Vietnam: Hanoi backs out of the 2019 Asian Games: April 2014
Published 6 May 2014
© Crown copyright 2014
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0.1 Summary
Prime Minister Dung announces that Hanoi will withdraw as host city of the 2019 Asian Games citing financial reasons, bringing one of our high value opportunities to a premature end. But our efforts over the last eighteen months have not been in vain: some ideas about how to make the most of a disappointing decision.
0.2 Detail
Prime Minister Nguyen Tan Dung announced on 17 April that Hanoi would not host the 2019 Asian Games, citing concerns about financial viability. The Games were one of our High Value Opportunities, which we have focused on intensively since Hanoi was chosen as host city in November 2012. This decision was a surprise to many in and beyond Vietnam - only two countries (South Korea and Pakistan) have withdrawn from the Games previously, most recently in 1978.
The events leading to this decision have been interesting, with weeks of intense political debate in the National Assembly, media and online.
Public opinion was strongly against the Games – a recent poll by a leading newspaper suggested 84% were opposed. Commentary since the announcement has praised the Government’s brave decision to back out now, rather than at a later stage when the reputational impact would have been even greater. Online commentators voiced concern about corruption. The withdrawal shows that the costs involved may have been underestimated. Vietnam’s initial estimate of $150m was less than a tenth of that spent anywhere else for recent games (Busan 2002 - $2.9bn; Doha 2006 - $2.8bn; Guangzhou 2010 – $17bn).
The decision reflects the pressures on the State budget, strained by costly state-owned enterprises and a high proportion of non-performing loans ailing the banking sector. The scramble to find funding for the Games prompted the World Bank to state publicly that it would not pay for Vietnam’s sporting venues. This underscores the need to follow the financing to identify viable commercial opportunities and why the Government is focusing on alternative financing models such as PPP. What next?
Through this HVO campaign, we have an enhanced relationship with the National Olympic Committee and the Ministry of Culture Sports and Tourism, evidenced by the MOU signed in January. We will nurture these relationships to identify opportunities linked to other sporting events, such as the 2016 Asian Beach Games in Nha Trang.
From our outreach to UK business, we have a good database of companies interested in the 2019 Games and some lessons learned from the process which we stand ready to share with colleagues elsewhere when the Olympic Committee of Asia choose an alternative. Some of the companies attracted to Vietnam by the prospect of the Asian Games are pursuing other opportunities with our support, so helping the pipeline of interest from UK business.
0.3 Comment
This bold decision is a setback to our ambitions to help carve out long-term opportunities for British business success. Nonetheless, the substantial progress which we have made in the last eighteen months on the back of London 2012 expertise has put us on a stronger footing.
0.4 Disclaimer
The purpose of the FCO Country Update(s) for Business (”the Report”) prepared by UK Trade & Investment (UKTI) is to provide information and related comment to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report