In just nine days, Lotte Group reversed its position on continuing a project considered one of the most prime and valuable developments in Ho Chi Minh City. Experts argue that Vietnam’s open business environment does not mean the country should bend over backward to please investors at any cost.

Deposits can be refunded, auctions can be rerun

The Thu Thiem Eco Smart City project, located in Functional Area 2A (now An Khanh Ward, Ho Chi Minh City), was first proposed in 1997 with a total investment of over 820 million USD (more than 20.1 trillion VND). The mixed-use complex was planned to include a financial center, services, and residential areas, envisioned as a central highlight of the Thu Thiem urban area.

Despite its potential, the project has faced a turbulent history. Public opinion was stunned when Lotte abruptly requested to withdraw from the project just over a month after receiving a notice to pay 660 million USD (around 16.19 trillion VND) in land-use fees. In a letter dated August 20, Lotte stated that the decision came after "comprehensive evaluations and careful discussions among investors."

Surprisingly, just nine days after indicating it would terminate the project, Lotte began reconsidering. To move forward, the company submitted three proposals to the Ho Chi Minh City government: to allow restructuring of share ownership among its subsidiaries, to permit attracting external investors with up to 35% ownership, and to waive the 5.4% supplementary tax. These proposals suggest that Lotte’s renewed interest is driven by conditions favorable to the business.

A poor precedent, experts warn

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Lotte Group has fenced off the project site. Photo: Tran Chung

“This is not healthy,” said Dr. Huynh Thanh Dien of Nguyen Tat Thanh University in an interview with VietNamNet. He noted that if Lotte genuinely wanted to terminate the contract, Ho Chi Minh City could consider accepting that decision. Dragging out this hesitation creates a negative precedent. An attractive investment environment should not mean investors get to call all the shots.

While resolving barriers for Lotte is necessary, any action must adhere to the law and reflect the principle of “shared benefits, shared risks.” This is the only way to build a sustainable, equitable, and trustworthy investment climate for all businesses, regardless of origin.

Support local businesses through higher localization

Expanding the perspective beyond Lotte, Dr. Dien observed that excessive favoritism toward foreign investors has widened the development gap between foreign and domestic enterprises. The two sectors often operate separately, like parallel economies within one nation.

Therefore, he stressed that incentives should be uniformly applied rather than tailored to special cases. In fact, regulations for foreign investors should arguably be stricter.

Associate Professor Vo Dai Luoc, former Director of the Institute of World Economics and Politics, echoed this view. He believes Vietnam’s investment policies are too lenient, particularly in areas like cheap land rentals and tax incentives.

In contrast, he noted that in China, fully foreign-owned enterprises are relatively rare. The government often requires foreign firms to form joint ventures with domestic companies and typically restricts full foreign ownership to high-tech sectors.

According to the professor, the late Singaporean Prime Minister Lee Kuan Yew once told him that Singapore mainly offers incentives to European and American investors. Asian investors, on the other hand, are treated on equal footing with local companies.

Delays lead to waste

Lotte is not alone. Over the years, more than 100 real estate projects in Ho Chi Minh City have been delayed due to unresolved financial obligations.

The government has been actively working to remove obstacles. The Prime Minister has repeatedly urged real estate corporations to reassess their investment portfolios, comply with legal procedures, cut costs, and proactively solve existing difficulties.

However, comprehensive reform remains the root solution. It would secure state revenue, create a transparent and fair investment environment, and support sustainable development while addressing housing needs.

Once procedural bottlenecks are eliminated, neither the government nor local authorities should need to “persuade” or “compromise” with individual investors, a practice that risks setting poor precedents and undermining fairness for others.

Land is a unique resource with both economic and strategic value. The prized site in Thu Thiem, a modern beacon on the banks of the Saigon River, has been fenced off for years. Now is the time for decisive action.

Nguyen Quoc Bao, Chairman of the Ho Chi Minh City Real Estate Club, said that if Lotte truly withdraws from the Thu Thiem Eco Smart City project, it will lose its deposit. The city can restart the land auction process in accordance with the law. Vietnam is not short of capable investors in the real estate sector.

Tran Chung