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Aviation infrastructure attracting private-sector investors in Vietnam

Many investors are in line waiting for signs of approval from the state agency to invest in aviation infrastructure projects in Vietnam under a public-private (PPP) form.

The strategic alliance between IPP and ACV

If no further changes occur, in the middle of this week, leader of the Ministry of Transportation will work with Imex Panpacific Ltd Company regarding investment in infrastructure of some airports.

Previously, Mr. Nguyen Hanh, Chairman of IPP has asked the Ministry of Transportation to allow him to take part in the construction of one more runway and Passenger terminal T2 of Phu Quoc international airport.

In particular, IPP had asked to build up the 2nd runway in Phu Quoc of 3.000m in length, 45m in width, which is capable to accept new generation airplanes such as Boeing787, Airbus 350, with a total investment of about 2.000 billion dongs. In the investment capital structure for the works of new runway – which is the key helping to increase the capacity of Phu Quoc airport to 25 million passengers per annum, IPP calls to the People's Committee of Kien Giang province to join in. IPP and Airport Corporation of Vietnam (ACV) will be in charge of the rest (the proportion is determined by the Ministry of Transportation).

Besides the construction of runway no. 2, IPP also wants to coordinate with ACV in construction of Passenger Terminal T2 with a capacity of 10 million passengers per annum, total investment of 7.000 billion dongs.

“IPP will coordinate with tourism companies all over the world to bring app. 5-7 million passengers to Phu Quoc per year for relaxation and shopping", said Mr. Nguyen Hanh.

The ambition of becoming the number one investor in the airport infrastructure in Vietnam of IPP is no doubt since this investor continues to ask for, in company with ACV, investing in a new passenger terminal with a capacity of 8 million passengers per annum in Tuy Hoa Airport (Phu Yen province) where IPP is willing to give ACV the position of legal representative, cum. General Director of project business. 

It is worth noticing that IPP is a familiar tradename in the aviation sector. Starting as an exclusive distributor of many luxury brands in the world at airports, in 2014, IPP became a leading shareholder, strategic investor of Southern Airports Services Joint Stock Company (SASCO).

IPP is also the biggest shareholder of Cam Ranh international terminal JSC. (CRTC), with a capacity of 8 million passengers per annum. The project with a total investment of 3.733 billion dongs commenced in September 2016 and is expected to be put in operation in the 2nd quarter of 2018. At CRTC, Mr. Nguyen Hanh is the Chairman of the Board; Mr. Phan Le Hoan, representing ACV's capital, is General Director.

Revenue incentive

It must be said that, private investment in airport infrastructure has been apparently popular in the last three years.

"Projects in aviation terminals are easy to call for investment because of short-term capital recovery

from airport service charges; stable revenue from food stall and duty-free shop rental."

- Aviation Department of Vietnam

According to the Aviation Department of Vietnam, there are at least 5 airport infrastructure projects under construction which have private investment contribution, including: Van Don International Airport (Sungroup); Da Nang international passenger terminal, international airport; Cam Ranh passenger terminal, international airport; Phan Thiet International Airport; Parking area, Domestic Terminal, Tan Son Nhat International Airport.

Notably, the allure of positive performances in business results of ACV and Da Nang International Terminal Investment JSC. has attracted many investors waiting to be licensed to invest in airport infrastructure projects. The opportunity to call for private investment is more evident after the Prime Minister approved the amendment of the Aviation Transportation Development Plan for the period of 2030.

Beside the construction of Tan Son Nhat passenger terminal, Long Thanh international airport which are the focal points of big domestic and foreign investors, some local airports such as Chu Lai, Cat Bi are also receiving significant attention.

In the Northern Provinces, the People's Committee of Hai Phong city is determined to invest early in T2 Terminal of Cat Bi International Airport, with the capacity of 8 million passengers per annum, under PPP form. Chairman of the People Committee of Hai Phong affirmed that they had received many proposals, in which a joint venture of an airline with a local bank committed to call for investment for this project right in this year, 2018. After the success of Quang Ninh province in Van Don airport, the People's Committee of Hai Phong asked the Prime Minister to allow them to be the state competent authority in Cat Bi Terminal T2 project. "Boosting up the socialization of investment in aviation is a breakthrough solution to release the pressure of the state budget, increase competitiveness of the economy and ensure national defense – security", said Mr. Dinh Viet Thang, the Director of Vietnam Aviation Department.

For foreign investors looking for opportunities to invest in Aviation projects in Vietnam, Viettonkin Consulting is ready to provide a wide range of services, including but not limited to, market research, due diligence and forensic investigation on the investment destination, M&A legal consulting, legal advisory services, contract drafting, company incorporation, tax planning and tax consulting. With our extensive experience in the field of legal consulting, accounting and tax, and business consulting services, we are more than happy to offer a one-stop solution with a customized service package that is most suitable to your specific needs.

 

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