Hoang Anh Gia Lai withdraws from tourism

Injecting money in tourism projects once played a very important role in Hoang Anh Gia Lai Group’s investment strategy. However, the group has announced plans to withdraw its capital from tourism projects.

Hoang Anh Gia Lai Group has announced it will restructure its investment fields and focus on five main fields: rubber, minerals, real estate, hydropower and woodwork and stone production. Other fields that the group’s leaders think are not profitable, especially hotels and tourism, are not part of their future development strategy.

According to Nguyen Van Su, General Director of Hoang Anh Gia Lai, the group has stopped pouring capital into the hotel and tourism sector over the last three years. This happened after it poured too much money into four projects, including two resorts in Quy Nhon and Da Lat Cities, and two hotel projects in Da Nang and Pleiku.

Since tourism has not brought the desired profits, Hoang Anh Gia Lai has considered halting operation of all four.

Their troubles with the resort projects arose in every facet of development, from site clearance to legal disagreements between Hoang Anh Gia Lai and of Lam Dong provincial authorities. Even now, when they have decided to transfer the project to other partners, the legal problems have not yet been settled.

As for the other three projects, Su maintained that Hoang Anh Gia Lai has successfully transferred the resort project in Quy Nhon, maintained control of the hotel project in Da Nang, and begun making profits with the hotel in Da Nang. However, a representative from Hoang Anh Gia Lai Group admitted that they will transfer the projects if it can locate a suitable partner.

As for the hotel in Pleiku, Su emphasized it still belongs to Hoang Anh Gia Lai Group. However, like the project in Da Nang, operation is not listed as an important investment deal because of its low profits.

Chair of Hoang Anh Gia Lai Group Doan Nguyen Duc, told local newspaper VnExpress that he himself and Hoang Anh Gia Lai group have not had much luck in hotels and tourism.

“I once invested in some projects, but they could not make a profit. Therefore, I have decided to give up,” Duc admitted.

Also, according to Duc, Hoang Anh Gia Lai still does not intend to expand. Duc has high hopes for rubber production, hydropower and mineral exploitation.

In related news, Hoang Anh Gia Lai has made public a deal to sell convertible bonds to Singaporean Temasek Holdings.

When asked why Hoang Anh Gia Lai chose Temasek, Duc responded that Temasek is a big corporation belonging to the Singaporean government, which is willing to make long-term investments (10 years or more).

Regarding the sum Hoang Anh Gia Lai will gain from issuing bonds, Duc explained that it will be used for rubber, minerals and hydropower plants.

Hoang Anh Gia Lai has thus wrapped up procedures to restructure its holding companies and five subsidiaries.- VnExpress

Tags: HOANG ANH GIA LAI