Announcement of IFC Invests Two Million Sixty Thousand US Dollars for Synthetic Fiber Expansion in Republic of China on June 22, 1971

FOR . ., IMMEDIATE RELEASE . ..., INTERNATIONAL FINANCE CORPORATION . 1 8 1 8 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IFC Press Release No. 71/11 June 22l'I 19 71 Synthetic Fiber Expansion in Republic of China IFC Invests $2.6 Million The International Finance Corporation is continuing to help expand synthetic fiber production in the Republic of China and to reduce the textile industry's dependence on imported raw materials. IFC is making a loan and equity investment of $2.6 million in Oriental Chemical Fiber Corporation, to support the company's expansion into production of polyester filament for te1~tiles. The remainder of the funds for the $7.9 million project is being provided by the principal sponsor and share- ~ holder of Oriental, Asia Cement Corporation, by local and overseas Chinese investors, deferred import duties and suppliers of capital equipment. Last year, IFC made Oriental a loan of $3 million for the establishment of a new $14.3 million polyester staple fiber plant. Production at this plant started recently, several months ahead of schedule. Orilhtal is a subsidiary of Asia Cement, which also receiverl last year an IFC investment of $4.2 million for expansion of its productive capacity. IFC's activity in the synthetic fiber sector furthers the Government's development strategy which centers on expanding exports, such as textiles, by taking advantage of the presence of a skilled and adaptable labor force, and of substantial managerial and entrepreneurial talent. Textiles are the Republic of China's major export commodity in terms of value. • Oriental's filament plant will account for some 13% of filament production in the Republic of China when the project is completed. /more  IFC P.R. No. 71/11 - synthetic fiber - China - 2 - As the plant's output will substitute for imports, it is expected to generate net direct foreign exchange savings of $1.1 million a year by 1977, averaging around $2 million thereafter. Some 100 employees are to be added to the company's labor force as a result of the project, raising the number of Oriental's employees to approximately 400. The polyester filament project is expected to widen Oriental 1 s base of operations as a synthetic fiber producer and to improve the company's profit- ability. The main buyers of filament are domestic manufacturers who convert filament into stretch yarn for textile applications. A number of plants have been built for the production of synthetic fiber to substitute for imports. • Oriental's expansion into filament production is a continuation of this development. Financial Details Oriental's share capital is to be increased by approximately $2.88 mil- lion equivalent, of which a portion will be provided temporarily by a sub- ordinated loan from Asia Cenent Corporation to be later converted into share capital. IFC is subscribing to $875,000 of the additional share capital. Overseas Chinese investors and the China Development Corporation, a development finance company associated with the World Bank Group, are taking up the balance of the share capital increase. The IFC loan is for $1.75 million. Oriental has negotiated a suppliers' credit from Lurgi Gesellschaft fUr Minerall:ftechnik mbH., of Germany for the major imported equipment. Deferred import duties on the imported equipment • account for the remainder of the financing. - 0 -