The LuxFashion project of Lifepro Vietnam Joint-Venture Company, including 11 close-circuit garment complexes, at a cost of more than US$ 300 million, has been operational in Ninh Binh Province. This project is the most modern and largest textile-dying-industrial garment line in Vietnam. Mass-produced fashion clothes, jeans, sporting wears, technical and special clothing, such as protective clothing for fire-fighters, are Lifepro Vietnam’s main products.
At present, the company has been franchised by GF Industry SpA for six fashionable trademarks and received many contracts, worth tens of millions of Euros, from various companies, such as Blue Jeans Gas, Carrera, Miss Sixty, IT Holding, Hydrogen, PJ RR Moda, Vitamina Jeans, Lifegate SRL, Punto Jeans.
Also, the company has signed a contract, worth over US$ 137 million, with Globe Manufacturing Company LLC to supply protective clothing for American fire-fighters.
The company’s market share now includes 35 percent to North America, 10 percent to Italia, 20 percent to France and Western Europe, 35 percent to Northern Europe. Also, it is planning to develop local market.
Luxfashion, one of Vietnam’s leading FDI (foreign direct investment) textile and garment manufacturers, has been forced to halt operations following its first shipment after being accused of violating a local tax regulation.
The manufacturer is a $ 194m joint venture between Hong Kong Golden Principal Investment, Canadian businessperson Ahmed El Fedhi, Lifepro Vietnam Company and local International Investment Trade and Service Group (Interserco).
It has been set up to make men’s, women’s and children’s wear for export to major markets in Europe and North America, and is equipped to carry out knitting, dyeing, sewing, cutting, ironing, special effects, washing, embroidery, screen printing and finishing.
It exported just one shipment to the EU before being forced to stop its operations, according to the local government in Ninh Binh province where it is located.
Reports say all foreign managers and experts have left Vietnam, and that the plant has borrowings of VND3,000bn (US $150m) from a local bank.
Project’s bad fashion statement, Oct 15, 2012
The runaway foreign investors of Lifepro Vietnam’s Luxfashion textile and garment complex, leaving $150 million in debts behind, have underscored the ugly side of foreign-invested projects that go wrong.
Nobody is now working at Luxfashion, except 24 security men protecting the sealed assets around the clock
The $300 million European clothing complex, located in northern Ninh Binh province’s Gian Khau Industrial Park, has been totally locked down since early September, just six months after official becoming operational.
In late August, the local authorities were reported by a Vietnamese representative of Lifepro Vietnam that all foreign managerial staff of Luxfashion complex, one of Vietnam’s largest textile and garment factories, had left Vietnam without a trace for the last two months.
The 12.8 hectare complex’s assets are now protected by Vietnam Bank for Agriculture and Rural Development’s South Hanoi branch to which Lifepro Vietnam owes $150 million. The value of the sealed assets at the complex remains unknown. The bank has also asked Ninh Binh authorities not to appraise any application of Lifepro Vietnam’s ownership transfer to other investors without notifying the bank.
Regarding the case, Ninh Binh Provincial Industrial Parks Management Authority’s Investment Department chief Tran Van Trinh said three summons had been sent since early September to leaders of Luxfashion in the Ninh Binh complex and its representative office in Hanoi. However, they had been met by stony silence.
“The investors have not turned up since they secretly stopped operations. We would like to work in a good-willed spirit with the investors to address their problems, while wanting to protect the local workers’ rights and our province’s prestige,” Trinh told VIR, adding that the local government was seeking higher-level help to deal with this case.
Lifepro Vietnam, with legal investment capital of $50 million, was liscensed in January 2011 with four shareholders – Hong Kong Golden Principal Investment (63 per cent), Canadian investor Ahmed El Fehdi (30 per cent), domestic private firm Lifepro Vietnam (5 per cent) and Vietnam’s state-owned Interserco (2 per cent).
Lifepro Vietnam was restructured from the former Enzo Viet Joint Stock Company established in 2007 by Ahmed El Fehdi and local Thanh Dong Fine Arts Export and Import Company. Internal disagreement resulted in the local firm pulling out Enzo Viet in 2008.
Luxfashion’s knitwear production for export officially came into service in March this year, with the peak time employment of 920 local workers.
“The investor came to Vietnam with the confidence that the country will open a good investment opportunity due to its encouraging investment environment for foreign investors. We hoped to develop the project, create jobs for more than 5,000 local and foreign workers,” Boubker El Fehdi, Ahmed El Fehdi’s son who acted as the executive general director of Lifepro Vietnam, wrote to VIR when contacted by email last week.
El Fehdi, who also left Vietnam and did not mention where he was, declined to directly respond to VIR’s question whether the $150 million debt would be repaid, but said: “The problem is not Luxfashion or the investors but it’s lack of support and to throw a spanner in the works that prevents the company to produce and earn an income. Only with revenue the company will pay the debts.”
“Our project remains the same for the future, that means to recruit, produce, export, grow the economy and small families of our workers in general,” he said in the email.
Lifepro Vietnam is the latest case of absconding investors leaving bad debts with Vietnam’s commercial banks to hit the headlines, amid Vietnam’s economic woes. It follows Taiwanese furniture-maker Kenmark Group having disappeared without repaying $44 million to two local commercial banks. Kenmark’s two factories abruptly stopped operating in May 2010.
Five years ago, Kenmark boasted it would pump $500 million into northern Hai Duong province’s Viet Hoa Industrial Park to building industrial production, trading and services facilities and urban areas.
Project’s bad fashion statement, Oct 15, 2012