Kimihiro Maeta: “Japanese companies are not interested in investing in the new airport”

Our newspaper was recently informed that the ground-breaking ceremony for the new international airport of Ulaanbaatar was held Monday at the Khushigt Valley in the Tuv Province, 54km from Ulaanbaatar. The soft loan agreement of 28.8 JPY to build the new international airport was made between the Mongolian and Japanese government in 2008. 

Kimihiro Maeta, the official delegation of joint partnership for the project to build the new international airport spoke with Udriin Sonin Newspaper regarding the details of the project.

-How is the construction work going to build the new international airport in Khushigt Valley? Quite a long time has passed since the project come into effect.

-The work on the draft diagram on the new airport started in August 2009 and was finished in December of 2011. As soon as the creation of diagram was finished, a pre-audition was carried out among executive companies. If we don’t conduct a pre-audition, it is risky to choose a company that won’t reach our demands. Only one company attended the pre-audition and then the tender was announced straight away. 

At that particular moment, no company attended the tender. In other words, there wasn’t any competition and the pre-audition was canceled. In July, seven companies delivered the tender materials. Since the construction work of the new airport is pretty large, the tender was announced in two separate packages in order to catch the interest of participating companies. The tender was announced in two parts: the first package included bridge and road construction and second package covered building construction. The first package tender was announced last November. The second package tender announced in December has been ongoing. The companies who bought the material are developing the tender materials. At the moment nothing has been built in Khushigt Valley.

-When will the construction work for the new airport start? When it will go into use according to the project plan?

-We are preparing the tender materials. The financial rating should be made after opening the tender. If we work in accordance with that plan, the construction work will begin by the spring of 2013 and will be finished by 2017. 

-Can you please give detailed information about the building and its capacity?

-Around 900,000 people pass Chinggis Khaan International Airport annually. The new airport in Khushigt Valley is estimated to be able to service 1100 passengers hourly, and will have a facility capable of servicing 1.3 to 1.5 million people annually, have parking for 825 cars, and a 3600m long runway. It will be built in the Tuv Province, 54km from Ulaanbaatar and is capable of receiving twenty planes at the same time. 

-How big is new airport building compared with other international airports in Asia?

-It is not that big to compared with many Asian airports. For instance, the newly built airport in Thailand serves to 100 million visitors annually. Thirty to fifty million passengers go through the airport in Narita, Japan annually. A runway of 3600m is enough long. So it is hard to compare with large Asian international airports. Mongolia’s population is not high. However, foreign and domestic flights will operate at a loss if we build a giant airport as Mongolia’s market is still small. The territory of the current Chinggis Khaan International Airport is twenty-one thousand square meters while the territory of the new airport in Khushigt Valley will be 31 thousand square meters. 

-Will Mongolian companies take part in the new airport creation? How many job vacancies will be created once the airport construction finishes?

-It is obvious that all the forking force in the constriction will be brought from Japan. We will hire Mongolian workers, but the total amount of workers will depend on the companies who are attending the tender. I can’t say the exact number of total workers as we haven’t heard the opinions of the companies who are taking part in the airport construction. Some people with required professions will be invited from Japan, China and the South Korea. It is hard to tell how many job vacancies will be created once the airport goes into use. I think all the staff in the current Chinggis Khaan Airport will move to the new international airport. It will be difficult for airport workers to go to work early in the morning and come home late night, as the airport is located quite far from the city. A satellite city will be created along with the new international airport in Khushigt Valley. 

-What happened to building a highway from city to the new airport?

-When the agreement was discussed between two countries, it was negotiated that Mongolian government will be in charge of building the highway from Ulaanbaatar to Khushigt Valley. According to the information we received, the draft work of highway is finished. We have information that tender is announced to choose the executive company. At the moment Khushigt Valley is empty valley, nothing is built in there. Mongolian government is in charge of providing the power to built airport. So it means power will be traced from Nalaikh district or Ulaanbaatar. Moreover, Mongolian part is in charge of communication and internet network, too. 

-Are there any difficulties in terms of the project?

-Well the trouble is, only few Japanese executive companies have expressed interest in taking part in the new airport construction work. 

-Why have Japanese companies expressed so little interest?

-Such a large scale project hasn’t been previously developed in Mongolia. Furthermore, Japanese investors think it is risky to take part in this project considering that vested Japanese companies haven’t operated in Mongolia. On the other hand, Japanese companies should have assistant executives. I think they worry that Mongolian construction companies are not experienced enough yet to choose as an assistant executive. 

Also, the Mongolian winter lasts a long time. Construction work stops during winter. Although construction stops during winter, executive companies should keep the working force and should maintain the equipments. Japanese companies estimate that certain amount of money will be spent on the above. I think because of those reasons, they are not interested in taking part in this project. Alternatively, on March 15, 2011 Japan suffered from the natural disaster. At the moment that disaster affected area is being reconstructed and Japan is mobilizing working forces on that area. That’s why there are only a few companies to attend the new airport construction project.

-What should be done to attract the interest of Japanese companies?

-At the moment seven companies have bought the bid that was advertised. The construction of the new airport will wait until it attracts more companies. We organized a project introduction meeting in Tokyo two times in order to attract the interest of Japanese companies to attend the project. In other words, we begged them to attend the tender. 

-How much is the amount of investment?

-The whole project is funded by the soft loan of 28.8 billion JPY from the Japanese government. The soft loan agreement was signed between Japanese and Mongolian government in 2008. The aid and soft loan amount granted from Japan to Mongolia was relatively low, from 1 to 3 billion JPY. At this time, Japan was going to make an investment in large construction.

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