Vietnam 2014: Year in Review

Firsts and Notable Events

Tomorrow is the last day of the year in the Gregorian calendar but the Year of the Horse in the Vietnamese lunar calendar extends until mid February, 2015. Overall, 2014 marked many firsts for Vietnam: the first McDonald’s opened in Ho Chi Minh City shortly before Tet (the lunar new year). The first Rolls-Royce dealership opened in Hanoi in August, and the first mobile game out of Vietnam, Flappy Bird, went viral (and is now currently only officially available on Amazon Fire TV). Notably, Lotte Center Hanoi opened on September 2, Vietnam’s Independence Day, (after five years of construction) and Formation 8 sponsored a bi-city Hackathon, demonstrating that there is continued interest in the growing startup ecosystem in Vietnam from outside investors.

More recently on Christmas Day (December 25) Hanoi received a “gift” in the form of the new airport terminal that opened for its first flight but the terminal won’t be fully operational until December 31. The four-story, 139,000 square meter Terminal 2 has cost several hundred million dollars to build and it will accommodate a growing number of travelers to Vietnam. However, not all of 2014 happenings were rosy; the falling price of oil, anti-China protests in the middle of the year, and continued reports of Vietnam’s public debt increasing were some of the more worrisome developments during the past year.

Trade Impacts: Sanctions and Price Swings

In the last six months the price of oil has dropped by 40% and it’s certainly quite a different situation from this time of the year in 2007 as oil was about to break the $100 per barrel mark. Consumers in the west will certainly enjoy going to the gas stations once again and the increased disposable income will provide short term benefits for their economies. Similarly, the price of gas in Vietnam has been falling as well, as it is regulated by the Ministry of Finance and the Ministry of Industry and Trade. We will most likely see a cycle of global oil production slowing down, new oil projects put on hold, and then the price of oil skyrocketing back up, perhaps even before the end of next year.

For 2015, Vietnam’s GDP was projected to grow 6.2% if the price of oil had stayed at $100 per barrel and for every $1 the price of a barrel of oil loses, the State budget would lose VND 1-1.2 trillion (approximately $5.1 million). Oil export revenue makes up an estimated 10.2% of the total budget revenue which is  lower than in previous years. However, the budget revenue target is VND 911.1 trillion (over $42 billion) so the change in the price of oil still impacts the budget and will continue to as the price of oil continues to fluctuate.

At the same time, EU and US sanctions against Russia (and the Russian counter-sanctions) also provide an opportunity for Vietnam to increase its exports (in particular seafood and fruit) to Russian consumers, who will still demand or need products that were readily available to them earlier this year. The complicating factor for Vietnamese exporters will be the declining value of the Russian ruble, currently in free fall (and valued at approximately half of its worth at this time last year). Still, Vietnam and Russia recently concluded negotiations for the Customs Union agreement, which is expected to increase trade between the two countries to $10 billion by 2020.

Changing Skylines and Construction Interruptions

If you’ve been to Nguyen Hue street in Saigon’s District 1 recently then you know what a eyesore the metro construction project has been there (and in District 2). Earlier this year, the cost projections for the project were revised from $1.1 billion to a staggering $2.7 billion. On the opposite side of the country, the $1 billion metro project in Hanoi hasn’t progressed much since construction began in 2012. Completion dates for both projects keep getting pushed back as well—something that will most likely continue to happen before the current projected completion dates.

Now is construction season in Hanoi, mostly due to the cooler weather and attempts to finish projects before Tet so families can spend the holiday in their new homes. However, for the neighbors of such a construction project it can mean a significant decline in the quality of life for the duration of demolition and building. Construction can begin anywhere from 5:30 to 6:30 AM every day of the week and last until 6:30 PM with a break in the middle of the day for a lunch and siesta (usually one to two hours). At night, trucks delivering supplies for the next workday can arrive at 11:00 PM, 1:00 AM, and 3:00 AM due to lack of required permits to transport the goods during the day. For residential construction in narrow alleyways, workers can block nearby entrances, leave a mess, and contribute to the local noise and air pollution with jackhammers and gas-powered pulleys (in the last six months, your author has experienced three such projects). Surprisingly, many Vietnamese don’t seem to mind the noise and delays, unless they are traffic related.

For a changing city, cranes perched across a skyline are the sight of progress. But perhaps the costs of construction projects can also be measured in psychological effects due to the disruption in daily schedules. The noise of progress is far more intruding than the sight of progress and it has lasting impacts on future generations. Still, if not construction then other sonic interruptions such as public karaoke, horn honking, or motorcycle engine revving will emerge through the city soundscape. For sure, anyone who has visited Hanoi has learned to appreciate silence in this loud, chaotic, and flowing city.

