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VietNamNews

Central region suffers from airport density

Update: February, 20/2012 - 10:06

by Le Hung Vong

Nine of the 14 provinces in central Viet Nam have airports while the others are seeking permission from the Government to build them. Three of the six provinces in the north-central region have airports (Nghe An, Quang Binh, and Thua Thien-Hue), while Thanh Hoa and Quang Tri have got permission for construction.

This high density of airports in the region has made them unprofitable, with most incurring losses.

Dong Hoi Airport in Quang Binh, which was built in 2008 at a cost of VND212 billion (US$10 million), can accommodate A320 and A321 aircraft and handle around 500,000 passengers a year.

However, its nine weekly flights from Ha Noi and HCM City only bring some 142,000 passengers.

Trinh Hai Duc, deputy head of the Dong Hoi Airport Authority, says it incurrs losses of more than VND55 billion ($2.6 million) a year.

Chu Lai Airport, a former military air base in Quang Nam Province, was reopened in March 2005 with twice-weekly flights from HCM City to boost socio-economic development in Quang Nam and neighbouring Quang Ngai.

A plan to turn Chu Lai into an international airport was approved by the Government in 2008. Following the increase to 10 weekly flights from HCM City in 2010 and the launch of four weekly flights to Ha Noi, the airport serves some 60,000 passengers a year.

An airport official says due to a lack of equipment, only small-sized aircraft like ATR 72 can land, while larger aircraft like Airbus and Boeing have to land at nearby Da Nang Airport.

The Tuy Hoa city airport is hoping to attract more passengers to reduce its losses through a VND290 billion ($13.8 million) expansion project that began last week.

The airport opened in 1997 with two weekly flights to HCM City, but closed down a year later due to a lack of demand.

It reopened in 2003 with 10 weekly flights to HCM City and seven to Ha Noi, and gets around 60,000 passengers a year.

Nguyen Nguyen Hung, former general director of the Southern Airports Corporation (SAC), warns however that higher investments in provincial airports will mean bigger losses for his agency.

It has to use the profits from Tan Son Nhat International Airport in HCM City to subsidise the eight provincial airports that are expected to break even only with more flights, he said, calling it a "political and social mission" to be fulfilled.

Last year SAC reported a pre-tax profit of more than VND200 billion ($3.3 million).

Hostile takeover talk

Leading joint stock banks ACB and Eximbank have rejected rumours they are interested in a hostile take-over of Sacombank.

Nguyen Thanh Toai, ACB deputy general director and spokesman, has said categorically: "I would like to make an official announcement that this will never happen."

Truong Van Phuoc, general director of Eximbank, also has told journalists there would be no merger of the three banks.

Their statements come in the wake of a rumour that an ACB executive will become the CEO of Sacombank. The rumours achieves traction because Sacombank shares have been accumulated by the other two banks' securities arms for the past year and a half, since the time it was trading at VND12,000.

Sacombank has a charter capital of VND10.739 trillion ($512 million) while its share now trades at VND21,900.

Family members and associates of Dang Van Thanh, the Sacombank chairman, hold a 13.81 per cent stake in the bank, treasury stocks account for 9.31 per cent, while Huynh Que Ha, deputy chairwoman of Sacombank, and her husband hold 5.22 per cent, adding up to a total of 28.34 per cent.

Eximbank holds 10.81 per cent while the stake held by ACB – a big shareholder in Eximbank – is unclear.

But ACB and Eximbank together have enough stakes to convene an extraordinary shareholders meeting to discuss issues related to Sacombank.

Sai Gon Tiep Thi magazine says ACB has ambitious plans to become one of the country's four top banks.

The four biggest in terms of total assets now are Agribank, BIDV, Vietinbank, and Vietcombank.

Agribank is the largest with assets of VND524 trillion, followed by Vietcombank with VND333.73 trillion.

If ACB, Sacombank and Eximbank do merge, their combined assets will be VND298 trillion.

Slow FDI disbursements

Many provinces are determined to speed up capital disbursement by licensed investors, and scrap projects that have been delayed or are not feasible.

This year Ba Ria-Vung Tau targets foreign direct investment of just $500 million, half of last year's figure.

Ho Van Nien, deputy chairman of the provincial People's Committee has said Ba Ria-Vung Tau would focus on the disbursement of the $27 billion licensed to be invested in 298 projects rather than on attracting fresh investment.

The province has decided to scrap 24 licensed projects due to long delays and failure to get under way.

Long An Province has unveiled plans to pull the plug on long-delayed projects, with the licences to be transferred to other investors with sufficient financial capability.

Phan Thanh Phi, head of the Long An Economic Zone Management Board has said the province has prevented investors from themselves selling their projects to other investors.

According to figures from his department, licences for 34 projects on more than 12,100ha of land have been withdrawn since 2009.

Lam Dong Province last year decided to cancel 45 local and foreign projects worth VND10 trillion ($478 million) and $30 million, respectively. A further 40 odd are likely to have their licences revoked before long.

Most of the cancelled projects are small or medium-sized hydropower projects or in tourism, agriculture, and forestry.

HCM City has withdrawn the licence for the $1.2 billion Thu Thiem Software Park Project in District 2, and is looking for new capable investors to join in.

Phan Huu Thang, former director of the Foreign Investment Agency has said registered capital of some $108 billion has yet to be disbursed, leading to delays, waste of land and product shortage, and affecting the image of the country's investment and business environment. — VNS

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