Authorities give long-awaited nod to huge property projects
Authorities give long-awaited nod to huge property projects
Two long-delayed property ventures in the south and south-central regions of Vietnam have finally been given the go-ahead by authorities.
Lotte initially proposed to build its eco-smart city in Thu Thiem New Urban Area as far back as 2009
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Lotte Group – the developer of the $900 million eco-smart city in Thu Thiem New Urban Area of Ho Chi Minh City – was approved by the government to continue the project after more than three years of delay.
Meanwhile, ITC Spectrum last week also received the green light from Binh Dinh People’s Committee to continue its $250 million Vinh Hoi Hotel and Resort Complex, which initially received approval to be built back in 2006.
The 3-year delay in the Lotte venture was mainly due to overlapping of legal regulations. Lotte proposed to build the eco-smart city on a 5-hectare land plot in Thu Thiem New Urban Area in 2009.
“We have made a turnaround. Regarding how we proceed from now is up to discussion with the city people’s committee,” an official from Lotte Properties Ho Chi Minh City last week told VIR.
Resolution No.195/NQ-CP dated December 31 cited that the government approved the proposal from Ho Chi Minh City People’s Committee, the Government Inspectorate, and the Ministry of Planning and Investment to assign Lotte Properties Ho Chi Minh City to continue to be the investor of the eco-smart city project.
“The People’s Committee is permitted to follow all of the procedures the investor had given previously, and Lotte has to finish all tax obligations as regulated by the law,” the resolution stated.
Ho Chi Minh City People’s Committee was also assigned to instruct and inspect the investor to implement this project according to commitments on investment scale, timelines, planning, and other legal issues with an aim to ensure the highest efficiency for the project, it added.
In 2013, a consortium of four of the group’s South Korean affiliates and three other partners from Japan was set up to implement the project.
In 2015, Ho Chi Minh City People’s Committee suggested selecting this consortium to implement the project by granting it the investment appointment without an auction. This selection, according to the committee, was based on Article 4 of the Law on Bidding 2013, citing that a certain investor can be chosen if it is the only one registered for this project.
The following year, the Lotte consortium advanced VND120 billion ($5.2 million) to implement the project. Later in 2016, the three Japanese investors withdrew. From then, the group was managed by Lotte Properties Ho Chi Minh City and investment capital dropped to $900 million.
The project, however, was halted by the city authorities to review the process of choosing investment and resetting all procedures in accordance with the current laws on bidding and investment.
Weighing up options
According to Conclusion No.1041/TB-TTCP dated June 2019 by the Government Inspectorate, Lotte’s appointment by Ho Chi Minh City People’s Committee did not comply with the relevant provisions of the Law on Bidding and the Law on Land. In addition, no land lease fees and taxes had been collected from the investor, despite it already occupying the area.
At the end of 2019, the committee also released two official documents to report the obstacles which have been halting the project. According to the documents, two solutions were proposed. The city could either nullify and reorganise the auction to choose new investors or retain Lotte as the investor to implement the venture.
In 2020, the Ministry of Planning and Investment (MPI) issued a document that analysed the advantages and disadvantages of both options. According to its assessment and opinions collected from related authorities, the latter option had more advantages.
In order to keep Lotte involved, the MPI suggested that the prime minister assign the Government Inspectorate to review all outstanding issues in order to establish a solid foundation for the final decision.
The inspectorate, meanwhile, cited that the permission for Lotte must be based on legal documents and suggested the MPI applies Article 26 of the Law on Bidding which regulates the “selection of investors in special cases”.
The government’s approval of this selection opens up the road for Lotte to go full steam ahead with the project, removing a gaping hole from the vista of Thu Thiem New Urban Area.
Fully-integrated dream
Meanwhile, the Vinh Hoi Hotel and Resort Complex may finally be able to lift off in Binh Dinh province.
After being licensed over a decade ago, the province last week ordered the prolonged preparatory work to be finished by April.
ICT Spectrum embarked on the project with great ambitions, signing with Marriott International to manage the project under two luxury hotel brands, Ritz-Carlton and JW Marriott, with the expectation that the project would be operational in 2014.
The project would have included an oceanfront, fully-integrated, mixed-use development including three resorts, an 18-hole championship golf course designed by Robert Trent Jones II, the residential villas, a retail village, an arboretum, and other recreational amenities.
However, after handing over the first 130ha of the 325ha project in 2011 for a total consideration of VND37 billion ($1.6 million) in land lease fees by the developer, construction has been stalling ever since.
The main reason for the huge delay, according to the committee, was the vast expense of land clearance and compensation.
“In many other projects, developers mostly advance a sum for the local authorities to do the land clearance and compensation. This advancement will be deducted from the developers’ land tax. This is the most feasible way to process the project,” said an official from the local committee, adding that such an arrangement was not reached for the project as neither sides could gather the funds required for the scope of the work.
In 2012 the government agreed to extend the lifetime of the project from 50 to 55 years to partly compensate for the delay. Some main facilities such as the road system around the project were built, but actual construction was never started.
The deadlock lasted until 2015 when the committee decided to revoke the project but the developer threatened to take the case to court. The chairman therefore directed local authorities to collect opinions from the related authorities and draft a plan to solve the impasse.
The committee chairman also requested the developer to submit the detailed design of the project to the competent body for approval, which was followed by further immobility.
This was broken last week, when in a document Binh Dinh People’s Committee Chairman Nguyen Phi Long urged local authorities to accelerate land clearance to allow the developer to begin the project before April.
Binh Dinh is one of the second-tier provinces attracting renewed interest from domestic and foreign developers.
In 2020, despite the impact of the ongoing coronavirus pandemic, the province has approved the choice of investors for 13 projects with a total investment capital of around VND28.5 trillion ($1.23 billion).
According to Nguyen Thanh Hai, director of Binh Dinh Department of Planning and Investment, in 2020 the province has attracted proposals for 155 investment projects with a total capital of VND51.6 trillion ($2.2 billion), up 28.63 per cent in the number of projects and up 4.03 per cent in total capital compared to 2019.
