Monday, September 10, 2007

Malaysia's largest property developer moves quickly into Vietnam

SP Setia planting its flag in Vietnam

MORE local companies have in recent months begun to make a beeline for booming Vietnam. SP Setia Bhd, the largest local property developer in terms of market capitalisation, has jumped on the bandwagon, deciding to strike while the iron is hot.

Vietnam has attracted over US$10bil in foreign direct investments (FDI) over the last few years. According to the Vietnam Foreign Investment Agency, FDI for the first half of this year rose 8% year-on-year to US$5.2bil, with Malaysia being the 11th largest FDI source.

Over the last 10 years, Vietnam's gross domestic product (GDP) has grown at an average rate of 7.5%, and this robust trend is expected to continue.

The booming economy and healthy FDI inflow have resulted in huge demand for housing, commercial, office and industrial space.

An artist's impression of the EcoLakes in Binh Doung province, 40km north of Ho Chi Minh City.
SP Setia has entered into a joint venture with Vietnam's Becamex IDC Corp, a state-owned conglomerate, to develop a RM2.1bil master-planned community called EcoLakes in Binh Duong Province, 40km north of Ho Chi Minh City.

The Binh Duong Province is the manufacturing hub of the country. It recorded the highest GDP growth last year at 15.4%, outpacing the country's overall GDP.

SP Setia group managing director and chief executive officer Tan Sri Liew Kee Sin said EcoLakes would offer link houses, semi-detached units, villas, apartments and condominiums.

The development will also include the creation of an eco sanctuary, fountains, lakes and a man-made beach. There will also be a medical centre as well as private and international schools.

Liew said construction of EcoLakes would most probably begin early next year and was expected be developed in six phases over eight years.

It is the first cross-border investment destination for SP Setia, which has a representative office in Ho Chi Minh City.

Becamex is a member of the blue-chip Group-of-91 premier companies in Vietnam.

The state-owned corporation has been in operation for more than 15 years. Its principal activities cover industrial park and infrastructure development. It also has interest in banking, securities and pharmaceutical companies.

Liew said the company chose Vietnam for its first overseas project because of the country's strong economic growth, sizeable population and stable socio-political climate.

“Having established a dominant presence in the Malaysian property market over the past decade, we are now ready to export our expertise to foreign markets,” he said.

EcoLakes, which is spread over 226ha in the heart of the MyPhuoc Industrial Park (MPIP), is similar to its well-known Setia Eco Park township in Shah Alam.

The property developer won in the Master Plan category of the Fiabci Prix d’Excellence Awards 2007 for Setia Eco Park early this year.

SP Setia group executive director Teow Leong Seng said about 60% of Vietnam's population of 85 million were under 35 years old and they commanded increasing purchasing power.

The current poor infrastructure in Vietnam did not reflect the purchasing power of its people, he said.

As part of efforts to further enhance the attractiveness of the project to potential investors, Becamex is constructing a 35km highway linking the project with Ho Chi Minh City, the port and international airport.

The highway, which will cut travelling time from an hour to only 30 minutes, is expected to be completed in three years.

Teow said the strategic location of EcoLakes in MPIP, one of the most prominent industrial development zones in the Binh Duong Province with a population of 200,000 in the vicinity, provided a ready pool of potential purchasers.

The rising FDI, rapid urbanisation and growing affluence among the people in Vietnam could only mean that there will be rising demand for residential and commercial spaces.