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Van Don International Airport (Photo: VNA) Hanoi (VNS/VNA) – Public investment alone is insufficient to
finance new airport infrastructure, exposing the need for more favourable
policies to draw in private investment.
Nguyen Anh Dung, deputy director of the Department of Planning and Investment,
Ministry of Transport (MoT), estimated total investment in airport
infrastructure between 2011 and 2022 at roughly 95 trillion VND (3.8 billion
USD).
The investment, of which 12.5% came from the State budget and 87.5% from other
sources, fell short of the actual capital needs during the period by nearly 40%.
“Public investment insufficient to meet the capital needs has led to the
overstretching of facilities in many airports. Tan Son Nhat Airport had to
serve 41 million passengers in 2019 against its capacity of 28 million,” Dung
said.
The deputy director revealed that some local authorities had been given the
go-ahead to build new airports under Public-Private Partnership (PPP) schemes.
However, he was concerned that the PPP projects would be unappealing to
investors for reasons of a long payback period (up to 50 years), unless
favourable policies are put in place to support the investors.
For the 2021-2030 period, total capital needs for airport infrastructure are
projected to top 403 trillion VND (16.2 billion USD). As the Airports
Corporation of Vietnam (ACV) has planned to contribute 265 trillion VND and the
MoT 9.8 trillion VND to the sum, about 128 trillion VND is expected to be
raised from the private sector.
Le Do Muoi, head of the Transport Development and Strategy Institute, remarked
that airport infrastructure worldwide is financed through eight types of
schemes, of which PPP and franchising are the most recommended for Vietnam.
“Under the two schemes, either the State grants private investors the
permission to fully finance, own and operate an airport, or the State owns the
airfield and private investors operate the terminal, taxiway and car
park,” he said.
He strongly disapproved of equitisation scheme for reasons of legal conflicts
and said the scheme would pose difficulties for investors.
Pham Ngoc Sau, director of Van Don International Airport, said the airport was
built in two years with an investment of roughly 7.5 trillion VND, of which 735
billion VND delivered by the State Budget and 6.75 trillion VND by investors.
The director called for more favourable policies for airport operators, which,
he believed, would act as an incentive for investors to put their money into
airport infrastructure.
Specifically, he called for the operators to be permitted to use commercials to
promote their airports and be granted more leeway in airport operations. He
also called on the authorities to support new airports in staff training and
through airport slot allocation.
Trinh Xuan Truong, chairman of the People’s Committee of Lao Cai province,
underscored PPP as the best scheme for airport infrastructure investment.
He said his province needed around 6.9 trillion VND to fund new airports, of
which 2.7 trillion VND was expected to fall to the provincial budget and
roughly 4 trillion VND to private investors.
“We need favourable policies to help investors recoup their investments in
a shorter period of time as airports normally have long payback periods,”
he said.
He took Sa Pa Airport as an example, which is expected to not pay back in 46 years.
He said the capital need of 4 trillion VND would be easy to raise if favourable
policies are introduced.
Trinh Duc Trong, deputy director of the Infrastructure and Urban Affairs
Department, Ministry of Planning and Investment, suggested different schemes
for different airports.
He said ACV should fully finance the upgrade of group 1 airports. Regarding the
upgrade of other types of airports, ACV could use share transfer to involve
other investors in the job.
For the construction of new airports, he suggested PPP schemes to attract
private investors./.
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