VietNamNet Bridge - What economists have warned about is coming true: registered steel projects have not been implemented as promised.

The Ha Tinh provincial Economic Zone (EZ) Board of Management has released a document that says the Van Loi Steel Complex will not be implemented in the EZ. 

Van Loi steel complex project was registered some years ago with the investment capital of VND1.8 trillion. 

The investor planned to churn out first batches of products in August 2010 in the first phase of the project. However, due to financial problems, the project implementation has stopped since 2010.

The Ha Tinh Iron Cast and Steel Company, the investor of the project, admitted it cannot continue implementing the project as committed.

The commercial banks which are the creditors of Van Loi have also been informed about this.

 Analysts believe that the creditors, which have poured VND750 billion into Van Loi so far, will have to divide the scrap iron the investor left.

The director of a Ha Tinh –based commercial bank, one of the creditors, noted that banks may lose all the VND750 billion they disbursed for the project.  

The machines and equipment the investor imported 10 years ago have become rusty and damaged. The investment items valued at VND1 trillion are now just scrap iron. 

Guang Lian, the steel project with the registered capital of billions of dollars in Dung Quat EZ, is in danger of having investment license to be revoked.

The local authorities have released an ultimatum that if the investor cannot prove its financial capability by the end of June, the investment license will be taken back.

The project, licensed nine years ago, still has not been implemented because Guang Lian Steel Company has delayed the investment because it could not arrange capital.

Pham Chi Lan, a renowned economist, commented that the collapse of the projects is anticipated. 

Economists warned about the sad ending for steel projects some years ago, pointing out that domestic overproduction and imports in masse in the context would kill the projects.

Lan, in an interview with Dat Viet newspaper, said investors were misled about the market demand. Meanwhile, local authorities drew up unreasonable development strategies.

Not only steel investors, but cement, glass and tile manufacturers also made miscalculations because of the exaggerated demand reported during the “real estate bubble” period.

She went on to say that the licensed projects which cannot be implemented have caused big losses to the localities and local people. Licenses were given to freely and  provincial authorities wanted to attract investments to their localities to develop local economies.

Dat Viet