Attracting investment in aviation infrastructure: Turning the tables to take off

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There is only one private airport in the country

Speaking at the seminar "Mobilizing resources for aviation infrastructure development", Deputy Director of the Planning and Investment Department (Ministry of Transport) Nguyen Anh Dung said, currently, of all 22 exploiting airports, 21 airports managed by state-owned enterprises, Airports Corporation of Vietnam (ACV), and only remain one has called for and mobilized social investment in the form of PPP, Van Don airport, Quang Ninh. In the period 2011-2019, the growth rate of Vietnam's aviation industry recorded a very high growth rate, averaging 16-18% per year, rated the fastest by the International Air Transport Association (IATA) in Southeast Asia and ranked fifth in the world.

The very fast development of air transport has put pressure on the airport infrastructure. In the period of 2011 - 2019, Vietnam's aviation infrastructure had a designed capacity of 95 million passengers/year while in the peak time before Covid-19 in 2019, the throughput through airports Vietnam's airport reached 116.5 million passengers/year (over 20 million passengers) and with such traffic, some airports suffered overloaded capacity, especially Tan Son Nhat and Noi airports, Bai, Cam Ranh, Da Nang.

Therefore, the Government and the Prime Minister have drastically directed the mobilization and diversification of investment resources in aviation infrastructure and so far have achieved some positive initial results. Many localities have proposed to socialize the investment and exploitation of works in airports and airfields; more and more enterprises have expressed more interests in cooperation and investment opportunities in the field of aviation infrastructure; many investment projects in this field in the form of PPP have been started or have been implemented effectively.

The very fast development of air transport has put pressure on the airport infrastructure. Photo: VNA.

Unable to find solutions

Assessing the difficulties and obstacles when attracting investment in the development of aviation infrastructure, Mr. Luong Hoai Nam, an aviation expert, said that the difficulty lies in 4 words: "There is no way". That is, investors are faced with administrative procedures, investment procedures; localities are unable to implement the plans due to the lack of mechanisms. In fact, it is very unfortunate that the investors who were previously eager to participate in these airport projects, have now disappeared after a period of researching.

Besides, Mr. Luong Hoai Nam is concerned that if investors are not entitled to consultation and planning proposals, it will be difficult to attract investors. From there, Mr. Nam suggested that there should be a mechanism for investors to have the right to participate in the planning of the airport with the intention of implementing socialization.

Commenting on this issue, the Deputy Director of the Planning and Investment Department said that the socialization has been researched and implemented since 2013, 2014. Investing in a new airport is not difficult such as Van Don Airport. However, socializing and reinvesting in airports that already have state-owned enterprises, and even military and defense activities, is extremely difficult. Currently, there are two main trends. The former is PPP as doing Van Don or franchising which share similar properties, just differ in words. The latter is high or low equitization. Currently, in some countries such as China and France, the State still holds over 51%. Others only rent out when the infrastructure is fully equipped, and if there still needs investment, franchises or PPPs are in favor. The Ministry of Transport highly appreciates the suitability of these models for Vietnam.

“This is a huge undertaking that cannot be done overnight and requires a roadmap, accompanied by a series of policies. On the other hand, it is necessary to revise the current policy because military- related activities related in many airports, and many airports now have regular military operations. Therefore, the Ministry of Transport would like to classify and evaluate the frequency of such groups to propose appropriate solutions. Developed countries often invest on have independent military airports, Vietnam are unable to separate them to support each other, "said Nguyen Anh Dung.