Airport infrastructure investment needs private involvement: insiders

Public investment alone is insufficient to finance new airport infrastructure, exposing the need for more favourable policies to draw in private investment.
Airport infrastructure investment needs private involvement: insiders ảnh 1Van Don International Airport (Photo: VNA) 
Hanoi (VNS/VNA) - Public investment alone is insufficient tofinance new airport infrastructure, exposing the need for more favourablepolicies 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 airportinfrastructure between 2011 and 2022 at roughly 95 trillion VND (3.8 billionUSD).

The investment, of which 12.5% came from the State budget and 87.5% from othersources, fell short of the actual capital needs during the period by nearly 40%.

"Public investment insufficient to meet the capital needs has led to theoverstretching of facilities in many airports. Tan Son Nhat Airport had toserve 41 million passengers in 2019 against its capacity of 28 million," Dungsaid.

The deputy director revealed that some local authorities had been given thego-ahead to build new airports under Public-Private Partnership (PPP) schemes.

However, he was concerned that the PPP projects would be unappealing toinvestors for reasons of a long payback period (up to 50 years), unlessfavourable policies are put in place to support the investors. 

For the 2021-2030 period, total capital needs for airport infrastructure areprojected to top 403 trillion VND (16.2 billion USD). As the AirportsCorporation of Vietnam (ACV) has planned to contribute 265 trillion VND and theMoT 9.8 trillion VND to the sum, about 128 trillion VND is expected to beraised from the private sector.

Le Do Muoi, head of the Transport Development and Strategy Institute, remarkedthat airport infrastructure worldwide is financed through eight types ofschemes, of which PPP and franchising are the most recommended for Vietnam.

"Under the two schemes, either the State grants private investors thepermission to fully finance, own and operate an airport, or the State owns theairfield and private investors operate the terminal, taxiway and carpark," he said.

He strongly disapproved of equitisation scheme for reasons of legal conflictsand said the scheme would pose difficulties for investors.

Pham Ngoc Sau, director of Van Don International Airport, said the airport wasbuilt in two years with an investment of roughly 7.5 trillion VND, of which 735billion 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 intoairport infrastructure.

Specifically, he called for the operators to be permitted to use commercials topromote their airports and be granted more leeway in airport operations. Healso called on the authorities to support new airports in staff training andthrough 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, ofwhich 2.7 trillion VND was expected to fall to the provincial budget androughly 4 trillion VND to private investors.

"We need favourable policies to help investors recoup their investments ina 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 favourablepolicies are introduced.

Trinh Duc Trong, deputy director of the Infrastructure and Urban AffairsDepartment, Ministry of Planning and Investment, suggested different schemesfor different airports.

He said ACV should fully finance the upgrade of group 1 airports. Regarding theupgrade of other types of airports, ACV could use share transfer to involveother investors in the job.

For the construction of new airports, he suggested PPP schemes to attractprivate investors./.
VNA

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