Australia aims to help seal Vietnam steel mill pact
HANOI - Australia hopes to help seal a deal between BHP Steel Ltd
and Vietnam over a controversial $100 million project that has been
deadlocked over tax issues, Foreign Minister Alexander Downer said
yesterday.
The agreement has been stalled for several months and a final decision on the steel
mill now rests with the prime minister, Vietnamese officials say.
"We hope that during my visit I can consolidate this arrangement," Downer told a news
conference ahead of a meeting with Vietnam's Planning and Investment Minister Vo
Hong Phuc, without giving details.
Downer, who arrived from Thailand for a two-day visit, is also scheduled to meet Prime
Minister Phan Van Khai later yesterday.
The Planning and Investment Ministry says BHP Steel had sought a five-year tax
exemption for importing materials, a tax-free import of 60,000 tonnes of galvanised
steel per year for two years and a 10 per cent corporate income tax for the whole
operation.
Hanoi imposes a corporate income tax of 25 per cent on foreign firms and this will be
increased to 28 percent from January 2004.
Downer said BHP Steel wanted the Vietnamese government's guarantee so the firm
could import materials and capital equipment at a zero tariff "to ensure the steel mill
remained competitive".
The company, Australia's largest steel maker that was spun off from minerals company
BHP Billiton Ltd/Plc, plans to build a galvanised steel mill in the southern province of Ba
Ria-Vung Tau to produce 120,000 tonnes of aluminium-coated steel and painted steel a
year.
State media also said the industry ministry was against BHP Steel's project, saying local
firms also planned to set up plants in the same province to produce similar products.
Vietnam is anxious to revive foreign direct investment (FDI) that peaked in the late
1990s before slowing as foreign investors, having complained of corruption and
bureaucracy, went to rivals such as China. However, Minister Phuc told Reuters last
month FDI was on the increase again.
Vietnam has licensed 271 FDI projects in the first half of the year with pledges totalling
$720 million, up 52 per cent on a year earlier in value. Disbursed FDI during the first
five months has also increased six per cent year-on-year to $900 million.
Reuters - July 30, 2003.
|