Expert Slams Mega Airport Proposal For Vietnam’s Commercial Capital

2015-05-05
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A Vietnam Airlines aircraft (top) takes off from Tan Son Nhat Airport in Ho Chi Minh City, March 15, 2014.
A Vietnam Airlines aircraft (top) takes off from Tan Son Nhat Airport in Ho Chi Minh City, March 15, 2014.
AFP

Lawmakers in Vietnam should not approve the construction of a massive new airport outside of the country’s commercial capital Ho Chi Minh City based on flaws in its current design, according to an expert reviewing the project ahead of a legislative session scheduled for the end of the month.

Nguyen Bach Phuc, chairman of the Ho Chi Minh Association of Consultants in Science Technology and Management (HASCON), said that his group was unable to recommend the Long Thanh International Airport project to the National Assembly based on seven concerns, including its socio-economic efficiency.

Other issues HASCON found during a review of the airport project included whether it was legal according to the constitution, how it fit with the country’s larger development scheme, its lack of a preliminary design plan, and the “obvious risks” associated with it.

The “careless” selection of an investment option for the project and a lack of clarity about the terms of an associated loan required to build it also raised red flags, Phuc said.

“Those are seven issues … that made us recommend to the National Assembly not to approve the project yet,” he said.

Phuc said HASCON had sent a petition to Vietnam’s ruling Communist Party, the politburo and the National Assembly outlining its concerns, and had requested a meeting with the country’s Ministry of Transportation and the project’s developer.

HASCON will present its doubts over the project during the next session of the National Assembly, which will be held at the end of May.

Massive project

Located around 40 kilometers (25 miles) northeast of Ho Chi Minh City in southern Vietnam’s Dong Nai province, Long Thanh was designed to replace Tan Son Nhat International Airport—built inside the city during the Vietnam War to support combat transportation and currently limited to serving around 20 million travelers annually.

In March, Minister of Transport Dinh La Thang said at a National Assembly Steering Committee meeting that total investment capital in the project had been cut to U.S. $15.8 billion from U.S. $18.7 billion six months earlier, U.S. $5.2 billion of which would be spent in the first phase of the project, according to a report by the official VietnamNet Bridge.

However, the chair of the National Assembly’s Economics Committee Nguyen Van Giau noted that U.S. $5.2 billion may not be the final estimate, the report said. A second phase would expand the project further in 2023.

Around 11 percent of the capital for the project would be sourced from the state budget, 26.5 percent from official development assistance (ODA) loans, and 62.5 percent from non-state budget, according to the Ministry of Transportation.

Long Thanh would become Vietnam’s largest airport—designed to be able to serve up to 100 million passengers per year after 2050—and the project’s backers say it could even serve as a major transit hub for the Southeast Asian region.

But detractors dismiss the project as wasteful and say it would be better to expand Tan Son Nhat, which could be upgraded to handle as many as 26 million travelers per year.

Numbers misleading

HASCON’s Phuc said a government report had over-reported the annual profits and underreported the annual costs associated with the proposed airport, presenting a grossly inflated rate of return on the project.

“It estimated more than U.S. $1.5 billion more than the actual annual profit, while the costs were presented as U.S. $260 million less than the actual amount per year,” he said.

“The total inflow is listed as around U.S.  $1.8 billion a year more than the correct number.”

He also estimated that if the interest on an ODA loan is more than one percent per year, it would take at least 100 years for Vietnam to pay back.

In October, Vietnam’s official Tuoi Tre News quoted Deputy Minister of Transport Pham Quy Tieu as saying that French airport architect ADPi had committed U.S. $2 billion in loans to fund construction of the Long Thanh, while Japanese Prime Minister Shinzo Abe had also pledged an ODA loan of U.S. $2 billion to the Vietnamese government for the project. The terms of the loans were not disclosed.

Hub unlikely

Phuc also questioned whether Long Thanh could function as a hub for travel in Southeast Asia, saying the airport would likely be limited to serving transit flights to Australia, but would still have to compete with other large airports in the region for share in that market.

“The Australia market is very small—only around 20 million people. In addition, all of Southeast Asia’s airports can serve transit flights for the Australian market, so what percentage of that small market would Long Thanh Airport realistically serve?” he asked.

Phuc said Long Thanh would likely be overlooked by transiting travelers in favor of airports with better reputations in the region, such as those in Hong Kong, Singapore, Malaysia and Thailand.

“That is why I believe the goal of turning Long Thanh into an international airport for transit flights is not feasible, making the investment report’s estimate of 100 million passengers per year unrealistic,” he said.

Reported by Mac Lam for RFA’s Vietnamese Service. Written in English by Joshua Lipes.

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