PM reiterates Formosa's investment term while accepting mistakes

Workers erect production facilities at the Formosa project in Ha Tinh. The central province is alleged to offer the Taiwanese investor illegal incentives. Photo nld.com.vn

The decision was taken following a suggestion made by the Ministry of Planning and Investment (MPI) regarding the same.

Minister and Chairman of the Government Office, Nguyen Van Nen, reiterated the PM's decision before reporters on the sidelines of a press conference on March 2, after the Government Inspectorate of Viet Nam alleged that Hung Nghiep Formosa Ha Tinh Steel Co. Ltd. was offered illegal incentives.

The Investment Law of 2005 stipulates that the maximum investment term for a foreign- invested project is 50 years, and this term may be increased to 70 years in exceptional cases and should be ordered by the Government.

Inspectorate reports stated that the province granted the 70-year investment licence to the company without the Government's permission. The local People's Committee, Department of Planning and Investment and the management board of the Vung Ang Economic Zone, where the project is located, was also held responsible for the oversight.

However, Ha Tinh Chief Inspector Thai Sinh told the Nguoi lao dong (The Labourer) online on March 2 that local authorities had granted the licence as authorised by two Government documents.

The authorities had also sent dispatches on the Government directives to 11 ministries and sectors, and received approval from all of them.

According to Sinh, the Government has assigned the MPI and the Ministries of Natural Resources and Environment, and Finance to resolve the issue reported by the inspectorate, and these agencies disagree with the inspectorate on its conclusion. "Thus, the inspectorate is the only one reporting this and won't provide adequate information."

Nen chose not to comment on the conflicting claims.

He said PM Dung appreciated the "unbiased spirit" of Government inspectors and had "basically agreed" with the inspectorate's reports, which also specified many other mistakes made by Ha Tinh authorities in managing the Formosa project's performance.

The reports stated that the Vung Ang Economic Zone management board had asked the company be pay land rents for only 55 years by offering tax exemptions for the remaining 15 years. An inaccurate rent calculation had resulted in a rental loss of VND46 billion (US$2.19 million) for the province.

As of March 31, 2013 the company owed VND136.7 billion ($6.51 million) in natural resource taxes and VND53.8 billion ($2.56 million) in environment protection fees.

The inspectors had also detected that the land area practically claimed to be cleared for project implementation during the 2008 to 2009 period in Ky Anh District was pegged at nearly 1,394 hectares, about 302 hectares less than the figure stated in the official documents.

The lack of transparency was revealed when the local authorities compensated individuals and households with VND32.94 billion ($1.57 million) for some "land in dispute", which has not been verified.

The inspectorate suggested that the ministries and relevant agencies coordinate to review the financial responsibility of parties involved in the Formosa project, while Dung asked the Ha Tinh People's Committee to agree with the inspectors' guidance.

Minister Nen emphasised that Vung Ang is "a sensitive area" in terms of national security and defence, so the Government attaches special importance to investment activities carried out there.

Formosa is a complex, comprising iron and steel refining facilities, and deep-water seaport and thermo-power plant systems. About 40,000 workers were employed there last December.

The project, along with other growing investments in Ha Tinh, has significantly driven the province's socio-economic development, the inspectorate noted.

Mismanagement

Besides mistakes related to Formosa, the inspectors have also uncovered the mismanagement of local authorities in administering general land and mineral exploitation projects, which have caused financial damages of up to VND493 billion ($23.48 million).

They also pointed out that the capital arrangements made by the province for adopted investment projects have been slow, touching only 44.28 per cent of all registered investments.

Nearly 560 out of the 1,120 inspected development contracts have shown slow progress. The ratio for uncompetitive bids, which were not in keeping with the laws on tendering and construction, had reached up to 60 per cent.