China Eximbank provides RMB 49 million concessional loan for Plastic Mould Factory Construction Project

Project narrative

In 2005, China Eximbank and the Vietnam Ministry of Finance signed an RMB 49,010,105 concessional loan agreement for the Plastic Mould Factory Construction Project). The loan carried the following borrowing terms: a 15-year maturity, a 5-year grace period, and a 3.2% interest rate. It was scheduled for semi-annual repayments between September 10, 2011 and March 10, 2021. Then, in 2006, Vietnam Development Bank and Vinaplast (Công ty CP Nhựa Việt Nam) — a Vietnamese a state-owned enterprise — signed a credit contract (No. 01/2006/HĐTĐ-ODA-TDTW1) for this project. The ultimate borrower (Vinaplast) used the China Eximbank loan proceeds to finance a RMB 49,010,105 commercial contract with China Shanghai Group Corporation for Foreign Economic & Technological Cooperation (SFECO). The purpose of the project was to acquire and install machinery and equipment at the factory of Vietnam Plastic Joint Stock Company and Thang Long Plastic Joint Stock Company in Tien Son Industrial Park (Bac Ninh), the factory of Bac Giang Plastic Joint Stock Company, the factory of the Van Don Plastic Joint Stock Company in My Phuoc 2 Industrial Park within Ben Cat District (Binh Duong), and the factory of Phu Plastic Joint Stock Company in Ho Chi Minh City. In September 2006, SFECO began to deliver the equipment and machinery to Vinaplast. All of the machinery and equipment was completely installed by March 2007. Mr. Tran Hong Phong, Mr. Vu Viet Hoan, former Chairman of the Board of Directors of Bac Giang Plastic Company, subsequently reportedly that the machines that his company received were of poor quality and not worth the money that was spent. He reported that "some machines broke down immediately, the capacity was only 30-40% of the theoretical capacity, and they had to be repaired continuously while the auxiliary equipment was not available."