The group is awaiting the Vietnamese Prime Minister’s approval to kick off the construction of its US$1.2-billion polypropylene (PP) manufacturing plant located at Cai Mep Industrial Zone in the southern province of Ba Ria-Vung Tau.According to the group’s plan, about 100,000 tons of PP produced in Vietnam will be shipped to Japan.
Exports from South Korea to Japan are subject to a tax rate of 6.5 percent. Meanwhile, Vietnam and Japan have signed the Japan-Vietnam Economic Partnership Agreement and other agreements to help remove tariff barriers between the two countries. By setting up production facilities in Vietnam, Hyosung hopes to improve its price competitiveness and boost sales.
The amount of 100,000 tons of PP that Hyosung plans to export to Japan only meet about 4 percent of Japan's demand. However, a positive response from the Japanese market will be a springboard for the Korean industrial conglomerate to reach out to the global market.
The move showed that Vietnam is becoming a more attractive destination for foreign investors as it has signed many free trade agreements with other countries, as well as the advantage of cheap labor and favorable geographic location.
According to Nguyen Anh Triet, director of the Cai Mep Industrial Zone Management Authority, the Ministry of Industry and Trade has approved the investment planning of the Hyosung project. The investor had completed the administrative procedures to implement the project, while simultaneously the province completed the site clearance and handed over the land to the investor.
The Hyosung plant will be located at the Cai Mep Industrial Zone
in the southern province of Ba Ria-Vung Tau. |
According to the plan, the complex is divided into two stages. In the first stage, Hyosung will inject $133 million and $336 million, respectively, into building a liquefied petroleum gas (LPG) storage tank and PP production plant with an annual capacity of 600,000 tonnes per year.
In the second stage, it will invest $496 million and $226 million, respectively, to construct a propane dehydrogenation (PDH) plant and another PP plant, as well as a petrochemical product warehouse.
Earlier in February 2017, representatives of Hyosung Group and the Vietnamese government signed the memorandum of understanding (MoU), marking a new step in implementing the project.
Speaking at the MoU signing ceremony, the representative of Hyosung said, “We will boost our price competitiveness with the integrated production system ranging from LPG to PP and expand our share in markets with great potential, such as Vietnam, China, and Southeast Asia.”
Hyosung set up a subsidiary in Japan more than three decades ago, but its PP sales were only 10,000 tons per year.
