Capital shortage slowing progress of industrial projects

Capital shortage is causing slow progress of many big projects in the industrial sector.

As per an initial plan, DAP Hai Phong factory this year was to provide about 290,000 tonnes of products to the market against a capacity of 330,000 tonnes a year. But, till the end of July, the factory just produced 75,000 tonnes, not meeting this year’s target of 30 percent. The reason was difficulty in accessing capital.

Previously, in 2003, DAP Hai Phong factory was built on a site of 72 hectares with a total investment of over $172.3 million and an estimated capacity of 330,000 tonnes a year. The factory was expected to ensure 30 percent of DAP demand in the domestic market and save some $45 million from importing this product.
However, the investor could not speed up the progress of the project because banks met difficulties in disbursing capital.

The $170 million project still incomplete is a “special event” in industrial sector.

Apart from DAP Hai Phong, some other projects, although being put into operation, can not be transferred such as Tranh River hydropower plant no 2, Se San hydropower plant no 4, and Phuong Nam paper mill.

Additionally, some power projects in Hai Phong and Quang Ninh are falling into unstable operation situation, they have to be halted for preparation. This showed a vicious cycle in the investment of projects.

During H1, the actualised investment capital for basic constructions of groups, corporations and companies under the Ministry of Industry and Trade accounted for only 36.5 percent of the plan, reaching nearly 81.668 trillion dong. Many other big projects of state-run enterprises also could not being carried out because of capital shortage

Foreign investment attraction into industrial sector has not yet found a breakthrough. During the first haft this year, both new registered and raised capital was only $8.43 billion, equalling to 80.9 percent from the same period last year. Of which, more than 20 projects registered to raise capital totally by $500 million, or 10.7 percent year-on-year.

As for new approved projects, although having signals of thriving with total pledged capital of nearly $8 billion, up 43 percent over a year earlier, these projects are not expected to carry out quickly or turn out product soon.

For example, the Mong Duong power BOT project of AES Group has a total pledged capital of $2.2 billion, but the investor promised to start the project one year later after arranging capital.

Sponge steel project of Kobe Steel Group to provide steel billet products with an investment of $1 billion and an output of two million tonnes a year, is expected to carry out on time.
However, till 2013 the plant would be able to start operation.

Many foreign investment projects with large scale being started in the last two years are also very slow in progress

For instance, Ca Na steel complex project worth $9.8 billion has not operations despite it being started in late 2008. Guang Lian Dung Quat steel project, although being handed over to new investor with raised investment of up to $4 billion, has nothing new in construction against at the time of being licensed in 2006. Petrochemical complex project ($3.7 billion of investment) in Southern of Vietnam also does not have any moves after the groundbreaking ceremony in September 2008.

In addition, there is a series of other projects in industrial sector also in the same situation such as fibre, garment and textile, dyeing of textile. – Dautu

Tags: Vietnam industries, Vietnam industry