Debated Hoa Sen Group steel project under tighter scrutiny than Formosa’s

Speaking to VIR on the side-line of the recent conference organised by the Japan International Cooperation Agency (JICA) on the development of the automotive and auto parts industry in Vietnam, director of the Department of Heavy Industry under the Ministry of Industry and Trade (MoIT) Truong Thanh Hoai said that the government has learned many lessons from the Formosa scandal.

To avoid another potential fiasco, for big projects like that of HSG, instead of only making comments and recommendations, the ministries in charge are going to evaluate the investor’s basic design and the investor will have to make adjustments according to these recommendations.

“Our laws on construction aimed to facilitate investment. The ministries only made comments which the investor was free to follow or ignore, in full knowledge that they could be held responsible before the law for the decision. It was more difficult to supervise that way. 

Now, the regulations on the management of investment and construction as well as on environment protection are tighter, so we are going to be stricter in evaluating the environmental impacts of a project, its pilot operation, or, later on, the official operation,” Hoai said.

Many experts have voiced concerns over HSG’s project. Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE), said that there is a global surplus of steel already, and Vietnam should instead concentrate on developing other industries that it has a comparative advantage in.

Former advisor to the prime minister, Pham Chi Lan agreed, adding that she was concerned about whether Vietnamese steel can compete with imports from China. She also questioned whether calculations on economic growth relying on a steel-oriented scenario are correct.

The MoIT has approved the project in the master plan on growing the country’s steel industry. “We think that it is necessary to have a large scale steel complex,” said Hoai “because most Vietnamese steel producers nowadays operate on a small scale and it would be difficult for them to lower production costs with an output of a few hundred thousand tonnes per year.

Moreover, they mostly produce construction steel, and Vietnam still has to import a lot of structural steel and steel for manufacturing. Thus, we encourage investment in the production of these product types.”