The green light has been given for the continuation of a $900-million eco-smart city invested by a consortium of Lotte Group affiliates, which had been delayed for more than three years.
|The venture has been in the works for nearly a decade, photo Le Toan |
In a recent meeting with the prime minister, Chairman of Ho Chi Minh City People’s Committee Nguyen Thanh Phong said that the committee is keeping its promise to allow the Lotte consortium to be appointed as the investor of the project without any proceeding auction.
However, 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 does not comply with the current provisions of the Law on Bidding and the Law on Land. In addition, so far the land leasing expenses and taxes have not yet been collected from the investor.
At the end of 2019, the committee also released two official documents, No.4655/UBND-DA and No.5019/UBND-DA, to report the obstacles which are halting this project.
According to these documents, two solutions were proposed. The city could either both withdraw and reorganise the auction to choose new investors, or retain Lotte as the investor to implement the venture.
Most recently, the Ministry of Planning and Investment (MPI) issued document No.279/BKHDT-DTNN dated April 17, in which it analysed both advantages and disadvantages from both options.
According to the MPI’s assessment and opinions collected from related authorities, the option of permitting Lotte to continue this project without an auction had more advantages than
the other. However, in order to keep Lotte involved, the MPI suggested the Prime Minister assigned the Government Inspectorate to review all outstanding issues in order to establish a solid foundation for the final decision.
Chairman Phong said that all related authorities have agreed that Lotte should be permitted to continue the project.
The Government Inspectorate, meanwhile, cited that the permission for Lotte must be based on legal documents and suggested to the MPI to apply Article 26 of the Law on Bidding which regulates the “selection of investors in special cases”.
Lotte initiated to build the eco-smart city on a five-hectare land plot in Thu Thiem Urban Development Area since 2009.
In 2013, a consortium of four of the group’s South Korean affiliates (Lotte Asset Development, Lotte Shopping, Hotel Lotte, Lotte Engineering and Construction) and three other partners from Japan (Mitsubishi Corporation, Mitsubishi Estate, and Toshiba Corporation) was set up to implement this project.
In 2015, Ho Chi Minh City People’s Committee suggested to select this consortium to implement the project by granting it by investment appointment without an auction. This selection, according to the committee, was based on Article 4 of the Law on Bidding 2013, citing that a certain investor can be chosen if it is the only one registered for this project.
In 2016, the Lotte consortium advanced VND120 billion ($5.2 million) to implement this project.
In the same year, the three Japanese investors withdrew, and the consortium only consisted of the remaining four Lotte companies. From then on, the group was managed by Lotte Properties Ho Chi Minh City while the investment capital was also reduced to $900 million. The project, however, was halted by Ho Chi Minh City authorities for reviewing the process of choosing investment and resetting all procedures in accordance with the current laws on bidding and investment.