China bags Cambodian airport contract agreement in blow to French operator

An illustration of Phnom Penh's planned international airport is displayed at the construction site outside the capital. (Nikkei photo)

China hand Cambodian airport terminal agreement in blow to France operator

A main part of Cambodia’s new essential airport terminal in Phnom Penh will be built by a Chinese language state-owned business, leaving the France operator of the capital’s current gateway facing an increasingly uncertain future.

Metallurgical Corporation of China won the 2.67 billion yuan ($405 million) contract to design and construct the airfield for the new airport, whose overall $1.5 billion price tag is being bankrolled almost entirely by Beijing.

The airport is part of the Cambodian government’s strategy to boost tourism, but it comes as other planned projects, including a new resort near Angkor Wat, face questions over their long-term feasibility.

For MCC, the airport contract is an important win. It is the company’s largest single foreign contract this year, surpassing a 1.26 billion yuan contract it was awarded in February to design and build Wanli (Mandai) Rainforest Northern Park in Singapore.

With the pandemic reducing the number of overseas projects undertaken this year, MCC has relied on domestic public works to prop up its books. Local demand helped MCC’s newly signed contracts reach 803.32 billion yuan in the first 10 months of 2020, up 35% versus the same period last year.

The company and its subsidiaries already have several projects in Cambodia, including a controversial coastal development undertaken by Union Development Group.

A close China ally, the country of 16 million has received billions of dollars in public and private Chinese capital, much of it under the banner of President Xi Jinping’s Belt and Road Initiative infrastructure program.

The new Phnom Penh airport — which will cover about 700 hectares and form part of a broader residential and commercial development of about 2,600 hectares — is being overseen by local conglomerate Overseas Cambodia Investment Corp., or OCIC.

Run by Sino-Khmer tycoon Pung Kheav Se, OCIC invested $280 million and holds 90% of the project, while Cambodia’s State Secretariat of Civil Aviation has the staying 10%.

Various other companies included include China State Construction Engineering, another state-owned enterprise that is certainly building the port, and Foster and also Partners of the U.K., which is certainly in charge of the airport’s style.

MCC’s agreement quantities to about 30% of the total spending budget for the new airport terminal, according to a processing made to both the Hong Kong and Shanghai in china share exchanges early last week.

Structure can end up being carried out by its essential part Shanghai in china Baoye Group, and involves building a 4,000 meter-long, 60 meter-wide runway, seeing that good seeing that a taxiway, apron and related services. This is certainly the subsidiary’s initial effective bet for an extensive airfield structure task outdoors Cina. Structure is anticipated to end up being finished by the eliminate of 2022.

The bulk of funding for the new airport comes from China Development Loan company. The Chinese language state-owned plan loan provider provides dedicated $1.1 billion to the task. The mortgage contract with OCIC was agreed upon in January 2018 with Top Li Keqiang and Perfect Minister Hun Sen in attendance.

Prime Minster, Hun Sen said the new airport terminal, place to open up its initial stage in 2023, is component of the government’s technique to boost tourism. As component of this technique, another China-backed airport terminal is definitely getting constructed in Siem Reap Province, house of the country’s well-known Angkorian wats or temples, by significantly its biggest visitor draw.

Yunnan Investment Group, the state-owned investment supply of the southern Chinese provincial government of Yunnan, completing that project under a build-operate-transfer scheme, which will see it revert to government ownership in 55 years.

Costing $880 million, it is usually largely funded by a Chinese consortium led by the China Development Lender and the Export-Import Lender of China, with participation from three commercial banks.

The new airports look increasingly likely to end the major role played by French-owned Cambodia Airports in the country’s aviation sector.

The company, which is 70% owned by France’s Vinci and 30% by Malaysian-Cambodian joint venture Muhibbah Masteron Cambodia, has a monopoly agreement to operate Cambodia’s existing international airports — in Phnom Penh, Siem Reap and Sihanoukville — until 2040.

But its future appears uncertain. Speaking at the site of the new airport in June, Hun Sen told reporters the existing airport in the capital would be kept for domestic flights, air valuables, state delegations and military use.

Sinn Chanserey Vutha, a spokesman for Cambodia’s State Secretariat of Civil Aviation, told Nikkei Asia that “high level” discussions were ongoing with Cambodia Airports about a future role or compensation.

“The negotiations will take a long time. Not one 12 months, or two years. Maybe several years,” he said.

Source: Nikkei

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