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Vietnam’s “King of tunnels”

Coming to Vietnam at the time, many must be surprised with accelerated development of infrastructures and transport works. Road section going through Deo Ca (Ca Pass- connecting Khanh Hoa and Phu Yen) was long and dangerous. Congestions frequently happened due to landslides. Therefore, a road tunnel was a must-do to minimize frequent accidents and to shorten both time and distance for vehicles travelling on National Road 1A. Current road going through Deo Ca is 13.2 km – taking a drive of 40 minutes shorter. The road tunnel is 4 kilometers long with 2 lanes, and it was designed with expressway standards which allows speed of 80kph and is able to cope with earthquakes up to magnitude 7.0. This is the second longest road tunnel of Vietnam’s, after Hai Van Road Tunnel. Since it was put into operation, there have been around 6,000 vehicles travelling through it daily and the number has currently reached 1 million.

In the field of transport infrastructure in Vietnam, Deoca Group is just one of many investors and contractors. However, Deoca Group surprised their competitors. They have done a work of Vietnam’s proud- a work that Vietnamese people controlled technology, a work with 100% of local capital, a work with execution period shortened and with VND 4,000bn of expense saved. It may not so strange worldwide, but what the investor did was a real wonder: together they overcame challenges on the site and together they made the dream of a 46-year-old boss Ho Minh Hoang come true.

Deo Ca Tunnel - One of five National Typical Works chosen by the Ministry of Construction of Vietnam

The thought of carrying out the project of Deo Ca Tunnel came in to his mind in 2006 when no one dared to think about it due to a vast total capital (nearly VND 12,000bn) and when technology of making a tunnel seemed to be an impossible to Vietnamese people. But in 2008, Hoang and his coworkers determined to make a breakthrough: carrying out the Project of Deo Ca Tunnel.

Global Built Asset Performance Index 2016’s data showed construction market output value of 36 countries in the ranking list tended to reach USD 11,200bn. Data from the General Statistics Office of Vietnam in 2016 showed the local output value estimatedly reached around USD 48bn- a 1/235 of the above output value. In many countries, construction markets are heating up and depend much on foreign contractors. And 1% of the market value is twice as big as Vietnam’s local output value: a great opportunity for Vietnam’s contractors.

“It is simply a crazy idea”, many uttered when they mentioned about Hoang and his idea of the road tunnel. Leaders of provinces of Phu Yen and Khanh Hoa, family, friends and coworkers cast doubt on him: they did not figure out how Hoang could have a large source of capital and how he could deal with it, when he just had around VND 100bn of his own.

To mobilize the capital, Hoang first came to foreign investors and foreign investment funds, but it was impossible due to their too complicated requirements. Not giving up, he knocked the door of local credit organizations to negotiate: MTV Co., Ltd, who managed the fund VietinBank Capital of Vietnam J.S Commercial Bank for Industry and Trade - one of the leading commercial banks of Vietnam’s. The partner not only lent him money but also became a great Deoca’s shareholder (holding 15% of shares)

Having a success with Deo Ca Tunnel, the group decided to continue with Cu Mong Road Tunnel (connecting Phu Yen and Binh Dinh), which is planned to open at the end of 2018. At the same time, the group was carrying out Hai Van 2 Road Tunnel (with a length of 6,000m), which is planned to open in June, 2019 (Hai Van 1 Road Tunnel was previously carried out by foreign countries) with the total investments in the three tunnels of VND 26,154bn. Currently, all works are 50% completed.

Bridge accessing to Deo Ca Tunne

John Bannister - Consulting-Supervising Director of Hai Van 2 Road Tunnel - satisfied with contractors’ execution progress: “They will be on schedule and the quality is exceptional”, said John.

Currently, Hoang’s Deoca Group has become the largest transport infrastructure developer when holding 70% of Vietnam’s BOT investment market share, with total investments of VND 60,000bn (around USD 2.3bn) in works of tunnels and expressways. The capital is mostly from available capital and from local partner, with big-name contractors as Ha Thanh, Licogi and associates. The payback period of Deo Ca Road Tunnel will be 28 years, however, a shorter payback period is under research and will be suggested to the Ministry of Transport.

Hoang has expanded his business to the field of road. In March 2017, Hoang became a rescuer for Bac Giang - Lang Son Expressway from a 2-year delay due to inability of the old contractor’s. After restructuring, he directed contractors to speed up and finish the upgraded constituent of 105km of National Road 1A after 8 months only. The 64-km constituent of Bac Giang- Lang Son is scheduled to be completed in the end of 2019 as committed. All units are working on 43 kilometers of the Tam Quan- Huu Nghi Expressway which is agreed to be added to Bac Giang-Lang Son Expressway Project by the Prime Minister.

Only in the period of 10 years, Deoca Group - a private group- has experienced a huge workload of all kinds: tunnels, bridges, expressways... in a newly - emerged market of the Southeast Asia - a potential market in many fields, especially in the field of transport infrastructures.

“We are aiming at the targets: being the largest infrastructure investor; the most powerful general contractor, and the most professional financial investor”, said Hoang to the local press. They are stepping stones for Hoang to bring Deo Ca Group to reach to the world.

