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Insight
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Getting locals in the swing
Update: 19-4-2004
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GOLF is probably not the first thing tourists plan to do during a vacation in Vietnam. As for locals, they dismiss it as a luxury. In any case, the number of courses is much lower than in Thailand and Malaysia.
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Playing from dawn to dusk: one you start, you can’t s stop |
But that does not mean there is no room for golf development. The country has a favourable climate and topography ideal for keeping grass green all year round and is now seeing the second wave in golf-course construction after the first in the mid-1990s.
The first wave
Vietnam started drawing interest in golf course construction when the country opened up to foreign investment in the early 1990s. Investors were enthusiastic about the opportunities in the crowd of foreigners in Vietnam to do business.
As a result, 15 foreign-backed projects were licensed during the decade, most of them from Taiwan, Japan and Korea. These investors expected a growing demand from the expatriate community and Vietnamese rather than tourists as Vietnam could not compete with major Asian destinations such as Thailand, Malaysia and Indonesia at that stage.
“These countries have so many golf courses that they are able to offer very low prices, hence attracting large tourist numbers,” says Lars Holden, general manager of Chi Linh StarGolf & Country Club in Hai Duong province.
Experience from neighbouring countries shows that golf developments are an attractive tool to draw tourists. Examples of this can be found in places like Bangkok and Tokyo where there are 100 courses within one hour’s drive of the cities. Meanwhile, Vietnam has only eight courses in the entire country.
Life has not always been easy for golf developers, however.
A drop in foreign investment and the low income of most Vietnamese in the wake of the Asian financial crisis meant that several multi-million dollar projects struggled to stay afloat in the late 1990s.
Indeed, at least five foreign investors actually abandoned their projects in Vietnam after the crisis. These included a $15-million property backed by Taiwanese Toyo Landic, and another $30-million development in Dai Lai Lake, both in Vinh Phuc province.
Other abandoned projects include a $35.7-million development in Haiphong, a $22-million Japanese-backed course in Hai Duong and the $12-million Phu Man in Ha Tay province. The Thai investors quit the Dong Mo course in 2000 while the development of Paradise golf course in Vung Tau was slow due to the limited financial ability of foreign partners.
Apart from Chi Linh StarGolf, which opened late last year, seven other golf courses struggled to survive with declining revenue from 1997 to 2000. Most of them have been making a loss for a long time, according to the Ministry of Planning and Investment.
The main reason behind the slump was the downturn in foreign investment that led to bad performance in other business sectors, the bankruptcy of numerous foreign-invested projects, the closing of foreign representative offices and, therefore, the small number of foreign businessmen coming to seek opportunities in Vietnam.
Golfer Franck Lafourcade, who is also general manager of Sofitel Metropole, says locals should be the core business segment for golf courses. However, in the last few years most Vietnamese have not been able to afford to play golf, exacerbating problems facing the infant industry.
The government has leapt to the rescue by lowering special consumption tax to 14 per cent between 1999 and 2001 and 20 per cent since 2002. All courses are asking for the tax reduction to be continued at the end of this year.
The next invasion
But the future is not so gloomy for Vietnam’s golf industry. Increasing tourist numbers, stronger foreign investment flow and growing local demand are catalysts for new developments.
According to the Ministry of Planning and Investment, the $70-million Thu Duc course in Ho Chi Minh City is now faring well with around 9,000 players a month. The $28.2-million Palm Song Be course in Binh Duong province has started to make profits.
The ministry is considering three foreign-invested golf projects in Quang Ninh, Lang Son and Lam Dong provinces. At least eight other golf courses are slated for Nha Trang, Phu Quoc, Hoi An, Halong, Tam Dao and Phan Thiet, major tourists spots in the country.
The long-delayed Kim No project in the suburbs of Hanoi has resumed construction after Thailand’s Noble Development Public Company jumped in to replace the South Korean investors. Site clearance for the $14.5-million project has been completed but the Thai company, a social public service company that is not allowed to bring money abroad, cannot begin construction until it has transferred its stake to its partner in Singapore.
