Korean building investors think big

“There is a new trend for Korean construction industry investors in 2004 to look towards the Vietnamese market,” said Hanoi-based KOTRA deputy director Jung Won-Joon.
Jung said Korean investment in Vietnam in general had been increasing in recent years. From the fourth biggest foreign investor in Vietnam in 1998, Korea has emerged as the second biggest in the last five months.
Jung said the trend was due to the declining business environment in Korea and companies were seeking opportunities outside the country.
“China and Vietnam have been popular recently and Vietnam has become a very famous destination in our country,” he said.
Jung also said KOTRA’s promotion of the Hanoi New Town project had raised the profile of Vietnam in Korea.
“This is a very promising project to make Hanoi become one of the most modern cities in the whole region,” he added.
Moreover, Jung said the South Korean government has shifted policy to push its investors to seek markets outside the nation’s borders.
“Our hot issue now is the government has issued new policies to reduce land and house prices, which have been too high in Korea and do not bring much benefit to investors,” he added.
Both state-owned and private Korean companies, such as Daewoo, Daewon, Posco and National Housing Corporation have investments in the Vietnamese market.
However, Jung said the country would attract many more Korean investors if it could resolve the uncertainty on policies relating to property and regulating land laws.
“Two of the biggest challenges for Korean construction companies in Vietnam are the price of land and compensation. I am sure that many more investors will come to invest in Vietnam if those policies were clarified,” he said.
Recently, the Ho Chi Minh City People’s Committee approved the Korea National Housing Corporation’s project to build 60,000 apartments for sale to the low income people in the city.
The apartments, with a minimum area of 50 square metres, will cost from $10,000 to $15,000 a unit. The Korean company will invest $1 billion in building the apartments and then sell them to the city for lease to the low income earners under three to five year instalment plans.
The Ministry of Planning and Investment also asked the government to approve a property project involving Korea’s Daewon and Vietnam’s Hoan Cau.
The two companies will invest $29.7 million in a high-rise apartment building at 600A Dien Bien Phu street, Binh Thanh district.
The local partner will contribute land equivalent to 49 per cent of the investment capital, including site clearance and compensation costs. Daewon will cover equipment and construction costs.
Daewon is also joining forces with Thu Duc Housing Development to build a $20.5 million property project in District 2, which includes three apartment blocks with more than 400 units.
A consortium consisting of six Korean investors is keen on developing a new urban centre on an area of 407 hectares in Hanoi and plans to build 470 houses, apartments and villas and other facilities such as conference and financial centres, a university, hospital and recreation parks.
According to KOTRA, as of July 2004, there were 23 Korean invested projects in the construction field, out of a total 777 Korean invested projects with investment capital of $83.6 million.
These projects employ 452 labourers and generate revenue of $42.3 million.
Most Korean construction projects focus on hotels or shopping centres.
The biggest projects operating in this field are Daeha Business Centre in Hanoi and Diamond Plaza in Ho Chi Minh City.