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Berjaya’s $3.5 billion project in second city faces possible revocation

The Ho Chi Minh City People’s Committee has just requested the city’s Department of Planning and Investment to review Berjaya Corporation Bhd.’s Vietnam International University Township (VIUT) project in the northwest urban area.

Accordingly, the department has to either resolve any difficulties that the Malaysian company is having in implementing this project or revoke the investment certificate.

The project, which received its certificate in July 2008, is located at Tan Thoi Nhi commune in Hoc Mon district. It has an area of 925 hectares and investment capital of $3.5 billion.

According to design, Berjaya is going to set aside 100 hectares for a university. The township is going to have 20 schools offering education from kindergarten to high school. The remaining 15-hectare area is going to be a multi-purpose complex with a commercial area, residential area, administrative and cultural area, and a healthcare centre that will operate in conjunction with the university, as well as a gym and a park.

Ten years after receiving the investment certificate, the project is still a field of grass. At the point of receiving the certificate in 2008, VIUT was the largest foreign direct investment project in Ho Chi Minh City. The city authorities placed a lot of hope on the project, giving credit to Berjaya’s renown as a big real estate developer.

The northwest urban area is 19 kilometres from the centre of Ho Chi Minh City. Recently, the Ho Chi Minh City People’s Committee asked the Department of Transport to list out roads that need to be built in order to call for investors for construction under the Build-Operate-Transfer format, offering payment in land to the investors.

In Vietnam, Berjaya has a series of real estate projects that came along slowly after receiving their investment certificates. Besides VUIT, there is Vietnam Financial Centre, also in Ho Chi Minh City. In 2013, the authorities of the southern province of Dong Nai revoked Berjaya’s investment certificate for the Nhon Trach New City Centre project because the company failed to start implementation. In addition, sales were lacklustre at the Bien Hoa City Square apartment complex in Dong Nai, and Hanoi Garden City urban area in Hanoi.

Last month, Berjaya, through its subsidiary Berjaya Gia Thinh Investment (Berjaya GTI), launched the first phase of its Vietnamese lottery business. Berjaya is the first foreign investor to tap into Vietnam’s lottery market.

Source: VIR

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Arguments fly over Vietnam’s need for more or less airports

The executives argue that new airports and upgrades will help overhaul the country’s poor aviation infrastructure, now a bottleneck for tourism development.

“My view is we need more airports and upgrades, because infrastructure, especially in important destinations, is critical for future development,” said Tran Trong Kien, chairman and CEO of Thien Minh Group (TMG), one of Vietnam’s top travel and hospitality companies.

Tan Son Nhat is handling 36 million passengers, which is way above its designed capacity of 25 million. Shutterstock/AsiaTravel

Tan Son Nhat is handling 36 million passengers, which is way above its designed capacity of 25 million. Shutterstock/AsiaTravel

Kien was responding to a VnExpress International question about the controversy over provincial proposals on building airports like the one near renowned tourist venue Sapa in northern Vietnam.

Several aviation experts have remarked that there are too many proposals and plans for new airports, and that the country has too many already.

Kien said the first priority should be to expand the Tan Son Nhat airport, second to expand the Noi Bai and Da Nang airports. These three meet or exceed their design capacity.

“Hue and Chu Lai airports are also extremely important, and Hai Phong airport is also a very good solution for future development,” Kien said on the sidelines of the Vietnam Travel & Tourism Summit 2018 Wednesday. He is also chairman of the National Tourism Advisory Board (TAB).

Hue currently has Phu Bai airport while Chu Lai airport is located in the Chu Lai Open Economic Zone in Quang Nam Province. Both are in central Vietnam. The northern city of Hai Phong has Cat Bi airport.

Kien said that up to 80 percent of foreign tourists come to Vietnam by air, but air connections from and to Vietnam, regionally and globally, are much lower than big cities in Asia like Hong Kong, Singapore, Thailand and Kuala Lumpur.

Luong Hoai Nam, deputy general director of joint stock company Vietstar Airlines, also said the country definitely needs new airports and upgrades to the old, poor ones.

“Phu Quoc and Van Don are the only two new airports up and running since 1975 (when the Vietnam War ended). Apart from them, the only changes in aviation infrastructure have been upgrades to military airports whereby limited expansions were made due to limited land areas,” Nam told the tourism event organized by VnExpress.