Clear Winners

In 2014, Korea and Japan deepened their relationships with Vietnam on cultural, educational, and economic levels. Additionally, Vietnam established or renegotiated a number of bi-lateral trade agreements with states such as Lao PDR, Israel, Macedonia, and others.

Additionally, Samsung selected Vietnam as the location for a $3 billion manufacturing facility. It already has a $2 billion plant here so Samsung’s selection of Vietnam shows its faith that Vietnam’s business climate will continue to meet Samsung’s future production needs; this development continues the trend of manufacturing shifting away from China. Vietnam’s largest export value for 2014 is still cellphones and components—something that has remained unchanged since last year.

Furthermore, Mercedes-Benz Vietnam had the best first-half of the year ever since setting up in Vietnam— and one could make the case that it’s the unofficial vehicle brand of Hanoi given how seemingly ubiquitous the models are throughout the city. It will be interesting to see how the brand finishes out the year once the final numbers moved are tallied. To that extent, luxury brands here continued to do well, overall (though there are emerging signs that some Vietnamese may be living beyond their means).

Last but not least, the World Cup was a huge winner in 2014, no doubt causing the loss of serious amounts of productivity over the summer as Vietnamese workers stayed up until 5:00 AM or later to catch the games in Brazil. Not everyone was a winner though, as those who gambled away their fortunes or homes were left with low spirits. Still, the World Cup was a chance for Vietnamese families and friends to get together and share the communal experience of watching the nation’s undisputed favorite sport.

Undoubtedly, 2014 was many things for Vietnam (not all of it covered in this post), but it certainly wasn’t dull. We hope that you will continue to join us in 2015 as Vietnam and Southeast Asia continue to ascend. Happy New Year to you and yours wherever you are in the world!


Lotte Center Hanoi

A few weeks ago we had the opportunity to check out Lotte Center Hanoi which is in its final stages of construction. Lotte Center Hanoi is located at 54 Lieu Giai in Ba Dinh District and has been under construction since October 2009. The building is about a 30 minute drive from the Noi Bai International Airport and is nearby the Australian, Korean, Spanish, and US embassies. Its grand opening is currently scheduled for September 2, 2014.

Along with the workers, we had to pass through security turnstiles in order to access the site and then proceeded to head down into the parking area to reach the elevators that would bring us up into the office space. Since it was an active construction site (with three around-the-clock shifts), we donned safety hardhats and were escorted by a Lotte representative at all times.

From the beginning of our tour it was clear that safety was a major priority for the management of Lotte Center Hanoi. This focus on safe working conditions was especially refreshing to see since safety sometimes seems like an afterthought for many construction projects in Vietnam. It’s not uncommon to visit any construction site in Vietnam and see workers walking around barefoot, not using ear protection when operating loud machinery or not utilizing eye protection when welding, and not properly utilizing climbing harnesses when scaling scaffolding. In Vietnam, sometimes hardhats are worn more to protect workers from the sun’s rays than to protect their heads from falling debris.

However, at Lotte Center Hanoi we saw workers in neon safety vests, we saw portable and regularly-interspersed fire extinguishers, and there were clear evacuation route notices everywhere we went so we were impressed by Lotte’s commitment to safety. Restricted areas were clearly marked off and hallways were generally free of clutter (preventing a fire hazard). Floors were protected with thin sheets of wood and giant cloth sheets were even draped over the massive openings in the lobby to try to contain the air conditioned cool air from blowing out into Kim Ma or Lieu Giai streets. According to Lotte Coralis Vietnam, from October 2009 to June 2014 the site has undergone 14,000,000 man hours without an accident. It’s a great example of how a construction site should be managed and we hope that in the future safety will be a higher priority for more general contractors and developers in Vietnam.

Defining the Hanoi Skyline

As a major part of the Hanoi skyline, the building is immediately noticeable from Tay Ho District and appears to tower over the taller Keangnam Hanoi Landmark Tower (which is farther away from the city center than Lotte Center Hanoi) from the north side of West Lake. The building’s exterior shape is in reference to the ao dai, the traditional Vietnamese dress and the building is actually separated into two towers: Tower A and Tower B which are connected via Sky Garden. At night, the façade at base of the building lights up in a spectacular array of changing colors to match the ever-changing color of the “Lotte” sign.

