If Formosa is behind the tonnes of dead fish that began washing up along Vietnam's central coast two months ago, it could jeopardise new President Tsai Ing-wen's signature policy of promoting investment in Southeast Asia in a bid to reduce Taiwan's economic reliance on China, lawmakers said.
"There will be no end of trouble", for the so-called Southbound Policy if Tsai's new government doesn't carefully address widespread concern among the Vietnamese public over the incident, said senior lawmaker Su Chih-feng of the ruling Democratic Progressive Party.
Vietnam's state-run media initially pointed the finger of blame at Formosa's steel plant in central Ha Tinh province, but has since back-peddled.
The authoritarian communist government has carried out tests but not yet announced an official verdict on the causes of the fish deaths, prompting many activists to allege a cover up.
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Formosa has a poor track record of environmental scandals spanning the globe, from Texas to Sihanoukville, Cambodia.
It has also been accused of causing pollution in Taiwan, including a petrochemical complex in southern Yunlin where Su used to be county chief.
Peter Nguyen, a Taiwan-based Vietnamese priest, said Tsai's government must ensure Formosa -- if proven responsible -- clean up the environmental disaster and fully compensate victims.
"Vietnam wants foreign investment but it should be win-win," he said.
"If our environment and our people suffer, it will pose major challenges and problems" for future Taiwanese investments in Vietnam, he added.
Taiwan and Vietnam do not have formal diplomatic relations but maintain close trade ties. Around 250,000 Vietnamese live in Taiwan, either because of work or due to marriage.
Hanoi will release the results of its probe -- conducted with international experts -- by the end of June, he added.
Formosa fanned the flames of suspicion in April when one of its employees in Vietnam told state media the country had to "choose whether to catch fish and shrimp or to build a state-of-the-art steel mill".
The employee was subsequently removed from his post and apologised for his remarks.
"I couldn't catch a fish since March," 29-year-old Vietnamese fisherman Le Guang Dung told AFP, adding he'd been forced to move to Taiwan to find work.