South Koreans unveil West-West Lake plan

The modern residential, commercial and office project, with total investment capital of more than $300 million, would stretch for 207 hectares from Cau Giay to Tu Lien district, said consortium chairman Sung Koo Yi.
“Apart from submitting the proposal to the MPI, we also wanted to clear up our ideas on documentation and explain the project further to the Vietnamese government,” Sung told Vietnam Investment Review in Hanoi last week.
Because of the project’s size, Sung said the consortium and its Vietnamese partner, the Hanoi New Town Management Board, had put a much amount of effort into preparing the documents and procedures for the project.
“This is the first project to be developed on both sides of the Red River, so we have to be very careful,” Sung said.
Sung said the proposal would utilise the consortium’s experience accrued from past projects.
“In South Korea, we have been working on similar projects, so it will be great for us to help Hanoi, especially considering the city’s lack of accommodation and infrastructure,” he said.
According to an official from the Vietnamese partner’s managing board, if everything goes smoothly, work will begin on the project in 2005.
The investor consortium is composed of the six South Korean engineering and construction companies.
Daewoo Engineering and Construction will play the most prominent role in the group, which also consists of the Daewon Co, Dong Il Highvill, Kolon Engineering and Construction, Posco Engineering and Construction, and the Dae-A Engineering and Construction.
According to a report from the Hanoi Department of Planning and Investment, the companies are big players in the construction and urban development industry in South Korea. At the end of 2003, total asset value of the six companies was $6.79 billion.
South Korean developers plan to spend $133 million on site clearance and $158 million to build infrastructure for the whole area between 2005 and 2011. The group would hand over 117 hectares of land, including infrastructure, to Hanoi authorities without charge upon the project’s completion.
Nguyen Do Khue, deputy director of the Hanoi Department of Planning and Investment, said the proposal was encouraging since the state would be spared from spending about $165 million to the clear site and build infrastructure.
Hanoi authorities have given the thumbs-up to the project, although Vietnamese companies claimed that the project’s profits would be higher than the South Korean’s if they were allowed to develop the town, at around $221 million.
However, Hanoi investment officials disputed those claims, saying this calculation was misleading as Vietnamese developers have not taken into account risks associated with the project and quoted inflated housing prices.
Also, officials said Vietnamese companies could not explain where they would source around $133 million for land clearance during three years as well as the capital for building infrastructure.
Hanoi authorities have also asked South Korean developers to work out a mechanism to lure sub-investors to build offices, hotels and commercial facilities in the area. If they fail to do so, the land dedicated to these sub-projects will be withdrawn.
This project is a part of the larger Hanoi New Town project, which covers a total area of 8,830 hectares along the two banks of the Red River and has a required total investment capital of $30 billion.
The larger project is expected to provide housing and accommodation for 750,000 to one million residents by 2020. Observers hope it will alleviate overcrowding in Hanoi, especially in the city’s Old Quarter.