SM eyes malls in Vietnam, Indonesia

MANILA, Philippines - While it remains bullish on China, the SM Group of retail tycoon Henry Sy is training its sights on Vietnam and Indonesia as possible sites for the future expansion of its shopping mall operations, a top group executive said.

Jose T. Sio, chief financial officer and executive vice-president of SM Investments Corp., told The STAR that Vietnam and Indonesia offer attractive investment opportunities that may help open opportunities for the Sy family’s businesses.

“We have received invitations for us to go into Vietnam and Indonesia. But these are all under study. We are concentrating our expansion on China,” Sio said.

According to a forecast by global auditing firm PricewaterhouseCoopers in 2008, Vietnam may be the fastest growing among emerging economies by 2025, with a potential growth rate of almost 10 percent per annum in real dollar terms that could push it up to around 70 percent of the size of the UK economy by 2050.

Businessman Chairul Tanjung, who chairs the National Economic Committee, an ad hoc forum for the President of Indonesia, predicted that Indonesia with a 285 million population, would become the fifth largest economy in the world after China, the US, EU and India. He said Indonesia’s economy would grow at an average of about 10 percent annually until 2030.

Sio pointed out that the group’s overseas mall expansion program remains focused on China, where they currently have four malls. He said the group, through SM Prime Holdings Inc., has yet to maximize the potential of the world’s second-biggest economy and most populous country.

“We haven’t really explored the whole of China. It’s such a big country. We’re in fact accelerating our expansion in China in the hope of replicating our success here,” Sio said.

The move is part of efforts to cut its dependence on the Philippines, where it currently has 40 malls nationwide. Including its China malls, the group’s total estimated gross floor area will reach 5.4 million square meters.

SM Prime has budgeted 3.58 billion reuminbi (roughly P24 billion) to build four new malls in China – SM Suzhou, which will open this December SM Chongqing (slated for opening in the fourth quarter of 2011), SM Tianjin and SM Zibo in central Shangdong province.

When completed, these malls would bring SM Prime’s total store network in China to eight. SM Prime entered China in 2007 after buying out the Sy family-owned malls in Xiamen, Jinjiang and Chengdu for $252 million.

SM Tianjin will be SM Prime’s biggest shopping mall, about 30 percent larger than its anchor Mall of Asia along Roxas Boulevard in Manila. To rise on a 34-hectare property, the project will require an investment of around two billion reuminbi approximately P13.4 billion.