Vietnam’s newspapers are reporting that the Hong Kong-based Dragon Best International has agreed to a partnership with a Vietnamese company, Ho Tram Tourism JSC, that envisions investing in: a $32 billion real estate development in Ho Chi Minh City, an $18 billion eco-tourism project nearby Ba Ria – Vung Tau Province, and a $50 billion economic zone.
On a global scale, these are huge projects. In Vietnam, they are head-scratching, utopian dreams that make experienced developers and economists skeptical about Vietnam investors’ capacity for realism.
Many international investors believe Vietnam is a promising frontier market, but none of them are going to pour an amount of capital into Vietnam that approaches the country’s annual GDP. Vietnam’s economy cannot absorb $100 billion in capital; moreover, it could not generate a return on the investment any time soon.
For Vietnam, the problem is that this is not the first pie-in-the-sky project that didn’t materialize. Last year Dubai investor Global Sphere announced its plans to spent $30 billion on the Hanoi Wall Street — 70 apartment blocks at heights ranging from 40 to 70 stories and housing up to 400,000 people with a 102 story central tower. Hanoi’s planners hadn’t heard about the project, and it has yet to be registered with the government.
In 2007, the US Eminence Group announced its plan to develop a $30 billion economic zone in Thanh Hoa Province. However, soon after the group made an enthusiastic presentation on the project, the investor vanished.
Ultimately, the investors who will be successful in Vietnam are those patient and disciplined enough to develop realistic, credible plans — not pipe dreams.