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Tien Giang borrowed money to subsidize an IZ developer
As if the scandal surrounding American investor Hoang Kieu isn’t enough of an embarrassment to Tien Giang province officials, they’re also having to explain why they’re still looking for the four million dollars irregularly advanced Nhut Thanh Tan Company to develop the Tan Huong Industrial Zone (IZ).
The People’s Committee (i.e., provincial government) of Tien Giang borrowed 150 billion dong ($7.9 million) to provide investment incentives to Nhut Thanh Tan Co., Ltd, the developer of the Tan Huong Industrial Zone in Chau Thanh district. Now the People’s Council of this upper Delta province has asked the People’s Committee to explain why that was necessary, reports Tuoi Tre.
The 150 billion dong was borrowed 150 billion dong from the Ministry of Finance in 2005 with a one-year term at a monthly interest rate of 0.15 percent to cover the cost of site clearance of 197.3 hectares near My Tho City to launch the Tan Huong IZ.
Later that year, the local government issued a decision on incentives for businesses investing in Tan Huong IZ. The capital for site clearance was estimated at 155 billion dong, of which the local government would lend half in advance to businesses that invested in the IZ’s infrastructure.
On December 29 2005, the province people’s committee issued a decision permitting the use of this mechanism - a 100 percent subsidy for site clearance and compensation for land - in development of some important industrial zones.
The next day, December 30 2005, the local government authorized the investment incentives for Tan Huong IZ, lending the developer 50 percent of the capital for site clearance. At that time many investors asked for 100 percent of capital for site clearance, and only Nhut Thanh Tan agreed to take on the role of developer with a subsidy of 50 percent.
In early September 2006, Nhut Thanh Tan Co., Ltd. was chosen to build infrastructure for this IZ. Nhut Thanh director Nguyen Thi Quy signed a commitment to repay the 77.5 billion dong (A trifle over $4 million) advanced by the local government. The Tien Giang authorities describe the incentive loan to the Nhat Thanh Tan Company as an extraordinary mechanism recommended by competent agencies to attract investment capital and speed up the IZ development project.
However, according to the Tien Giang People’s Council (Legislature), this investment incentive policy was not approved by the council according to the law. Also, according to records of the Management Board of Tien Giang’s IZs, Nhut Thanh Tan so far only repaid 10.5 billion dong in seven installments, and only after repeated requests by the provincial government. Meanwhile, the province had to repay the 150 billion debt to the Finance Ministry in 2006, plus 2.7 billion dong in interest.
Though the the developer of Tan Huong IZ benefited from extraordinary incentives, this IZ doesn’t work very effectively. According to plan, the IZ would be filled up by 2009, with 15,000-20,000. However, the IZ had only nine projects with a total of 500 workers in early May 2010, taking up a mere 16 hectares, less than 12 percent of the total area.
Provincial government officials say they didn’t ask for the People’s Council’s consideration and approval for this policy because the capital was borrowed from the Finance Ministry to implement key projects, including Tan Huong IZ. It planned to auction 11 hectares of the Dong Sen-Phuong Nam area to have money to pay the loan but this plan failed. Thus the province was compelled to pay off the loan with funds from Tien Giang’s operating budget.
Interviewed by Tuoi Tre, Tien Giang Party Secretary Tran Thi Kim Cuc said that the local government was wrong to lend Nhut Thanh Tan company 77.5 billion for five years at zero interest without first getting the approval of the People’s Council. “I’ve asked the People’s Committee to review its mistake at the upcoming Council meeting,” Cuc said.
vietnamnet, Tuoi Tre
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