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WTO accession poses challenges to steel industry
Vietnam ’s entry into the WTO has led to a sharp increase in foreign investment in the steel industry, posing a great challenge to local small-sized businesses, an expert said at a workshop in Hanoi on Dec. 26.
An improved investment environment and an increasingly growing economy since the country joined the World Trade Organisation (WTO) have made the local steel market more attractive to foreign investors.
Formosa and Tycoon from Taiwan , Posco from the Republic of Korea and Lion Group from Malaysia are among the biggest investors in the industry with their investment for each project ranging between 1 billion USD and 10 billion USD.
The simplification of investment licensing procedures and decentralisation of authorities have helped draw foreign investors to the industry, said Pham Chi Cuong, Chairman of the Vietnam Steel Association (VSA).
However, he expressed his concern about this trend, saying that massive investment in the sector would lead to an imbalance in supply of power and materials and disrupt the supply-demand ratio of the market. Added to this is Vietnam ’s lack of expertise in administration.
Cuong suggested that compliance with the approved plan for development of the steel industry to 2020, with vision to 2025, remains necessary for the industry’s sustainable growth.
Vietnam ’s consumption of steel reached 10.2 million tonnes in 2007, compared to 7.2 million tonnes in 2006. The figure is a bit under 10 million this year despite a fall in demand as a result of the global financial turmoil and high domestic inflation.
The country’s production of steel billets in 2008 reached 2.4 million tonnes and is expected to increase in coming years as more facilities go operational, making it less dependent on material imports.
vna
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