The Export-Import Bank of Korea could assist Incheon International Airport Corp to finance Myanmar’s new airport project as the state-run airport operator is currently looking into ways to fund the potential deal worth up to $600 million, said sources familiar with the situation.
IIAC could seek Korea Eximbank, which has a non-binding agreement with IIAC to support the export of its airport operation know-how, to back its consortium through the policy bank’s Economic Development Cooperation Fund or low-interest loans with long-term maturity, sources said.
A consortium led by the operator of the world renowned airport met the requirements to further its build-operate-transfer bid for the development of Myanmar’s Hanthawady International Airport in Yangon. A preferred bidder among seven consortia from Japan, China and Europe is expected to be chosen by June this year.
Yangon’s second airport would be able to handle over 10 million passengers a year, and its size would be equivalent to Gimhae International Airport, one of Korea’s biggest regional airports along with Gimpo and Jeju, one source said.
The new airport would also be one-quarter the size of Korea’s Incheon Airport in terms of annual passenger handling, he added.
The development cost would be around $600 million, and it is highly likely the final potential bidder would have to come up with a majority of funding given Myanmar’s lack of financial resources as it has been recently freed from international sanctions, the sources said.
IIAC has begun to seek out financial institutions such as investment banks and commercial banks to assess their interest in investing in the project should it win the infrastructure bid.
The state-run Korea Development Bank is one of the banks in talks with IIAC for financial advice, local media reported.
The Eximbank said last month that it would increase its support in project financing to help Korean firms win deals in Southeast Asia and other developing markets against China and Japan.
It plans to extend funds worth 21 trillion won for overseas projects, including power plants and water treatment, up from 19 trillion won last year, while setting aside 1.4 trillion won EDCF, up from 1.2 trillion won in 2012.
Another source said that it expected tough competition in Myanmar especially against Japan, which has traditionally been a strong player in Southeast Asia’s infrastructure market.
For instance, Japan has been spending about $1 billion for infrastructure development in Vietnam, compared with Korea’s $200 million in the region. Japan allocates about 65 percent of its official development assistance finances to Southeast Asia, he noted.
The new Yangon airport could be structured as a joint venture between the winning operator and the Myanmar government as the latter is likely to hold a share equivalent to some 36 square-kilometers it offered for the development, an industry source said.
By Park Hyong-ki (
hkp@heraldcorp.com)
