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Vietnam plans to nationalise civilian airports operator

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Vietnam plans to nationalise civilian airports operator

 

HANOI (Reuters) - Vietnam is considering nationalising Airports Corporation of Vietnam <ACV.HNO>, a move that economists say may hurt investor sentiment and hamper the Southeast Asian country's privatisation drive.

 

The Ministry of Transport has sent a proposal to Prime Minister Nguyen Xuan Phuc to buy shares in the company, which operates the country's civilian airports, from private investors, Deputy Minister of Transport Nguyen Ngoc Dong said late on Wednesday.

 

The move is aimed at "ensuring the highest security and defence conditions", Dong said without elaborating further in a statement posted on the government website.

 

The proposal comes as Vietnam has been seeking to speed up its privatisation of state firms in recent years to improve their performance and to fill its coffers.

 

The government said last month it would sell stakes in 93 state-owned enterprises, including the country's largest bank by assets - Agribank, by the end of 2020.

 

The government sold tiny stakes in Airports Corporation of Vietnam to private investors in 2016 as part of that privatisation process.

 

The government currently owns 95.4% of the company while several foreign investment funds, such as Dragon Capital, Korea Investment Management and RBC Global Asset Management, hold the remainder, according to Refinitiv Eikon data.

 

The company has a market capitalisation of 173.74 trillion dong ($7.49 billion) as of Thursday, potentially valuing the stakes of private investors at $344.54 million.

 

"We would work out plans to raise funds for purchasing the stake if the proposal is approved," Dong said.

 

Dong and the Airports Corporation of Vietnam didn't immediately reply to Reuters' emails seeking comment.

 

Hanoi-based economist Pham Chi Lan, a former government economic adviser, said the move would have an adverse impact on investor sentiment.

 

"It would cause concerns among foreign and domestic investors, who have already invested and have plans to invest in Vietnam," Lan told Reuters on phone.

 

"Instead, the government should sell bigger stakes in state-owned enterprises to private investors to make the firms more competitive and efficient."

 

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-- © Copyright Reuters 2019-09-05

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This may reflect highly-focused strategy on the part of the government. It is exactly what I would do in their position.

As Thailand jettisons the Western tourism industry it built up organically over the past half century, there is a real opportunity for Vietnam to capture a substantial portion of it. To do this, they need to minimize the level of opportunistic nonsense that visitors encounter when they first arrive, and this means they have to control the entire airport environment - we all know how easy it is for the various services offered to new arrivals to slip over into outright scams. That first impression often taints the entire trip.

For example, some airports in the Philippines, such as Clark Airport in Angeles city, are dominated by taxi mafia who violently keep out other taxi services and overcharge outrageously. Tighter control in Davao Airport and a properly regulated taxi service provides a far more positive first impression of that city.

 

As it stands, Vietnamese airports are pretty good - for instance, you can get Grab to pick you up at the HCMC airport without any problems, which is not possible at Chiang Mai airport - but there is certainly some nonsense with taxis in the smaller Vietnamese airports that are so important for driving growth in less developed regions. Even getting a reasonable quote from a taxi driver is terrifying for a new arrival because, in the ridiculous Vietnamese currency, everything is in hundreds of thousands.

 

Many Westerners living in Thailand have not much experience in the neighboring countries, or had rough experiences when they tried them years ago. In the past, Thailand was notable as an easy place to stay. For many now becoming worn down by Thai bureaucracy and the unmistakable sense that we are no longer welcome, a safe, well-managed experience in Vietnam could be a very pleasant surprise.

Taking control of the entire airport experience could be the sort of focused government intervention that gives Vietnam a big win over the next decade or so.

 

Edited by donnacha
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12 minutes ago, donnacha said:

s it stands, Vietnamese airports are pretty good - for instance, you can get Grab to pick you up at the HCMC airport without any problems, which is not possible at Chiang Mai airport - but there is certainly some nonsense with taxis in the smaller Vietnamese airports that are so important for driving growth in less developed regions.

Never been to a Viet airport that didn't have a bus service into the town centre.

Hanoi is most expensive at $2, HCMC $1, and Da Nang 25c.

Edited by BritManToo

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Just now, BritManToo said:

Never been to a Viet airport that didn't have a bus service.


Smaller regional airports, favored by budget airlines for short routes from Thailand, do not always have bus services that align with the times when planes arrive. You could arrive very late. I have experienced this first-hand several times.

I agree that the regular bus service from the airport in HCMC is excellent.

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16 minutes ago, BritManToo said:

Never been to a Viet airport that didn't have a bus service into the town centre.

Hanoi is most expensive at $2, HCMC $1, and Da Nang 25c.

Done 5 minutes research before I arrived in Hanoi. Immigration, 10 minutes, city bus was wIting in front, showed the English speaking bus attendant where I was staying.  ( I knew it was close to the route), she stopped the bus, pointed me in the right direction, map app, pointed me the way, 10 minute walk with a few 50 cent beers along the way. $1 Bon mi sandwich, arrived at the hotel. Easy. No scams.