Ho Minh Hoang - President of Deoca Group

Hoang was born in Binh Dinh, but then grew up in Phu Yen. Having expertize in the field of industrial electricity from the HCMC University of Education Technology. In 1998, he returned to Phu Yen to start business in the management role: running Hai Thai Carpenter Manufacturing - Construction - Electric Installing Co-operative, founded by his father. The cooperative carried out small rural works in the 1980s. It was upgraded to Hai Thach Co., Ltd., in 2002 and then, to Hai Thach Group in 2009. Hoang held the position of President.

Quite different from the father, Hoang has ideas of breakthrough, cherished the hope of carrying out great works - transport works of national level and urban lighting works, which were not only the most modern ones in Vietnam but also pieces of art: Scale of Justice on Nguyen Tan Thanh Street, Ocean Tuna in Hung Phu New Urban Area, Wings of Hope on Hung Vuong Street, Tuy Hoa City, Phu Yen.

However, Hoang is prudent in every small things. Think big, start small: building values of foundation from small works when carrying out great ones; managing short-term, medium-term and long-term works to achieve the group’s targets.

Although transport projects in form of BOT (Building - Operation - Transfer) cope with problems, and critics: BOT Cai Lay, Tien Giang, for example, Vietnam Government reconfirmed it the most suitable way of transport infrastructure investment, which is also a driving force for him to realize his ambitions.

Albert Einstein’s saying “Try not to become a man of success, but rather try to become a man of value” is the saying Hoang loves to quote when talking with his coworkers.

He is building a group operating in multi-sectors with 19 member companies, dividing into 5 business sectors with around 5,000 staff members: investment business, project business, sales& manufacturing business, service business and foreign investment business.

Associated Prof- PhD Tran Chung - Head of Quality Board, Vietnam’s General Association of Construction said Deo Ca Road Tunnel is an example showing that Vietnam’s contractors are able to carry out works of international level.

Reports from the construction sectors showed 85% of projects in Vietnam currently belong to local contractors, Deoca Group is one of them. However, to have greater development, there is no choice but “going to international markets”.

However, “going to international markets” seems to be a challenge to Vietnam’s enterprises. An enterprise with no good preparation and strategies will end up in failure.

Seeing this, he, together with his closed coworkers, is planning to restructure Deoca Group. Considering people a decisive factor in business, besides recruiting consultants with great expertize on the fields of transport infrastructure, he also pays attention to young ones and gives them opportunities to prove themselves. He is building his own economic empire in his own way: doing business with global ideas and vision.

Hoang is cooperating with universities in the U.S (among which is Cal Poly, California) to solve the matter of high qualified human resource - a Vietnam’s greatest barrier. At the same time, he is making investments in the States and mobilizing capital from the States to Vietnam, gradually making Deoca Group a multinational group.

After a long travel in the States, Hoang came back with the intention of restructuring the brand name of Deoca.

“You have to play with the rich if you want to be rich; you have to play with the successful if you want to be successful; you cannot fish where there is no fish. The States is a place where the world elites in science and technology gathering. We want to learn ideas of enrichment in the American way”, explained Hoang about his aiming-to-the States strategy. He also loves Japanese business model.

Donald Trump, the American President in power, is not alike to other Presidents. He has had unusual moves, however, he has given more opportunities to businesspeople worldwide. Hoang is one of them. He thinks many companies in Vietnam has had certain successes in different fields. However theirs are not probably suitable models for Deoca Group to learn from. There should be further research from models from developed countries in the world as the States or Japan...

Deo Ca may not be as successful as those companies are, but the difficult time that any successful company has to go through was over. “With stable income, we have never paid a staff of 5,000 members in arrears for over a decade,” said Hoang. He also persuaded many talented ones who had been working with multinational corporations in the States to work for him at an average salary of USD 5,000 - 6,000 monthly. 3Having bright eyes, stentorian voice and brisk paces, Hoang looks like a warrior who has no way to withdraw when starting work. The aiming-tothe States strategy by Deoca Group is not quite new for there have been many who had tried it. The new thing is the group wants to bring capital and people back to Vietnam to develop, especially the intellectuals and investors of Vietnamese origin.

Hoang does not thinking of either going to the States to make more money or using the strength of holding 70% of Vietnam’s market share as an advantage for him to stay in the States. He traveled and bring back to Vietnam what is needed to solve the problem he is dealing with and to protect himself.

Market diversifying, managing financial risks, reducing loan interests and avoid being dependable to local banks are ways the businessperson used to protect himself in the situation mechanism innovation has not caught up with roadmaps and commitments the country had involved in.

The theory of Three Identifies: Concentration, Orientation and Quantification- has been his business philosophy: paying attention to small things; having high concentration, having good orientation from the basis of scientific critics, and having resulted measured by economic efficiency and benefits of investors’, laborers’, communities’, capital providers’ and of the whole society’s.

Hoang is always listening to ideas of contrast, and using new knowledge to make his own values. Deoca Group is one of a few enterprises having a strong Board of Consultancy with personnel who used to hold important positions in fields of transport, construction, inspection, auditing, law, press and media... a group of experts with expertise and experience, who are able to connect social relationship of all levels.

Ho Minh Hoang - President of the Board of Administration of Deoca Group on a walkabout

Hoang has well led DeoCa Group as a private group without being influenced by interest groups to make values to the society by works of roads and tunnels nationwide.

“We will not sell our works that earned our reputation. I have no time left to play a sacrificing hero. We need to nourish and train our next generations. We want our people to have the best of the world that is in shortage in Vietnam. So we choose going abroad to learn,” confirmed Hoang.

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