After 10 years of being left idle, the Vietnam International University Township (VIUT) project proposed by Berjaya is facing closure. Many other foreign invested projects are in the same situation.

In 2006-2007, Berjaya became the first Malaysian conglomerate which received a license to develop nine large projects in Vietnam, including the Thach Ban new urban area project in Hanoi, the Vietnam Finance Center (VFC) in HCMC, and VIUT in HCMC, covering an area of 925 hectares in total.

Berjaya’s business performance in Vietnam has not been as successful as expected.

Hanoi Garden City, one of the key projects of the conglomerate, remains unsold because it is located in a disadvantageous position. Meanwhile, VIUT is facing the possibility of having its investment certificate revoked.

The investment certificates for VIUT and VFC were granted by HCMC authorities in February and July 2008. However, to date, they remain on paper.

Nguyen Hoai Nam, CEO of Berjaya Vietnam, assigned by Berjaya to manage projects in Vietnam, admitted that the biggest problem was that Berjaya could not truly assess the Vietnamese real estate market.

Illustrative photo (source: VNN)

The market once experienced a ‘bubble’ period when investors rushed to pour money into shopping mall and apartment projects. As the market began to freeze up later, many projects faced sales problems, including Berjaya’s.

The CEO of a foreign business complained that there were many problems in the market and the investment environment was not transparent enough. Domestic investors tend to conceal information about projects.

The joint venture of Hong Kong Land and Sumitomo Realty & Development decided to quit the project at No 164 Dong Khoi street in HCMC after four years of pursuit.

The reason cited was that city authorities could not fix the cost and time for site clearance. The two sides also could not come to an agreement on the height of the building.

Prior to that, the joint venture had to compete with 70 other investors to obtain the right to implement the project.

Some economists think FDI into the real estate sector should not be strongly pursued by Vietnam. In many cases, foreign investors register projects in Vietnam and mobilize capital in Vietnam to execute the projects, but don’t bring foreign capital to Vietnam.

Phan Huu Thang, FIA former director, now deputy chair of the Vietnam Real Estate Association, thinks Vietnam should continue welcoming projects in real estate, but said local authorities need to be more cautious when granting licenses to investors.

By mid-2017, the total registered FDI capital in the real estate sector had reached $19.22 billion, but only $7.72 billion had been disbursed./.

( VNF/VNN )