Aviation firms fly to foreign funds

Deputy Minister of Transport  Pham Quy Tieu discussed  such PPP model in a meeting with  US-Vietnam aviation cooperation working group last week.

“We will soon complete the legal framework, including investment incentives in upcoming time to attract private investment in this important industry,” said Tieu.  

Meanwhile, Le Manh Hung, also Deputy Minister of Transport told VIR that Vietnam’s aviation infrastructure development projects faced difficulties in finding financing sources. If the PPP model were deployed soon, it would bring benefits for infrastructure development in Vietnam, he said.

Vietnam’s aviation industry has impressively grown at 15 per cent annually within the last five years. It is expected to continue such growth in the near term, underscoring the need for Vietnam to building an adequate and modern infrastructure network to accommodate such growth, Hung said.

 “Vietnam is thirsty of finance to upgrade the existing airports and build up new airports,” he said.
According to Civil Aviation Administration of Vietnam, the country would need around $2.84 billion for airport development infrastructure to the year of 2015 and $2.73 billion of investment would be required for developing airports during 2016-2020.

“Finance will be drawn from the state budget, official development assistance (ODA) and foreign investment capital. But the majority will be from foreign investors and ODA because state budget is limited,” Hung said.  

From now to 2020, Vietnam plans call for investments to upgrade  Hanoi’s Noi Bai international airport, Ho Chi Minh City’s Tan Son Nhat and Danang international airport.

Noi Bai airport’s four-floor terminal T2 is expected to complete construction in 2014 with an increased capacity of 15 million of passengers annually. Notably, it will need a huge fund to continue expanding the capacity up to 50 million passengers by 2030.

Meanwhile, Tan Son Nhat airport  is also looking for funding partners to expand it up to 25 million passengers from eight million passengers annually at present. Danang airport  will be expanded to a capacity of 25 million passengers from current 6 passengers per year.

US’ airport developer ADC-HAS who desires to invest in developing Cam Ranh international airport in central Khanh Hoa province said PPP model in aviation sector was not new. This model has been applied in many countries for the last  25 years, however, it is speeded up in Southeast Asia and Vietnam.

The US firm recently sent its proposal to the Ministry of Planning and Investment to sign a memorandum of understanding on development of Cam Ranh international airport. This follows the firm spending more than one year studying the local aviation market’s potential.

ADC-HAS initially proposed to invest in Chu Lai, Long Thanh, Phu Bai, Danang, Tuy Hoa, Quy Nhon, Pleiku and Cam Ranh airports under the public-private partnership format.