[THE KOREA TIMES]
Building an international airport in a third-world country is a challenging task.
It requires dealing with a mercurial government, acquiring enough land and raising financial support.
There is too much uncertainty for any firm to take on without hesitation.
In this sense, the NSRIA or New Siem Reap International Airport Co, led
by two Korean firms ― Lees A&A and its financial partner Cambodia
Airport Co. ― is engaged in what others might call a mission impossible.
But when one listens to its CEO Lee Tae-hwan talk about the project, one
can appreciate how the difficult feat could be translated into reality.
As with any business, however, there is no 100 percent guarantee.
The project is constructing a new international airport 40 kilometers
east of Angkor Wat, the UNESCO-designated world cultural heritage site,
at the cost of $500 million. It is composed of one runway and a terminal
on the site as large as 5 square kilometers, with the capability to
handle 3 million passengers a year.
According to Lee, the new airport is expected to go into operation in
late 2015 with the old adjacent airport to be closed, so there will be
no competition from it.
The airport currently serving the Cambodian capital of Phnom Penh is not
big enough. The runway of the new airport will be the only one in
Cambodia to accommodate Boeing 747 Jumbo jets, making the airport the
country’s first and only gateway to the world.
“We have just been notified that the Cambodian government is launching a
government-wide steering committee,” Lee told The Korea Times during an
interview at his office in southern Seoul Thursday, explaining that it
will serve as an additional commitment from the government to the new
Angkor International Airport. Lee heads to Cambodia next week.
An interesting element is Lee’s approach to the project ― charting a reverse course.
Usually for projects of this scale one finds investors and uses their
money to gain the government’s permission and buy the land.
Instead Lee, a former executive of big Korean construction firms, first
tackled the network he established through his years of experience in
Indochina to first get government approval and obtain the site. About
one fifth of the projected costs, or $20 million, has been self-financed
in the process.
“If we had raised investment first without permission and land, it could
have caused delays and related cost overruns,” Lee said. “Now, we have
cleared much of the uncertainty and are set to go.”
He said that at this stage his firm is attracting investors, both
domestically and overseas, for construction to begin late this year.
“We are talking with multiple potential investors including investment
banks,” Lee said, adding that ongoing negotiations prevent him from
mentioning who they are.
When asked about the business viability of the airport, he was reassuring.
“Already, as soon as we open, we will absorb about 2 million passengers
from the existing airport that will be closed,” Lee said. “About 18
international airlines including European ones, that can’t gain direct
access to Cambodia due to the lack of a big airport, have already
applied for use of the new airport.”
He was also positive about the build-operate-transfer (BOT) of the
project that is usually a length process to retrieve initial investments
and gain profits.
“The period we can be in control is set at 65 years but can be
extended,” he said, believing that, when considering that the new
airport will serve as Cambodia’s only major international airport for a
significant period of time, profitable years will follow shortly
thereafter.
He also pointed out three additional things that are working in their favor.
First, he mentioned the efficiency and professionalism of the Cambodian
public servants. “We deal with Ph.D. holders who studied in the U.S.,
Russia and European countries,” Lee said.
Secondly, Cambodia proves to be neither a banana republic nor led by a
tinpot dictator. “It is a country that has a strong tradition of
adhering to a contract perhaps resulting from the influence of the
French,” the CEO said.
Thirdly, the location of the airport is close enough to easily access
Angkor Wat but is at a sufficient distance away from it so as to protect
its historical integrity. “UNESCO has cleared the site,” he said with a
smile that should be expected on a man who has an unbeatable hand.
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