Korea Land & Housing Corporation (LH) has selected five companies, including Hyundai E&C and POSCO E&C, as preferred bidders among private operators to join a "Pangyo-class" new town project that it is pursuing in Vietnam. In the institutional sector, Korea Overseas Infrastructure & Urban Development Corporation (KIND) is likely to join the project through an equity participation format. With a project cost reaching 6 trillion won, the project is expected to take clearer shape in the second half of this year.
On the 4th, according to LH and others, LH selected Hyundai E&C, POSCO E&C, JEIL Construction Co., Omega Construction, and JR Asset Management as preferred bidders to participate in the Dongnam New Town (District 1) project in Bac Ninh Province, Vietnam. The preferred bidder in the institutional sector is KIND.
Dongnam New Town is LH's first new town project in Vietnam. The plan is to build a new town of about 50,000 households on an 8.1 million-square-meter (800 hectares, based on the actual development area) site in Que Vo District, Bac Ninh Province, 18 kilometers northeast of Hanoi. In Korea, it would be on par with Pangyo New Town.
Dongnam New Town is planned for a new population of 120,000, and will be built to accommodate 160,000 residents. LH will develop housing, business, education, and sports facilities in Dongnam New Town. The project is scheduled to be developed in phases over 50 years from this year through 2076. The total project cost comes to 5.87 trillion won.
The selection of preferred bidders follows LH's receipt of investment policy approval (IPA) from the Vietnamese government to participate in the official tender for the Dongnam New Town project, after which LH selected private operators to join the bid. Before participating in the investor tender, LH will work to form a consortium. For this LH investment participation tender, private operators did not pre-form a consortium but instead expressed interest individually, so prior coordination is needed to form the consortium.
An LH official said, "Once the (Vietnamese government's) investment plan approval is granted, Bac Ninh Province will open bidding for the project, and LH and the companies selected as preferred bidders this time will form a consortium to participate in the bid," adding, "If we win, the project will move forward in earnest." The official said, "Unlike other projects, the preferred bidders did not come in with a pre-formed consortium. Although equity adjustments or role allocations for project participation were not set in advance, there is a high likelihood that the preferred bidders will participate in the consortium as is."
If participation in the consortium is confirmed, KIND, selected as the preferred bidder in the institutional sector, is highly likely to participate through an equity investment format. A KIND official said, "We will play a role in enhancing the bankability of the development project through support for this project's feasibility study and investment," adding, "The specific investment size, equity ratio, and the form and scope of support will be determined in consultation with LH as the preferred bidder."
Because the Korea government has also paid close attention to the Dongnam New Town project, the LH-led consortium has a strong chance of winning. In Jul. 2024, LH signed a memorandum of understanding (MOU) with Bac Ninh Province for cooperation on developing Dongnam New Town. When To Lam, the top-ranking official in Vietnam's power hierarchy and the Communist Party general secretary, made a state visit to Korea in Aug. last year, President Lee Jae-myung said, "We will actively support cooperation on the Bac Ninh New Town project."
In particular, the fact that LH has experience building the Korean-style industrial complex "Hung Yen Clean Industrial Complex" in Vietnam is another reason why it is favored to win the Dongnam New Town project. The Hung Yen Clean Industrial Complex was developed over 1,431,000 square meters (430,000 pyeong) by a joint venture in which a Korea consortium including LH, KIND, and Shinhan Bank invested 75% equity, and Vietnam's TDH EcoLand invested 25% equity.
The Vietnamese government plans to open bidding in the first half of this year and then select an operator. After winning, LH plans to establish a special purpose company (SPC) and, following the payment of investment funds, kick off the project in earnest from the second half of this year. An LH official said, "Once all investment decisions are made within the first half of this year, the project will take shape around the second half."