State talks down Ciputra debt rumours

Investment authorities have come out to bat for the $2.1 billion Ciputra Hanoi International City after rumours the large debt of one of its subsidiaries would sink the deal

An affiliate of the Ciputra Group, Development Planning and Investment (DPI), is the foreign partner in the Ciputra Hanoi project. While another Ciputra Group affiliate, Citra Development Indonesia, is reported to have an overdue debt of more than $230 million.
Whether the debt can be restructured remains unclear and there are fears that if the group and its creditors did not reach agreement, the project was likely to be delayed as has happened to some other property projects in the capital.
The Indonesian property group was licensed in 1996 to form the Citra Westlake City Development joint venture with Hanoi-based Urban Development and Investment Company to develop a 368-hectare property project with registered capital of $2.1 billion. However, construction only started in late 2002 after years of slow progress as a result of the 1997 Asian economic crisis.
Hanoi Planning and Investment Department deputy director, Nguyen Do Khue, confirmed last week the project was performing well and there were no signs of it being delayed.
“I assure you that the project is being implemented on schedule. It has never been delayed,” Khue told VIR.
He said the authorities knew the financial ability of the Ciputra Group was strong enough to implement the Hanoi project and the debt of one of its affiliates would not impact on its investment in Vietnam.
Asked whether the development of the Ciputra City was slower than other housing projects built by Vietnamese firms, Khue said: “This is a huge project that cannot be completed in one or two years. We should look at what the investors are doing now.”
When VIR visited the site last week crowds of workers were busy completing the two apartment towers and hundreds of villas.
Citra Westlake City Development Company director, David Arnsdorff, also said the debt of an affiliate company in Indonesia would not affect the progress of the Ciputra project in Hanoi.
“The development and construction progress of the project is on schedule,” he said, adding that the joint venture would hand over the first houses to customers next month.
Arndorff said the construction of two apartment towers with total 300 apartments and another 400 houses would be completed by the end of this year.
The joint venture said construction of 450 apartments in three more towers and 300 houses would be started within this year. In addition, 10 apartment towers with a total 1,500 apartments and 400 houses will also be under construction by next year.
In early next year, construction will begin on the biggest shopping centre in Vietnam on 7.3 hectares on the Lac Long Quan Road. It will house 1,263 speciality shops, 48 restaurants and cafes, a hyper-market, department stores and entertainment centre.
Land acquisition and construction of the main infrastructure for the whole project would be completed by the end of next year, Arndorff said.
In total, the company plans to build 50 apartment towers, 2,000 houses, a hospital, schools, a shopping and trade centre, and an office complex in the next five years.
“With respect to the Vietnamese government and Hanoians, the project will not be delayed and will be completed on schedule,” Arnsdorff said.
Ciputra, also the owner of the five-star Hanoi Horison Hotel, has developed 11 large-scale township projects ranging from 500 to 6,000ha, with office buildings, apartments, shopping centres, hotels, theme parks and golf courses in Indonesia and overseas.
The group said its subsidiaries and affiliated companies were operating and performing well. In Indonesia alone during the last two years Ciputra Group has developed three new residential projects in Medan, Menado and Bali, and one shopping centre in Pekanbaru; all have been launched successfully.