THE keystone to Pochentong airport's $100m international terminal will be laid Feb

14 - Valentine's Day - but bankers who have just loaned $38m for the upgrade are

taking out insurance in case Cambodian politics disrupts their honeymoon.

The ten-year syndicated loan was awarded by five international banks to Societe Concessionaire

de l'Aeroport (SCA), the Franco-Malaysian civil aviation engineering firm - and the

first joint venture of its kind to be set up in a third country - at an official

signing in Phnom Penh on Jan 27.

Bankers representing May-bank Group, the Kuala Lumpur-based lead arranger of the

loan at $19m, nevertheless admitted that volatile coalition government politics was

a cause of concern for doing business in Cambodia.

"We have agreed in principle to grant the loan, but we certainly hope that things

here will be all right given the current political situation," said Dato Mohammed

Basir Ahmad, chairman of Maybank.

In a recent letter to the co-premiers, Dr Mahathir Mohammad, the prime minister of

Malaysia - the largest foreign investor in Cambodia - warned both Prince Norodom

Ranariddh and Hun Sen that political stability was crucial for the soundness of Malaysian

investments here.

To protect their money against civil war, government expropriation, or breach of

contract the five lenders - Aseambankers Malaysia Berhad, Maybank, Sime International,

Banque Indosuez, and Credit Commercial de France - will be covered for political

risk through Malaysian Export Credit Insurance Bhd and COFACE, the French insurers.

As for the recipients of the loan, borrowers expressed confidence that the Pochentong

upgrade would go smoothly despite domestic politics, but they were also careful to

point out that they are taking a prudent approach to the airport's development.

Marc Beatrix, vice-president of overseas concessions with GTM Entrepose - the French

civil engineering firm that has a 70 percent stake in SCA - stressed that the immediate

aim is to accommodate at least one million passengers by 2000.

Phase I of the new terminal will be designed to make room for expansion facilities

for up to 5 million passengers over the long term, he noted.

There are nine other phases to the upgrade - including the construction of a 3600m-long

runway - but for the time being the builders are concentrating on the first.

"Our commitment is to adapt airport facilities according to the demand,"

Beatrix said. "What is very important is that we don't go too slow, but we mustn't

go too quickly either."

"There is nothing as costly as doing something too big for the present requirements,"

he added. "If we were to build a 2 million passenger airport today, we would

be ruined."

In 1996, according to Renzo Sacchi, SCA's managing director, 630,000 international

passengers passed in-and-out of Pochentong, a flow that is supposed to swell by between

20-25 percent annually till 2000.

When phase I is completed in two-and-a-half years, wide-bodied aircraft, such as

Boeing 747-400s and Airbus 340s, will be able to use Pochentong provided that they

are flying at medium-range, he said.

In 1997, sources added, medium-haul B-767s and A-310s will be taking-off and landing

there.