Phu Quoc Island projects lay idle
Phu Quoc Island projects lay idle
More than 100 hospitality and entertainment projects on Phu Quoc Island with the combined pledged capital of around $6 billion have been licenced, but few have been carried out due to underdeveloped infrastructure and the high cost of labour.
Investment into hospitality and entertainment on the island is not only already high, it is still on the rise. Vingroup is opening a VND17 trillion ($805.7 million) Vinpearl resort this coming November. It includes 750 rooms and 30 villas and is the group’s largest hotel ever and the biggest 5-star project on the island thus far. Over the next few months two smaller projects, the Salinda and Famiana resorts will also open.
Among the pledged projects are a 100-hectare five-star resort by SunGroup and a VND500 billion ($23.7 million) Novotel hotel by CEO Group. The Novotel is part of the VND4.5 trillion ($213.3 million) 80-hectare Sonasea Villas & Resort. Both Sungroup and CEO’s projects are slated for opening by the end of next year.
Nearby, Nam Cuong Group has just finished site clearance on its 32-hectare resort area and will start construction of the VND3.2 trillion ($151.7 million) hotel and villa project at the end of this year. BIM group has invested VND1.5 trillion ($71.1 million) to build a Crowne Plaza hotel that will include nearly 500 rooms, as well as apartments and villas.
Over the next two years, Phu Quoc expects to add between 1,500 and 2,000 additional 4 and 5-star hotel rooms. Currently the islands has nearly 1,000 rooms below 4-star. The country’s airlines are similarly targeting the island with increased flights and bigger aircraft and all of the aforementioned developments have helped the number of visitors rise substantially. However, hotel room rates have skyrocketed to some of the highest in Vietnam.
While many big projects have been registered and are moving forward, many others have been suspended or are progressing slowly.
Hong Kong’s Millennium Group’s $1.6 billion, 520-hectare Bai Dai Resort project is about to have its licence revoked due to a lack of progress, six years after it was approved.
In the middle of 2013, the Kien Giang Provincial People’s Committee revoked the $2 billion Asia Pearl project. Proposed by Switzerland’s Trustee Suisse and Vinaconex R&D JSC at the end of 2007, the project has lain dormant.
One reason for the slow implementation of pledged projects, according to research by CBRE, is the underdevelopment of the island’s infrastructure.
The island lacks crucial elements such as asphalt roads. A 100km road project, which is key to the island’s infrastructure, is being built, but very slowly. Another major issue is that the plan has been regularly changed.
“Another reason is the lack of high-quality labour,” said Mauro Gasparotti, executive director of Vietnam-based property consultancy firm Alternaty. Investors are spending too much money on training and are paying high wages and incentives to attract staff to the island.
Despite government incentives such as 10 per cent corporate income tax for the lifespan of the project, compared to 22 per cent on the mainland), a 50 per cent exemption on personal income tax for Vietnamese workers, and a visa exemption for tourists staying less than 30 days, investors are still hesitant to carry out their projects.
Phu Quoc is an island paradise that is less than 2 hours by air from popular other tourist destinations and major cities in Southeast Asia, but the number of tourists to the island remains quite low at around 600,000 per year, 20 per cent of whom are foreigners. Tourists usually stay only 2-3 days and few return because of the lack of tourism products and entertainment options.
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