Lotte Mart faces able payment for rent in arrears
South Korea’s Lotte Vietnam Shopping is facing a payment of VND187.3 billion ($8.3 million) in arrears for rent at its Lott Mart location in the southern province of Ba Ria-Vung Tau.
According to a government inspector’s report for land use in Ba Ria-Vung Tau during the 2011-2016 period, Lotte Vietnam Shopping JSC has been using the land in Ba Ria-Vung Tau illegally by building a Lotte Mart department store on it – which has been operating since December 2014 – despite not yet having received
a land use right certificate. The local authorities have been blamed for giving the okay to the South Korean firm to build its store despite lacking such a certificate.
The official inspection report said, “The responsibility was that of the chairman of the Ba Ria-Vung Tau People’s Committee, the director of the Department of Natural Resources and Environment, and the director of the Department of Finance during the 2011-2015 period.”
The report also pointed out that the province has not conducted the auction of land use rights for the area that the Lotte Mart store is located in. Thus, the official inspection report is asking the province to timely collect $8.3 million in rent during the period for the store site.
At time of printing, VIR had not received any confirmation from Lotte Vietnam Shopping of the arrears payment being made. This back payment is likely to add further pressure on the firm, which recently reported slipping into losses of VND800 billion ($35.5 million) at the end of last year.
Last week, Lotte Vietnam Shopping provided an executive response to VIR, offering details on its business plan in Vietnam. Jeong Seong Won, chief financial officer of Lotte Vietnam Shopping, said, “By 2019, we will start to generate operational profits, which will be more cost-effective and more efficient in Vietnam.”
This means that Lotte Vietnam Shopping will turn a profit one year earlier than it had laid out in a written document sent to some Vietnamese ministries and local media last month, in which the company stated, “We expect to gain profits from 2020 onwards.”
Won also admitted that the firm had slipped into losses in some department stores in the southern provinces of Binh Duong and Dong Nai, but that it had no plans to shut down these stores.
“Profitability is only a matter of time,” he said. “The loss at these department stores is not what we expected. It will be a great challenge for us to improve and make these stores work efficiently and profitably.”
After 11 years of development, Lotte Vietnam Shopping is operating 13 department stores across the country.