Major developer Vinaconex withdraws from $451 mln tourism project in northern Vietnam

Vinconex has withdrawn from the VND11 trillion ($451.3 million) Cat Ba Amatina tourism project in Hai Phong city, which has its subsidiary Vinaconex ITC as the main investor.

The withdrawal has been finalized with the termination of an agreement between Vinaconex and the subsidiary, Vinaconex Investment and Tourism Development JSC (Vinaconex ITC).

Under the capital contribution agreement signed in June 2021 between Vinaconex, listed on the Ho Chi Minh Stock Exchange (HoSE) as VCG, and Vinaconex ITC, registered on the unlisted public company market UPCoM as VCR, the former would invest in the project’s CT02 zone and connecting infrastructure on Cat Ba town, a popular island destination off the northern coastal city of Hai Phong.

VCR would participate in the project by making asset contributions and acquiring investment rights in the CT02 zone, while VCG would contribute VND2.2 trillion ($90.3 million) and get 50% of the profit from the zone.

With the contract termination, VCR will return $90.3 million to VCG in 90 days from September 30. VCG will have to work with credit institutions to release VCR’s deposited assets in the project.

Founded in 2008, VCR is the main investor of the Cat Ba Amatina project. The 172-hectare urban-tourism project has two phases for completion in 2023 and 2025. It is to build 1,300 villas, high-rise buildings, serviced apartments, luxurious resorts, hotels, commercial centers, recreational areas, and other facilities.

By end-2022, VCR finished site clearance and 98% of the land levelling; basically completed infrastructure for the first phase, including traffic infrastructure, water supply and sewage systems, bridges, planting of trees; and built 99 villas in the A1 (BT4) zone.

In 2022, amid a downturn in the real estate market and low liquidity, VCR had to adjust the project’s progress and deliver some villas to customers instead of putting new products on sale. The firm also failed to meet its revenue and post-tax profit targets in 2022, only managing 37% and 6%, respectively. In the first half of 2023, VCR fulfilled 18% and 7% of the annual targets, respectively.

Vinaconex, among the most popular construction firms in Vietnam, has three main businesses – construction, property, and financial investment. Its leadership expects challenges in the real estate market to persist. Its construction department would focus on infrastructure and industrial projects driven by public investment.

So far this year, Vinaconex has won bids to participate in several major traffic infrastructure projects, including the first phase of an expressway linking northern provinces of Tuyen Quang and Ha Giang; an expressway connecting northern provinces of Tuyen Quang and Phu Tho; and three packages 5.10, 4.6, and 3.4 of the Long Thanh International Airport worth VND46.4 trillion ($1.9 billion).