Haicang zone undimmed by giant's change of heart
Formosa Plastics Group sparked a wave of Taiwanese investment when it announced plans to build a US$7 billion petrochemical complex in the Haicang investment zone in the late 1980s.
In the event, the Taiwanese plastics giant built only two PVC pipe and parts factories with a total investment of US$79.81 million.
Formosa chairman Wang Yung-ching scaled back his plans in 1992 after China refused to allow him to sell all output on the domestic market.
The municipal government did not feel it had lost out when the group exchanged its huge investment for the two small factories, in which Formosa holds 60 and 65 per cent stakes.
Xiamen's secretary-general Shi Zhaobin said: 'If Mr Wang had not proposed his investment interest for Haicang, we [Xiamen] would not have created today's Haicang investment zone.' The State Council approved Haicang as a state-graded investment zone in 1989 to house Mr Wang's proposed complex.
Haicang administrative committee vice-director Du Fusheng said the government had invested 4.6 billion yuan (about HK$4.27 billion) to level 21 square kilometres of farmland and build roads, bridges, a power plant and port.
By the end of April this year, 80 foreign-invested projects with a contractual investment of US$1.5 billion had been committed to Haicang.
Taiwanese-owned Xiang Lu (Xiamen) Fibres Co was Xiamen's largest foreign investment project with a total investment of US$300 million. It plans to expand.
A further 108 domestic projects, with a total investment of 2.5 billion yuan, have been committed to the zone.
Mr Du said 22 projects had started production last year, with a total industrial output of 3.2 billion yuan.
He expected more to start this year and output to increase to 4.5 billion to six billion yuan.
According to Haicang's development blueprint, the port area will cover 10 sq km.
Its 26 km coastline is capable of housing 36 berths, of which 13 will be able to handle vessels of 10,000 deadweight tonnes.
Four berths are being built, a coal pier for the power plant, and an oil, container and general-usage pier.
Xiamen had formed a 50-50 joint venture with Hong Kong's Hutchison Port Holdings to manage the container and general berths.
To boost development of the port and investment zone, Mr Du said Beijing's approval was being sought to establish a tax-free processing zone and warehouse.
Haicang was still planning to develop a petrochemical industry on a 13 sq km site behind the port.
Mr Du said they hoped to lure other international petrochemical enterprises to Haicang as the area was an ideal site for a petrochemical complex.
A 40 sq km area behind the petrochemical zone has been zoned for electronic projects. Haicang's city centre and residential area will be on a 32 sq km site to the west.
Mr Du admitted Haicang's development was progressing slowly. 'Capital is one of the key issues,' he said. 'But this is not a simple project. We have had to start from a piece of farmland.' A nationwide, three-year austerity programme starting in 1993 and Beijing's decision to cancel import tariff exemptions on capital goods had taken their toll.
The pace of development would increase once preparation work was completed.
A key factor is direct shipping links with Taiwan. Haicang port is in Xiamen Bay, which is one of two ports China's Ministry of Communications has opened for direct shipments to Taiwan.
Completion of the Haicang Bridge in 1999 also will improve the investment environment. It will shorten the travelling time to Xiamen island from 45 to 10-15 minutes.