Vietnam News Network

Vietnam News: Local, National, Business, Sport, Entertainment and Technology

Trade BCHUSD, Bitcoin and Cryptocurrencies

BUY & SELL BCHUSD | View BCHUSD News & Updates


Buy Sell BCHUSD, Bitcoin and Cryptocurrencies

Special mechanism needed to attract FDI to infrastructure   2011-06-16 - Viet Nam Net

The Ministry of Transport (MOT) has proposed to apply an additional special mechanism to call for foreign investment into the infrastructure sector.

Despite a lot of great efforts, Vietnam has not succeeded in calling for foreign investment into infrastructure projects. Dau tu has quoted an official from the Ministry of Planning and Investment as saying that to date, “no foreign direct investment (FDI) project in the aviation sector has been successfully implemented.”



“It is necessary to apply an additional breaking mechanism in order to make the FDI projects in the aviation sector become realistic,” MOT wrote in the report to the Prime Minister about the project on setting up a joint venture with foreign partners to upgrade the Phu Bai International Airport in Thua Thien-Hue.



MOT has made such a proposal after realizing that the first FDI project in the aviation infrastructure sector is in the danger of “failing completely” right at the preparation works.



The research work conducted by the Middle Airports Corporation (MAC), the Vietnamese partner who has been chosen to team up with the Singaporean International Airport (IA) to set up a joint venture, showed that the project on upgrading the Phu Bai international airport has low financial feasibility.



As initially proposed, the joint venture would be set up with MAC’s capital contribution of 51 percent of the total capital (which is mostly the value of the assets at the Phu Bai Airport). Meanwhile, IA would contribute 49 percent of the total capital of the joint venture. The airport has been planned to be upgraded to become capable to receive Boeing 777s, and have the capacity of five million passengers per annum with the total investment capital of 6087 billion dong in the first phase.



Two investment solutions have been put forward, but both of them are believed to have high financial risks.



In the first solution, the investment capital of the joint venture would make up 50 percent of the capital, while the other 50 percent of capital will come from commercial loans. In this case, the investors would incur the loss of 686 billion dong at least after 25 years of operation.



With the second solution, 100 percent of the capital needed for the project will be the joint venture’s capital. The solution seems to be financially feasible, but no investor would make investment with the stockholder equity.



Currently, besides some information such as the conditions for capital contribution, the conditions on ensuring the efficiency of the project need to be clarified by IA. The lack of a mechanism for appraising the assets of airports, and the mechanism of using airports with the security and national defense purposes all remain barriers to the implementation of the ideas.



Prior to that, MOT also released a document; requesting South Korean Joinus to draw up initial proposals to facilitate the investment in the Quang Ninh airport under the mode of BOT (build – operation – transfer). The ministry has also asked the investor to consider another mode – BT (build – transfer) for more choices.



While IA and Joinus may fail to make investment due to the financial feasibility, the US Airis Holdings missed the opportunity to make investment in the T2 terminal at Noi Bai Airport, simply because they were late in making registrations.



According to MOT, the project on building T2 terminal at Noi Bai airport has been assigned to the Northern Airports Corporation. Some other projects have been found investors and they are under implementation.



If the projects can go smoothly, the infrastructure items of the Noi Bai airport would meet the demand for 5-10 years. Therefore, at this moment, MOT still does not intend to call for FDI into Noi Bai airport.



At present, the Long Thanh International Airport project which has the estimated construction cost in the first phase of 6.05 billion dollars, not including the expenses for site clearance, has caught the special attention from investors.



Under MOT’s proposal, some infrastructure items would be open for private economic sectors who can invest under the mode of BOT, or PPP (private public partnership).



Other news

Supermarket brands’ development causes worries   2011-06-16

Vietnam is world’s 2nd largest gold hoarder   2011-06-16

Livestock farms accused of price collusion   2011-06-16

Exporters feel the pinch of high interest rate   2011-06-12

Inflationary ease and worries   2011-06-12

Raw titanium “bleeding” causes millions dollars in loss   2011-06-12

“Black box” promises fat profit to manufacturers   2011-06-12

PM Dung urges US firms to invest more in Viet Nam   2011-06-12

Dollar interest rate decreases bring positive changes to market   2011-06-12

Donors say Vietnam economy still unstable   2011-06-11

Billion-dollar projects become scarcer   2011-06-10

Oversupply brings bitterness to steel manufacturers   2011-06-09

Enterprises and agencies slow to react to shipping surcharges   2011-06-08

Land use purpose transfer brings golden opportunities to investors   2011-06-08