South Korea’s Kumho Construction & Engineering Inc. will go it alone in the long-stalled Asiana Plaza office building complex project in Ho Chi Minh City, pending approval of a proposal by local partner Saigontourist.
Well worth the wait: Korea’s Kumho hopes it will take the reins at Asiana Plaza
State-run Saigontourist has officially asked the Ministry of Planning and Investment (MPI) and Ho Chi Minh City authorities to allow its foreign partner to wholly invest in the project, a source from the country’s largest tour operator confirmed last week.
Saigontourist is one of the two local partners in the Kumho Saigon Joint Venture Company, which was set up to develop the $223-million Asiana Plaza project. The other partner is the District 1 Housing Development Company.
“If approved, we will hold talks with Kumho soon over the stake transfer, aimed to turn the joint venture into a wholly foreign-owned concern,” the source said.
Kumho was not available for comments, but according to market commentators, the local partners’ proposal to let the South Korean partner go it alone was “unexpected” because previously, Ho Chi Minh City government had turned down Kumho’s petition – in February this year – for continued involvement in the project.
As Vietnam Investment Review (Issue 704) reported, upon the request of the central government, Ho Chi Minh City mayor Le Thanh Hai had asked Kumho to transfer its 65 per cent stake in the Kumho Saigon Joint Venture Company to the Vietnamese side.
The municipal government then promised to provide support for Kumho if it got involved in other projects here. “If the Korean investor insists on the Asiana Plaza project, what the city government can do is to find another place for it,” the mayor said in a then-signed decision.
However, sources close to Saigontourist who wished not to be named told VIR that the Vietnamese side had finally agreed to withdraw from the ailing project as they failed to find suitable partners to continue the project. What’s more, they had not reached consensus with Kumho over the transfer.
So far, Kumho has invested $15.2 million in cash into the project, while Saigontourist and another Vietnamese partner have contributed $22 million in real estate properties.
The MPI is gathering opinions over Saigontourist’s request and will submit it to the government for approval.
The Kumho Saigon joint venture was licensed in 1996 to build the $223-million Asiana Plaza complex at 39 Le Duan Boulevard, District 1, including a luxury apartment building, a five-star hotel and retail stores, with Kumho holding a 65 per cent stake and its local partners the balance.
Work on the project was originally scheduled to start in October 1997 and be completed within three years. However, the regional financial meltdown forced the venture to temporarily shelve the project. The Korean partner blamed the suspension on its financial difficulties.
The venture has, since 2000, leased out the project site to tenants to set up stores pending a final conclusion on the fate of the project. The city government asked the Vietnamese partners to take over the project in mid-2004.
Sources from the city government said many foreign investors had expressed interest in the 13,600 square metre complex, surrounded by Le Duan, Hai Ba Trung, Nguyen Du and Le Van Huu streets.