Long Thanh investors to gain wings

Investing in the gigantic  Long Thanh international airport in southern Dong Nai province is set to become easier in the near future.

“Without breakthrough mechanisms such as supporting and risk-sharing measures, making large-scale airport projects like Long Thanh become foreign direct investment ones will be hard,” said Minister of Transport Dinh La Thang.

Opportunities to invest in the $6.7 billion airport project, Vietnam’s largest ever transport infrastructure project, would become clearer after its feasibility study report was available, he said.

Southern Airports Corporation (SAC) is charged with carrying out the feasibility study and establishing particular management mechanisms for the project.

“The Vietnamese government was recommended to pour capital from the state budget into airport infrastructure items, administrative areas and some other non-profitable items, which account for some 60 per cent of the total costs of the project,” Thang said.

Meanwhile, it had been suggested that profitable items such as passenger terminals, an aircraft maintenance area and airport facilities be opened to airlines and private companies under the form of build-operate-transfer (BOT) or public-private partnership (PPP), the minister added.

According to the Japan International Cooperation Agency (JICA), opening the project up to the private economic sector, especially in the realm of non-aeronautical operations, would help the project’s financial internal rate of return (FIRR) increase to 12 per cent – a feasible rate given Vietnam’s economic context.

But according to Japan Airports Company (JAC), the firm responsible for Long Thanh project planning, the FIRR was only 4.1 per cent, lower than coupon rate of treasury bonds. Therefore, state-owned enterprises had to get on board in a big way and loans had to come with low interest rates.

Under the Long Thanh airport plan approved by Prime Minister Nguyen Tan Dung late last month, the airport will belong to communes of Phuoc Long, Bau Can, Long An, Binh Son, Suoi Trau and Cam Duong in Dong Nai’s Long Thanh district.

The airport will be 32 kilometres from Bien Hoa airport, 43km from Tan Son Nhat international airport, 40km from the centre of Ho Chi Minh City and 24km from the centre of Bien Hoa city.

The airport, set to cover 5,000 hectares, is to welcome a maximum of 100 million passengers and five million tonnes of cargo yearly. It will be able to receive A380-800 aircraft and other planes of equivalent size.

Because the project is so large, JAC proposed three-phase construction.

The first phase, to last from 2018-2020, will involve the building of two runways and a terminal serving 25 million passengers as well as 1.2 million tonnes of goods a year.

Also in the first phase will be an aviation industrial park and an aeronautical institute. Total costs for this first stage are estimated at $4.34 billion.

According to JAC, airports in Ho Chi Minh City and surrounding areas will serve 25 million passengers and 639,000 tonnes of cargo by 2020. The figures are forecast to reach 44.5 million passengers and 1.2 million tonnes of goods by 2030. – VIR

Tags: Long Thanh airport, Vietnam aviation, Vietnam aviation industry, Vietnam aviation market