Singapore companies sign US$291mln projects with Vietnam companies

Deals of Keppel Land and CapitaLand with Vietnamese companies affirms positive Singapore-Vietnam business and investment climate.

Four agreements with investment value totaling US$291 million were inked on Thursday between Singapore-based companies and Vietnamese companies, for residential and manufacturing projects. These latest investments affirm the continued positive business and investment climate between Singapore and Vietnam. The agreements were signed on Thursday at the sidelines of the 17th ASEAN Summit in Hanoi, Vietnam, witnessed by Prime Minister Lee Hsien Loong and Vietnam Prime Minister Nguyen Tan Dung. The signings are as follows:

1. CapitaLand Limited, through its wholly-owned subsidiary, CapitaLand (Vietnam) Holdings, signed a joint venture agreement with Vietnamese partner, No Va Land Investment Group Corporation. This is their first partnership developing an approximately 9,000 square metre residential site, worth US$40 million in District 9, Ho Chi Minh City, an established township, situated roughly 10 kilometres off the city’s Central Business District. CapitaLand’s total investments into Vietnam are expected to grow from its current asset base of S$400 million to approximately S$2 billion over the next three to five years.
2. Keppel Land Limited signed a joint venture agreement with Hung Phu Real Estate Investment Corporation to develop a US$ 63 million, 9.8 hectare gated villa development in District 9, Ho Chi Minh City. This is their second partnership with Hung Phu Real Estate Investment Corporation on residential development in Ho Chi Minh City.
3. Keppel Land Limited signed a joint venture agreement with Tien Phuoc Company Ltd to develop a US$115 million, 13.5 hectare gated villa development, their fourth partnership with this Vietnamese partner in Ho Chi Minh City. Other joint venture projects between the partners include The Estella (a 1,393-unit condominium development), a 30-hectare mixed-use waterfront township with another Vietnamese partner, Tran Thai Company Limited, and a waterfront residential development in District 12.
4. PepsiCo signed a tenancy agreement with Vietnam Singapore Industrial Park (VSIP) for a US$73 million beverage production plant in the VSIP-Bac Ninh project in Bac Ninh Province. This is PepsiCo’s fifth company-owned production facility in Vietnam. PepsiCo has pledged to invest US$250 million in Vietnam over the next three years, bringing its total investment over the 2008 2013 period to more than US$400 million.

With three out of the four agreements focusing on residential development, the good match between Singapore’s expertise in urban planning and development and Vietnam’s rising need for quality housing is apparent. According to RNCOS, a market research firm, Vietnam is undergoing rapid urban migration, of about 3.4% annually. This coupled with an increase in spending on residential real-estate, projected to grow at a CAGR of around 6% during the period 2010-2013, reflects the potential demand and trend of increased spending by Vietnamese on housing, according to an IE SIngapore report.

Echoing the results of this finding, Mr Kevin Wong, Group CEO of Keppel Land said, “The sell-out success of Keppel Land’s first residential development in Ho Chi Minh City, Villa Riviera, demonstrates that prime villa developments are highly sought after. Keppel Land will continue to leverage our strong relationships and track record in delivering quality homes offering integrated lifestyle concept to further build up its reputation of being the choice developer in Vietnam.”

On other real estate opportunities in Vietnam, Mr Chen Lian Pang, CEO (Southeast Asia) of CapitaLand Commercial and CEO of CapitaLand (Vietnam) Holdings, said, “CapitaLand has started a strategic initiative to tap into the genuine and non-speculative demand of the locals who have real needs to set up new homes arising from the rapid and massive urbanisation in China and Vietnam. CapitaLand will leverage on its proven track records in property development and its strong network in Vietnam to tap on the opportunities in this segment of the residential sector.”

On the good relationship with Vietnamese joint venture partner, Becamex IDC Corporation, Ms Low Sin Leng, Co-Chairman of the VSIP Group and concurrently Executive Chairman of Sembcorp Industrial Parks said, “The VSIP Bac Ninh Integrated Township and Industrial Park is the third successful VSIP project undertaken by Sembcorp. Over the years, we have strengthened our relationship with our Vietnamese joint venture partner and the VSIP Bac Ninh is a good example of our good and close relationship. We continue to deliver good professional service, hassle-free environment and close customer relationship. We will continue to grow and expand our business presence in Vietnam.”

International Enterprise (IE) Singapore’s Group Director for Southeast Asia, Mr Kow Juan Tiang said, “Vietnam is undergoing rapid urbanisation and as such there is good potential for Singapore companies to do business and invest in urban infrastructure development. These projects reaffirm Singapore companies’ continued confidence in the long term potential of Vietnam and our support in developing Vietnam’s residential and industrial infrastructure sector.”

To help Singapore companies invest and participate in Vietnam’s growth, International Enterprise (IE) Singapore, a government agency under the Singapore Ministry of Trade and Industry, operates two offices in Vietnam. Located in Hanoi and Ho Chi Minh City, the Centres help Singapore companies export, do business and invest in Vietnam. IE Singapore supports Singapore companies’ overseas expansion in a wide variety of ways – from building capabilities, to sourcing of overseas market opportunities, as well as business match-making.

Bilateral trade and investments
In 2009, Vietnam was Singapore’s 14th largest trading partner with bilateral trade growing at a CAGR of 6.6% over five years to reach S$13.41 billion in 2009. For the first nine months of 2010, bilateral trade between the two countries reached S$9.53 billion.

As of September 2010, Singapore was ranked the 5th largest foreign investor into Vietnam with cumulative investments of US$17.9 billion in registered capital across 851 projects. These investments span a range of industries, from industrial parks, urban infrastructure, hospitality, logistics and port developments.