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...