VietNamNet Bridge – The mammoth $3 billion Guang Lian steel complex is very likely to be crossed off the list of foreign-invested projects in Vietnam as some investors have left, and the only remaining investor is considering leaving.

JFE, the world’s leading steel manufacturer from Japan, has decided to quit the $3 billion steel project in Dung Quat Economic Zone after shilly-shallying for eight years.

Vo Tien Dung, deputy head of the Dung Quat Economic Zone in Quang Ngai province, on September 16 confirmed the news at the provincial People’s Committee meeting.

JPE reportedly has sent a document to the government about the decision to quit the project, which was initially capitalized at $3 billion. Investors had been seeking permission to raise the investment capital to $4.5 billion.

Dung said that JFE decided to withdraw from the project because the Vietnamese steel market is on the decline, while there are many other steel mills now under construction in Vietnam and neighboring countries.

The other investor, E-United from Taiwan, has said it will make a decision about continuing the project after a meeting with the Quang Ngai provincial People’s Committee on September 19.

According to Dung, there could be two scenarios. First, Quang Ngai could allow the investor to continue the project if it commits to follow the project implementation schedule set by local authorities. Second, if E-United does not accept the schedule, the project development will stop, and local authorities will have to give back the investment already made by the investors.

Dung revealed that if the project is stopped, E-United would claim back $50 million.

The steel complex project has experienced a thorny path since the day it was licensed in 2006. The project was registered by Taiwanese Tycoons Group, capitalized at $1 billion.

However, after four amendments, the investment capital was raised to $3 billion. In early 2012, the Japanese JPE decided to team up with E-United to take over the project, developing a 7 million-ton steel mill on an area of 700 hectares.

JFE made a series of investment demands, including a preferential corporate income tax of 10 percent, water supply of 200,000 cubic meters per day, national electricity grid and a 210-hectare of sea-water surface as “rewards” for the huge investment project.

However, even though it received major preferential incentives, it has announced its withdrawal from the project.

Analysts commented that Vietnam, once more, “has tasted bitterness” when trying to attract huge investment projects.

The hundreds of hectares of land allocated to the investors, after the Quang Ngai provincial authorities spent hundreds of billions of dong, has been left idle.

Meanwhile, hundreds of households, who had to leave their land and houses to make way for the project, are forced to live near the empty land plot, and are struggling to make a living as they now do not have land for agricultural production.