In the last two years alone, the steel industry has witnessed the boom of ‘super-projects’. Besides the 23 licenced projects named in the steel industry development plan, 32 other unprogrammed projects have also ‘arisen’ in many localities.

Steel projects… everywhere

Besides the 23 licenced projects named in the steel industry development plan, 32 other unprogrammed projects have also ‘arisen’ in many localities
In 2007-2008, the steel industry attracted big steel investment projects from both domestic and foreign investors, including ones worth several billion dollars like the Thach Khe iron ore exploitation project, and Ca Na steel complex in Ninh Thuan province. 32 unprogrammed projects were set up during the period.

The Ministry of Industry and Trade (MOIT) has found out from a recent tour to inspect the implementation of the 2007-2015 steel industry development strategy that steel projects have arisen everywhere throughout the country. Steel projects are mostly found in the north in Cao Bang, Bac Kan, Hoa Binh, Hanoi, Ha Nam, Hai Duong and Nam Dinh, and in the south in Ninh Thuan and Ba Ria-Vung Tau.

There are seven steel projects in Ba Ria-Vung Tau, five in the north port city of Hai Phong, four in Hai Duong, and three in the central province of Ha Tinh.

With the 32 unprogrammed projects, Dr Phan Dang Tuat, Head of the Industrial Policies Institute under MOIT, said that capacity may reach 60mil tonnes. Meanwhile, the steel industry development strategy approved by the Prime Minister predicts that the capacity will be just 10-11mil tonnes by 2010, and 24-25mil tonnes by 2025.

With the excess of capacity, Viet Nam will surely have to export steel. However, it will be not so easy to export steel, especially as Vietnam neighbours huge steel providers – China, Japan, South Korea and Taiwan.

Pham Chi Cuong, Chairman of the Viet Nam Steel Association, has every reason to worry about the overproduction of steel in just a few years.

Why have so many unprogrammed steel projects arisen, then?

According to MOIT, skyrocketing steel prices and forecasts about the high steel demand both have prompted investors to inject money in steel production.

However, the ministry has also acknowledged that unsuitable policies are the main reason behind the steel project boom.

The problem lies in… the policies

The currently applied Construction Law clearly stipulates that investors must get approval from relevant ministries for investment in projects which are not listed in the industry development strategy.

However, the new Investment Law, which initiates decentralisation in licencing projects, allows local authorities to grant licences for projects worth less than VND1,500bil (type-B projects), which means that investors of unprogrammed projects do not necessarily have to seek the approval of relevant ministries.

The 32 unprogrammed projects include 24 implemented without the consultation of the MOIT and without the agreement of the government.

The loophole has provided local authorities with a ‘tool’ to dodge the laws for the last several years.

It is clear that when there are two laws which cover the same issue, investors will refer to the law which can bring more benefit rather than the one which forces them to spend more time and money on investment.

As a result, the steel industry is now facing the risk of overproduction and bearing the consequences of the ‘metallurgy project fever’. (VNN)