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SCMP Reporter

NEXT month's opening of the US$20 million Landmark, an 18-storey office and residential complex in Ho Chi Minh City, represents a major triumph for the Hong Kong and Vietnamese partners involved in the joint-venture project.

  It also represents a breakthrough for businesses looking for quality office space and housing in a market where they are in short supply.

  According to John Bidgood, general director of International Burotel Co - the joint-venture partner of the Peninsula Group in Vietnam - all manner of things can go wrong in a joint venture.

   Disagreements between partners and problems with financing arrangements can all spell doom for the project even before it gets off the ground.

  But, according to Mr Bidgood, many of the problems which beset many other projects in Vietnam, did not influence the Landmark.

  He said many of the problems the partners faced were quickly ironed out through the combined efforts of the joint-venture partner - the Vietnamese army.

   'Before we got started we had problems with the definition of the site boundary and road-widening proposals,' said Mr Bidgood.

  'We faced them as joint-venture partners together and it helped to form a strong and trusting relationship. By the time we started the project, we had a very good relationship.'   Equally important was the decision to put all sub-contract work out to public tender.

  This resulted in the winning bids being very committed to the success of the project from the outset.

  The completion of the project may spell good news for the increasing number of foreign companies beating a path to Vietnam.

   There is little or no quality living or office space available in either Ho Chi Minh City or Hanoi and rents are very expensive.

  The complex has 68 furnished serviced flats in studio or two-bedroom units. Rent for the studio units is from US$2,900 a month and that for the two-bedroom units $6,000 a month.

  Rents in the popular areas of Ho Chi Minh City are running at between $5,000 and $6,000 a month for a four-bedroom house of 2,500 to 3,000 sq ft.

  The only other housing option in the city, besides old hotels, are villas.

   Mr Bidgood said companies needed a long-term commitment to the country for something as simple as renovating a flat because landlords wanted two to three years rent in advance.

  'The Landmark flats will prove popular with people who see getting a villa as too much of a hassle,' he said.

   The Landmark also has more than 75,320 sq ft of office space covering six floors, a business centre and AsiaSat and Palapa satellite communications.

   Office space has been leased primarily by American, Japanese and Australian firms.

   'The fact that we have the only building like this in town means that we are very popular with foreign firms,' Mr Bidgood said.

   But he said there was a lot of construction - including hotels and serviced flats - which should be completed in a few years.

  He said project developers in Vietnam should take on small projects, such as hotel refurbishments.

   'Financing of large projects is a problem. Part of the problem is that Vietnamese companies do not have the required equity to put into very large multi-million-dollar projects.

  'There is not a lot of loan financing available, so you have to be cash-rich to be able to invest.

        'Or you can put together a project which doesn't require a lot of capital, a project where the Vietnamese put in some land or a building in need of refurbishment.' 



Landmark provides formula for success