Guang Lian Steel Company is optimistic as local authorities are close to handing over a new investment certificate for its steel project in Dung Quat Economic Zone.
The company, a subsidiary owned by Taiwanese E-United Group, wants to build a $4.5 billion steel project in the zone, but has had an agonisingly long wait for its investment licence.
Guang Lian Steel general director Hsueh Hung Yi said the company had been actively working with bankers and Quang Ngai People’s Committee to iron out disagreements between the investor and the local authority.
“We convinced bankers to send a comfort letter to Quang Ngai People’s Committee proving our financial ability to develop this $4.5 billion project,” he said. Yi said the company was trying to meet the local authority’s requests, even some of these weren’t actually required under Vietnam’s investment laws.
“We understand the Investment Law doesn’t require investors to provide comfort letters issued by a bank for an expanded project, but we will do this,” Yi added. In September, representatives from the Export-Import Bank of China visited Vietnam at the invitation of E-United Group to confirm it would stump up the funds needed by the group for its steel project in Dung Quat Economic Zone.
Yi said before the bank issued the letter, it wanted to see strong support from the local authority. “There are some outstanding issues that need to be resolved but the local authority has also said it will grant an amended investment certificate for this project soon,” he added.
Le Van Dung, deputy director of Dung Quat Economic Zone Management Authority, affirmed local officials would actively work to remove difficulties and hindrances. Guang Lian is the second largest steel project to be licensed in Vietnam, following the mammoth port and steel manufacturing complex of Taiwan’s Formosa Plastics Group in Vung Ang Economic Zone, Ha Tinh province.
E-United Group has a 90 per cent stake in the project while Thailand’s Tycoons Worldwide Group holds the remaining 10 per cent. Last year the investor got the green light from the government to lift the project’s registered capital to $4.5 billion from $3 billion.
Accordingly, the project’s capacity will be raised to 7 million tonnes from 5 million tonnes per annum. However, Quang Ngai People’s Committee has held out on granting the revised investment certificate until the investor could show a comfort letter issued by a bank.
Yi said the delay had negatively impacted on E-United Group’s investment in Vietnam and eroded local people’ confidence in the project. “We acknowledge that confidence of people in our project is very low, we are very sorry about that. But we are losing lots of money and time because of the delay in issuing our investment certificate,” said Yi.
He said Guang Lian had recruited 300 Vietnamese employees and 50 foreigners and shelled out some $60 million for the Dung Quat-based project.
“The slow pace in issuing our investment certificate indicates support from the local authority remain lows, forcing bankers to impose tougher conditions for our project,” he added.