VietNamNet Bridge - The Ministry of Finance (MOF) has said that the proposed Long Thanh International Airport’s impact on the public debt would not be higher than 0.28 percent of GDP.

MOF has calmed the public by saying that the airport development would only have a modest effect on public debt. 

Tran Hoang Ngan, a finance expert, has confirmed that 0.28 percent of GDP is an inconsiderable impact on the public debt. 

He said the investment of VND12.149 trillion to be disbursed within three years would be ‘bearable’ for the state budget. 

This means that the state budget would disburse about VND4 trillion for the project every year. The figure accounts for 2 percent of the total spending of VND200 trillion every year on investment and development. 

The State Appraisal Council estimated that the EIRR (economic internal rate of return) of Long Thanh is 24.5 percent, higher than the average discount rate of society, which shows the high feasibility of the project.

As the project is still under the pre-feasibility study period, there has been no detailed report about its financial efficiency. 

However, the pre-feasibility study showed that the FIRR (financial internal rate of return) for terminals is 13.9 percent for a period of 25 years.

Long Thanh, once operational, is expected to speed up industrialization in the southern provinces in the Mekong River Delta. It is expected that 200,000 jobs will be created by Long Thanh. 

According to the National Assembly’s Steering Committee, the total investment capital for the first phase of the project is $5.236 billion.

Le Van Hoc, a National Assembly’s Deputy from Lam Dong province, noted that capital from ODA (official development assistance) would account for 26.5 percent of total investment capital in the first phase. This will have a direct impact on the public debt and the project’s cost.

Hoc said in most cases the countries that provide ODA will require the use of at least 30 percent of their materials and equipment for the project. This will increase the cost of the project.

Nguyen Quoc Binh, a National Assembly’s Deputy from Hanoi, suggested that PPP (private-public partnership) should be the major investment mode. 

State, businesses and international investors would join the investments to take full advantage of each party. 

While the state has land, infrastructure and labor force, investors have capital, technology, management and operation skills.

“The combination of ODA and PPP with PPP being the major investment mode is the best solution for the first phase of the project,” Binh said.

CV