Vietnam pollution fight hits supplier to global fashion brands

Pacific Textiles Holdings

21/07/2017 07:00

* Dispute highlights wider concerns over pollution in 
Vietnam 
    * Japan's UNIQLO among customers affected by factory 
blockade 
    * Pacific Textiles says suffered significant financial 
impact 
 
    By Mai Nguyen 
    HANOI, July 21 (Reuters) - Vietnamese villagers blockading a 
textile plant that serves global fashion brands are seeking the 
permanent closure of the factory due to pollution concerns, 
highlighting a growing readiness in Vietnam to campaign over 
environmental issues. 
    Hundreds of people from Hai Duong, 50 km (30 miles) east of 
Hanoi, have kept watch in shifts day and night since April to 
stop work at the Pacific Crystal Textiles mill, operated by Hong 
Kong-based Pacific Textiles  1382.HK . Among those affected by 
the stoppage is Japanese clothing giant UNIQLO. 
    The blockade marks another challenge to the communist 
state's authority stemming from industrial pollution at a time 
when Vietnam is seeking more foreign investors to maintain one 
of Southeast Asia's highest growth rates. A toxic spill from a 
Taiwanese-run steel mill in central Vietnam last year sparked 
unprecedented protests.  urn:newsml:reuters.com:*:nL5N1HE5TH       
    The factory in Hai Duong opened in 2015 as a venture between 
Pacific Textiles Holdings Ltd and garment maker Crystal Group. 
Initial investment in the plant was reported at the time to be 
least $180 million. 
    Villagers said they started to notice a bad smell last year. 
    "It was an unbearably rotten, foul, pungent smell," said 
60-year-old war veteran Vu Dinh Vinh. It got worse at night. 
    When he and others investigated, he said, they found the 
smell came from water discharged from the factory.  
    The company was fined 672 million dong ($30,000) for that 
December spill, according to a statement on the Hai Duong 
authority's website in February. Water was found to have 
breached limits for acidity and alkalinity balance, colour, 
total suspended solids, chemical oxygen demand and biochemical 
oxygen demand.  
    But villagers said they were still concerned, accusing the 
factory of continued pollution and setting up their blockade on 
April 12.  
    When a delegation from the local authority visited on 
Wednesday to give the villagers a three-day deadline to move, 
they said they were not going anywhere. 
    "We want to expel the factory and never let it produce 
again," said 70-year-old Bui Van Nguyet.         
    Pacific Textiles said there had been only one discharge of 
waste water, on Dec. 24, 2016, and that it had not reached the 
nearby river. Villagers were wrong to say pollution had 
continued, it said. 
    Pacific Textiles' head of corporate social responsibility, 
Eugene Cheng, told Reuters steps had been taken to stop any 
discharge of waste water with the help of the local government. 
    "We did not understand the reason or motive behind them to 
shut down the factory as some of the villagers' relatives are 
also working for our factory," Cheng said. 
     
    FINANCIAL IMPACT 
    In regulatory announcements, the company has reported a 
"significant financial impact" because of the blockade at the 
factory, which had accounted for 10 percent of its sales.  
    This week, Pacific Textiles said it was waiting for the 
local People's Committee and industrial park to "clear the 
blockage". 
    Local authorities did not immediately respond to a request 
for comment.     
    UNIQLO owner, Japan's Fast Retailing  9983.T , told Reuters 
it indirectly sourced fabric from the mill and had shifted 
production elsewhere for now. It said it had verified the steps 
Pacific Crystal had taken to remedy the situation after the 
spill.  
    "Fast Retailing is serious about running an ethical, 
sustainable business, and operates all supplier relationships 
under a strict code of conduct," spokesman Aldo Liguori said. 
    Fast Retailing believed the dispute with farmers related to 
the initial terms of the sale of the land, he said, adding that 
neither it nor Pacific Crystal was involved in discussions. 
    Villagers said the dispute with the local government over 
the sale of the land, which had been going on for more than a 
decade, was a separate issue.  
    "This is entirely about pollution," said Vinh. 
    Pacific Textiles did not specify which customers it supplied 
from the factory but its website says it has relationships with 
brands including Calvin Klein and Victoria's Secret. The 
latter's owner, L Brands  LB.N , told Reuters no production for 
any of its brands came from the plant. Calvin Klein owner PVH 
Corp  PVH.N  did not respond to an emailed request for comment. 
    Gap Inc  GPS.N  said it worked with both Crystal Group and 
Pacific Textiles, but did not source from or work with this 
plant. 
    Attention to pollution in Vietnam has grown since last year, 
when a spill from a Formosa Plastics Group  1301.TW  steel plant 
poisoned sea life along more than 200 km (125 miles) of 
coastline, prompting long-running protests. 
    The government has told companies they must meet 
environmental standards in order to stay in the country. 
    The state has also shown a readiness to tackle environmental 
campaigners, whose protests have tested the limits of strict 
laws to limit criticism and maintain public order. One of 
Vietnam's most prominent bloggers, Nguyen Ngoc Nhu Quynh, who is 
known by her pen name of Mother Mushroom, was jailed for 10 
years this month for anti-state propaganda.  
 ($1 = 22,725 dong) 
 
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Pacific Crystal Textiles location    http://reut.rs/2ugG6an 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Additional reporting and writing by Matthew Tostevin; Editing 
by Lincoln Feast) 
 ((matthew.tostevin@thomsonreuters.com; +66 2 648 9777; Reuters 
Messaging: matthew.tostevin.thomsonreuters.com@reuters.net)) 
 
Keywords: VIETNAM POLLUTION/