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Factories torched in anti-China riot in Vietnam

Some non-China operations also mistakenly attacked

[SINGAPORE] Anti-China protests in Vietnam took a violent turn on Tuesday night, as angry mobs - vexed by China's recent deployment of an oil rig in disputed waters - looted factories and set industrial property alight in the southern province of Binh Duong. Two Sembcorp-run Vietnam Singapore Industrial Parks (VSIPs) were among several industrial zones hit by the unrest.

The Singapore government yesterday urged the Vietnamese authorities to restore law and order "before the security situation worsens and investor confidence is undermined".

While businessmen The Business Times spoke to appeared largely unfazed by the protests - most said the turmoil was likely a one-off isolated incident - analysts warned that undertones of antagonism towards China could be a recurring theme in the socialist republic.

Reuters reported Tran Van Nam, vice-chairman of Binh Duong Province People's Committee, as saying to local reporters: "About 19,000 workers were demonstrating against China's violation of Vietnam's territorial waters . . . Some workers turned angry, destroying companies' gates and entering the compounds and asking other workers to join a strike."

Reports suggest that the rioters had wanted to target Chinese companies and employees, but ended up trashing Japanese, Korean, Taiwanese, and Hong Kong factories instead, after mistaking them for Chinese-owned facilities - perhaps because of Mandarin-looking characters on logos and signboards.

Several industrial parks were said to be affected too, with more than a dozen foreign-owned factories torched - although no official numbers have been given. There were no reports of casualties; police are said to be holding almost 500 people for questioning.

At the two VSIPs, four factories from China and Taiwan (which made garments and electronics) were set on fire. Of the 424 companies operating there, 99 tenants were affected by the protests, when crowds bashed windows and doors in, and looted factories.

The two VSIPs were set up in 1996 and 2006, as part of Vietnam's efforts to attract foreign investments into the country. The parks are the result of a collaboration between Vietnam's state-owned Becamex IDC Corp and a Singapore consortium lead by Sembcorp. The latter effectively holds a 47 per cent share in the joint-venture company that manages the parks.

Mainboard-listed Sembcorp said that protesters were still circling the two parks as at press time, though riotous activities were being controlled by VSIP security officers and local police who remained on-site. Though more than 200 people have been evacuated from the two VSIPs, BT understands that some parts of the industrial zone remain unaffected and some tenants are continuing with operations.

The tumult in Binh Duong comes days after protests were staged in Hanoi and Ho Chi Minh City over the past week. Earlier this month, China moved a drilling rig to a location 120 nautical miles off the coast of Vietnam, in a part of the South China Sea claimed by the latter.

Yesterday, a spokesman for Singapore's Ministry of Foreign Affairs (MFA) said that MFA had called in the Vietnam ambassador to Singapore to register its "serious concerns" about the security situation in VSIP I and II, and the attacks on foreign companies in the two industrial parks. The spokesman added: "Singapore views this issue very seriously given our close economic cooperation with Vietnam."

But businessmen who have a stake in the Binh Duong VSIPs do not seem too ruffled by the incident. T Chandroo, chairman and CEO of Modern Montessori International (MMI) - which has poured $2 million to build its first school in Vietnam - told BT: "So far we've never heard of any such incidents happening in Vietnam. I take it as a one-off thing, and I'm very confident things will settle down."

But analysts have another take. Said Barclays economist Leong Wai Ho: "I think it's a rude awakening for foreign investors and potential foreign investors, and these things are going to be factored into any company's strategic investments in Vietnam. If your production and supply chains straddle China and Vietnam (as many operations do), things may not be so smooth.

"No one saw this coming, and this anti-Chinese sentiment is not going to go away anytime soon. It looks more like it's going to be a protracted series of geopolitical risk flares, which will result in more of what we've just seen (in Binh Duong)."

Added CIMB economist Song Seng Wun: "We've already seen this happen between Japan and China - they squabbled over islands, and two-way trade (took a hit) for a good year or so. Depending on how officials respond, the same thing could happen here this time."