“We must act instead of hibernating”

Mr. Dang Thanh Tam, Chairman of the Board of Directors of Kinh Bac Urban Development Corporation: We must take action instead of "hibernating"

“A large investment flow is heading to Vietnam,” Dragon businessman Dang Thanh Tam shared about 2024, which he expects will bring more investment and business opportunities, but also require major changes from businesses.

Mr. Dang Thanh Tam, Chairman of the Board of Directors of Kinh Bac Urban Development Corporation

Until now, 2023 still seems to be far from over in the calculations of Mr. Dang Thanh Tam and many businessmen. The Russia-Ukraine conflict has become more fierce and costly, and a rather serious armed conflict between Israel and Hamas has come. The world is more unstable, putting the business community at risk and insecurity.

In this context, Mr. Tam acknowledged that Vietnam has certain favorable factors. In particular, the US-China trade tension has led to a wave of investment shifting from China to other countries, including Vietnam, to avoid the risk of high tariffs on goods exported to the US.

“This helps foreign investment in Vietnam maintain a certain pace,” Mr. Tam believes. However, he also admits that only a few businesses will benefit, while many others will face difficulties, especially those investing in residential real estate. Kinh Bac Urban Development Corporation is present in all states.

It can be said that Kinh Bac is in the group of businesses that benefited, with a successful year of weathering the storm. Although Mr. Tam clearly identified that it was not easy, the business achieved that result thanks to a fairly complete plan, anticipating possible situations.

Whether optimistic or pessimistic, businesses must develop very specific policies and strategies. This is the key point so that when difficulties arise, businesses can proactively adjust to minimize damage.

In 2023, Mr. Tam agreed with Kinh Bac's Board of Directors to arrange financial resources to repay the corporate bond debt before maturity, even though this loan had a very solid cash flow plan. By June 22, 2023, Kinh Bac had paid off all VND 3,900 billion of corporate bond debt.

In fact, when investors have confidence in a business, they will not hesitate to invest. In the early redemption of Kinh Bac's bonds, about half of the bondholders did not sell the bonds early because they believed in the business and wanted to wait until the bond maturity date to receive the full interest. Therefore, Kinh Bac also suffered a financial loss, because it had reserved a source of low-interest money to pay.

Once a plan has been developed, the next issue is to determine how to implement the plan (including preparing adequate human resources and sound financial capacity) and to resolutely implement the proposed action program.

He also made no secret of his view that action is needed instead of hibernation. In fact, many businesses choose to weather the storm by doing nothing. They believe that doing nothing is better than implementing something uncertain.

“This may protect businesses from losses, but from a social perspective, it causes huge losses. Businesses do not create jobs, not to mention causing many workers to become unemployed, do not create social products, and especially, when favorable conditions come, there are no human resources and available plans to grasp them,” Mr. Tam shared his opinion.

Of course, actions also need to adapt to the changing business environment. There are businesses that choose to change their business lines, such as shifting from building high-end housing to building low-income housing to serve the real housing needs of people, especially near industrial parks.

“This is also the activity we aim for, which is to build social housing, worker housing, and low-income housing,” said Dragon businessman Dang Thanh Tam.

Mr. Tam said that the model of integrating industrial parks - urban areas has been implemented in many developed countries in the world such as the US, Germany, Japan... In the ASEAN region, Singapore, Malaysia... have also been developing industrial park - urban area ecosystems with high concentration of resources, technology and production capacity.

We must build a certain defense strategy. On that basis, we will make flexible decisions and need to closely monitor political, social and economic fluctuations.

- Businessman Dang Thanh Tam

In Vietnam, Kinh Bac is one of the leading units in building the model of industrial park - urban area infrastructure complex. Up to now, the Corporation has built 4,000 social housing units, reaching 7% of the social housing fund nationwide (about 62,700 units).

Among them, we must mention the Bau Tram Lakeside Green Urban Area Project developed synchronously with Lien Chieu Industrial Park (Da Nang), with a total urban area of 46 hectares, including 10 high-rise apartment buildings with 3,358 apartments. Similarly, the Evergreen Bac Giang Social Housing Project Complex developed with Quang Chau Industrial Park with 3,334 social housing units, expected to meet the housing needs of about 12,000 workers.

Or the social housing project in Trang Due Worker Housing Commercial Service Urban Area developed synchronously with Trang Due Industrial Park, started construction in the second quarter of 2023, including 2,538 social housing units to serve more than 50,000 workers in this industrial park.

In reality, building an industrial park - urban area ecosystem is not only in line with the national orientation of building social housing, ensuring settlement and employment for workers, but also solving the problem of stabilizing the labor force in industrial parks, thereby creating a highly competitive and dynamic investment environment, especially in cases of force majeure such as natural disasters and epidemics, workers are still guaranteed a place of residence, and businesses are not interrupted in production.

In the story, Mr. Tam hardly mentioned the difficulties and barriers that Kinh Bac had to overcome when implementing social housing projects. However, talking to other investors and businesses in the real estate sector, it can be seen that when choosing to build social housing, businesses need to have a great "heart".

The social housing project implemented by Kinh Bac is a part of a commercial housing project, not a separate social housing project, so there is no 20% land fund for commercial business. Therefore, with the same investment capital, project scale and housing quality, Kinh Bac's social housing has a higher selling, rental and hire-purchase price than other separate social housing projects.

This makes the investor have very little profit, which as revealed by Mr. Dang Thanh Tam is less than 1 million VND/m2. However, with the passion to do the best they can, Kinh Bac is still determined to overcome many difficulties to invest heavily in social housing.

Assessing 2024, Mr. Tam commented, “we should not be too optimistic”. “We must build a certain defense strategy. On that basis, we will make decisions flexibly and need to closely monitor fluctuations from politics, society, and economy”, Mr. Tam said.

In particular, he continued to emphasize Vietnam's position in the international arena, thereby creating opportunities for Vietnamese businesses. Specifically, great opportunities will come from the relationship between Vietnam and the US and Japan being raised to the highest level. Vietnamese businesses and goods can grow strongly in exports to the world's largest markets. The US also pledged to help Vietnam develop the semiconductor industry and better protect the environment.

“In this context, we hope that there will be a large investment flow from the US to Vietnam, especially financial investment, because the US is the largest capital market in the world. At that time, the stock market will be more vibrant, promoting capital mobilization at cheaper costs, thereby improving production and business activities,” Mr. Tam shared his opinion.

In particular, he also mentioned the big problem of the current economy. As a country with the second largest reserves of rare earths in the world, Vietnam does not have the technology for deep processing. In order not to be left behind in attracting semiconductor and chip production, Vietnam needs to have policies and programs to train human resources for this field.

As for Kinh Bac, the company continues to build infrastructure and create land funds to continue to welcome the shift of factory investment, especially high-tech factories such as semiconductor and chip manufacturing. Mr. Tam also shared a lot about the plan to install solar panels on factory roofs to provide an additional 20% clean energy, increasing the rate of clean energy use for products manufactured from Kinh Bac's industrial park.

“We want to create the most favorable conditions for exporting goods to the European and American markets, taking advantage of the great opportunities that are opening up,” said Mr. Tam.

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