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A New Turning Point for Lotte's Billion-Dollar Project Thu Thiem Eco-Smart city

Vietnamese government issued Resolution No.195/NQ-CP dated December 31 included specific instructions on how to solve the problems and difficulties of this project.

According to this Resolution, 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 to continue to be the investor of the eco-smart city project in the Thu Thiem New Urban Area.

The solution came after three years of delay, mainly due to the 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.

In March of 2013, HCMC People's Committee approved Lotte Group to spend money on the investment proposal cost of Thu Thiem Eco Smart City project on 12 land lots of 12.5 ha of functional Area 2a. The total proposed investment by the investor was up to nearly 2.2 billion USD, with an investment joint venture consisting of 4 companies of Lotte Group and 3 Japanese companies.

In 2017, the investor-Lotte Properties agreed to pay a deposit and nearly 2,000 billion VND of land use to receive six plots in advance. They also committed to fully invest in completing the technical infrastructure of the whole Area 2a to form a center of finance-banking, trade and services.

However, the project was halted and the authorities had to step in to conduct an inspection.

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. Besides, no land lease fees and taxes were collected from the investor, despite having already occupied 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 reorganize 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 analyzed the advantages and disadvantages of both options. According to its assessment and opinions collected from related authorities, the latter option had more advantages.

To keep Lotte involved, the MPI suggested that the prime minister assign the Government Inspectorate to review all outstanding issues 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.

At the same time, Ho Chi Minh city government requested the government to assign the Ministry of Natural Resources and Environment to guide the implementation procedures for land lease to investors without auctioning, according to the provisions of Point I, Clause 2, Article 118, the Law on Land.

The current concern is that after being allowed by the government to continue implementing the Thu Thiem Eco Smart City project, what specific actions will the investor take to speed up the progress after years of suspension.

The representative of Lotte Properties claimed that the project's implementation progress is being accelerated and there will be very specific and important results in 2021. The representative added that Lotte is preparing procedures to conduct meetings with the city committee about the next steps of this project. Their goal is to get the master plan 1/500 approved and have the decision to allocate land from the authorized level this year.

As an investor, keeping yourself constantly updated on these policy updates help you stay relevant in the market and predict future trends. Interested to know deeper about Vietnam's business opportunities? Contact Broad Avenue Team right now for more information.





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