FPG Confirms Vietnam Steel Operations On Hold
16 June 2016
Formosa Plastics Group (FPG, ????) yesterday confirmed that a scheduled launch date for operations at a subsidiary’s steel mill in Vietnam has been postponed and said that no new schedule has been set.
Formosa Ha Tinh Steel Corp (????????) vice president Chang Fu-ning (???) said that the No. 1 furnace of the steel complex, which is in the Vung Ang Economic Zone in Ha Tinh Province, would not become operational on Saturday next week as scheduled.
The confirmation came after Taiwanese media reported that FPG was forced to postpone the start of operations of a furnace at the plant because Vietnamese authorities have demanded that the group pay US$70 million in taxes it has been accused of not paying.
The report said that the delay was also because Vietnamese authorities needed more time to process an application filed by FPG to begin production.
The report cited sources in Vietnam as saying that the move to chase FPG for the tax could have untold political factors.
Chang said that FPG has communicated with the Vietnamese Ministry of Finance over the alleged failure to pay taxes.
Sources said that the postponement could deal a blow to Taipei’s “new southbound policy,” which is aimed at building closer ties with more business partners in the region, including an ambition to turn ASEAN into an extension of Taiwan’s domestic market.
The sources said that the postponement of operations at the steel facility has caught many investors operating in Vietnam off guard, with some wanting Taipei to step in to resolve the issue.
The US$10 billion Formosa Ha Tinh Steel is the first steel furnace investment project by a Taiwanese firm in an overseas market.
FPG subsidiaries Formosa Plastics Corp (????), Nan Ya Plastics Corp (????), Formosa Chemicals & Fiber Corp (????) and Formosa Petrochemical Corp (????) hold a 70 percent stake in the Vietnamese project.
China Steel Corp (??), the largest steelmaker in Taiwan, and Japan’s JFE Steel Corp have 20 percent and 5 percent stakes respectively.
Chang said that management of the Ha Tinh steel mill has been in discussions to develop a strategy to deal with the delay.
The steel complex was one of the targets of anti-Chinese protests staged by Vietnamese in May 2014 after China deployed a US$1 billion oil rig in disputed waters in the South China Sea.
Construction of the Ha Tinh complex started in December 2013 and has a projected annual capacity of 7.5 million tonnes targeted for domestic consumption and export to other Asian nations.
The project includes a port and a power plant that are to be completed by the end of 2020.
Source : taipeitimes.com