The fledgling industry has drawn interest from local investors who have learned from foreign investors’ experiences in golf development. Ho Chi Minh City-based Au Lac joint-stock company is building a 36-hole course on Tuan Chau Island in Halong Bay with the first nine holes expected to be in operation by the end of this year.
Nguyen Thi Nga, chairwoman of Kings’ Valley Corporation, the owner of 18-hole Dong Mo course, says she believes there will be five or six new courses operating by 2006.
“Our motto is to increase service quality and the rights of members. We have a stable number of members, more than 600, and this clientele has stayed with us for a long time,” Nga says.
Her company, Ngan Anh, stepped in to fill the void left by Thai investors in the Dong Mo course, which lies at the foot of Ba Vi mountain and Dong Mo Lake. The company has upgraded all 18 holes, built a new marina and purchased new equipment. It is developing an additional 18 holes for the Mountain View Course.
But the bravest and most aggressive investor is Chi Linh StarGolf, which replaced the Japanese developers to rescue a $22-million project in Hai Duong province. The course will have 18 holes this July and will be completed in 2006 with 36 holes, 360 villas and a five-star hotel.
“Currently, when you think of Vietnam, you do not think of golf. However, with courses of the quality like Chi Linh StarGolf and the PGA event occurring, we will catch up quickly and see tourist golf in Vietnam boom,” Holden says.
“Chi Linh StarGolf is comparable to many of the finest golf courses in the world.”
Inspired by initial good business performance, the owners of this course are preparing procedures to build another course at Vinh Phuc province’s Dai Lai Lake.
MPI sources have said that a local company is applying to build a golf course in Do Son town in Haiphong. This project was initially billed as a $35.7-million development but abandoned by foreign investors.
“I have no doubt that golf is going to play a big part in the tourist market of Vietnam in the future. The country is so unique and having a few more golf courses will only bolster its position as a destination,” Holden says.
He says that golf development is shored up by the large expatriate market with a large percentage of these being Korean and Japanese who are keen golfers and can buy a golf membership in Vietnam for a more reasonable price than in their home countries.
However, Holden points out that attracting Vietnamese to play golf is essential as without them golf will never be developed in this country.
Lafourcade says he is confident that more Vietnamese will become interested in golf.
“I believe more Vietnamese will play golf. It is like the progress from a bicycle to a motorbike to a car. You can see that now there are a lot of luxury cars in Hanoi.”
Golf education
Nga of Kings’ Valley says the number of Vietnamese account for just 10 to 15 per cent of the members in a golf club. Therefore, the membership and daily playing fees are often higher than in foreign countries because golf development requires huge investment.
Most Vietnamese are not aware of golf and what is important to attract them is to make them understand that it is not a game for a select few but a healthy sport to be enjoyed by all, Holden says.
This is the concern of Hi-Tek, a US information technology company which is planning to establish a Golf ‘n’ Fun centre in Hanoi. Its president Lee Johnson says Vietnam has potential for golf development but locals are not familiar with golf.
“Our centre will have a public area for people to practice golfing,” says Johnson.
He recently brought in Cary Schuman, a golfer who is recorded in the Guinness Book for hitting the longest fairway, with the aim to promote golf among Vietnamese.
Holden is confident that in the future Vietnam will be producing high quality golfers similar to those from other Asian countries such as Thailand.
At present, 45 per cent of Chi Linh members are Vietnamese and he expects them to reach 60 per cent.
“For a country that has only been playing golf for a short time, there is amazing promise in what I see.
“Since I arrived in Vietnam four-and-a-half years ago, the number of Vietnamese playing golf has jumped dramatically,” he says.
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Vietnam promises to be something of haven for foreign golfers with new international standard golf courses coming onto the market. But how to attract locals to tee off is another question, Minh Son writes.
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