Glove maker Kossan Rubber Industries Bhd, which had planned to invest RM100 million for expanding its glove operation to Vietnam as early as this year, has decided to hold back its cross-border expansion project, as recent anti-China protests in the country have dampened business confidence, said its managing director and CEO Datuk Lim Kuang Sia.
“We are worried and we will hold back for a few months,” Lim told SunBiz when contacted by phone yesterday.
“We have to do further studies. The situation is very unstable now and we have to be very careful on such geopolitical risk,” said the rubber glove tycoon.
Lim, who is the founder and substantial shareholder of Kossan, had set his sights on a leasehold site, measuring 40-50 acres, in a large-scale industrial park in TayNinh Province, northwest of Ho Chi Minh City.
The RM100 million invetment was to set up a new plant with a production capacity of about 3 billion pieces of gloves annually.
According to Lim, Kossan came close to finalising the land purchasing deal. However, the riots that broke out at the industrial zones in southern Vietnam recently left him no choice but to hold it back, as the business sentiment and market conditions in the country have turned negative again.
“I hope it’s just temporary but this kind of situation should not happen in the first place,” he said.
Lim said that the Vietnamese government should protect the interests of foreign investors, as foreign investments are beneficial to the local economy as well as the people in Vietnam.
He also pointed out that Western companies do not invest in Vietnam as much as the Chinese companies from Taiwan, Hong Kong, China and Malaysia do.
“I was told that there are some 100 Malaysian companies in Vietnam. At the first phase, many foreign companies from Taiwan, Hong Kong and China were there. Then, the Japanese and Korean companies came in at the second phase,” said Lim.
Despite the fact that Kossan, being a Malaysian company, is not linked to the recent dispatch of an oil rig by a China state-owned oil firm to a contested area of the South China Sea, Lim, however, remains cautious on the latest developments.
“The Vietnamese rioters don’t care who you are and where you are from. As long as they see a Chinese character or Chinese name in your factory, they will destroy it. That is why many Taiwanese and Korean-owned factories were also affected,” he said.
“An issue of sovereignty is not easy to be resolved, but what happened was terrible. Unless the government comes out with a clear direction, then it will be a different story,” he continued.
Lim had in March 2014 told SunBiz that Kossan could make its second attempt at a foray into Vietnam as early as this year, after its first venture into the Indochinese country in 2007 fell through.
The decision to abort the plan then was because the rubber glove maker was concerned over the unfriendly business environment and unstable government policy in the Indochinese country. High inflation as well as the sharp depreciation of the Vietnamese dong, due mainly to the global financial crisis then, also played a part.