Speculators look for place in the sun

Despite promises to end shady land deals, tourism developers can find few in-roads

“How can investors take part in the development of Phu Quoc when all the land is in the hands of real estate speculators?”
That question was repeatedly by investors at last week’s conference in Ho Chi Minh City on investment in Phu Quoc amid echoes of a recent land scam.
Although several senior officials from the island’s People’s Committee have been detained for illegally selling and allocating land, and although Kien Giang authorities have vowed to bring land problems under control, many investors still believe “the task is easier said than done”.
Nguyen Huu Tho, general director of Saigontourist, said that his company, the country’s leading hotel and tourist firm and main stakeholder in Saigon Phu Quoc Resort, still faced problems in land clearance on two resort and golf projects.
“We first thought we could operate a resort in Sao Beach, but we cannot,” he said, explaining that his company had originally submitted a master plan for developing 400ha of land on Sao Beach into high-class resorts but then provincial authorities granted rights to another company.
“Clearly, illegal land acquisitions have posed challenges for clearance and have caused investors like us to miss business opportunities, therefore hindering the development of the island,” he said.
Tho noted that when Saigontourist began seeking investment for Phu Quoc several years ago, Thailand’s Koh Samui was just an isolated island yet has now has become a popular destination, drawing more than two million tourists per year.
Yet Phu Quoc lags behind with poor infrastructure, a lack of detailed plans, bureaucracy and red tape, which have kept investors away.
The government has approved a master plan that envisions the island becoming an international tourist hub by 2020 with high-class tourist complexes. But making these plans reality would require significant work and millions of dollars to build roads around the island and to improve overall access to the spot.
Phu Quoc currently has only a single three-star resort, the Saigon Phu Quoc. The airport, though boasting a new terminal and receiving two to seven flights from Ho Chi Minh City per day, is small and can accommodate only 70-seat aircraft. Mountainous terrain further complicates plans for enlargement.
Though the Ministry of Transport has plans to build a larger airport on another part of the island, it remains unclear when construction will begin. Phu Quoc can also be reached by boat and plane from Rach Gia and Ha Tien, but foul weather often causes delays.

Investors are waiting
Investors are anxiously awaiting solutions to these infrastructure problems before committing serious money to the island.
“Investors will always be wary and slow to invest until adequate public utilities like electricity, water, drainage, roads and airport are provided,” said Dean Nguyen, president and CEO of TravelToVietnam Corporation.
Nguyen said that authorities should not expect investors to provide basic utilities; they must be there before investor dollars.
Many foreign investors at the conference said they would be interested in funding the airport but were discouraged by authorities unwillingness to allow outsourcing facility management due to security concerns and that the plan needs serious re-thinking.
Another challenge that many investors said they face is the lack of a detailed master plan.
“There are too many ministries and different authorities involved in the planning without knowing who is finally in charge and who guides the development in a professional way. Even though a master plan for Phu Quoc has been formulated, information is still traded as hidden goods,” said Louk Lennaerts, general director of Life Resorts Development.
Lennaerts also raised questions about the sustainability of the island’s master plan. Authorities should introduce world-class building standards to ensure that the environment of Phu Quoc is not harmed and that all construction meets requirements.
Dominic Scriven, director of British fund management company Dragon Capital, and also a major stakeholder in Mango Bay Resort on Phu Quoc, proposed provincial authorities ask all investors to contribute to a fund for protecting the forest and preserving the natural environment.

Despite uncertainties, scores of investors both foreign and Vietnamese, are rushing for a piece of the pie on one of the Vietnam’s most beautiful islands. They believe the site, a mere hour’s flight from Ho Chi Minh City, could outperform other premier beach holiday destinations in Southeast Asia.
Among them are the French group Victoria Hotels and Resorts, which recently reached an agreement with provincial authorities to lease 20ha for a $12-million resort project.
Victoria, which currently operates five hotels across Vietnam, expects to begin construction on 50 villas and 30 bungalows in Cua Can Commune that would target affluent travellers and employ more than 300 people.
The US-based Rockingham Asset Management LLC, which is operating and managing many large-scale property and tourism projects worldwide, is also seeking to build a $1.5 billion resort. One provincial official confirmed that the US investor was planning a multi-project investment scheme including hotels and restaurants. “But the investor has not laid out specific blueprints for such investment projects until it gets a green light from the government agencies,” hesaid.
If the licence is forthcoming it would be the largest-ever project on the island, which has been zoned to become the hub of the region under a government master plan.
Local companies mostly from Ho Chi Minh City, such as Tin Nghia, Saigontourist, Trung Son, Viet Phuong and Bao Vinh, have signed up to lease hundreds of hectares of beach-front property where they hope to develop high-quality resorts. Last week, the province awarded licences to 12 projects, worth $60m, which focus on tourism and trade services.
“They are just first ones and many more are waiting in the wings,” said provincial Party chief, Truong Quoc Tuan, adding that nearly 180 projects have registered with one-third of them foreign-invested.
“The province would prioritise to call investors to develop hotels and resorts, infrastructure projects such as roads, bridges, transport facilities, power supplies, waste treatment and a hospital,” he said.
According to Bui Ngoc Suong, chairman of Kien Giang People’s Committee, his province would set aside over 3,800ha of land on the island to build 17 infrastructure and tourism projects, including golf courses and racetracks. “We are awaiting government approval on the island’s 1:2000-scale map to tailor investment,” he said.
Suong also added that a Phu Quoc Investment and Development Management Board would be set up soon to monitor investments, and that the province was working out specific compensation plans and building resettlement areas to speed up site clearance.
“The blueprint is expected to be approved later this year, after which we would organise another investment conference to focus on more specific matters,” he said.
Suong stressed the province would soon set up rep offices in Hanoi and Ho Chi Minh City to help streamline investment procedures.



No. 761/May 15-21, 2006