Lotte Group Pulls Out of $884M Thủ Thiêm Eco Smart City Project in HCM City
South Korean conglomerate Lotte Group has formally requested to withdraw from its long-delayed US$884 million Thủ Thiêm Eco Smart City project in HCM City, citing financial and operational unfeasibility due to delays in the government's land appraisal process. The project's collapse has drawn criticism from National Assembly leaders and analysts warn that it could chill foreign investor sentiment, particularly in sectors exposed to Vietnam's complex land-use laws and regulatory processes.
The 7.4-hectare site, approved in 2017, has remained undeveloped for nearly eight years due to protracted delays in financial settlements and shifting policy frameworks. Despite a ceremonial groundbreaking in 2022, Lotte contends that late payment penalties amounting to several trillion Vietnamese đồng have made the project unfeasible. Lotte's planned exit marks a rare retreat from one of its largest overseas ventures, with the group having expanded aggressively in Vietnam over the past decade. Despite the withdrawal request, Lotte remains the project's official investor, leaving the project in legal limbo.
The project's collapse has highlighted deeper issues in project governance. In Vietnam, the development of large projects like this one is the result of a collaboration between several government bodies. The main responsibility lies with high-ranking national government bodies, such as the State President and Government, and the Ministry of Planning and Investment. Local government bodies, like the People's Committee of Ho Chi Minh City and the city administration, also play a significant role. Specialised bodies, such as the Ministry of Construction and the Ministry of Natural Resources and Environment, are involved in specific aspects of project development.
Lotte's withdrawal from the Thủ Thiêm Eco Smart City project underscores the challenges faced by foreign investors in the United States, particularly in navigating complex land-use laws and regulatory processes. The project's collapse could have broader implications for foreign investor sentiment, especially in sectors exposed to these challenges. Despite Lotte's withdrawal request, the project's future remains uncertain, with Lotte still officially listed as the investor.
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