Vietnam's biggest airport project faces financial hurdle

By Mai Ha, Thanh Nien News

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A rendering of Long Thanh Airport in the southern province of Dong Nai. File photo A rendering of Long Thanh Airport in the southern province of Dong Nai. File photo

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Soon after it was approved by legislators, the Long Thanh Airport project has faced its first hurdle: a possible lack of funding for site clearance.
Authorities in the southern province of Dong Nai, where the airport will be located, announced at a meeting on Friday that it has sought the government's assistance so it can pay compensation to affected residents and build resettlement areas. 
The province estimated that it will cost nearly VND11.27 trillion (US$495.83 million) to clear more than 2,550 hectares of land for the project's first stage, expected to start some time between 2018 and 2019.
However, Truong Van Phuoc, vice chairman of the National Financial Supervisory Commission, said even though the government is obligated to finance the project, the state budget is strained. 
It is very likely that the government will not be able to disburse the required funding for site clearance within a short period of time, Phuoc said. 
Dong Nai needs to work with the transport ministry for alternative funding plans, such as issuing bonds to relocated residents, Phuoc said.
But Tran Du Lich, a legislator from Ho Chi Minh City, argued that "what people want is real and fresh money."
With an annual revenue of around VND12 trillion ($527.95 million), 51 percent of which is submitted to the government, Dong Nai is capable of taking out loans on its own if it is allowed to retain a larger share of the revenue, Lich said.
Dang Thuan Phong, vice chairman of the Social Affairs Committee under the National Assembly, thought neither of the suggested plans is viable.
It will affect the state revenue if Dong Nai Province cuts down its contribution, and it is not quite reasonable either to ask affected residents to buy bonds, Phong said.
Long Thanh is expected to replace Tan Son Nhat in Ho Chi Minh City as the country's largest airport.
Financial concerns about the project, which was approved in June at a cost projection of $15.8 billion, came amid gloomy forecasts about the state budget in the forthcoming years.
Official figures suggested that state revenue will be at least VND31.3 trillion ($1.38 billion) below this year’s target due to a sharp decline in crude oil prices, which prompted the finance ministry to take out a VND30-trillion loan from the central bank, raising concerns about fiscal discipline and risks.
The government recently announced its plans to borrow more than VND3,000 trillion ($134.3 billion) over the next five years to repay existing debt and cover the state budget's deficit.
It also plans to sell stakes in 10 companies, including major ones like Vinamilk and FPT, expecting to earn VND40 trillion ($1.77 billion) from it. The government said it will earmark a fourth of that amount to make up for the budget shortfall.

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