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All the major airports - facilities and operations - in Australia are owned and run by businesses (although I believe the Australian government retains ownership of the land). The government sold them off some decades ago.  (Small city/town airports were transferred to local governments).  This has not adversely impacted on airport operations. On the contrary, it has encouraged greater investment and much greater responsiveness to airlines, businesses and passenger demands than would have occurred under a central government bureaucracy.  So I am not a believer in the need for governments to own and operate airports so long as there are clear policies established to ensure the airports are retained and operated well for the overall benefit of the community.

Edited by Biikqth

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56 minutes ago, BritManToo said:

Hanoi is most expensive at $2, HCMC $1, and Da Nang 25c.


Sorry, I didn't see your edit.

Yeah, buses tend to be cheap, that is true. They also tend to have schedules.

No one landing in any country for the first time is worried about spending $5, $10, $20 dollars. What they are deeply worried about is getting hustled out of $50, $100, $200 dollars because they land in an airport after the buses have finished for the night. That happens.

Now, again, I absolutely agree that large airports sometimes have 24 hour bus routes in which case, hooray, problem solved! Unfortunately, not all airports do, and that is when the feeding frenzy can occur.

In the big scheme of things, getting hustled out of a hundred dollars or whatever is no big deal, it is almost certainly less than you paid for your air ticket, it should not be something that ruins your whole trip. Sadly, for most people, it feels like a punch in the stomach and, when they tell their friends about it, or share their experience on social media, it does untold damage to a country's reputation.

So, yeah, Vietnam is probably smart to focus on completely controlling that pivotal part of the visitor experience, in the interests of growing the economy as a whole.

 

Edited by donnacha

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40 minutes ago, Biikqth said:

So I am not a believer in the need for governments to own and operate airports so long as there are clear policies established to ensure the airports are retained and operated well for the overall benefit of the community.


I agree with the principle but, as someone familiar with Asia, do you recognize that the business culture in some countries is insufficiently developed to reliably act as a replacement for government control?

I mean, I can think of specific instances, such as policing, in which even the government is insufficiently developed to operate services well for the overall benefit of the community 😄

In general, if the business culture of a country tendx to be chaotic and prone to corruption, privatizing certain things has predictably poor results. For example, rail privatization in the UK has been an unmitigated clusterf*ck, but worked out well in the Netherlands.

Different countries become ready for different stages at different times. Vietnam business culture is still relatively undeveloped. That is fine for hotels, shops, restaurants etc, but it might make sense, for the time being at least, for certain key parts of the visitor experience to be run according to strategic rather than immediate profit goals. 

 

Edited by donnacha

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donnacha, my view is that in too many countries around the world, the very worst corruption and incompetence occurs with and by governments, both elected members and bureaucrats. While private enterprise certainly can be corrupt and incompetent, if there are real business competitors, the extent of corruption can be modified and there is pressure to improve efficiencies. Monopolies, whether by business and certainly by unelected governments controlling the media, have few or no limitations in these areas.

I would have thought the government of Vietnam could have retained control of the airports by keeping a majority of the shares (if a company arrangement) or by leasing the airport under strict guidelines. Perhaps the government officials see a likely massive increase in passenger numbers in the future and want to keep their hands on all the funds. 

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1 hour ago, donnacha said:

n the big scheme of things, getting hustled out of a hundred dollars or whatever is no big deal, it is almost certainly less than you paid for your air ticket, it should not be something that ruins your whole trip. Sadly, for most people, it feels like a punch in the stomach and, when they tell their friends about it, or share their experience on social media, it does untold damage to a country's reputation.

I hardly ever pay more than $100 for flights.

My last trip CNX to Da Nang return (July) was 2,500bht.

My next trip CNX to Hanoi return (October) was 2,900bht.

Hotel rooms $10-$15/night, free VISA waiver on entry, Vietnam is cheap as chips!

 

And I make sure any flights I take arrive well before 5pm.

Arriving late at night is just poor planning.

Edited by BritManToo
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19 minutes ago, BritManToo said:

And I make sure any flights I take arrive well before 5pm.

Arriving late at night is just poor planning.


Ah, perhaps you are based in Bangkok where there are lots of flight options to lots of destinations. That's excellent.

In many regional airports, however, Vietnamese budget airlines run one daily flight to [some small Thai airport], and then the same plane flies back to [some small Viet airport], so that the crew end the day back in their home city. This means that the return leg leaves late and arrives late.

You're British, you must surely be familiar with some budget airlines having inconvenient departure or arrival times.

Again, I'm pleased that you have the option, on the routes you fly, to leave in sufficient time to catch a public bus when you arrive. Smashing. My post is primarily those people who are might not have been as smart as you in deciding to live close to major airports.
 

 

Edited by donnacha

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