$200m Vietstar project heads down the tubes

The $200 million, AJ Vietstar Company-backed property project in Ba Ria-Vung Tau province has hit the rocks.

The South Korean investor blamed the four-fold land leasing tax rise as pulling the rug from under its feet.

According to a source from the Ba Ria-Vung Tau People’s Committee, the tax had increased from 0.5 per cent of the land’s value to 2 per cent per square metre, per year.

Meanwhile, a  Ba Ria-Vung Tau Planning and Investment Department source told VIR that the Ba Ria-Vung Tau People’s Committee chairman Tran Minh Sanh had signed a decision to stop the operation of the project and withdraw the investment licence.

The AJ Vietstar project to develop a mixed-use property complex in Ba Ria-Vung Tau was licenced in January, 2009.

Two months later the foreign investor said that it faced difficulties in implementing the project because the land leasing tax had increased four times and suggested the local authorities provide it another land lot which has the lower leasing tax.

However, Sanh said authorities must obey the regulations on fixed land leases despite the pleas from the investor.

Sanh said the leasing tax was due to the location of site, now one of the key streets of Vung Tau City and had the highest compensation costs.

“The reason to increase the land leasing tax is to have enough finance to compensate for local people who devoted their land to the project,” Sanh said.

The AJ Vietstar complex project was located on 1.6ha in a unique location as the gateway to the city.

The project was to be shaped like an “ao dai” (long dress), with a low construction density, around 36 per cent of the total area, the rest was reserved for public facilities.

Expected to be put into operation 2014, the complex would offer 80 semi-detached houses, two 15-storey apartment towers, a 25-storey hotel tower and trading centre, school and health care centre.

AJ Vietstar was one of the 12 projects which were given investment licence in January, 2009 on the occasion of Ba Ria-Vung Tau Tourism Cultural Festival 2009.

Other outstanding property projects were the Saigon Atlantis Hotel invested by Winvest Investment with investment capital of $4.1 billion, Toc Tien Urban Area of Charm with $600 million and Safari park with $500 million.