Saturday, February 26, 2011

Vietnam cancels Lion Groups' RM31b project

The Vietnamese govt should give details for revoking a license issued to a Malaysia-Vietnam joint-venture entity Lion Group-Vinashin which put a halt to its giant steel mill project in the country.

The US$9.8 billion (about RM31 billion) project in the southern coastal province of Ninh Thuan began in November 2008 includes power plants and a sea port. Upon completion, it can produce 4.5 million tonnes of steel products.

The only reason given for the project cancellation is heavy debts incurred by the Vietnam Shipbuilding Industry Group (Vinashin), and that 'investors did not fulfil commitments for implementation of the project as stated in the investment licence'.

The Lion Group, which held a 75 per cent stake in the project was also accused of having difficulties arranging funding while 'trouble' with the chosen technology.

In December Vinashin, whose debts of more than US$4 billion pushed it to the brink of bankruptcy, reportedly defaulted on the first US$60 million instalment of a $600 million loan arranged by Credit Suisse in 2007.

Police are investigating and have arrested Pham Thanh Binh, Vinashin's former chairman, who is accused of violating state economic management regulations.

It was understood that Lion was not informed of the cancellation. As to how much the company has spent for the project is also unknown but sources said it was close to RM2 billion.

On our part, the govt and MITI should get clarification of the matter. As among Malaysia's top conglomerate, such a significant business losses affects our dignity. Take a look what happened to Lion's share on Bursa Malaysia...

11 comments:

center court said...

i believe vietnam made the right decision in the interest of both parties.

in order to avoid more losses, it was best to call off the project before it eats out more, esp from lion group as the biggest stakeholder.

anyway, we should expect a clear explanation from vietnam

an observer said...

lion has spent much money in the project. i hope both governments can find a way to revive it. there must be some ways.

Anonymous said...

wow!

lion lost a lot.

who will offset such losses?

zenith said...

thats what we call a termination without prior notice.

lion was not informed of the license revoke. i think the company has every rights to seek full clarification from the vietnamese govt.

not after the project has started two years ago!

something is amiss here...

timah langat said...

daripada rugi lebih besar, elok dibatalkan saja projek tu, betul tak?

kita pun sedih jugak sebab ia babitkan syarikat malaysia tapi ia adalah satu pengajaran berguna bagi kita yang ingin melabur di luar negara untuk projek besar seperti ini.

alangkah baiknya kalau wang sebesar itu dilaburkan di negara sendiri!

Anonymous said...

their partnership went back many years. didnt lion realise that its partner was in trouble?

kulup ludin said...

vietnam mesti ada sebab kukuh untuk menarik balik lesen kepada lion dan membatalkan projek berkenaan.

di samping syarikat perkapalannya menanggung kerugian besar hingga menyebabkannya hampir muflis, ia juga ingin memelihara kepentingan lion agar tidak terjerumus lebih jauh ke dalam masalah yang terbabit.

apa pun, kerajaan vietnam harus sekurang-kurangnya membuat kenyataan bertulis kepada malaysia dan lion group mengenai tindakan mendadaknya itu.

ramai pelabur malaysia ada di vietnam. kita tidak mahu ia menjejaskan hubungan yang sudah ada.

Anonymous said...

dah rugi, tutup la.

tu pun tak paham ke.

projek besi tu pun baru nak mula. bukan rugi sangat pun lion setakat ni

x-factor said...

why dont lion group get another vietnamese partner for the steel mill project?

after such a big investment, the project can proceed with new ventures.

loans can be arranged here, in malaysia

siew said...

i believe the project can still be salvaged if lion group agrees to engage another vietnam company.

its a waste to just abandon it after all yang money and effort

tokman said...

Did the Malaysian govt and the Lions Group came in clean when they made the deal with Vietnam? Was a proper feasibility study made by the Lions Group and transparent in her deal with the Vietnamese investors? Information from corporate friends reveal that it is always risky and complicated when you deal with some Asean countries as it involves so much corruption at ALL levels and every change of new govt! I hope I am wrong here.....