The state-run Airports Corporation of Vietnam (ACV) will use its own fund for the three-year project, which will increase the airport capacity by 20 million passengers annually, the Ministry of Planning and Investment said in a recent report to the government.

The ministry has expressed its support from the proposal but asked ACV to explain its cost calculations.

The terminal will cover 100,000 square meters, and ACV will build more aircraft aprons, a two-lane overhead path, a five-lane viaduct in front of the terminal and a multi-storey car park.

The expansion is needed because the Tan Son Nhat airport, the largest in Vietnam, is set to serve 45 million passengers in 2025, while the existing capacity of its two terminals is 28 million passengers a year, said ACV, which manages 21 state-owned airports.

ACV chairman Lai Xuan Thanh said that without an expansion at Tan Son Nhat, the aviation market could "freeze" some time in the future due to overload.

Vietnam has made plans to upgrade existing airports and construct new ones amidst rising air travel demand.

Last year, the country’s 21 state-run airports served 103.5 million passengers, up 11 percent year-on-year, and the figure is set to rise to 112 million this year, according to ACV.