VietNamNet Bridge – A lot of gigantic foreign invested projects capitalized at multi-billions of dollars, hoped to help develop the poor local economies, have failed completely for many reasons.

Steel group decides to leave

In 2007, Tata Steel signed an MOU on the development of a steel complex worth $5 billion in the Vung Ang Economic Zone in Ha Tinh province. In August 2008, the business cooperation contract of the involved parties was signed, under which Tata contributed 65 percent of capital, while the Vietnam Steel Corporation and Vietnam Cement Corporation contributed the other 35 percent.

The steel project then promised to help foster the local economy of Ha Tinh, a poor province in the central region, and its steel industry.

However, the Indian steel group has unexpectedly announced its decision to quit the project, seven years after it kicked off the project and showed the strong determination to develop it.

Deputy Chair of the Vung Ang Economic Zone Board of Management Nguyen Dinh Van, while affirming that the board of management has not received any official document from the Indian investor on the project cancelation, said that a lot of problems exist.

According to Van, it takes VND700-800 billion to clear the site for the project, while the other total expenses could be up to VND5 trillion. As the province cannot budget such a huge sum, it asked for the support from the state budget and has been told that it has to manage itself.

Vo Kim Cu, Chair of the Ha Tinh provincial People’s Committee, has affirmed that it is the Indian investor’s decision to drop out; while the local authorities have done everything they can to help the investor implement the project.

Current mechanism stands in engine manufacturer’s way

The South Korean Hyundai has proposed to stop the cooperation with the Vietnamese Truong Hai Automobile Corporation in an engine manufacturing project.

Dinh Van Thu, Deputy Chair of the Quang Nam provincial People’s Committee, said the foreign partner made such a decision because the slow project implementation has affected its production and business plan.

The investor initially planned to set up the Chu Lai – Truong Hai engine manufacturing factory in Tam Hiep Industrial Zone, with the investment capital of VND2.6 trillion.

Also according to Thu, the difficulties of the project are foreseeable. Under the Prime Minister’s Decision No. 49, the Euro 4 emission standards will be applied in Vietnam as of January 2017. Meanwhile, the project would only become operational by December 2014, which means that there is only two years ahead, a too short time if compared with the project’s duration.

The leave will not a big problem

According to the Vietnam Association of Foreign Invested Enterprises (VAFIE), it is understandable why Tata decided to leave Vietnam: the project cannot go in accordance with its business plan.

The association believes that the investor intended to buy existing mills in Vietnam rather than building a new complex.

Acting Director of the Central Institute for Economic Management (CIEM) Nguyen Dinh Cung warned that the foreign investors’ leave may raise worries among the public.

However, Prof Nguyen Mai, a well-known economist, affirmed that the leave of the foreign investors will in no way badly affect the Vietnamese investment environment.

Kim Chi