The Phu Quoc airport in southern Vietnam is a public investment project while the latest, Van Don, is a private project of the Sun Group in the northern province of Quang Ninh.

Nam said Vietnam has 21 airports while Thailand has 38. The aggregate annual capacity of 21 airports in Vietnam is only equivalent to Thailand’s biggest Suvarnabhumi Airport, Singapore’s Changi and Malaysia’s Kuala Lumpur.

“Lack of airports, especially the bigger ones, leads to an overload, with airports serving about 105 million passengers this year against the designed capacity of only 75 million.”

The biggest airport Tan Son Nhat which is handling 36 million passengers, way above its designed capacity of 25 million, has suffered overloading for many years, but the “upgrades are very slow”.

“Our airports are like a house designed to accommodate 25 people, but last year 36 were living in it and the figure this year is 40.

“The images of passengers running, pulling their suitcases to Tan Son Nhat airport (instead of having cars driving them to the gate due to traffic congestion) published in local and foreign media are harming the image of our aviation and tourism sectors.”

Too many already

Previously, in interviews with VnExpress International some aviation experts claimed Vietnam was building too many airports without carefully evaluating their necessity.

Authorities in the southern Ba Ria-Vung Tau province have been working with private firm Ho Tram Ltd, the investor of the Grand Ho Tram Strip resort, on plans to construct a $194 million civilian airport nearby.

Ba Ria-Vung Tau already has an operational airport on Con Dao Island and the mega Long Thanh International Airport being planned in southern Dong Nai Province is just 40 kilometers away.

In July, Lao Cai Province proposed that a $246 million airport built near Sapa for both civilian and military purposes.

Nguyen Thien Tong, former faculty head of aeronautical engineering at the Ho Chi Minh City University of Technology, said it’s not necessary to have two new airports in Ba Ria-Vung Tau, as the province does not have a large (enough) number of tourists.

Ngo Viet Nam Son, an architect who participated in designing the Ninoy Aquino International Airport Terminal in the Philippines, argued that it would be much more efficient if money is spent on building an expressway which connects Ba Ria-Vung Tau and HCMC.

As for the proposed airport near Sa Pa, Tong claimed that roads should be the focus of this area, not airports as investing in roads in this area will allow different vehicles to travel to multiple destinations in the north, serving the majority of the population.

Son was concerned about the distance from the airport to Sa Pa town, which is about 100 kilometers away, a distance too long to attract tourists.

The Ministry of Transport in September approved amendments to the expansion plan for HCMC’s Tan Son Nhat airport.

The plan, which lists targets until 2020 with orientation towards 2030, includes the addition of a third terminal and a 250 hectare expansion of the airport’s area. Specifically, the airport’s total area will be increased from the current 545 hectares (1,350 acres) to 791 hectares.

Regarding Hanoi’s Noi Bai airport Deputy Minister of Transport Le Dinh Tho in October urged related agencies to quickly review plans to expand the airport to the south. Their aim is to increase the capacity to 100 million passengers a year in 2050.

The airport now has a capacity of 21 million passengers per year, but accommodated some 24 million passengers in 2017.

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As trade spat cools, Chinese firms reconsider Vietnam move

With China and the U.S. suspending imposition of new trade tariffs, Chinese companies are rethinking their move to Vietnam.

The cost of building a new factory and hiring land at industrial parks in Vietnam has increased in the past few months and become an obstacle for many foreign investors, including those from China.

Given the higher costs, many Chinese export manufacturers, especially small and medium-sized ones, have taken advantage of the recent trade cease-fire between China and the U.S. to postpone plans to relocate their factories to Vietnam, according to South China Morning Post (SCMP).

Prices to rent industrial land in Vietnam have increased in recent time.

Prices to rent industrial land in Vietnam have increased in recent time.

U.S. President Donald Trump and Chinese President Xi Jinping have recently agreed to a ceasefire in a trade war that has seen the flow of hundreds of billions of dollars worth of goods between the world’s two largest economies disrupted by tariffs.

The two leaders agreed to hold off on imposing more tariffs for 90 days starting December 1 while they negotiate a deal to end the dispute following months of escalating tensions, according to Reuters.

But experts repeatedly expressed doubt that any concrete steps to totally ease tensions between the two economic giants can be achieved in so short a time.

“This is not a truce, this is not an armistice,” Steve Okun, senior advisor at McLarty Associates, told CNBC. He noted the additional tariffs that the U.S. and China have imposed on each other’s products are still in place, so the 90-day withholding of further levies doesn’t signal the end of the trade fight.

