The announcement of the US investor First Solar to halt the construction of the solar panel factory in Cu Chi district of HCM City has triggered a worry that the investor may stop investing in Vietnam or narrow the project scale.
The First Solar’s investment project in the Dong Nam Industrial Zone in Cu Chi district of HCM City was once highlighted as a salient achievement of HCM City in attracting foreign direct investment (FDI). However, the investor of the project unexpected has announced the halt of the project, after 10 months of implementation.
In the first 10 consecutive months of 2011, HCM City continuously was listed in the top three of the localities in Vietnam which attracted the highest volumes of FDI capital. Earlier this year, HCM City granted the investment license to First Solar Vietnam, whose investment capital alone makes up 50 percent of the total registered FDI capital, at over one billion dollars.
Especially, the project is not only believed to play a very important role in the development of the local economy, but also to make a great contribution to the social development. It is expected that once becoming operational, the factory would employ 600 workers. Meanwhile, HCM City, with a modern factory, would be mentioned in the future as the destination of hi-tech investors.
On the day of receiving the investment license, the representative of First Solar said that by 2012, the First Solar’s factory in Vietnam will be the second largest factory out of the six operational factories worldwide, 239 MW per annum, just second to the one in Malaysia (1430 MW).
However, First Solar recently decided to reconsider the investment plan and investment projects. Prior to that, Rob Gillette, Managing Director of First Solar was dismissed for miscalculating the demand for solar energy in the world, which led to the group’s decision to push up investment.
The announcement by First Solar to halt the construction of its factory in Vietnam has raised the worry that the US group may withdraw from Vietnam or narrow the scale of the factory.
Lu Thanh Phong, Deputy Director of the HCM City Department for Planning and Investment, has affirmed that the First Solar’s project will still be added into the list of FDI projects in 2011, since the investor has only stated the halt of the construction, not the withdrawal, for the project.
In fact, First Solar in Vietnam is facing big difficulties, because the demand turns out to be not as big as it previously thought. At the project kicking-off ceremony, President of First Solar Group Bruce Sohn said that the products of the factory would be mainly exported to the EU market.
However, in the latest statement, First Solar said that it has to postpone the construction of the factory until it can see that the world market needs the supply from the factory. First Solar will complete the construction of the factory, but it will stop the recruitment and equipment import until the project is resumed.
The factory’s construction work began in March 2011 with about 2000 workers. First Solar has not released a concrete plan on worker employment and equipment installation, while it will follow necessary procedures as requested by the Vietnamese laws to postpone the project at reasonable moment.
Commenting about the move by First Solar to postpone the project, Lawyer Nguyen Huu Phuoc from Phuoc & Associates Law Firm, said that the current Investment Law and other legal documents do not stipulate any concrete cases which allow foreign investors to postpone the implementation of investment projects.
However, the article No 67 of the Decree 108 guiding the implementation of the Investment Law stipulates that investors, when postponing or delaying the implementation of the projects that lead to the changes in the committed progress of the projects, they must inform in written documents to the state management agency about the reasons and the expected delay time, at least 15 working days in advance.
As such, in this case, the state management agencies can either approve or not approve the suspension of the project.