Decision 1946' lays down the law re. VN golf development

Decision 1946′ lays down the law re. VN golf development

HO CHI MINH CITY – The Vietnamese Government has issued a broad suite of golf course development guidelines that should go a long way toward legitimizing and codifying future development here, according Asian golf industry veteran and development consultant Jeff Puchalski.

Decision 1946, issue in January 2010, regulates the number of courses that can be developed in Vietnam, without strict caps, while implicitly endorsing golf tourism for the first time. It also stipulates the type of land that can be made available to golf development going forward, while delineating a developer’s obligations to former landowners, the environment and local economies.

"In the short term, Decision 1946 dispels the rumors that Vietnam has been or will be overrun by rampant golf course development," says Puchalski, founder and CEO of Ho Chi Minh City-based Fore Golf Asia. "It provides that 89 golf courses can be established in Vietnam by 2020. Of those 89, 24 are currently operating, leaving 65 to be developed in the next decade.

"There’s been a lot of loose talk and inaccurate press reports of 160 to 200 golf courses under construction in Vietnam, right now. Decision 1946 puts that pipe dream to rest."

While as many as half a dozen new courses may open in Vietnam this year,  Puchalski believes that all 65 new projects are unlikely to open by Jan. 1, 2020.

"The reality is, the 89 figure will never be reached in that short a time span," he says. "The development process in Vietnam remains Byzantine, even by Asian standards. I’d say 50 new courses in the next decade would be an extraordinary achievement."

With GNP growing at a rate of 7 percent annually, Vietnam is one of the world’s fastest growing economies and a darling of offshore investors. Even so, the momentum of course development in Vietnam had been clouded during 2009, mainly by lingering land-use, environmental and economic issues. The New York Times highlighted these issues with an October 2009 story that nevertheless furthered, without attribution, the speculative 160 new courses figure.

Against this backdrop, the symbolic value of Decision 1946 may outstrip even its practical application. "Golf’s reputation as a sport for rich expatriates has made it politically delicate for the government to endorse its growth," explains Puchalski, who’s been operating and developing golf courses in Vietnam (and living in country) since 1996. "Decision 1946 lays down the law but also stresses and publicly acknowledges, officially, for the first time, that golf promotes tourism."

Puchalski notes there may be practical underpinnings to this symbolic gesture. Government backing of golf and tourism may have been influenced by preliminary 2009 figures from the Vietnam National Tourism Administration, which indicate that total arrivals dropped last year by 11 percent, to 3.025 million tourists.

The geographic distribution of golf projects, as outlined by Decision 1946, is quite specific. Of the remaining 65 Vietnam golf courses to be established, the VN government has mandated that 7 will be located in the Northern Midlands, 9 in the Red River Delta (read: Greater Hanoi), 25 in the provinces centered around Hue and Danang, 5 in the Central Highlands, 15 in the Southeastern Region (Greater Ho Chi Minh City), and 4 in the Mekong Delta.

"The government can be so specific because these 65 projects have already been master planned and/or approved, in principle, in these various regions," Puchalski explains. "However, a sizeable number of project ‘owners’ are just sitting on their approvals, waiting for an infusion of cash or development savvy, or simply looking to sell. Decision 1946 says that all 65 owners must start construction within 12 months of the license date, and be open for business with 48 months of the license date, or their permitting will be revoked.

"So, it’s my feeling that new licenses will be issued – to new ownership groups. In fact, I believe two already have been issued. So there is flexibility, and we’ll just have to see who falls away where, and which provinces move the most aggressively to replace them."

The new rules also codify that golf courses must provide sustainable employment for people displaced by development. In Vietnam, the land is owned and controlled by local Peoples Committees. The Committees strike the deals with developers, then mandate that land be cleared of people, homes, farmland, etc. Employment at these new developments is a hot-button issue because 1) the jobs pay very well by Vietnamese standards; and 2) at least one existing course development hired several former residents during construction, only to fire them upon opening. Decision 1946 sets out to ensure long-term employment for people whose land was used for the golf course project.

Decision 1946 also says golf courses can only occupy up to 5 hectares of rice crop field in "low production", but it does not specify what low production means. The document stipulates environmentally safe maintenance procedures but doesn’t specify what constitutes "safe".

"This is the gray area developers have always been obliged to navigate here," says Puchalski, whose development portfolio, in Vietnam, inc includes Ocean Dunes Golf Club in coastal Phan Thiet, designed by 6-time major champion Nick Faldo, and the remodeling of Dalat Palace Golf Club, the country’s top-ranked course. "The Decision’s stance on golf real estate says that all ‘supportive projects must be built within the land approved. It would seem this effectively limits the amount of real estate that can be involved, because there’s only so much land you can get for a golf course project – basically 100 hectares for 18 holes.

"But there’s more to it: Most of the anti-golf rhetoric floated in Vietnamese media has asserted that golf courses are just a front for developers more eager to build lucrative real estate projects," Puchalski says. "So, the language in 1946 was offered strategically, to cool down this rhetoric. The fact of the matter is this: Developers can get villa projects approved anywhere in Vietnam quite easily and without controversy – if separate companies own the real estate and golf components, and the real estate is merely developed next door to the 100 hectares set aside for golf. This is perfectly legal; it’s what we did at Ocean Dunes GC, and it’s what will be done going forward."