Suspension of Investment Registration for Cement Projects

Summary

In Official Letter 06/BXD-VLXD released on 5 January 2010, the Ministry of Construction ("MOC") requested provincial people's committees to suspend investment registration for cement projects from now until 2020.

Full Update

As at the end of 2009, investment in 97 cement production lines had been completed and operation commenced with a total design output of 57.4 million tonnes.

Pursuant to the master plan for development of Vietnam's cement industry until 2010 with orientation to 2020 as approved by the Prime Minister of the Government in Decision 108/QD-TTg dated 16 May 2005:

• In 2010 there will be an additional 13 reverter furnace cement production lines completed and put into operation with a total design capacity of 11.7 million tonnes per year, exceeding the domestic demand by approximately 2 million tonnes
• In 2011 another 12 reverter furnace cement production lines will be completed and put into operation with a total design capacity of 9.35 million tonnes per year, 8 million tonnes in excess of the domestic demand
• In 2012 another 7 reverter furnace cement production lines will be completed and become operational with a total design capacity of 6.72 million tonnes per year, approximately 15 million tonnes above the domestic demand
• In 2015 there will be an additional 7 reverter furnace cement production lines completed and put into operation with a total design capacity exceeding domestic demand by some 14 million tonnes
• In 2020 domestic cement production will reach approximately 102 million tonnes, which will exceed demand by 7 million tonnes

Out of a fear of oversupply, the MOC has suggested suspending the licensing of new cement projects from now until 2020. To this effect the MOC submitted Official Letter 64/BC-BXD dated 3 November 2009 to the Prime Minister and on 5 December 2009 the Government Office in its Official Letter 8703/VPCP-KTN notified that Deputy Prime Minister Hoang Trung Hai agreed with the MOC's suggestion.

For inquiries related to this Client Alert, please contact:

Dao Nguyen (dao.nguyen@mayerbrown.com)

Thinh Dan (thinh.dan@mayerbrown.com)

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