Published on October 30, 2007
The plan followed a meeting between CP Group chairman Dhanin Chearavanont and Vietnamese Prime Minister Nguyen Tan Dung on May 28.
During that meeting, Dhanin outlined CP's investment strategy to the Vietnamese leader, giving details on projects that had already been submitted for investment approval to the Vietnamese authorities, which were waiting for appropriate investment sites.
Sooksunt Jiamjaiswanglerg, president of CP Vietnam, said investment would focus mainly on real-estate and retail sales, which would account for about 50 per cent of total investment.
Both the real-estate and retail businesses will be developed concurrently, including land and residential development.
"They will be located in the same area, which will also have a department store complex to serve the needs of the people," Sooksunt added.
Due to worsening traffic congestion in the big cities, Vietnamese authorities are now planning to build satellite towns, which will grow parallel with urban areas such as Ho Chi Minh City. This would lead to a boom in the real-estate business, while Vietnamese banks are keen to provide financing support for mortgage loans.
The Vietnamese population is now 84 million, but the country has a total area of 331,033 square kilometres, about one-third of Thailand's. This has created housing problems for the Vietnamese and congestion in the cities.
Vietnam's retail business is still underdeveloped, with only a handful of foreign investors, because the country has not yet fully liberalised its retail business.
There are four to five outlets of France's Big-C and eight to nine outlets of Germany's Metro.
By 2009, Vietnam plans to liberalise its retail business, a commitment under its World Trade Organisation membership. CP, as a big-time investor, is looking at this open-door opportunity with keen interest because there is also a report that Wal-Mart of the US, the world's largest retail giant, is interested in investing in Vietnam.
CP is also interested in the mobile-phone and fixed line business in Vietnam, and has already had discussions with Vietnamese authorities.
CP has already been operating a retail business in Vietnam on a small scale, with about 120 Fresh Mart convenience stores. The convenience stores mainly take in processed food products such as chicken and pork from CP. The company plans to set up 1,000 outlets throughout the country.
CP is now the second largest private foreign investor in Vietnam after Chinese companies. Since 1992, it has invested about $350 million in Vietnam, starting with animal feed. Next year it plans to open two feed factories with a capacity of 600,000 tonnes for livestock feed and 380,000 tonnes for aquaculture feed.
CP's business in Vietnam is expected to rack up $550 million in revenue this year, up 30-40 per cent over the previous year. Next year, it plans to garner $700 million in total revenue.