Earlier, the Government Office had ordered Khanh Hoa provincial authorities and the Vietnam National Shipping Lines (Vinalines) to halt the project "in order to clarify certain related issues."

Posco's offer

Last July, the Ministry of Transport awarded Vietnam's leading marine construction company, Vinalines, a contract to build a deep-water international seaport at Van Phong Bay, one of Khanh Hoa's most treasured sites.

The port, planned to be big enough to receive large-size container ships of up to 15,000 twenty-foot equivalent units (TEU), was deemed to fit well into Khanh Hoa's master plan.

It was expected to be a major driving force in the Van Phong Economic Zone.

Vinalines set aside VND3 trillion (US$186 million) for the initial phase - the construction of two wharfs that could hold container ships of 6,000 to 9,000 TEU.

Construction work for the first two wharfs was to start on January 25, 2008, for completion within two years.

Construction of another 35 wharfs would soon follow.

The plan was thwarted, however, when South Korean steel giant Posco offered to invest an initial amount of $5.8 billion to build a steel and thermoelectricity manufacturing complex at the site of the seaport project.

Posco's offer gave Khanh Hoa and central government authorities second thoughts about the port project.

The South Korean company's steel plant is planned to be able to churn out 8 million tons of steel a year.

The project will include a 1,100 megawatt thermoelectricity plant, as well as a port to serve the steel and power plants.

Posco's project requires 960 hectares of sea and land, including the 750 hectares set aside for the Van Phong seaport.

Posco said its plan would generate 100,000 jobs as well as stimulate Khanh Hoa's economy.

Khanh Hoa yielding

At Posco's invitation, a delegation of high-ranking officials from Khanh Hoa traveled to South Korea to check out the company's other facilities.

Delegation member Le Duc Vinh, head of the Khanh Hoa Department of Construction, praised Posco's concern for the environment, as evidenced by its world-class waste processing facilities.

Other delegates agreed, saying Posco would abide by Vietnam's environment protection laws if it built the Van Phong plant.

Khanh Hoa's People's Committee Chairman Vo Lam Phi said while he thought the seaport project was important, Posco's plans would also contribute to diversifying and boosting the local economy.

An on-going debate

The Posco project's opponents dismissed the delegation's report on Posco's environmentally-friendly record, pointing out that none of the delegation members were environmental experts.

Former Chairman of Khanh Hoa's People's Committee, Pham Van Chi, predicted Posco's steel plant would still discharge millions of tons of polluting coal and iron dust every year.

HCMC Marine Science and Technology Society's Secretary-General Doan Manh Dung warned the mountains surrounding Van Phong Bay would trap polluting gases generated by a steel plant, increasing the risk of acid rain in the area.

Professor Phan Van Truong from the HCMC University of Architecture said all developed countries in the world were trying to squeeze environmentally-unfriendly industries out of their territories.

Truong said local authorities should beware of foreign investors who believed they could get away with polluting because of Vietnam's lax enforcement of environmental laws.

Dung said Khanh Hoa authorities should carefully weigh up the short-term benefits of Posco's multi-billion dollar project against the less tangible and long-term benefits of a deep-water seaport.

Dung said Posco's project could be carried out in many places along the coast of Vietnam.

"But there is no other place like the Van Phong Bay to build an international deep-water seaport," he said.

Phan Van Truong agreed, saying shallow and beautiful seas should be reserved for tourism facilities, while coastal sites with deep water should be used for port construction.

"Van Phong is considered to have no rival in Vietnam," Truong said.

"That should be enough for us to make up our mind that we won't do anything too polluting to the place."