VinaCapital, one of Vietnam's largest asset managers and a shareholder of Hoa Sen Group, is failing to see eye-to-eye with the latter in regard to its controversial plan to build a multibillion-dollar steel plant.

Hoa Sen Group, a major corrugated sheet producer, made headlines after insisting on the development of a US$10.6 billion steel complex in the south-central coastal province of Ninh Thuan. The Chinese equipment and technology expected to be used in the megaproject are amongst the chief concerns of locals worried over the plant’s potential negative impact on the environment.

The Ca Na plant issue was raised at an annual meeting held by VinaCapital for its investors in Ho Chi Minh City on Thursday.

VinaCapital, through its subsidiary VCG Partners Vietnam Fund, currently holds a 0.5 percent stake in Hoa Sen Group.

A representative of the asset manager said at yesterday’s meeting that VinaCapital disagrees with the Ca Na project, despite being one of Hoa Sen Group’s long-term shareholders.

“VinaCapital has put forth serious questions regarding the steel project and will not back the project unless the developer proves it has effective and sustainable solutions for environment protection,” VinaCapital managing director Nguyen Hoai Thu said.

Thu added that from the business perspective, shareholders should back any project that may yield profit, “but if matters relating to the environment and sustainable development are involved, we have to reconsider our investment decisions,” she said.

As per Hoa Sen Group’s proposal, the controversial construct project is expected to last until sometime between 2025 and 2030. The developer has already obtained in-principle approval from Ninh Thuan authorities, and is pending approval from higher level authorities.

Thu said that if Hoa Sen Group continues to push the project while environment issues remain unresolved, VinaCapital will consider pulling its stake in the corrugated sheet maker.

“Shareholders have the right to leave the company if they are dissatisfied,” Thu said, referring to ‘foot voting,’ or the ability to leave undesirable situations.

“We will do so if we feel we can no longer be on the same path with Hoa Sen Group.”

Thu said VinaCapital sees potential environmental issues that may arise from the Ca Na project as “far more serious” than any bad reputation the company may acquire while doing business with Hoa Sen Group.

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