$4.1 billion tourism complex appeals for unprecedented incentives
$4.1 billion tourism complex appeals for unprecedented incentives
Attempts by the Ba Ria-Vung Tau People’s Committee to salvage the long delayed $4.1 billion Saigon Atlantic Hotel invested by Winvest LLC Group from the US hit insurmountable obstacles as the province’s mandate seems to fall short to grant the investor’s requests.
The investor offered the province to provide incentives on land lease fees for the tourism and entertainment complex, so that construction can be implemented. However, the two parties have yet to reach a compromise because the province does not have the necessary competence to address the licensing issues around the project.
The project was licensed in April 2006 with the initial investment capital of $300 million. It was then allowed to increase capital to $4.1 billion in 2009, requiring additional area of 610 hectares offshore compared to the initial area of 307ha onshore.
However, the project was running behind schedule, largely due to challenges in land clearance due to the shortage of the province’s fund.
In November 2012, the province handed over 87ha of land for the investor and, as of August 2014, it basically completed the land clearance as well as compensation payments for the investor. However, the construction works could not be started due to the appearance of new problems. Notably, according to regulations, the investor has to pay the land lease fees based on the date it received the land from the province, instead of the 2007-2008 period when it advanced a sum of VND98 billion ($4.39 million).
The investor said that it would be severely disadvantaged because the fees in 2012 were higher than in the 2007-2008 period. Thus, it proposed the province to pay the fees based on the latter.
Le Hoang Hai, deputy director of the Ba Ria-Vung Tau Department of Planning and Investment (DPI), said that the investor has retained interest in developing the project, however, it failed to reach a compromise with the province about the land lease fees. This was largely due to the fact that local authoritiesdid not have the necessary competence to approve the investor’s proposal. Besides, there is no precedent for similar proceedings.
“Earlier in 2012, the investor requested governmental incentives on land lease fees and, after receiving this call for help, Deputy Prime Minister Hoang Trung Hai at that time asked the province to submit a report on the implementation of the project. However, as of now, the government has yet to issue new directives for the project,” Hai stated.
In another move, the Ba Ria-Vung Tau People’s Committee has released the criteria to choose new investors for Vung Tau Paradise Resort. The project was developed by Vung Tau Paradise Company, a joint venture between Vietnamese Vung Tau Intourco Resort JSC and Taiwanese Paradise Development and Investment. The project was licensed in 1991 with the total estimated investment capital of $97.2 million, of which only about $40 million has been disbursed to date.
In addition, since coming into operation in 1995 with poor infrastructure featuring a 27-hole golf course and a housing area with only 54 units, the resort has not only not generated any profit but went straight into the red. The firm also failed to make good on its commitments to construct several designed components, including a 500-room hotel, a theatre, and an entertainment playground.
