Slow site clearance deters investors

Despite Vietnam’s attractive features as an investment destination, investors are concerned over site clearance issues

Ba Ria-Vung Tau People’s Committee last month reported that it had not yet handed over a 464-hectare site to Long Son Petrochemical Limited Company.

The company is a joint venture between Thailand’s SCG Group, Qatar Petroleum International, and PetroVietnam. It received an investment certificate for this $4.5 billion project in 2008, but has not yet started construction because of land rental and site clearance issues.

The provincial committee reported that it had to reclaim 398 hectares of land from 388 households for the projects. Among of them, 294 households received land compensation and were relocated to other sites. Local authorities have not yet completed negotiations with the other 94 households.

The project construction should have stared early this year and be completed in 2017, but because of the site clearance issue, this process has been delayed.

Bottlenecks in site clearance have also halted two mammoth tourism property projects in Ba Ria-Vung Tau for seven years. These include the $4.1 billion Saigon Atlantis resort complex invested by the U.S-based Winvest Investment LLC, and the $900 million Skybridge Dragon Sea resort complex.

So far, Winvest Investment LLC has handed over just 87 hectares of land for a 300-hectare site despite the firm providing $4.6 million to local authorities for land compensation.

“We tried, but the fact is that the province just cannot afford site clearance costs for the project,” said Dang Minh Thong, deputy director at Ba Ria-Vung Tau’s Department of Planning and Investment.

Land clearance issues are commonly occurring throughout Vietnam and deterring investors despite the country emerging as a good destination for foreign direct investment thanks to its political stability, strong economic growth and cheap labour costs.

To clear land for an investment project, local authorities and investors have to negotiate with residents over compensation rates, which will be based on the market land prices. But Thong said the negotiation process always takes too long.

Nghi Son Refinery & Petrochemical, the investor of $9 billion Nghi Son oil refinery and petrochemical complex in Thanh Hoa, took five years to handle the site clearance. And this work has only finished in early October.

“This is a big concern for many foreign investors investing in Vietnam,” said Nguyen Chi Hien, head of Department of Planning and Investment in Phu Yen province.

Hien said Phu Yen was facing difficulties in clearing land for the $3.1 billion oil refinery and petrochemical Vung Ro project, which was invested by Vung Ro Petroleum.

“The investor is urging us to complete site clearance for the project. It is not easy,” said Hien.n

Prof. Dr. Nguyen Mai, chairman of Vietnam Association of Foreign Invested Enterprises, said land clearance was an urgent issue that the Vietnamese government and provincial authorities should tackle as soon as possible to boost disbursement of foreign direct investment.