VietNamNet Bridge – Vietnam has been told not to expect too much financial support for the Long Thanh airport from commercial banks Official Development Assistance (ODA) funds as capital flow from ODA is declining.

The Airport Corporation of Vietnam (ACV) has received approval from the National Appraisal Council to build Long Thanh Airport in Dong Nai Province, after making great efforts to convince the council on the necessity and feasibility of the project.

The council has agreed that it will submit the project to the Prime Minister for approval.

ACV would need $7.8 billion for the first development phase of the project, half of which is expected to come from ODA loans.

Meanwhile, the other $3.8 billion would be sourced from institutional investors who contribute capital under the mode of joint-venture and PPP (public-private partnership).

Vietnam would seek ODA capital from the World Bank, Asian Development Bank and the governments of Japan, France, South Korea and the US through international cooperation agencies, including JICA (Japan International Cooperation Agency).

ACV remains optimistic about the feasibility of calling for capital through the PPP investment mode.

“A lot of foreign investors, including French ADPi, South Korean Samsung and Incheon Airport Corporation, and some Japanese groups, have expressed their willingness to invest in some project’s items under the mode of PPP or BOT (build-operate-transfer),” an ACV report

However, Vietnamese financial experts said they are not optimistic about the capital mobilization.

Deputy Governor of the State Bank Nguyen Dong Tien has warned that it would be better not to expect too much from ODA, which is on the decline.

Moreover, as Vietnam’s foreign public debt is still at a high level, the country needs to think carefully about borrowing funds.

Commenting on the names of the credit institutions listed as the project’s “potential partners”, Tien warned that Vietcombank and VietinBank (the two banks in which the state holds controlling stakes) would not be able to contribute capital to the project, because they are facing major difficulties with their infrastructure projects.

As for the Vietnam Development Bank, Tien also thinks ACV should not expect capital contributions from it because its financial capability is limited.

Professor La Ngoc Khue, former deputy minister of transport, who has criticised the Long Thanh Airport project, noted that it is necessary to clarify the management modes for the project’s items before determining the investment modes – PPP, ODA, or joint venture.

According to Khue, the major infrastructure items of the airport, including the runway, parking lot and terminal, must belong to the state and must be put under management of state-owned enterprises.

Private investors would be allowed to invest in catering, services or less important items, while foreign investment would not be sought. This is also the operation model being applied by other big airports in the world, like Chek Lap Kok in Hong Kong and Changi in Singapore.

VNE