Infrastructure to Vietnam
(Last updated: 28 Aug 2013)
Trends and opportunities
The market
Vietnam requires significant infrastructure investment to meet its development needs and to sustain strong economic growth into the future. According to the Ministry of Planning and Investment (MPI) and the Japan Bank for International Co-operation (JBIC), Vietnam will need around US$154 billion for infrastructure development (principally for transportation, urban development and electricity supply) for the period of 2011-2020.
According to MPI, around 50 per cent of the required budget is to be provided under Vietnam’s State Budget and international Official Development Assistance (ODA) funds, with the remainder to come from private investors, under a Public Private Partnership (PPP) model.
Japan is the largest ODA provider with a total commitment of US$2.16 billion for the 2012-2013 fiscal year. The majority of this funding covers infrastructure development. A report from the Ministry of Planning and Investment's Foreign Investment Agency showed that Japan also remains Vietnam’s largest foreign investor, accounting for US$5.59 billion, or 34.2 per cent of the total Foreign Direct Investment (FDI) registered in the country in 2012.
Decision 71 on ‘Promulgating the Regulation on Pilot Investment in Public-Private Partnership (PPP) Form’, which was issued by the Prime Minister in November 2010, came into effect in January 2011. A pilot program was launched with 26 PPP projects in the water, transportation, energy, and healthcare sectors.
Recently, the multi-industry group Bitexco was selected by the Government and the World Bank as a private investor for the US$757 million Dau Giay – Phan Thiet Expressway Project, the nation's first public-private partnership (PPP) infrastructure project.
Austrade is working closely with key government, aid and industry stakeholders, including AusAID, on targeted pilot PPP projects, and the introduction of relevant Australian expertise at the early stage of these projects, including technical assistance, design, consultancy, and Engineering, Procurement and Construction (EPC).
Opportunities
The projected growth in construction and related services includes transportation (expressways, metro/monorail), airport and urban development, and industrial and residential waste treatment). The increasing adoption of Build Operate Transfer (BOT) and PPP models, and the established track record and reputation of Australian infrastructure expertise, technology, equipment and services offer significant opportunities for Australian businesses in the medium to long term, especially in the following areas:
- Architecture
- Consultancy services and Technical Assistance
- Engineering services
- Concept design
- Construction management
- Project management
Other areas of opportunity include: supply of metallic materials (aluminium, steel sheets), high-end architectural interior products and designs, fire safety and building materials (energy efficient, HVAC, lighting and Hi-end building materials).
Tariffs, regulations and customs
Imported construction materials are subject to duties, ranging from 5 per cent to 35 per cent. As a general rule, higher tariffs are applied to imported products that compete against locally produced products.
Decree No. 15/2013/ND-CP, which was issued by the Government on 6 February 2013 and entered into force on 15 April 2013, covers quality control of construction work, including survey, design, construction and inspection, safety management, warranties and licencing. This Decree contributes to tighter management of the construction investment process and strengthens the role of Government Project Management Units in ensuring and improving the quality of the infrastructure and effective use of capital investment.
Marketing your products and services
Market entry
Australian businesses preparing to enter the Vietnamese market must plan strategically, and be persistent and consistent with face to face follow-ups. It can take up to one or two years to make a successful sale into this market.
To enter or expand in Vietnam, depending on the nature of the business, Australian companies may directly deal with project developers or indirectly through the appointment of an agent or distributor. In order to be successful, Australian suppliers are highly encouraged to visit the market and spend time assessing market needs, sales potential and possible distributors for their products. It is important to conduct a detailed analysis of the market prior to entry.
Firms seeking a direct presence in Vietnam can do so by establishing a representation office, branch or Foreign Investment Project.
The infrastructure sector is a highly competitive market. Many international architecture and construction services firms already have a foothold in Vietnam. Australian products and services can compete, owing to the expertise and reputation for quality among Australian suppliers, and the increasing demand among developers for new, innovative technologies and services.
Product demonstration and educational seminars on the latest technology, services, and products in line with market demand can be a positive way to build brand recognition amongst potential end-users. An agent/distributor can assist in contacting developers, potential buyers/users, provide after sales service and organise product demonstrations. Providing technical support to your local partner will also signal your commitment to the market.
Links and industry contacts
Government, business and trade resources for Vietnam
Asian Development Bank – www.adb.org/VietNam/
Ministry of Construction – www.moc.gov.vn
Ministry of Planning and Investment – www.mpi.gov.vn
Ministry of Transport – www.mt.gov.vn
The World Bank Group – www.worldbank.org.vn
Contact details
The Australian Trade Commission – Austrade – is the Australian Government’s trade, investment and education promotion agency.
Through a global network of offices, Austrade assists Australian companies to grow their international business, attracts productive foreign direct investment into Australia and promotes Australia’s education sector internationally.
For more information on how Austrade can assist you, contact us on:
Australia ph: 13 28 78 | Email: info@austrade.gov.au
A list of Austrade offices (in alphabetical order of country) is also available.