Today is:
News and Info  
.::| New and Info
Ministry eyes sale of highways, airports
Posted date: 03/27/2015 09:21:22

Late last year the Ministry of Transport-owned Viet Nam Expressway Corporation decided to sell a number of expressways including the Cau Gie -Ninh Binh, Ha Noi–Hai Phong and HCM City-Long Thanh -Dau Giay highways.

The ministry has since allowed 70 per cent of the Ha Noi-Hai Phong Expressway to be sold to an Indian investor to raise funds for other road projects to reduce the dependence on public funds or government bonds.

The ministry expects that by changing investment models, the objective of building 2,000km of highways can be fully achieved.

The corporation is working with relevant bodies to wrap up procedures to find local and foreign investors to buy roads and, most importantly, to determine the price of each highway.

Earlier this year the Ministry of Transport also announced a pilot scheme to sell the operational rights of Phu Quoc International Airport and one of the two terminals in Ha Noi's Noi Bai International Airport and part of Da Nang Airport and Cam Ranh Airport to raise funds to modernise the country's other airports.

The ministry's decision follows the success it had recently in selling some seaports.

The feasibility of the plan seems very high as many airlines and major investors have already expressed a desire to buy airport operational rights despite the fact the legal framework for this is rather sketchy at this time.

Bitexco is among those interested in taking over the operation of the HCM City-Long Thanh-Dau Giay Expressway that officially opened early this year.

In early February private carrier Vietjet Air submitted a proposal to the transport minister to exploit Noi Bai International Airport's Terminal 1 for 20 years.

The 115,000sq.m T1 with 19 boarding gates can handle nine million passengers a year.

Meanwhile, Vietnam Airlines has asked to buy T1 outright.

In a communication to the ministry, the carrier said it would use the terminal for operational management and services for its passengers and for operating domestic flights.

It said the price would be based on current regulations, and it would raise the money needed for the purchase internally as well as from other sources.

A source said, however, that the ministry has already decided to lease out Row E in T1 with a capacity of 3 million passengers a year to Vietjet Air.

Analysts believe that the lease of terminals to private players is quite feasible and can be completed this year since investors only need to bring in a moderate amount of money to upgrade them and then operate them efficiently.

But taking over entire airports would require investors to have deep pockets, access to technology and experience in operating them.

This would leave out domestic investors, meaning finding operators for entire airports, like planned for Phu Quoc, will be difficult.

Vietnamese investors are wary of taking over expressways too since most of them have been built with foreign loans and they fear might come with complex regulations.

Nevertheless, analysts said inviting various economic sectors, particularly private, to participate in developing seaports, roads and airports is necessary since their presence would help increase competitiveness.

Besides, it would enable the Government to raise more investment, they said.

But to ensure the move is effective, feasible transfer norms must be worked out for highways, seaports, and airports, while the government must ensure there is a proper legal framework to carry them out smoothly.

One thing will not change: passengers must have the best services and reasonable costs after the private sector takes over the operation of highways and airports.

Buying ailing banks

On March 5 the State Bank of Viet Nam fully acquired the Viet Nam Construction Joint Stock Commercial Bank (VNCB).

Following the takeover, the construction bank is now a one-member limited company with a chartered capital of VND3 trillion (US$142.86 million).

As the central bank had stated a month ago VNCB's stakes have been transferred at a price of zero dong per share.

This is the first time that the central bank has been directly involved in the restructure of a commercial bank.

The bank is now managed by the Vietcombank.

According to the central bank, another six to eight banks will be dealt with in the same way, a task that has become unavoidable to restore their health and to generally create a healthier banking system.

Two of them are Ocean Bank and GP Bank, which are expected to be taken over soon.

Before the takeover plans for the two banks actualise, the central bank will have to audit and determine the value of the two lenders.

GP Bannk is among a number of struggling lenders that were placed on a restructuring list in 2012, but no investors have shown interest in it.

An SBV official said that one major task for the banking sector this year is to merge ailing lenders to reduce the total number of banks.

To achieve that, strong action will be taken, including acquisition of small banks by the central bank an weak banks file for bankruptcy.

The central bank expects several mergers and acquisitions deals in the industry this year to create bigger, more competitive banks.

It plans to reduce the number of banks from the current 37 to 15-17 by the end of 2017.

The central bank's taking over of small banks may not an ideal method since it would affect the Government's finances, but there is little c hoice since no one wants to buy banks that are too sick or bankrupt.

Besides, the ailing banks are also unable to file for bankruptcy since the central bank would then have t o pay back the public's deposits as well as ensure the stability of the entire sector.

After acquiring ailing banks, the central bank will recapitalise them and sell stakes to recover the money.

Steady dollar-dong rate

On March 3 Vietcombank traded the US dollar at VND21,330-21,380, meaning both buying and selling rates were up VND50 from the previous day.

Another State-owned giant, BIDV, also adjusted its buying and selling rates by VND10-15 also to respectively VND21,330 and VND21,380.

But analysts said the changes were merely seasonal because the banks balance their foreign exchange, and rates would continue to be stable for the rest of the year due to certain reasons.

The country's foreign exchange reserves are at a record level of US$36 billion.

The interest rate on dong deposits remains much higher that on dollars. With inflation remaining very low, people prefer to sell dollars and keep dong, enabling the central bank to keep ex change rates steady.

Many pointed out that the forex rates would not fluctuate much since the balance of payments situation remained rather stable in the last two years and the use of dollars was markedly down in the domestic market.

The relentless rise in exports is helping replenish the country's foreign exchange reserves.

It is predicted that this year the dollar will strengthen because of the US economy's strong performance. This is likely to put pressure on the dong.

Analysts said the central bank should make slight adjustments to the exchange rate to ease this pressure while also supporting exports.

The adjustments should be less than 2 per cent, they said, however


Other news: 
 Samsung đầu tư 1,4 tỷ USD vào Khu Công nghệ cao TP.HCM (03/27/2015 09:12:45)
 Samsung Thái Nguyên, dự án tỷ đô “nhanh bất ngờ” (07/06/2013 10:47:46)
 Forum looks at climate change (09/18/2010 08:44:07)
 Government In Action (07/16/2008 04:12:46)
 Ha Noi roads redo to cost $13 billion (03/13/2008 10:35:37)
 Migrant workers need help (03/13/2008 10:35:18)
 Foreign investment in 2007 reaches $15b (11/28/2007 02:18:26)
 There’s no place like home for alienated photographer (11/28/2007 02:01:44)
 Vinashin, Czech firm ink deal to outfit ships (03/27/2007 11:50:54)
 The paper industry has targeted production of some 600,000 tons of pulp and 1.4 million tons of paper per year by 2010, the Vietnam Paper Corporation said. (03/15/2006 09:31:11)