Even so, many export manufacturers, especially small and medium-sized firms (SMEs) in China, have jumped at the chance to postpone.

Xie Jun, a Chinese furniture exporter, said the cost of building a new factory in Vietnam had soared in the past few months and become unaffordable to many.

A sofa foam and sponge factory owner in China’s eastern province of Zhejiang moved to set up a factory in Vietnam’s southern Dong Nai Province early this year, he said.

The preparatory steps cost him nearly 10 million yuan ($1.4 million), including paying for and converting the industrial plants, transferring automated production lines from Zhejiang, as well as paying allowances to send skilled Chinese workers there.

The expense was even higher than building a new factory of the same size in Zhejiang, Xie said.

“So the [trade war] truce is really a relief for us. And we hope the government can really end [the trade war] next year,” Xie told the SCMP.

At an industrial park in Dong Nai, the price to rent industrial land on a long-term lease of up to 50 years reached $90 per square meter as of last month, up from $60 to $70 last year.

The prices also increase in other localities.

The average rent of industrial land in northern Vietnam hit $82 per square meter per lease term in Q3, an increase of nearly 9 percent compared to Q1, according to a report of real estate service firm Jones Lang LaSalle (JLL) on Vietnam’s property market in the Q3.

Hanoi’s average rents increased significantly to $137 per square meter per lease term, the highest in the north, driven by limited supply.

JLL said the country’s industrial properties will remain desirable due to strong foreign direct investment coming mostly from Japan, South Korea and Taiwan.

Gao Jian, co-founder of Vnocean Business Consulting Service company, which helps more than 50 industrial parks in Vietnam to recruit Chinese manufacturers, said there were various costs associated with setting up a plant.

“If we talk about founding a small electronics factory of about 300 workers in popular industrial parks near Ho Chi Minh City, it would cost about $1 million,” Gao said.

Thus, for those firms that remain in China, the tariff truce has allowed them to cling to the possibility that there might be no need to relocate, at least in the short run.

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City to demolish 120,000sq.m of dilapidated apartment towers

HCM City plans to demolish 120,000sq.m of dilapidated apartment buildings by 2020 and build 240,000sq.m of new apartments to replace them, according to its Department of Construction.

It has furnished a list of 14 buildings to be demolished and seven to be built to the Municipal People’s Committee.

Co Giang apartment tower in District 1's Co Giang Ward, was built in 1968 and houses nearly 900 households. It has seriously deteriorated and is in grave danger of collapsing. — VNA/VNS Photo Hoang Hai

Co Giang apartment tower in District 1’s Co Giang Ward, was built in 1968 and houses nearly 900 households. It has seriously deteriorated and is in grave danger of collapsing. — VNA/VNS Photo Hoang Hai

Of the city’s 1,244 apartment towers, 533 inhabited by more than 50,000 families were built before 1975.

The department studied 88 of them and found 23 face a high risk of collapse.

Co Giang apartment tower in District 1’s Co Giang Ward, for instance, was built in 1968 and houses nearly 900 households. It has seriously deteriorated and is in grave danger of collapsing.

In 2006 the People’s Committee had planned to move its residents out and rebuild it.

In 2011 it ordered the immediate demolition of Co Giang, but the order has not been carried out. Around 300 families have refused to move out because they did not agree with the compensation they are to receive or the new houses they are to get in return, claiming they are too far away.

Despite being the city’s central district, District 1 has 89 apartment towers that face a serious danger of collapse, threatening the lives and properties of 7,000 families, according to Tran The Thuan, chairman of its People’s Committee.

The district is studying the 89 apartment buildings and doing a social survey of the 7,000 families living in them.

First, eight buildings facing the highest risk of collapse will be rebuilt followed by the others, with the schedule based on the state of the buildings.

The district plans to start the project in the second quarter of this year.

At a meeting with the district People’s Committee earlier this month, Dinh La Thang, Secretary of the city Party Committee, called on the city and local authorities to allot funds for the work.

He also urged District 1 to rebuild all apartments facing a risk of collapse within the next five years.

The city would announce policies to resolve the problem of aged apartment buildings, he said.

The task of rebuilding has been at a standstill in recent years because of difficulties in reaching agreement between investors and relocated households over compensation and the locations of resettlement houses.

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