Throughout the building, First Grade building systems are used and the building uses some advanced techniques, which makes it a pioneering project for Vietnam. For those worried about tectonic plates, the building can withstand a 7.0 magnitude earthquake due to the two-layer outrigger system which enhances its structural stability. Low-carbon dioxide concrete was used to construct Vietnam’s largest support base structure and the building features rainwater harvesting and gray water systems, which makes it a truly eco-friendly project.

World Class Interior Features

Overall, the feel of the space is quite nice even with ongoing construction and unfinished areas. The building is divided into four main spaces: Serviced Residences, Hotel, Office, and Commercial. The Observation Area is on the 65th floor and will feature a Sky Deck like the one in Chicago. The Serviced Residences and Hotel are from the 33rd to 64th floors flanking both sides of the Sky Garden that occupies the center of the building. The hotel will have 318 rooms of which 83 will be suites and 235 will be Deluxe Rooms. The 32nd floor is the Technical Floor and the Offices are located on the 8th through 31st floors. On the 7th floor, there will be an outdoor swimming pool, a basketball court, separate male and female saunas, an indoor golf range, a yoga room, a gym, a jacuzzi, and an outdoor BBQ grill area. Starting on Ground Floor and continuing to the 6th floor will be the Lotte Department Store and Lotte Mart. There will be five levels below-grade which will contain the parking area for the building.

One of the unique features about Lotte Center Hanoi is the Sky Garden, which is a series of atria inside the building that occupy the middle space between Tower A and Tower B. They are four-story (office floors) and five-story (residential floors) areas for communal activities such as meetings, private events, or just a place to relax. For the office spaces, the tenant on the ground level of each atrium is able to modify the atrium to reflect a company’s culture (within Lotte specifications). The office space also features one of four raised floors in Hanoi, making it easier for the tenant to outfit the space to meet specific technology needs.

There are one, two, three, and four bedroom Serviced Residence layouts to choose from with the one bedroom (64-84 m²) pricing around $2,700 per month and four bedroom (175 m²) available for around $7,000 per month. If you do end up moving in, make sure to ask for permission before hanging any paintings. All the serviced apartments we saw had a beautiful view of West Lake but most serviced apartments should have a view of the north, west, or east due to the building space distribution. Double Low-E multi-layer glass are used in the Saint Gobaint windows, which are imported from France. Some bedrooms might have a Sky Garden view as opposed to a skyline view depending on how many bedrooms a unit has. All apartments are equipped with WiFi and wired internet connections.

The bedrooms all have different styles, themes, and layouts, ranging from lighter woods to darker tones with complementary appliances. Regardless, each apartment is fitted with a single downlight near the entrance that is motion activated to provide light as soon as you enter the apartment, and which will turn off automatically once you leave. It’s a great and rather simple feature than can be helpful in any residence.

For private events there will be three banquet halls (Crystal Ball, Charlotte, and Emerald) to choose from plus a Wedding Center on the 6th floor. Depending on which banquet hall, it can accommodate anywhere from 100 to 900 people. A wedding celebration in the Crystal Ball banquet hall might be the new standard for Hanoi’s elite.

Perhaps the most-anticipated feature of Lotte Center Hanoi will be the rooftop restaurant on the 68th floor called “Top of Hanoi.” It will be an open-air restaurant with a surrounding view of Hanoi—something that does not yet exist in Vietnam at or near that height. Additionally, there will be six other food and beverage (F&B) outlets to choose from, featuring a variety of cuisines and flavors.

A New Level of Luxury in Vietnam and in Asia

If you end up living in one of the Serviced Residences in Lotte Center Hanoi, then you might never have to leave the building for most of your activities, provided that your office is downstairs, you shop at Lotte Mart or Lotte Department Store, and any visitors you might have stay in the five-star hotel. It’s truly an amazing vision that has been realized in Hanoi and we look forward to what the Lotte Group has in store next for Vietnam.

Lotte Group has the Lotte Legend Hotel in Saigon so this is its second hotel in Vietnam. It’s built by Lotte Group, a conglomerate that has over 60 business units and employs over 60,000 people with headquarters in Japan, but significant business divisions located in South Korea.

Lotte Group is currently building Lotte World Tower in Seoul, Korea. It will be almost twice the size of Lotte Center Hanoi but currently about 70 of 123 floors are complete. When it will be finished in 2016 (scheduled), it will be the sixth tallest building in the world.

The Lotte Group is named after Goethe’s work of art, “Charlotte.”

For more information about Lotte Center Hanoi please contact Nguyen Thi Hien (Ms. Hien) in the Marketing Department via email at or via telephone at +84 97-925-9190.