Part 1: Big projects leave HCM City
Two bad pieces of news relating to the multi-billion dollar projects in HCM City occurred in the last week alone. The project on the Thu Thiem software park in district 2 with the initially registered capital of up to 1.2 billion dollars is facing the risk of having license revoked. The HCM City’s authorities once hoped that once it becomes operational it will contribute 4.3 billion dong in tax a year, create a turnover of 6.5 billion dollar and generates 70,000 jobs to software and information technology engineers.
Meanwhile, Chair of the HCM City People’s Committee Le Hoang Quan has agreed to revoke the license granted before to TA Associates Vietnam, a joint venture between SaigonTel, which contributes 20 percent of capital to the joint venture, and TA Associates International Pte Ltd (Singapore), a subsidiary of Taiwanese Teco, which contributes 80 percent of capital.
Though the city’s authorities have created most favorable conditions for TA Associates Vietnam to implement the project at the Thu Thiem new urban area, but the joint venture has not fulfilled the initial commitments, while it has made new proposals which do not come in line with the initial commitments.
The joint venture kicked off the project on the biggest software park in South East Asia in mid 2008, just one month after it got the investment license. However, due to the global financial crisis and economic recession, the foreign partners of TA Associates Vietnam met financial difficulties and could not fulfill the commitments. To date, the 16 hectare land plot reserved for the project still has been left idle.
In the meeting with the press on November 10, the representative of the Thu Thiem urban area Management Board (ICA) affirmed that Teco is a big Taiwanese business, and that the city’s authorities have decided to revoke the license of the project only after realizing that the city’s authorities and the investor could not find a common voice. The investor has made some unreasonable proposals, while some proposals do not fall within the competence of the city’s authorities.
Meanwhile, Dang Thanh Tam, Chair of Saigon Invest Group, the holding company of SaigonTel, who is accompanying President Truong Tan Sang at his visit to South Korea and at the APEC meeting in Hawaii, told Thoi bao Kinh te Saigon’s reporters through phone that SaigonTel only makes 20 percent of the capital contribution in the joint venture, therefore, it does not have the power to make decision. The HCM City’s authorities also did not work out with SaigonTel.
However, Tam also said that the project implementation has been slow because the foreign partner met difficulties in the global economic crisis in 2008. The partner returned to resume the project implementation in 2010 and then proposed the city’s authorities not to impose fine for the slow land leasing fee payment. However, the proposal was not accepted. Meanwhile, in mid 2010, Teco was invited by the Chinese authorities to invest in Tsing Tao.
The investor has invested in a modern software center in Tsing Tao with the investment capital of 300 million dollars.
As such, the Thu Thiem software park project needs to find a foreign alternative partner.
Meanwhile, the US First Solar Group last week announced the halt of the construction of its solar panel in Cu Chi district in HCM City. The information has stirred up the public because it is a mammoth project in terms of investment capital. The announcement of the First Solar has raised a worry that the US may narrow the scale or stop investment in Vietnam.
It is the mammoth project which helps HCM City to surpass many other localities to lead the country in terms of foreign direct investment attraction.
Source: TBKTSG
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