Vietnamese experts have raised concern about the possibility of a massive steel surplus in the near future when a number of billion-dollar steel projects come into operation, the Vietnam News Agency reported.
They are also worried about negative effects on environment from the projects.
Just in a short time, Vietnam has licensed several steel joint ventures with total investment of up to tens of billions of U.S. dollars, including US$7.9-billion Son Duong Formosa steel complex that was kicked of early last month.
Recently, South Korea’s Posco has submitted to the Vietnamese authorities the study report on the first 100 per cent foreign-invested steel project in the country.
Along with carrying out the US$5.3 billion steel project in central Khanh Hoa province, Posco is planning to invest US$1.5 billion in building a 1,000-MW electricity plant serving the steel mill.
However, the FDI influx into the steel industry has shown tenacious attraction of Vietnam’s investment environment.
Pham Chi Cuong, chairman of the Vietnam Steel Association, said that Vietnam is having basis to attract the world’ steel giants.
Vietnam’s investment environment is being improved quickly after WTO membership, Cuong said, adding its stable economic growth along with an increase of 20 per cent in steel consumption in 2007 are promising a huge steel consumption market.
For foreign investors, beside low labor costs and political stability, the government’s commitments on preferential policies are very of importance George E.Kobrossy, general directory of Zamil Steel Vietnam said.
He also suggested Vietnam should set up large domestic steel complexes so as to gain initiative in this industry.
Phan Huu Thang, head of the Foreign Investment Department under the Ministry of Planning and Investment, expressed his peace of mind about careful calculation on the supply-demand on the market when mapping out a steel industry plan.
Cho Chung-Myong, Posco Project Manager, said Vietnam should not be too worried about the possibility of a huge steel surplus as the country will need up to 10 million tons of steel/year in the future and can export steel when totally opening market by 2015 under the WTO commitments
Posco plans to ship abroad some 30 per cent of steel products when its factory comes into operation, he added.
Regarding effects on environment, the Posco manager has pledged to only apply Finex environmentally-friendly technology.
The steel industry development plan approved by the prime minister in September 2007 set goals to supply a maximum of steel products for the economy’s demand and boost exports.
Under the plan, the steel industry will need US$10 billion-12 billion to produce 12 million-15 million tons of steel ingots and 19 million-22 million tons of finished steel in 2025. Vietnam will be also able to export some 700,000 tons of cast iron and steel in the year. (VNA)
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