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Expert warns against new steel and oil refinery projects

04/08/2016

Chairman of the Vietnam Association of Foreign Invested Enterprises, Nguyen Mai has said that Vietnam should stop calling investments for cement, steel and oil refinery projects due to their environmental pollution and ineffective business.

 

Investors have delayed or cancelled Nhon Hoi project

Formosa's recent toxic waste discharge in the central region and news that foreign investors have delayed or cancelled a USD20-billion petrochemical project in Nhon Hoi Economic Zone have raised the issue. Mai said Vietnam should review and re-evaluate all existing and coming projects instead of calling for new investments.

The government was warned a few years ago about restructuring their investment portfolio and impacts but only small projects have been inspected. Vietnam has already halted investments into the cement industry after warnings about redundancy and environmental issues, such as air pollution or loss of limestone karsts of Ninh Binh and Kien Giang, were issued. And this time steel projects have been the focus.

In recent years, a large number of localities had granted permits to steel projects en mass without checking if they were using new or out-dated technology. At the end, lots of firms went bankrupt due to high production costs and inability to compete with Chinese products. Those still using out-dated technology pose threats to the environment.

"China and the US have strong steel industries which are also suffering from environmental issues, especially China. Meanwhile the number of steel factories we have now can satisfy local demand. If it's not enough, buying steels from overseas is actually cheaper than local products. That's why we don't need new large-scale projects," Mai said.

Before 2013, many local authorities violated regulations, offering incentives, to attract steel investments. As a result, many of the factories were able to occupy large plots of land despite being small or medium-sized firms in reality. The government tried to screen projects more carefully but the Formosa incident and the Nhon Hoi project show that they haven't been careful enough, he said.

"Formosa is an ambitious project right from the start. The investor proposed to build a factory with capacity to produce 20 million tonnes of oil products a year. After much discussion, we decided that in the first phase, the factory would produce only half of what had been proposed. But now we need to review and reconsider the second phase development too," Mai said.

He went on to say that Vietnam already had Dung Quat, Nghi Son and Vung Ro oil refinery projects with capacity to produce from 55 to 60 million tonnes per year. But Vietnam's annual crude oil reserve is only 10 to 15 million tonnes. In order to keep the refineries running, Vietnam must import crude oil and might not make much profit as world oil prices are low.

In addition, oil refineries are not environmentally-friendly projects. They do not create huge amount of jobs for locals and has low added value because Vietnam does not have total control over the technology nor exported products in large FDI projects.

Mai also emphasised that Vietnam should not start new cement projects and supervise textile projects more tightly because they also pose environmental hazards.

By Nguyen Tuyen | dtinews.vn | August 04, 2016 11:46 AM

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