WASHINGTON D.C., Oct. 21 -- The International Finance Corporation (IFC) today signed an agreement to provide US$96.6 million in loans to Morning Star Cement Limited (MSC), for a US$309 million greenfield cement project in Viet Nam.
Present at the signing were representatives of MSC's two joint venture partners, "Holderbank" Financière Glaris Ltd of Switzerland, and the Ha Tien I Cement Company, part of the Viet Nam National Cement Corporation. Holderbank is one of the largest and most experienced cement manufacturers in the world.
Also present were representatives of Nissho Iwai and the Export-Import Bank of Thailand, which together will arrange an additional US$90 million in loans to MSC. The total loan package of $186.6 million is being provided on a limited-recourse basis and without government-guaranteed repayment.
"This is the most significant project financing which has been structured on a limited-recourse basis in Viet Nam to date," said Mr. Harold Rosen, Manager of IFC's Southeast Asia Division. "It represents a major advance, not only in Viet Nam's ability to produce a key product for future economic growth, but also in helping to pave the way for other large project financings without government guarantees. The project addresses both the developmental needs of the country and the objectives of the many private international businesses who are participating as investors, lenders, and suppliers."
MSC is scheduled to begin production in 1998 and will have a total capacity of 1.8 million tons of cement per year, more than one third of the country's present production capacity. With a production facility in Kien Giang province, in the extreme southwestern corner of the country, and a pozzolane grinding plant integrated into a distribution terminal near Ho Chi Minh City, the project will serve the southern provinces, which have relied more heavily on imported cement than provinces to the north.
Of the US$96.6 million in IFC loans, US$30 million will be invested by IFC directly, with the remaining US$66.6 million to be supplied by the Long Term Credit Bank of Japan, Credit Suisse (Singapore Branch), the ANZ Banking Group Limited, Standard Chartered Bank, Banque Nationale de Paris, Commerzbank International S.A., ING Bank, and Banque Worms.
This is IFC's sixth project in Viet Nam, bringing the Corporation's total investments in Viet Nam to about US$170 million, for projects with total costs of nearly US$500 million.
Mr. Rosen placed the project within the context of IFC's activities in the country. He said, "Although we realize the singular importance of this project, we also recognize that future economic growth will require development of many sectors simultaneously, both through investments and through advisory work. IFC is currently engaged in developing other joint venture projects in Viet Nam, in the areas we have already supported -- tourism, construction materials, agribusiness, and infrastructure -- as well as in other sectors."
IFC has 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, including infrastructure financing. Most recently, and with funding from the European Union and the Government of Australia, IFC is studying the feasibility of a facility to develop small private businesses in Viet Nam.
IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
