The Taipei-based Formosa Chemicals & Fiber Corp. will build a nylon factory, as well as increase its capacity for the manufacture of polyester and spinning yarn, according to William Wong, the group's chief executive officer. He outlined details of the proposal at the FPG's annual athletic meet at Mingchi University of Technology in Taishan Township, Taipei County.
Meanwhile, another Taiwanese information technology giant, Hon Hai Precision Industry Co. Ltd., the world's largest contract electronics manufacturer, announced in August that it would also be investing heavily in Vietnam, earmarking US$5 billion over the next five years to make components for computers, digital cameras and mobile phones.
To overcome the shortage of electricity available for factories in Vietnam, and ensure there is enough power to meet the increased demands of the new facility, the FPG has already installed generators capable of producing 150,000 kilowatts of electricity per hour. The group is planning to install another set of generators after the proposed expansion, pending approval from the local government. "The nylon plant is expected to be operating commercially by the end of 2009, once all related matters are resolved," Wong said.
Wong is a nephew of Wang Yung-ching, 91, the legendary entrepreneur who founded the FPG in 1958 and stepped down as chairman of the board in 2006. The decision to expand was made after the nonagenarian visited Vietnam with his daughter, Wang Juei-hua, and Wong. "Vietnam will probably become our largest overseas production base after the United States and China," Wong said, referring to factories the FPG had previously built in China to lower production costs for the manufacture of plastic pipes, synthetic leather and textiles, as well as chemical plants in the United States.
Formosa Petrochemical Corp. and Nan Ya Plastics Corp., two more affiliates of the FPG, had previously invested about US$700 million in their Vietnamese facilities. The group plans to use these companies to expand its output of biaxially oriented polypropylene, which is used to manufacture packing materials. "We may invest in a cogeneration plant expansion if the project gains approval from Vietnamese authorities," Wong remarked.
Nan Ya Plastics Corp. is Taiwan's biggest processor of plastics used in pipes and synthetic leather, and Formosa Petrochemical Corp. is Taiwan's only publicly traded oil refiner. Formosa Petrochemical Corp. has a processing capacity of 21 million metric tons of crude oil per year, or 450,000 barrels per day. The fourth affiliated firm is the Formosa Plastics Corp., which is the world's second-largest producer of polyvinyl chloride.
Concerning FPG's activities in China, Taiwan's media reported last month that the group had bid for the right to build a comprehensive ethylene complex in Ningbo's Beilun petrochemical industrial zone, in China's Zhejiang Province, but had not been awarded the contract. China's National Development and Reform Commission, under the auspices of the State Council, ultimately decided to hand over control of the project to China National Petroleum Corp.
When asked if the group planned to transfer its ethylene investment project to Vietnam after the thwarted effort in Ningbo, Wong claimed that the proposal is still in the application process in China. Commenting on the same project, Formosa Petrochemical Corp. Chairman Wilfred Wang said Nov. 10 it had not yet been approved by the Taiwanese government, let alone authorities in any other country. He also added that Vietnam is presently not in a position to develop such a large upstream venture as the group's ethylene project, especially as the country's downstream plastics industry has so recently been established.
Anticipating that the group will face a much more competitive market following the expansion of the Association of Southeast Asian Nations and the establishment of a free-trade agreement between the ASEAN and the United States, the chairman stressed that the group will be particularly cautious about making investments in the area.
According to statistics released Nov. 14 by the Ministry of Finance, Taiwan's export of chemicals is up 28 percent from the same time last year, while those of plastic and rubber have a 19-percent growth. Two of Taiwan's 10 biggest exporters in 2006 were subsidiaries of the Formosa Plastics Group, led by Formosa Petrochemical in the number one spot and Nan Ya Plastics in sixth place.
Write to Liu King-pong at kpliu@mail.gio.gov.tw