Getting approval for 4-5 star resorts takes up to 14 years, investor says

Getting approval for 4-5 star resorts takes up to 14 years, investor says

VietNamNet Bridge – An investor would need 14 years to fulfill necessary procedures to open a resort with 300 four- to five-star rooms covering an area of 10 hectares, according to Than Thanh Vu, deputy chair of the Vietnam Tourism Real Estate Association, who is now managing director of Phu Quoc Land, a real estate estate firm.

He said he had come to the conclusion after summarizing his 13-year business experience and analyzing the stories of members in the association.

According to Vu, after deciding to develop a project, an investor would need 63 months to learn about land prices and estimate the expenses on site clearance.

In order to develop a resort with this scale, he would have to fulfill 44 major groups of works, and to fulfill at least half, he would have to get approval from local authorities and competent agencies.

The “authorities and competent agencies” the businessman mentioned include 12 agencies, from provincial communist party committees and people’s committees, to commune and district authorities, planning and investment departments and culture, sports and tourism departments.

“The procedure could be accelerated if there is cleared land available in localities and if the local authorities had land fund-use programs,” Vu said. “But in most cases, local authorities don’t have these things ready.”

Kenneth Atkinson, chair of Grant Thornton Vietnam, an auditing and consultancy firm, said it would take up to three years to fulfill some administrative procedures, while it only takes several months to do the same thing in other countries.

Duong Thanh Thuy, chair of Thanh Thuy group, commented that the development process of real estate projects depends a great deal on site clearance and the local authorities’ decisions about the land rent.

According to Thuy, if the bank loan interest rates remain stable, an investor would be able to recover investment capital after 20 years.

If an investor plans to lease land for his project for 50 years, he would only be able to estimate the investment rates if the local authorities commit to keep the land rent unchanged for at least every 10 years.

However, Thuy said, in most cases, local authorities do not make any commitments about the land price stabilization.

Therefore, Thuy said he once had to give up a project after the provincial authorities unexpectedly raised the land rent by 10 times.

Investors often complain about the long time they have to wait to get site clearance. “We once had to wait five years just to get clear land,” Thuy said, saying that this is seen as the biggest problem for investors.

“Simple procedures, available cleared land and stable land rents are the three most important factors that determine project implementation. However, these remain unsettled problems,” she said.

TBKTSG

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