 |
Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] Seoul, August 21, 2025 – Lotte Group has officially notified the Ho Chi Minh City People’s Committee that it will withdraw from the long-delayed Thu Thiem Eco Smart City project, once envisioned as the “Vietnamese version of Jamsil” for its scale and ambition.
The decision comes after prolonged regulatory delays and sharply escalating costs. Lotte had signed an agreement with the city in 2017 to develop a mixed-use complex consisting of a 60-story tower with retail, hotels, residences, and apartments on a prime site in the Thu Thiem New Urban Area. Four Lotte affiliates in retail, hotels, construction, and asset development invested approximately KRW 220 billion (USD 160 million) to establish a local project company.
Chairman Shin Dong-bin underscored the project’s significance by attending the groundbreaking ceremony in September 2022 as his first official overseas trip following a presidential pardon.
Escalating Costs and Regulatory Delays
However, despite the agreement, Ho Chi Minh City only finalized the land use fee in July 2025, nearly eight years later. The fee was set at nearly KRW 1 trillion (USD 770 million) – ten times higher than Lotte’s initial estimate of KRW 100 billion.
During the protracted delay, construction costs also surged, pushing the total project budget from an originally planned KRW 1 trillion (USD 770 million) to KRW 3.5 trillion (USD 2.7 billion). Lotte had sought to negotiate external investment participation and more flexible payment terms with the city, but authorities insisted that the full land use fee be paid upfront.
Strategic Withdrawal
Faced with mounting costs and inflexible conditions, Lotte has opted to return the allocated land and halt further development. The withdrawal underscores the challenges global companies face in navigating complex approval processes and rising costs in overseas mega-projects.
The Thu Thiem Eco Smart City cancellation also marks a setback for Lotte’s broader international expansion strategy, though the group continues to maintain a significant retail and consumer presence in Vietnam.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
