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During his official visit to India a fortnight ago, Vietnam’s President Truong Tan Sang came out strongly in support of the early implementation of Tata Steel project, the largest Indian investment project registered in this country.
Sang was quoted by Indian media outlets as saying that Indian and Vietnamese officials were ramping up efforts to kick-start the Ha Tinh province’s Vung Ang Economic Zone-based project. Sang’s words have encouraged Tata, one of the world’s largest steelmakers, to pursue its investment plan in Vietnam which has been in the pipeline since 2008.
Previously, the Indian firm had started to look to other countries for a possible home for its long-delayed $5 billion project. Now they have changed their tune. “We firmly believe in the strong determination of Vietnam’s leaders to implement this project. Hence we expect favourable conditions will be created for effective and fast implementation as this project brings in significant economic value to this country,” said Indronil Sengupta, Tata Steel chief executive in South East Asia.
But a source from Vietnam’s Ministry of Planning and Investment (MPI) said the shape of the project’s development remained hazy because of uncertainty about who was responsible for site clearance costs – the main hurdle preventing the Indian investor from getting its hands on an investment certificate.
The source said the MPI had officially told Tata Steel before Sang’s visit to India that the firm would not receive the necessary investment certificate unless the firm shelled out for site clearance.
“Tata Steel wants the government to support site clearance compensation, but our answer is still no. We do not have money for clearing the site of such a huge project, especially given the government is reducing public investment to rein in inflation,” said the source. Ha Tinh People’s Committee estimated costs for clearing the roughly 725-hectare site around would tally up to around VND4 trillion (nearly $200 million).
In June this year, the Indian investor said it was willing to pay a part of the site clearance cost, which is the same way that Taiwanese Formosa Plastic Group did at its mega seaport and steel manufacturing project close to Tata Steel’s site. But Vung Ang Economic Zone Management Authority deputy director Nguyen Dinh Van said Tata Steel’s proposal was not accepted.
The Tata Steel project, initially proposed in May 2007, will produce 4.6 million tonnes per year. The project is jointly invested by Tata Steel, Vietnam Steel Corporation and Vietnam Cement Industries Corporation with the foreign partner committing to hold a 65 per cent stake.