Mercedes-Benz car assembly factory in Ho Chi Minh City faces hindrances in land lease extension
Mercedes-Benz car assembly factory in Ho Chi Minh City faces hindrances in land lease extension
A car assembly factory in Go Vap District, Ho Chi Minh City operated by a joint venture between world-renowned carmaker Mercedes-Benz Group AG and a local company will have its land lease contract come to an end in 2025 but extension procedures remain incomplete.
The main gate of the Mercedes-Benz Vietnam factory on Quang Trung Street in Go Vap District, Ho Chi Minh City. Photo: Phuong Nhi / Tuoi Tre |
At a recent meeting with Party General Secretary and State President To Lam, chairman of the Ho Chi Minh City People’s Committee Phan Van Mai reported that the plant has been operated by Mercedes-Benz Vietnam Co. Ltd., a joint venture between Germany’s Mercedes-Benz Group AG and Vietnam’s Saigon Transportation Mechanical Corporation (SAMCO).
Mercedes-Benz Group AG proposed extending the land lease contract by five years.
However, under the prevailing regulations, when the contract expires, the 104,000-square-meter land lot at 693 Quang Trung Street in Go Vap District will be taken back.
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| A wall of the Mercedes-Benz Vietnam factory is hundreds of meters long on Quang Trung Street in Go Vap District, Ho Chi Minh City. Photo: Phuong Nhi / Tuoi Tre |
Party General Secretary and State President To Lam deemed the stagnant extension process as unreasonable.
He pointed out the significant contributions of auto projects to local budgets and committed to working with relevant agencies to address these issues.
The Ho Chi Minh City government has recently requested the prime minister's approval for Mercedes-Benz Vietnam Co. Ltd. to lease the land for an additional five years beyond April 2025 without undergoing a bidding or auction process.
If approved, the city plans to assign SAMCO to develop an automotive mechanical industrial park and recommend it to Mercedes-Benz Group AG to encourage the relocation of its factory.
The city will seek to finalize procedures for another project on the land lot at 693 Quang Trung Street, scheduled to commence after April 14, 2030.
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| Another entrance to the Mercedes-Benz Vietnam factory in Go Vap District, Ho Chi Minh City. Photo: Phuong Nhi / Tuoi Tre |
Mercedes-Benz AG Group holds a 70-percent stake at Mercedes-Benz Vietnam Co. Ltd., while SAMCO owns the remaining 30 percent.
The car assembly plant was licensed in 1995 and Mercedes-Benz Vietnam Co. Ltd. was allowed to use the land at 693 Quang Trung Street for 30 years from April 1995.
Mercedes-Benz Vietnam officially began its operations in 1997 with an initial capacity of 60 cars per month. The plant was built at a cost of VND1.127 trillion (US$45.2 million).
By 2005, the capacity increased to 12,000 cars per year.
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| The plant has contributed significantly to Ho Chi Minh City’s budget. Photo: Phuong Nhi / Tuoi Tre |
In 2021, Mercedes-Benz Vietnam Co. Ltd. proposed extending the land use by five years until 2030.
In March 2024, Deputy Prime Minister Tran Hong Ha required the Ministry of Natural Resources and Environment and the Ministry of Finance to provide guidance to the Ho Chi Minh City administration.
However, solutions have yet to be worked out.
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| A map shows the position of the Mercedes-Benz Vietnam factory in Go Vap District, Ho Chi Minh City. Photo: Phuong Nhi / Tuoi Tre |
Mercedes-Benz Vietnam currently employs 800 workers.
Between 2017 and 2021, the company yielded revenue of over VND9 trillion ($360.7 million) per year and contributed more than VND5.5 trillion ($220.8 million) to Ho Chi Minh City’s budget each year, according to a report by the municipal Department of Planning and Investment.
