Formosa shutdown may slow Taiwan economy

The shutdown of several refineries operated by Formosa Plastics, one of Taiwan's top conglomerates, could cause the entire economy of the island to slow down, an official said Tuesday.Taiwan's government Sunday ordered a partial shutdown of Formosa's naphtha cracking complex at Mailiao on the island's west coast after a fire -- the seventh blaze to hit the facilities in slightly more than a year.The shutdown could deal a palpable blow to Taiwan's export-reliant economy, especially if the order were to be expanded to the whole complex as demanded by angry residents living nearby."The shutdown will have a negative impact on the economy as a whole. That we can say for sure," said an official at the Directorate General of Budget, Accounting and Statistics, speaking on condition of anonymity."But as to how big that impact will be, it's still not clear at the moment. It depends on how many plants will be closed, and for how long," said the official of the directorate, which compiles official economic data.The agency last week lowered its 2011 full year growth forecast to 5.01 percent from previously 5.06 percent amid growing uncertainty about the international economic situation.Angry residents have threatened to block Mailiao and demanded that the whole complex, comprising about 30 plants, be closed for thorough safety checks, rather than a partial shutdown.If the public in the area gets its way, it would become a nightmare for Formosa Group, analysts said."If the whole complex is closed for safety checks, the conglomerate's sales may dive by as much as 50 percent," said Mars Hsu of the Grand Cathay Securities.To reflect the mounting fears, panic-stricken investors have dumped the shares of companies affiliated with the conglomerate.The total market value of its four flagship enterprises -- Formosa Plastics, Nan Ya Plastics, Formosa Petrochemical and Formosa Chemicals and Fibre -- shed Tw$400 billion ($13.8 billion) Monday and Tuesday, local media said.Formosa spokespeople were not immediately available for comment.