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Plan for second Lotte Mart in city rejected
Lotte Mart, a member of South Korea’s leading department store operator Lotte Shopping, cannot proceed with a major plan to open a second shopping center in HCMC as earlier announced because the city authorities have turned down its proposal.
Lotte Vietnam Shopping Co., a unit of Lotte Mart, originally planned to open its second outlet this year on the first five floors of the EverRich apartment building under construction in District 11, after the opening five months ago of the first in Saigon South new urban area in District 7.
An announcement of the second Lotte Mart plan was displayed at its booth at the recent Asian Corporate Conference in the city as well.
A HCMC Department of Planning and Investment source close to the situation said on Monday that the city authorities had received Lotte Vietnam’s proposal for the second department store at the EverRich building but they had refused it.
The proposal has been rejected due to many reasons, according to experts. The proposed Lotte Mart store was reportedly expected to target customers in districts 10, 11 and Tan Binh, but there are already some supermarkets in these districts, including Saigon, Big C and Co.opMart.
The entry of Lotte Mart there would have an impact on the planning of the retail outlets, they said.
Under the WTO commitments, the retail market will be opened up to international firms after November 2010, except for gasoline, books and newspapers, cigarettes, rice, sugar and precious metals.
But after the opening of their first store in Vietnam, international retailers must seek permission for every other outlet.
Tran Quoc Khanh, a former WTO accession negotiator of Vietnam, earlier said the ENT (Economic Needs Test) principle would be used to consider licensing the second retail point onwards for foreign investors.
This means such licensing is conditional based on three criteria: (1) the number of retailers in a locality, (2) the stability of the market and (3) the size of the residential quarter. Moreover, the Government will also look into local development programs and local population density to decide whether to grant licenses.
Experts said to date, there had been no legislation giving clear instructions on how to define ‘economic needs’ and interpret the three criteria, and that the term ‘retail point’ has also not been clearly defined.
The lack of rules and definitions of concepts is believed to create difficulties for enterprises when making business decisions, and for state agencies in management work.
If decentralization is put into place, this may make the oversight of foreign-owned retail points difficult. Thus, state agencies will need to set out the conditions for opening the second retail point onwards, experts said.
Lotte Vietnam’s plan for expanding its store chain across Vietnam may become slower than planned.
Lotte Vietnam Shopping Co. is a joint venture between Lotte Shopping and Vietnam’s Minh Van Company.
Its first Lotte Mart, the biggest shopping center in Vietnam, costs US$75 million and covers 33,400 square meters in Saigon South area. The three-floor Lotte Mart South Saigon includes a 15,800-square-meter supermarket which stocks some 50,000 items.
The shopping center has also other amenities such as cinemas, bookstore, home appliance center, restaurants, cultural center, bowling and billiard facilities, coffee shop, children game area, and fastfood center.
Lotte plans to set up about 30 department stores and supermarkets within 10 years in HCMC, Hanoi, Danang, Can Tho, Haiphong and Hue, at a total cost of some US$5 billion. They will include 15 department stores and supermarkets in HCMC and the city’s neighboring provinces in the near future.
Lotte Shopping is seen as the fifth largest business group in Korea. Lotte Mart now has 90 department stores in four countries including 62 stores in South Korea, 8 stores in China, 19 in Indonesia and one in Vietnam.
VietNamNet, SGT
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