Parkson's Vietnam unit to file for bankruptcy, only remaining store to close

• The Parkson group set foot in Vietnam in 2005 and developed a premium shopping mall chain in the major cities of Ho Chi Minh City, Hanoi and Haiphong. The group also operated several outlets in Indonesia and Myanmar, but has since closed these stores.

KUALA LUMPUR (April 27): The Parkson group is to exit the Vietnam market after operating there for 18 years as it is not commercially feasible to continue its operations in the country, said Singapore-listed Parkson Retail Asia Ltd (PRA), a 67.96%-owned subsidiary of Parkson Holdings Bhd.

It said Parkson Vietnam Co Ltd will file an application to a court in Ho Chi Minh City for the commencement of voluntary bankruptcy proceedings on Friday (April 28).

Parkson Vietnam is wholly-owned by PRA.

“Parkson Vietnam has historically been operating at a loss, with such losses being compounded in recent years due to the challenging business environment due to the Covid-19 pandemic,” said PRA in a statement to the Singapore exchange, a copy of which was posted on Parkson Holdings' filing with Bursa Malaysia. 

"In particular, the lack of support from Parkson Vietnam's landlord (such as the negligible rental rebate or rental reduction) during the Covid-19 lockdown had adversely impacted Parkson Vietnam's financials. The high land tax imposed by the local government had also added to Parkson Vietnam's financial difficulties.

“As such, the group has assessed and determined that it is not commercially feasible to continue its operations in Vietnam and the board of directors of Parkson Vietnam has determined that it will be in the best interests of Parkson Vietnam to file the application,” said PRA executive chairman Tan Sri William Cheng in the statement.

Parkson Vietnam currently operates the PRA group's only remaining store in Vietnam.

Cheng said the decision is in line with PRA’s focus on its operations in Malaysia, where it remains optimistic about the overall market prospects with improving consumer sentiments and the increasing numbers of foreign tourists.

“Under Vietnam law, the liabilities of Parkson Vietnam shall remain with and be limited to Parkson Vietnam and do not extend to the company, the company’s other subsidiaries or its holding companies,” said Cheng.

"The group's maximum potential exposure resulting from the voluntary bankruptcy of Parkson Vietnam will therefore be limited to its capital contribution in Parkson Vietnam. Notwithstanding the foregoing, the company had recognised full impairment loss on its capital contribution in Parkson Vietnam in its audited financial statements," he added.

Going forward, Cheng said PRA will continue to enhance its operating efficiencies and cost improvement strategies, as well as identifying new sites with potential for opening new outlets in Malaysia.

In its filing, Parkson Holdings said Parkson Vietnam's bankruptcy is not expected to have a material impact on the group's earnings for the financial year ending Dec 31, 2023 (FY2023) and its net assets based on the audited consolidated statement of financial position of the company as at Dec 31, 2022.

For FY2022, the Vietnam operations recorded a loss before tax of S$2.3 million (RM7.68 million) compared with a profit before tax of S$13.7 million in the previous year, as revenue fell to S$2.4 million from S$10.1 million during the period.

The Parkson group set foot in Vietnam in 2005 and developed a premium shopping mall chain in the major cities of Ho Chi Minh City, Hanoi and Haiphong. The group also operated several outlets in Indonesia and Myanmar, but has since closed these stores.

With its impending exit from Vietnam, PRA's only operations will be in Malaysia. According to PRA's annual report 2022, it has 38 stores in Malaysia with a total retail space of 429,000 sq m.

Parkson Holdings' share price ended the day half a sen or 3.57% higher at 14.5 sen, valuing the group at RM172.54 million. PRA shares closed up 0.2 Singapore cent or 2.63% at 7.8 Singapore cent on Thursday, giving it a market capitalisation of S$49.53 million.