The new particleboard plant will be owned and operated by Vina Eco Board Co., Ltd. (“VECO” or the “Company”). VECO was established in May 2010 by SFC and Sumitomo Forestry (Singapore) Ltd., SFC’s wholly owned subsidiary in Singapore. Incorporated in 1947, SFC is a publicly listed company on the first section of Tokyo Stock Exchange and Osaka Securities Exchange. SFC’s shares are widely held by institutional investors, financial institutions as well as individual investors.

The total project cost is estimated to be approximately USD93 million, and SFC plans to finance the Project with 50% in long term debt and 50% in equity. The proposed IFC investment is an equity investment of up to USD9 million for up to 20% of VECO’s share capital.

9.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	9.0

* These investment figures are indicative

The Project site is at the Phu An Thanh Industrial Park, Long An Province, about 30 km west of Ho Chi Minh City, Vietnam.

(i) Climate Change Mitigation: Through the Project, IFC will support positive climate change impact linked to sourcing of waste wood and use of bio-mass based power plant. (ii) Employment: The Project will generate about 200 jobs at the Project site and also indirect employment through linkages to farmers who will supply part of the wood raw materials to the Project. In the future, the Company is considering supporting farmers in sustainable plantation by working with local government agencies and research institutes and providing advice and seedlings. (iii) Development of Local Industry: The Project will support the development of local wood processing industry by establishing the first particleboard facility in Vietnam. From construction phase to operational stage, SFC will bring in its first class expertise and quality management system, which is expected to have demonstration effect to the local industry.

(i) Long term partner: IFC previously supported SFC’s project in Indonesia in early 90’s, and SFC and VECO are expecting IFC’s support as a long term partner, especially in emerging markets and where they have no prior production experience, such as in Vietnam. Although SFC is a very experienced sponsor, IFC’s global and regional experience can add value. (ii) Macro-economic and country risk mitigation: IFC’s investment will support SFC’s first investment in Vietnam by mitigating macro-economic and country risk.

This project has been categorized as a “B” project in accordance with IFC’s Environmental and Social Review Procedures. The proposed project involves the development of a wood panel manufacturing and biomass generation facility using wood fiber from managed agriculture landscapes and forest plantations. The facility, located in an established industrial park [in the Southern Mekong Region], is expected to have isolated impacts which can be avoided through proactive management or mitigated through proven measures. The E&S themes identified during appraisal included: expansion of the management program to meet the sponsor’s corporate mandates for wood traceability and lifecycle assessment; labor and working conditions of wood assemblers; management of manufacturing wastes and hazardous materials; adaptation of processing and feedstock to climate change; and stimulation of vigorous replanting of forest/fruit trees through extension services. During appraisal it was observed that the Company has substantial environmental, health and safety and quality assurance management systems and capacity which provided material demonstration of its commitment to corporate social responsibility, legal obligations, and sustainable natural resources management. The Environmental and Social Review Summary (ESRS) and Action Plan (ESAP) will characterize the results of the appraisal and the agreed upon measures to advance the Company’s environmental and social performance.