Government plans one of world’s biggest airports in Kandal

The Cambodian government has approved plans to build one of the world’s largest airports in Kandal province, though key actors have yet to work out the details and one economist noted yesterday that the current proposal may be short-sighted.

A document from the Council of Ministers, dated December 21, approves an investment proposal from Cambodia Airport Investment Co Ltd to build a $1.5 billion, 2,600-hectare airport in Kandal province’s Kandal Steung district, about 30 kilometres south of Phnom Penh.

Cambodia Airport Investment is a joint venture between local conglomerate Overseas Cambodia Investment Corporation (OCIC) and the Cambodian government’s State Secretariat of Civil Aviation (SSCA), according to the document. Last Thursday, OCIC signed a “cooperation framework agreement” for a new Phnom Penh airport with the state-run China Development Bank.

A 2,600-hectare airport would be the ninth-largest airport in the world, putting it just below the US’s Chicago O’Hare (2,610 hectares) and well above China’s Beijing Capital International (2,330 hectares). The current Phnom Penh International Airport is about 400 hectares.

According to the document, OCIC will invest $280 million, while unspecified “foreign banks” will provide $1.1 billion in funding. OCIC will own 90 percent of the shares in the completed airport, with the rest going to SSCA.

But the project is just getting off the ground, according to OCIC and government officials. Sin Chansereyvutha, a spokesman for the SSCA, said yesterday that there was no detailed plan or agreement, and the aviation authority had not even met with OCIC to discuss the project yet.

“The project will need a long time [to materialise] because we need to negotiate on many criteria, on the frameworks of the agreement,” Chansereyvutha said, adding that the government would also have to find a way to deal with Cambodia Airports, the company that currently holds a concession to operate Phnom Penh International Airport until 2040.

Cambodia Airports, which is majority-owned by France’s Vinci Group, submitted plans to the government last year to expand both the Phnom Penh and Siem Reap airports to accommodate future growth in traffic, according to Khek Norinda, the company’s PR and communications director.

But expansion plans have been halted in the past by government officials, who have opted instead to build new airports, financed by Chinese banks, in both towns.

Norinda declined to answer questions yesterday about Cambodia Airports’s concession agreement or about whether negotiations were ongoing between the company and the Cambodian government, instead replying with a statement that said “dialogue through a mutual respect of the agreement made between both parties is critical for the future development of the airports, their successes and the country’s development. Our teams are always ready to engage with Cambodian authorities.”

Another potential roadblock to the new airport project is its questionable long-term viability, according to Nget Chou, a senior consultant at Emerging Markets Consulting.

Chou said yesterday that he was suspicious a project requiring so much capital would materialise, and even if it did, its proximity to Phnom Penh would not accommodate the long-term trend of rapid urban expansion.

“The suggested location seems like it does not reflect long-term planning, because in the next 10 years, that place could become [as crowded] as the current existing airport,” he said, adding that an airport further away, connected with an expressway, would be a better option.

Brendan Sobie, Southeast Asia analyst at the Centre for Aviation, said that the size of the airport was less important than other factors, such as the number of runways and terminals.

“A lot of the details are not yet known but it seems there is movement to meeting the long term growth needs of Cambodia’s aviation market,” Sobie said in an email yesterday. “Cambodia has been one of the fastest growing markets in Asia – and the world – over the last several years and there is potential for more rapid growth which can only be fully realised with a new airport.”

OCIC is owned by Pung Khiev Se, the powerful tycoon whose company also developed the capital’s Koh Pich. Contacted yesterday, Khiev Se’s assistant, who declined to give her name, said that the project is still in the preliminary stages, and said she could not give out the exact location of the new airport.

“Regarding the actual location, I cannot confirm yet,” she said, declining to verify the location listed on the Council of Ministers document. “It could change and is flexible based on actual circumstances,” she said.

Despite that, the assistant was confident that construction on the new airport would begin sometime in the next five years.