Malaysia firm blasts Vietnam state shipbuilder

Malaysian conglomerate The Lion Group has blamed problems at Vietnam’s scandal-hit shipbuilder Vinashin for the failure of a multi-billion-dollar joint venture.

The $9.8 billion project by state-owned Vietnam Shipbuilding Industry Group (Vinashin) and Lion would have included a steel mill, power plants and a sea port in the southern Vietnamese province of Ninh Thuan.

Vietnamese officials said last month that the project’s investment licence had been revoked because investors did not fulfil their commitments.

“The Lion Group wishes to clarify that the lack of progress is due to the financial and management issues affecting Vinashin which has not been able to respond on the continuity of the project,” the Malaysian firm said in a statement to AFP.

It added that Lion required certain conditions, including adequate import tariff protection, to be in place for such a large investment.

“As these requirements have not been met, the Group has therefore decided not to proceed with the project,” it said.

Pham Dong, head of the Ninh Thuan planning and investment department, earlier told Dow Jones Newswires that The Lion Group held a 75 percent stake in the project but had difficulties arranging funding. There was also “trouble” with the chosen technology, Dong said.

In December Vinashin, whose debts of more than $4 billion pushed it to the brink of bankruptcy, reportedly defaulted on the first $60 million instalment of a $600 million loan arranged by Credit Suisse in 2007.

Police are investigating and have arrested Pham Thanh Binh, Vinashin’s former chairman, who is accused of violating state economic management regulations.

Others have also reportedly been held in the case, which threatened the country’s global financial reputation.

Vinashin, whose interests spanned a range of sectors from ports to real estate, is being restructured – AFP

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