Discussion on accession to the Cape Town Convention and Protocol

Accession to the Cape Town Convention and Protocol allows Vietnam to access preferential loans to purchase aircraft.

This morning (October 15), the National Assembly Standing Committee gave its opinion on the Government's Proposal on joining the Convention on International Interests in Mobile Equipment and the Protocol on Matters Specific to Aircraft Equipment (Cape Town Convention and Protocol).

Access preferential capital upon joining

Implementing the Government's work program, the Ministry of Transport has coordinated with relevant agencies to conduct research and propose Vietnam's accession to the Convention on International Interests in Mobile Equipment and the Protocol on Matters Specific to Aircraft Equipment.

Minister Dinh La Thang said that joining the Cape Town Convention and Protocol allows Vietnam to access preferential loans to buy aircraft.

The Government's submission presented by Minister of Transport Dinh La Thang said that the basic objective of the Cape Town Convention and Protocol is to facilitate the efficient financing and leasing of aircraft equipment, bringing significant economic benefits to member countries of the Convention and Protocol at any stage of development, especially for developing countries by providing commercial credits for aircraft equipment that were previously not easily accessible due to high costs.

The Convention and Protocol have established a solid, unified international legal regime to protect the interests, preserve the ownership and rights of lessors; encourage the granting of credit, leasing and reduce related costs.

The Convention and Protocol provide better protection for creditors and lessors against the risk of loss of assets, increase the creditworthiness of loans and leases, leading to the possibility of allowing credit exporting organizations to reduce the cost of borrowing capital through the mechanism of international registration of interests and sanctions applied uniformly to aircraft hulls, aircraft engines and helicopters formed on the basis of credit loans for leasing and purchase.

Minister of Transport Dinh La Thang said that Vietnam's aviation industry is in the development stage and the need to develop a modern fleet of aircraft requires access to low-cost loans. According to the Aviation Transport Development Plan, by 2020 the total number of aircraft will be about 140-150 and ownership will account for about 50%. Thus, in addition to leased aircraft, borrowing capital to buy aircraft and mortgaging the aircraft itself requires a very large source of capital.

Access to preferential loans allows airlines to improve safety and efficiency in operating their new generation fleets, increasing profits. Furthermore, when aircraft manufacturers achieve high sales, after-sales costs will also be significantly reduced as the market expands.

Weigh the pros and cons

According to the Report, Vietnam's accession to the Cape Town Convention and Protocol is extremely necessary and a prerequisite to create a favorable legal environment for Vietnamese economic organizations to access preferential credit sources from international financial institutions in developing aircraft fleets, improving transport capacity and competitiveness in the process of international economic integration.

However, opinions in the National Assembly Standing Committee all agreed that it is necessary to carefully study and consider when deciding to join the Convention and Protocol, in which it is necessary to assess the actual situation of Vietnam as well as anticipate all possibilities, both advantages and challenges, and difficulties when joining.

According to Chairman of the Judiciary Committee Nguyen Van Hien, the provisions of the Convention and Protocol create favorable conditions for borrowing, but the conditions are very strict and the creditors are in control. These are extremely complicated legal documents, so it is necessary to carefully study the conditions of our country and consider the possibility of joining at the present time.

In addition, Mr. Nguyen Van Hien also emphasized that the explanation needs to provide more complete and convincing information, such as the current situation of credit mobilization in recent years, the current and future capital mobilization capacity for the aviation industry; the situation of government guarantees in loans and taking into account the risk of the government becoming a debtor when businesses are weak and lose money. The compatibility of the Convention and Decree with the current laws of our country also has differences.

Chairman of the Finance and Budget Committee Phung Quoc Hien analyzed that when participating, in addition to being legally bound, we are also subject to strict control. What Mr. Hien worries about is that businesses that make losses and do not pay debts on time are quickly dealt with and forced to hand over the aircraft to creditors. That affects the ability to recover production as well as the counterpart capital.

Commenting on this issue, Chairman of the Law Committee Phan Trung Ly said that many issues related to the content of the Convention have not been regulated in Vietnamese law, and there are also other differences.

Vice President Uong Chu Luu suggested that it is necessary to review and explain more clearly many contents, including both advantages and difficulties, and submit them to the National Assembly for comments according to regulations./.

According to vov.vn - LT