Transport ministry prefers Vietnamese aviation firm as Long Thanh Airport investor

By Anh Duy   August 3, 2019 | 08:00 pm PT
Transport ministry prefers Vietnamese aviation firm as Long Thanh Airport investor
An artist's impression of the Long Thanh International Airport to be built in the southern Dong Nai Province. Photo courtesy of the Airports Corporation of Vietnam.
The Transport Ministry highly recommends that funding for the nation's biggest airport is mainly sourced from the Airports Corporation of Vietnam.

This is one of three funding options that the ministry has proposed in the feasibility report for the project recently submitted to Prime Minister Nguyen Xuan Phuc. Other funding sources proposed are ODA (Official Development Assistance), and inviting bids from interested investors.

The state-owned Airports Corporation of Vietnam (ACV), which runs 21 airports in the country, has been in charge of building runways, parking bays and terminals for the biggest airports in Vietnam and therefore has relevant experience, the ministry has argued.

ACV will use its own funds for the airport so public debt won’t be affected, the ministry has said, adding that the airport operator could start work early in 2021 and finish by 2025.

Do Tat Binh, ACV deputy director, said the company now has $1 billion and can increase this to $1.5 billion to invest in the airport’s first phase, which has a total budget of $4.7 billion. The ACV will raise the remaining funds by borrowing or tie-ups with partners.

Another option is to use ODA funds, which will allow access to lower interest, the ministry has said. However, the only accessible ODA funds now are from Japan and South Korea, which the Vietnamese government will have to borrow and then let investors borrow again. This will lead to an increase in public debt and a dependence on the lender country’s contractors and consultants, the ministry has remarked.

The third option proposed by the ministry is a public-private partnership (PPP) model with a due bidding process. However, the bidding process could increase project duration by 18 months, making the 2025 deadline difficult to achieve, the ministry has noted.

Commenting on the proposal, economist Ngo Tri Long told VnExpress that appointing ACV to construct the airport should be carefully considered, as there won’t be any competition. He said that asking investors to bid for the project is a better option as it will ensure transparency and effectiveness in a project as big as the Long Thanh Airport.

The bidding process can be shortened, but the government should not appoint an investor just because of a deadline, he added.

The Long Thanh International Airport, to be built in southern Dong Nai Province in three phases over three decades, is set to become Vietnam’s largest airport.

The first phase is scheduled for completion in 2025, when the new airport will be able to handle 25 million passengers a year. The next two phases will run from 2030 to 2035 and from 2040 to 2050.

The three phases are estimated to cost $5.4 billion now, but experts have warned this could double if the project was delayed by five years.

Lying 40 kilometers east of HCMC, the airport is expected to take up the overflow from the largest existing airport in the country, the Tan Son Nhat International Airport.

Once completed, Long Thanh International Airport will have an annual capacity of 100 million passengers and five million tons of cargo.

Vietnamese airports served 103.5 million passengers last year, up 11 percent from 2017, according to ACV.

Flying into the future: Check-in at Vietnam's planned largest airport.

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