L. JOSEPH
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WASHINGTON, D.C., August 10 -- The International Finance Corporation (IFC) has approved financing packages for two new companies in Viet Nam: a steel rolling mill and a flour mill. To date, IFC has invested US$19.5 million and mobilized US$26 million in financing for projects in Viet Nam. IFC has also provided technical assistance to the Government of Viet Nam on the legal and institutional framework needed to develop capital markets, establish a local leasing industry, and improve the climate for foreign investment. "Viet Nam presents excellent prospects for the private sector," said Mr. Jemal-ud-din Kassum, IFC's Vice President for Operations who recently visited Viet Nam to sign the country's first private sector port project. "Viet Nam's economic fundamentals -- a substantial growth rate and a considerable domestic market -- are especially attractive to the private sector," added Mr. Kassum. IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private
sector projects in developing countries. STEEL ROLLING MILL IFC has approved a loan of US$15 million for the construction and operation of Vina Kyoei Steel Limited, a steel rolling mill located in Ba Ria-Vung Tau province in southern Viet Nam. The total project cost is estimated at about US$70 million. The new mill will produce up to 300,000 tons per annum of steel bars and wire rods to meet the high demand resulting from Viet Nam's strong economic growth. The need for steel products is likely to increase rapidly with the projected rise in infrastructure, general construction, and other activities. (More) IFC Press Release No. 96/14 Page 2 of 2 "This is IFC's fifth investment in Viet Nam and demonstrates that private sector projects can be implemented in Viet Nam's challenging legal and regulatory environment," said Mr. Peter Cook, Director of IFC's Asia Department. Key investors in the plant include the Vietnam Steel Corporation, a state-owned enterprise; Kyoei Steel Ltd., a leading Japanese mini-mill steel
maker; Mitsui & Co. Ltd.; and Itochu Corporation. Kyoei Steel Ltd. will transfer its technology and expertise to construct and operate this modern rolling mill. FLOUR MILL IFC has approved US$11 million for the construction and operation of Vimaflour, a joint venture flour mill located in Cai Lan in northern Viet Nam. IFC's financing consists of a loan of US$8 million for its own account and a syndicated loan of US$3 million for the account of participating banks. The total project cost is estimated at US$26 million. Vimaflour will be the second company producing significant volumes of wheat flour in Viet Nam. The only other notable wheat flour producer is a state-owned company in Ho Chi Minh City. Viet Nam imports over 80 percent of its flour requirements from China, Japan, and the European Union. The balance is supplied by the state-owned milling factory, which has been unable to operate at full capacity. "The domestic production of wheat flour by Vimaflour will decrease Viet Nam's dependence on imported wh
eat flour and reduce the cost of flour by about US$14 million per year," said Mr. Karl Voltaire, Director of IFC's Agribusiness Department. "The new flour mill will also support the development of small and medium-sized private bakeries and noodle manufacturers." Malayan Flour Mills, a Malaysian company, and Viet Nam Central Food Corporation I, a Vietnamese company under the Ministry of Food and Agriculture, are the principal investors in the project. Malayan Flour Mills will own 70 percent of the joint venture and the Vietnamese company will own 30 percent. Malayan Flour Mills will manage the project.