Nearly a year after the bribery scandal that involved Lotte Group chairman and took down the South Korean president, the multinational giant is now gearing up its investment strategy in Vietnam by pushing ahead with two giant projects in Hanoi and Ho Chi Minh City.
|Lotte is set to make an even bigger splash with projects in Hanoi and Ho Chi Minh City, Photo: Dung Minh |
During a visit to Vietnam last week, Lotte Group chairman Shin Dong-bin, who remained in the post despite the scandal, met with Vietnamese Prime Minister Nguyen Xuan Phuc and outlined his plans to speed up the process of developing Lotte Mall Hanoi and its Ho Chi Minh City-based eco-smart complex.
This visit focused on advancing ventures which have slowed in pace over the last 12 months, with Lotte Group committing to apply environmental friendly technologies to all projects.
Lotte Group plans to start construction of the $600 million and 7.3 hectare Lotte Mall Hanoi before year-end, and open in 2021 with facilities such as offices, hotels, and commercial sites.
It is also in the final preparation stages to kick off a $2 billion eco-smart city in Ho Chi Minh City. This will be a large-scale development project featuring shopping malls, hotels, offices, and apartments located at Thu Thiem New Urban Area, destined as a new economic hub of the city. This project is scheduled to begin at the end of 2019 and put into operation in 2022.
This is the second trip of high-ranking Lotte Group officials to Vietnam in the last two years, reaffirming its commitment to the country.
In October last year, Lotte vice chairman Hwang Kag-Gyu visited Hanoi and met with PM Phuc to explain the group’s business in Vietnam and discuss investment expansion and co-operation plans.
According to Dong-bin, Lotte Group’s prospects in Vietnam are vast, especially in the hospitality sector, and the group is expected to increase investment in the field in the near future.
Lotte Group currently boasts two large-scale hospitality assets in Vietnam, Lotte Centre Hanoi and Lotte Legend Hotel Saigon. Both produce high profits.
In October this year, Dong-bin was released from jail following the suspension of a 30-month bribery and embezzlement sentence that had created a leadership vacuum atop the South Korean retail giant for almost eight months.
Lotte Group immediately made plans to speed up investments which had been delayed significantly in its chairman’s absence.
The company is now planning to pay around $44 billion for Vietnamese and Indonesian developments over the next five years, as well as open chemical factories in South Korea, Indonesia, and the US.
This package also reserves funds for investment in large-scale infrastructure development of e-commerce in the retail sector in the context that traditional retail has shown a downturn.
Lotte Group is also paying attention to the startup entrepreneurs of Vietnam and plans to set up a fund for the market as soon as it is feasible.
The conglomerate has been active in Vietnam in the food and restaurant business since the 1990s, with core businesses such as distribution, service, and construction continuing to enter the country. Currently, there are 16 affiliated companies in Vietnam including confectionery stores, department stores, cinemas, Lotte Mart, Lotte Asset Development, hotels, and Lotte Duty Free with 11,000 executives in place. Despite the group claiming strong accumulated losses in retail, Lotte still foresees its expansion in this sector, with ambitions to turn a profit in 2019.
Lotte Vietnam Shopping, is operating 13 trade centres in the country. According to Lotte Group’s 2017 financial statement, the shopping company’s liabilities are 45 times higher than its equity, and accumulated losses are more than $100 million after 11 years of operating in Vietnam.