Lotte Vietnam copes with paying land rent of $8.2 million in lump sum

Lotte Mart Vung Tau, the nineth trading center of Lotte debuted in 2014 with the total investment capital of $31.4 million, is located at the corner of 3/2 and Thi Sach streets, ward 8, Vung Tau city.

This 10,400 square metre land is considered to be the golden location of the city as it is surrounded by many modern hotel projects.

Additionally, the land that Lotte Mart Vung Tau is residing on is public land and clean land not compensation for ground clearance, which is subjected to auction of land use rights in accordance with the land law.

Initially, this public land was given to Trung Duong - Thai Son Joint Stock Company by People's Committee of Ba Ria - Vung Tau, but not through an auction of land use rights. Trung Duong - Thai Son Joint Stock Company committed to later transfer the land to Lotte.

Without going through the process of auctioning, People's Committee of Ba Ria - Vung Tau province then gave Lotte permission to use this land to build Lotte Mart Vung Tau. 

The birth of Lotte Mart Vung Tau not only meets the shopping needs of local consumers, tourists but also acts as a push to local economy, attracting large investments.

Due to land misconduct earlier in the ownership transfer, the procedures for renting land were not handled by the Department of Natural Resources and Environment of Ba Ria - Vung Tau province. 

They then advised the People's Committee of Ba Ria - Vung Tau province to revoke and cancel land lease decision, despite the significant contribution of the shopping center to the development of the province.

Disagreeing with that proposal, People's Committee of Ba Ria - Vung Tau province insisted that Lotte would be maintained to ensure a favourable investment environment for attracting foreign investors.

As a result, the Government Inspectorate has proposed the Prime Minister to consider and decide this situation.

If Prime Minister approves the permission of the People's Committee of Ba Ria - Vung Tau Province to continue leasing land to Lotte Vietnam, the Government Inspectorate requests People's Committee to set the land rent for Lotte to pay in lump sum with the  amount of $8.2 million, from the actual time of land handover.

Additionally, Lotte must pay an extra fine of delinquency payment, which occurs due to the failure of Lotte to pay the land rent in a timely manner.

The Government Inspectorate also said that the responsibility for these violations lies with the Chairman of the People's Committee of Ba Ria - Vung Tau province, former head of the Department of Natural Resources and Environment and head of the Department of Finance in the period 2011-2015.

In particular, it was concluded by the Governemnt Inspectorate that Ba Ria - Vung Tau province had wrongfully rented public land to Lotte. 

According to the report released by Lotte Vietnam on May 18, its accumulated losses in 2017 were nearly $35.2 million. While most of its commercial centers have not yet been stabilized, Lotte Mart already continues to expand its retail activities.

An aching question is raised on whether this land issue will further influence to Lotte's ambition to start making profit by 2020 and to open 60 supermarkets in Vietnam.