VietNamNet Bridge - Guang Lian could be an ‘unlucky’ project in the eyes of other investors as it has changed many hands, but Hoa Sen still sees big benefits if it takes over the project.

An analyst noted that Hoa Sen, if developing the project as planned, would not have to spend much money on site clearance because the work has been done by the previous investor E-United. 

Though the investor did not implement the project, it spent tens of millions of dollars on site clearance, which allows Hoa Sen to cut investment costs and time.

However, the biggest advantage of the project does not lie in site clearance, but in the tax incentives promised by the local authorities for the project. 

At the time when Tycoons received an investment certificate in 2006, the steel project was subject to a 10 percent preferential corporate income tax and a lot of other investment incentives.

If Hoa Sen registers a new steel project at this moment, it will not be able to enjoy the investment incentives, as steel is no longer listed among the fields for investment encouragement. 

However, if Hoa Sen takes over Guang Lian project and does not adjust the project’s scale, it will inherit all the investment incentives from the previous investor. 

The investment incentives will give Hoa Sen a great competitive edge when it launches products into the market. 

Of course, if Hoa Sen chooses another approach, registering a new investment project after the provincial authorities revoked the license granted to E-United, it will not be able to enjoy incentives.

However, a question has been raised if Hoa Sen is capable of reviving the project which even JFE Steel, one of the world’s 10 largest steel manufacturers, had to give up.

Hoa Sen is one of Vietnam’s largest steel groups with 20 years of experience and 52 export markets. Le Phuoc Vu, president of Hoa Sen, is known as an influential businessman with a long-term vision.

Hoa Sen has five subsidiary companies and two factories. Most recently, in mid-June, the conglomerate inaugurated a 1-million ton per annum cold rolled mill in Nghe An, capitalized at VND5 trillion.

Its finance report showed that its turnover in the months from October 2014 to June 2015 reached VND13.5 trillion, while the post-tax profit was VND484 billion. 

However, an analyst said, Guang Lian would still be a big challenge to Hoa Sen, as the scale of the project is far beyond the projects that Hoa Sen has developed.

While the required investment rate is high for Guang Lian, the analyst said, Hoa Sen cannot be sure about the prospects of the project. In fact, the world’s steel industry is facing big problems caused by overproduction in China. 

NCDT