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Sunday, July 21, 2024

Aviation sector lacks funding for infrastructure development

The Saigon Times

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HCMC – The local aviation sector needs some VND271.4 trillion for airport infrastructure development in the 2021-2030 period, but the State budget can meet 65.8% of the amount, according to the Ministry of Transport.

The ministry is consulting with cities and provinces over a plan to mobilize capital for developing infrastructure at the airports, Lao Dong newspaper reported.

Airports, particularly Noi Bai, Danang, Tan Son Nhat and Can Tho, are more attractive to private investors than road and railway projects as they hold high growth potential.

However, it is important to ensure both the benefits of both the State and private investors.

According to experts, the aviation sector has mobilized private resources for aviation service development. However, its mobilization for aviation infrastructure projects, such as runways, taxiways, aprons and passenger and cargo terminals, has yet to be enhanced.

In addition, the capital for aviation infrastructure projects is huge but the capital recovery capability is low.

A representative of the Ministry of Transport said by 2023, policies and the legal system on the transfer of airport investment and operation rights would be completed. The pilot scheme for right transfers will be completed by 2026.

According to the ministry, the Can Tho International Airport holds high potential for development but has yet to prove its effectiveness. Therefore, it needs a new and modern management mode to become more attractive to passengers, reduce pressure on the Tan Son Nhat International Airport and facilitate socioeconomic development in the Mekong Delta.

As of 2030, the proportion of private resources for aviation infrastructure under the public-private partnership (PPP), investment and operation right transfer and direct investment models is expected to rise from 20.5% to 24.9%.

Associate Professor Dr Nguyen Hong Thai from the University of Transport and Communications said the demand for air travel is huge, while local airports are overloaded. Therefore, airports must be expanded. As such, the Long Thanh International Airport in Dong Nai Province and a second airport in Hanoi are being developed to meet the demand.

To prevent wastefulness at airport infrastructure projects conducted under the PPP model, the State governance must be improved, while criteria for investors should be worked out, Thai noted, adding that when private investors are called on, their contributions and benefits should be clarified.

Vu The Phiet, general director of the Airports Corporation of Vietnam, said the mobilization of private capital for the development of aviation infrastructure would help accelerate the sector’s development, improving the traffic infrastructure system and boosting the regional connectivity, and the corporation supported the mobilization of private resources for aviation infrastructure projects.

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