Minister Thang: Long Thanh project uses the least possible budget

Minister of Transport Dinh La Thang said that if approved, the project will only use more than 6 trillion VND of the budget for phase 1a.

Minister Dinh La Thang talks to the press in the hallway of the National Assembly about the Long Thanh international airport project.

Dear Minister, many people are concerned that investing in Long Thanh International Airport will put pressure on public debt and be too much for the current "health" of the economy. Could you elaborate on the capital mobilization plan to implement this project?

Minister Dinh La Thang:When building the Project, we have considered that we will try to use very little budget money. The State only invests or supports investment in infrastructure that is not capable of recovering capital such as site clearance, construction of traffic connection systems in the port area, workplaces of State management agencies, command stations... which according to preliminary calculations is about 21,849 billion VND, accounting for 14.6% of the total investment cost of phase 1.

The remaining amount will be mobilized from society, in many different ways, for example 47,859 billion VND, accounting for 29.1%, enterprises will borrow ODA capital from the Government to use for runways, taxiways, parking lots and flight equipment... and must repay the debt themselves (similar to what has been implemented with Noi Bai T2 and Tan Son Nhat T2 terminals). The last amount, which is also the largest, about 92,648 billion VND, accounting for 56.3% will mobilize the non-state sector (enterprise capital, public-private partnership...) to invest in items with the ability to recover capital quickly such as passenger terminals, cargo terminals...

Thus, if following this option, the increase in national public debt due to project implementation (mainly from loans and the ability to repay ODA loans), according to preliminary assessment, is not large. With ODA loans of about more than 2 billion USD for phase 1, according to the mechanism of the Government lending to enterprises, the impact of project loans on GDP at current prices of each year is very low (especially in the period from 2016 - 2019), expected to be only about 0.091% in 2022.

Meanwhile, the economic internal rate of return (EIRR) of the project can be up to 22.1%, higher than the social discount rate (the standard EIRR for public works in Vietnam is between 10% and 12%), so the project has good debt repayment capacity. Reality has also proven that investment projects in the aviation sector all have positive financial efficiency, enterprises borrowing ODA capital from the Government always ensure to repay their debts on time (specifically, the project to build the international passenger terminal of Tan Son Nhat International Airport, the project to build the international passenger terminal T2 - Noi Bai).

Model of a corner of Long Thanh International Airport

What does the Minister think about the recent criticisms about the project?

Minister Dinh La Thang:I highly appreciate the responsible attitude of the people, National Assembly deputies, and press agencies towards the Long Thanh International Airport project. This shows the progress in many aspects of our country's political and economic life. On the part of the Ministry of Transport, we always listen attentively, are open to feedback, and are grateful for the contributions to the project.

To further reduce the State budget capital allocated for phase 1a, the Ministry is proposing to allow Vietnam Airports Corporation to use the revenue from equitization to arrange about VND5,000 billion for site clearance. If approved, the State budget for phase 1a alone will be only about VND6,076.9 billion (5.1%).

Thank you Minister!

According to GTVT newspaper