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Aeon ventures into Vietnam

HO CHI MINH CITY (Jan 13): Aeon Group Japan has invested US$100 million (RM314 million) to develop its first flagship retail outlet on a 3.5ha piece of land within Gamuda Land's development, Celadon City in Ho Chi Minh City, Vietnam.

The investment includes the cost of the land, the construction and other costs related to marketing and design, said Yasuo Nishitohge, general director of Aeon Vietnam Co Ltd. The group is leveraging on Vietnam's bullish economic growth amid a fairly low retail market in the country.

"We are looking at the growth of the Vietnamese economy and so far we are very confident with it," Nishitohge told The Edge Financial Daily.

"The retail market in Vietnam is currently undeveloped and we believe that we can contribute to that particular market segment in the country. We are very determined to start with our new flagship store," he said.

Aeon's flagship retail outlet has a proposed gross floor area of 80,000 sq m and a net lettable area of 45,000 sq m. However, Nishitohge added that they will be expanding the floor area by 150% to 120,000 sq m as the current size is not sufficient to keep up with the catchment of one million people within a 15-minute radius. When operational, it expects some 100 million sales annually from both its Jusco store as well as other tenants.

The group's decision to acquire land within Celadon City was primarily due to the development's lush green space and the availability of the large parcel of land suitable for its mall business which they could not find anywhere else in Ho Chi Minh City.

"Land of this size is very scarce within the city," Nishitohge said. "Plus, the development has a very good environment that will be able to complement our outlet well."

Celadon City is a mixed development comprising residential, commercial and academic components. Built on 82ha of leasehold land in the northern corridor of Ho Chi Minh City, the overall gross development value of Celadon City is RM6 billion which will be developed in six phases over nine years. The residential component has apartments ranging from 67 to 97 sq m and offers a range of two-bedrooms, three-bedrooms and 3+1 bedrooms. Selling prices for the units range from US$60,000 to US$130,000. Aeon is still currently in talks with international and local educational institutions for its education component.

Aeon's flagship store in Vietnam will be operational by 2014. Aeon Group Japan also plans to expand in Vietnam with at least two new outlets opening each year from 2014 leading up to 2020.

Nishitohge said they will be announcing plans for the group's second retail store in Vietnam after Chinese New Year.

He added that the group is looking 20 years ahead with this expansion plan.

"We have considered the purchasing power of Vietnam's population and we are very confident with the economy," said Nishitohge.

"Even though our outlet in Vietnam will be a small contribution to the group's revenue, yet it holds a big meaning to the group itself," he added. "We wish to further expand within Asean countries and our success in Vietnam will be important to our future."

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