Lotte to invest $900 mn in Vietnam smart city project

Lotte Group, South Korea’s fifth-largest conglomerate, is set to invest $900 million in Vietnam to establish a smart city as it aims to accelerate its global business through active expansion in Southeast Asia.

Lotte on Sunday unveiled a project to build a 60-story shopping mall, offices and others on 50,000 square meters of land in Ho Chi Minh City with the group’s smart technologies and retail know-how.

The group will build the smart city that provides telemedicine through the internet of things (IoT) and artificial intelligence, as well as intelligent payment systems and delivery services by drones and robots, in the Thu Thiem district of the city, which Vietnam aims to develop into a similar district as Pudong in Shanghai, a finance and trade zone of the Chinese city.

Through investment in the region starting with Vietnam, Lotte aims to ramp up overseas sales overall, which have been stagnant. The conglomerate’s overseas sales fell to 8.3 trillion won ($6 billion) last year from 9 trillion won in 2019.

“We plan to raise the group’s sales to 100 trillion won by actively targeting Southeast Asia, led by Vietnam,” said a group official. In 2021, the group’s total sales stood at around 75 trillion won.

TO INVEST MORE IN VIETNAM

Chairman Shin Dong-bin said the group will expand investment in Vietnam in a groundbreaking ceremony for the smart city on Sept. 2, the country’s independence day.

Lotte has already been actively expanding its presence in Vietnam. It spent 330 billion won on a 23-story shopping complex in Hanoi to be completed next year.

Lotteria, its fast-food restaurant chain that entered the market in 1998, is the country’s top player with some 260 stores. The group’s retail units Lotte Mart and Lotte Department Store are operating 14 hypermarkets and two branches, respectively, there. Lotte Duty Free has stores in Hanoi, Da Nang and Nha Trang.

“Lotte Ventures set up a unit there last year as the Vietnamese government granted it approval, for the first time to a foreign venture investment company,” said another group official.

TESTBED FOR FUTURE BUSINESSES

Lotte plans to utilize Vietnam as a test bed for future businesses, especially those that cannot be carried out in South Korea due to regulations and other factors.

“We will be able to establish various business models through discovering local startups for the mobility sector, an emerging future business, led by Lotte Rental Co.,” said the other group official.

The group aims to develop the digital healthcare and bio sectors as future growth engines, which Vietnam wants to nurture.

Lotte is also investing in Indonesia for Southeast Asia businesses, especially the petrochemical sector.

Shin on Aug. 29 visited the country where Lotte Chemical Corp. and its subsidiary Lotte Chemical Titan Holding Sdn Bhd in the region are building a new petrochemical plant with a $3.9 billion investment, the group’s largest spending for overseas business.

The project, dubbed Lotte Chemical Indonesia New Ethylene (LINE), is to build a petrochemical complex that can produce 1 million tons of ethylene, 520,000 tons of propylene and 250,000 tons of polypropylene a year.

Lotte Chemical expected the LINE project to generate annual sales of $2.1 billion once it starts commercial operations in 2025.

Write to Dong-Hui Park at donghuip@hankyung.com
Jongwoo Cheon edited this article.