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Economists skeptical about Ministry’s plan for 1,000 supermarkets

2014-09-23 14:16:43

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Under the wholesale and retail network development program, Hanoi would have 999 supermarkets of different kinds by 2020, 42 shopping malls and 595 traditional markets.
 
Vu Vinh Phu, chair of the Hanoi Supermarket Association , when affirming the tendency of developing supermarkets instead of traditional markets, said some problems may make the plan unfeasible.
 
The lack of land fund for supermarkets, according to Phu, is the biggest problem. Where should the supermarkets be built, in the inner city or the suburbs? There is no more land left in the inner city, while it will take a lot of money to compensate people for site clearance.
 
It is estimated that it would take VND600 billion at least to compensate people to obtain a land plot of 2,000-5,000 square meters.
 
The second biggest problem is investment capital. Metro, for example, said it took $18 million to develop a supermarket.
 
The third biggest problem lies in the workforce. There are nearly 100 supermarkets in Hanoi, but only 10 percent of the workers have taken training courses in the field.
 
Regarding purchasing power, the factor which determines how many supermarkets to build, Phu said 87 percent of Hanoians go to traditional markets and small groceries instead of supermarkets when they need essential goods.
 
Therefore, many of the 1,000 supermarkets might be idle, and the huge capital poured into supermarket development would be difficult to recover.
 
“I think developing one-third of the total planned supermarkets would be in our power,” Phu noted.
 
Under MOIT’s plan, of the 999 supermarkets in Hanoi’s MOIT projects for 2020, there would be 23 hypermarkets (first-class supermarket), 111 second-class supermarkets and 865 third-class supermarkets.
 
The central urban area would have 19 hypermarkets, 82 second-class and 530 third-class supermarkets.
 
No more new traditional markets would be built in the inner city, while the existing traditional markets with the area of over 3,000 square meters will be upgraded into hypermarkets or shopping malls.
 
The existing small supermarkets with an area of less than 1,000 square meters would be developed into second-class supermarkets.
 
With such a distribution network, MOIT is trying to attract Hanoians to supermarkets, which are believed to be more modern and civilized, instead of the untidy traditional markets.
 
However, Phu believes that traditional markets will exist forever in Vietnam, because they are a part of traditional culture. The Dong Xuan wholesale market, for example, is a part of history of Hanoi and the country.
 
Other analysts also said in local newspapers that MOIT’s supermarket plan is “ utopian “, calling it “ something MOIT officials drew up in their free time “.
 
“The money should be spent on transport infrastructure development, water supply and drainage, and education development, rather than on building supermarkets,” an analyst said when he was asked to comment about the total investment capital of VND521 trillion to be spent on the supermarket plan.
 
Source: VNN