Lotte E&C’s Vietnam Strategy Unravels as La Premier Abandoned and Payment Disputes Drag On

Lotte E&C Sells Stake in Vietnam ‘La Premiere’ Development Project
After Entering Vietnam in 2007, Results Remain Bleak
Payment Still Unsettled for Highway Project Completed in 2018

Lotte E&C has abandoned a residential land development project in Ho Chi Minh City that it had been pursuing for the past seven years. Once considered a potential “turning point” for the company’s Vietnam operations, the project failed to secure regulatory approval and has now collapsed.

Lotte E&C’s Vietnam Development Plans Collapse

According to the construction industry on the 23rd, Lotte E&C sold its entire stake in the La Premier development project in Ho Chi Minh City to its local partner, Phu Cuong Group, this past May. A company official said: “The project never progressed. We liquidated our shares before even reaching the approval or groundbreaking stage.” The sale price was not disclosed.

La Premier was launched in 2018 as a joint venture between Lotte E&C and Phu Cuong to develop two 25-story apartment towers with 725 units and commercial facilities on a 15,848㎡ site in the Thu Thiem New Urban Area. The partners established a special-purpose company, Hau Giang Commercial and Construction Investment Co., with Lotte E&C acquiring a 51% stake for about $11 million. At the time, the company projected sales revenue of roughly $98 million.

The project was originally slated to begin construction in October 2018 and be completed by May 2020. However, it never advanced. According to the Financial Supervisory Service, as of the end of last year Lotte E&C valued its stake in the SPC at about $7.3 million—just 68.1% of the original acquisition cost. The SPC also posted a net loss of around $1 million in 2023.

Lotte E&C’s Struggles in the Vietnamese Market

With the collapse of the La Premier project, many observers say Lotte E&C’s push into Vietnam has effectively unraveled. The company first entered the country in 2007, when the broader Lotte Group began expanding into Vietnam. Its initial contract was the construction of the first Lotte Mart store in Ho Chi Minh City, commissioned by Lotte Mart Vietnam. To support operations, Lotte established a local subsidiary, Lotte E&C Vietnam Co., Ltd., in 2008, and the following year it won the $290 million Lotte Center Hanoi project, commissioned by Coralis Vietnam, a subsidiary wholly owned by Lotte Shopping Luxembourg.

Seeking to reduce dependence on group-related projects, Lotte E&C pursued more civil engineering contracts, including the Danang–Quang Ngai Expressway, the Lotte–Lac Soi Expressway, and the Yen Vien–Lao Cai railway improvement. However, beyond group-affiliated projects such as the $130 million Lotte Mall Hanoi, the company struggled to win significant contracts and saw little expansion in its revenue base. In this context, the 2018 launch of the La Premier project was considered a turning point, marking Lotte E&C’s first bold move to reposition itself in Vietnam as a developer.

There were even expectations that Lotte E&C would use Vietnam and other Southeast Asian markets as springboards for further expansion into advanced economies. A market insider noted: “Lotte E&C has carried out projects in countries including Vietnam, Indonesia, Japan, the Middle East, and Singapore. The expectation was that it could leverage these markets as stepping stones to the U.S. and Europe, evolving into a global construction company.” The withdrawal from La Premier, however, has delayed the realization of that scenario.

Vietnam’s Unpaid Construction Bills Leave Korean Firms in Limbo

Prospects for Lotte E&C to reengage in the Vietnamese market appear slim, as disputes with the government over unpaid construction fees remain unresolved. Lotte E&C and POSCO E&C, which each built sections of the Danang–Quang Ngai Expressway, have not received full payment since completing the project in September 2018. As of last year, outstanding receivables totaled about $15.8 million for Lotte E&C and $18.1 million for POSCO E&C—roughly $36 million including accrued interest.

Worse still, both firms have been ordered to pay compensation. In June last year, the Hanoi People’s Court accepted claims from the state-run Vietnam Expressway Corporation (VEC) and ruled that Lotte E&C must pay $5.1 million and POSCO E&C $2.8 million. VEC alleged that cracks and potholes had appeared on parts of the road after completion.

The contractors dispute any fault. At the time of the ruling, a Lotte E&C official stated: “The defects occurred after the road was in use, not immediately after completion. Under Korean standards, liability would not rest with the builder. We intend to clarify and resolve the matter.” POSCO E&C added: “We have already carried out the necessary repairs, yet payments remain unsettled. Construction was done with full government approval, and there have been no quality issues throughout six years of operation.”