINANCIAL TIMES
Vietnam pollution scandal tests foreign investment push Spill at Taiwanese-owned steel plant sparks $500m payout, protests and lawsuits
Michael Peel in Bangkok
A pollution scandal in Vietnam involving a leading foreign investor has emerged as test of the country’s push to become a regional manufacturing hub. Formosa Plastics of Taiwan has agreed to pay $500m for a chemical spill and has had to deal with legal action launched by local fishermen and a mass protest at its factory. The affair touches on several contentious areas in Communist-ruled Vietnam, including anti-Chinese sentiment, regulatory shortcomings and a lack of transparency in public life. Like a controversy over forced labour in Southeast Asia’s seafood industry, the Formosa spill is a reminder of the increased focus on big companies flocking to the region to exploit investment incentives and large consumer markets. “This case is an important lesson for multinational companies that they cannot expect to get away easily in countries with less strict environmental standards,” said Pavida Pananond, associate professor of international business at Bangkok’s Thammasat Business School. “It also shows host governments that inward foreign direct investment should not come at the expense of local wellbeing.” Thousands of people protested on Sunday at the $10.6bn Formosa Ha Tinh Steel plant in central Vietnam, a subsidiary of Formosa Plastics. They were seeking compensation for the April spill that killed fish along a 200km section of coastline. In recent months Vietnamese cities have seen several demonstrations against the company, one of the largest of an estimated 2,000 Taiwanese businesses in the country. Hundreds of local fisherman had descended on a Ha Tinh provincial court the previous week to lodge lawsuits against the company. “Vietnamese people can’t accept Formosa in Vietnam after this environmental problem,” said Anthony Dang Huu Nam, a Catholic priest who is one of the organisers of the legal action. “They want Formosa to compensate them for their loss.” Authorities initially played down the possibility that Formosa was responsible for the spill and said protests were being organised by “reactionary” forces aiming to topple the government. Protesters responded by rallying round the slogan “I choose fish,” a retort to a suggestion by a local Formosa employee that people needed to decide whether they wanted their seafood industry more than the steel plant. In June Formosa offered a formal apology and $500m in damages after the government said its investigations suggested the company was responsible for releasing toxic substances including cyanide and phenol. The authorities suggested it might avoid further action because the country was “building an investment environment [and] an image of integration and participation in trade agreements”. But the move does not seem to have drawn the sting from what has been a problematic past few years for Formosa in Vietnam. In 2014, at least one mainland Chinese worker at Ha Tinh Steel was killed and damage estimated at $3m caused by anti-Chinese rioters at industrial estates in Vietnam. Last year, two Korean businessman, one of whom worked for Samsung, were jailed by a Vietnamese court after a scaffolding collapse killed 13 contract workers at a Formosa site. Formosa told the Financial Times it was looking to move on from its “past troubles” in Vietnam. “In the future we will also make efforts to improve our deficiencies and comply with relevant government decrees,” it said. It said it had paid the to Vietnamese authorities $500m last month. Vietnam’s foreign ministry did not respond to questions about whether it had received the payment and what the money would be used for. Hanoi faces further scrutiny over its handling of the Formosa affair, as it did two years ago over its slowness in dealing with the rampaging anti-Beijing mobs. The full official report into the spill has not been published, sparking questions about the chemicals involved and their potential long-term effects. Additional reporting by Xuan Nguyen in Hanoi
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