Vietnam Report 2010 English Abstract from the German Report

1. General information From January, 16th to February, 17th 2010 Heinecke Werner conducted an inspection of Vietnamese natural stone factories and quarries on behalf of WiN=WiN. The inspection trip was organized und kindly supported by Fair Stone Partner Mr. Gassner (Akiuco enterprise). During the inspection, nine natural stone enterprises all over Vietnam were visited. On-site the Fair Stone Representatives were able to talk to business manager as well as to normal employees. Apart from that, conversations with business people and employees of other branches (transportation, gastronomy, retail sale and inland water transportation) were held for the purpose of gaining comparable information about wages, social security and the governmental inspectorate. The Akiuco Company from Liechtenstein as well as stone supplier Stone Hill are Fair Stone Partners since 2009. Akiuco entered the Vietnamese export market of natural stones as an early pioneer at the end of the 1980ies. Akiuco founded the export company in Quang Ngai Stone Hill Quang Ngai Co. Ltd in 1994. Nowadays the Gassner family owns the major part of the Stone Hill Quang Ngai joint-venture. Besides the visit of Fair Stone Partner Stone Hill, which has already adopted the most important Fair Stone Standards, the Fair Stone delegation visited also other quarries and factories which are not in the Fair Stone system. 2. Background information Vietnam has an old tradition in processing of natural stones reaching a few thousand years back in time. Very old giant constructions, which were built by order of the old Chinese and Indian dynasties, show the skills of Vietnamese stone producing craftsmanship. During colonialism, the Indochina Wars as well as the time under socialist leadership the stone processing branch was disrupted and after revaluation this kind of industry lacked experience. Under the current conditions of globalisation, the socialist government has opened the national economy for the global market and foreign interests. Thus Vietnam also started to sell natural stones to European and American customers. Due to its rising domestic investment, the domestic demand for natural stones occasionally outstripped the export of stones in some aspects seminal to China. Vietnam, especially in the North and in the middle, possesses multiple sources of natural stones, granite, basalt, limestone and marble in particular. Unofficial calculations estimate between 250.000 and 400.000 people working and generating their income in the Vietnamese natural stone industry. More than half of the industry is export dependent. A big fraction, perhaps more than half of it, work as freelancers in teams of skilled labour and is not formally hired. The profession of a mason needs basic knowledge and experience. Due to this freelancers in the branch of the natural stone industry are relatively well paid with a wage between 160 and 250$ per month. Some contact persons believe that the wages of the stone industry in Vietnam are higher than in China. The minimum legal salary for rural Vietnam is 58$ per month. 3. Fair Stone observations made during the inspection 1. There is neither child nor forced labour in the visited Vietnamese natural stone enterprises. 2. In most of the cases the enterprises are small and manual enterprises, in many cases they are family businesses with a good working atmosphere. 3. All formal employees have labour agreements, which are pre-formulated by the state authority. 1

4. There is a very high fraction of freelancer teams, who work per piece. They help to balance economic variability. They seem very skilled and earn relatively high wages between 160 and 250$ per month. People of this professional category mostly invest their wages in their families and housing constructions, not in the pension fund offered by the state. 5. Safety and health protection at the working places are low in the Vietnamese natural stone production. The inspection of the governmental commercial inspectorate does not work properly and seems not to be credible. Introducing Fair Stone Standards due to the Step by Step quality management is therefore very important. 6. The noise protection, which is offered by the employers, is mostly not used by the employees. Unacceptable high level of noise has been measured (100 and 114 decibel). 7. About 75% of passenger transportation and about 15% of the transportation of goods are conducted via auto cycle and bicycle. The duty to wear a helmet, which was introduced by state authority two years ago, is widely accepted due to high retributions. Therefore the use of helmets and masks in the natural stone production can widely be observed. 8. In Vietnam, like in other emerging nations, systematic corruption is a common phenomenon. Despite the official governmental announcement that education and health care is for free, pupils and patients sometimes have to pay informal fees in practice. Although corruption seems to be relatively moderate in Vietnam, bribery of state officials, who control quarries and stone factories, seems likely, at least in some cases. 9. In all factories visited, the state instructed purification plants for the production process and the recycling of water were silted because of deficient care. 4. Fair Stone recommendations 1. The working conditions of the employees feature several shortcomings. Therefore implementations of standards, which take the Vietnamese context into account, are recommended. 2. Due to the existence of a governmental commercial inspectorate, which is very uncommon for an emerging market, Fair Stone should consider to incorporate the state authority and to start a business contact with them. On its own the authority does not seem to be able to control the safety and health conditions on the working place in an effective way. In spite of that and in spite of corruption Fair Stone should establish collaboration with the commercial inspectorate and the state authority in cooperation with ISSA, which has intensive contacts to the Vietnamese government. 3. The noise protection on the working place is an urgent and important demand. Although the employers provide ear-protections (earplugs), most of the employees do not use them. Due to measured noise levels of 114 and 100 decibels at working places, employees who do not use ear-protection will be deaf within few years. Fair Stone has revealed this in an unmistakable way. 4. The exposure of trash and surpluses is almost never well-regulated in the Vietnamese stone processing industry. Cluttered stone remains not only hinder the production process, they are also a source of hazard. A regulated handling for stone residues is highly recommended. 5. In all factories Fair Stone visited the state instructed purification plants for the production process and the recycling of water were silted because of deficient care. It is recommended to clean them regularly and to dispose the stone sludge. 6. The safety protections of electrical constructions in Vietnam differ from European standards considerably. Electrical equipments in natural stone factories are often a significant source of hazard for employees. Although it seems not feasible to introduce European standards, at least electronic cables should be isolated. This should be inspected twice a year. 2