Water Management to Vietnam
Trends and opportunities
Vietnam’s annual economic growth rate was around 5.5 per cent in the first six months of 2016. With a population of almost 95 million (with 33.6 per cent of the population residing in urban regions), this figure is expected to increase sharply in the coming decade (Source: Worldometers, 2017). The country aims to become an industrialised nation by 2020 but faces challenges as a growing population, rapid urbanisation and industrialisation are putting more pressure on the water and wastewater management of the country.
According to Media Analytics Ltd., the demand for water for both residential and industrial purposes has not been fully met in Vietnam since the 2000s because of inadequate, ageing and inefficient water and wastewater infrastructure. Due to the limited expansion of water supply systems in urban areas, there is a lack of water connections in some peri-urban regions and smaller towns. Only 10 per cent of city households’ wastewater is treated.
Equal efforts have been made to make water utilities more efficient and profitable, resulting in water utilities organised either as publically-owned one member Limited Liability Companies (LLCs) or as Joint Stock Companies (JSC).
According to Business Monitor International, most of the country's large-scale water utility projects are located near the main cities, Hanoi and Ho Chi Minh City. Vietnam has also recognised the need to improve its water infrastructure, and we have seen Vietnam offer several large-scale water utility projects (mainly water treatment facilities) under a PPP framework. According to the Vietnam Ministry of Construction, there are around 15 large-scale urban water supply projects worth US$500 million that are in need of investment across Vietnam.
In addition, there is also a significant deficit in wastewater treatment facilities. Vietnam has an ambitious plan to upgrade its wastewater treatment capacity. According to the Orientation for Development of Water Sewage and Drainage Systems in Vietnam’s Urban Centres and Industrial Parks Leading to 2025, and Vision for 2050, by 2025 all urban cities will have centralised municipal wastewater treatment and collection systems; 70-80 per cent of municipal wastewater will be collected and treated properly and all traditional handicraft villages will have centralised or decentralised wastewater treatment facilities. With Vietnam set to take a tougher stance on pollution, this could prompt companies to develop the necessary wastewater treatment facilities.
Opportunities in the water sector include:
- urban and industrial water: system design, asset management, sustainable cities,recycling water and wastewater especially in emerging industrial zones
- agriculture: irrigation technology, surface and groundwater management, leakage control, smart systems, water accounting and flow management
- mining: mine planning, aquifer management, mine water quality, wastewater treatment and monitoring and testing
- improvement of municipal water and wastewater treatment facilities through new constructions and by retrofitting treatment plants.
There is a high level of competition especially when it comes to foreign funded projects. Competition primarily comes from companies from the following nations:
Competition also come from local firms, which are cost-competitive and mainly undertake work for utilities and municipal projects.
The Engineering Procurement Construction (EPC) market is competitive, without single enterprises taking a dominant role. Leading state owned enterprises (SOEs), which have undertaken (waste) water treatment plants, include Vietnam Water and Environment Construction Investment Cooperation (VIWASEEN) and the Water and Environment Joint Stock Company (WACO), are gradually privatising and opening up the market to the private sector.
Private operators play a limited role in the municipal water sector and have not yet made any investments in this area. However, their role may increase under current pilot public–private partnership (PPP) projects.
Tariffs, regulations and customs
The national strategy for water resources towards the year 2020, as indicated in Decision No. 81/2006/QD-TTg, announces objectives, guidelines and implementation measures related to the protection, exploitation, use and development of water resources.
Decree No. 80/2014/ND-CP has come into effect to allow full cost recovery, instead of the low fee structure (as low as 10 per cent) and the remainder is subsidised by municipalities.
Marketing your products and services
Australian companies need to keep regular contact with key market players and identify projects at an early stage. In many cases, local partners or representation and a sales resource in-market are needed.
Absence of strong regulations and policies for water supply and sanitation, strong competition as well as a lack of transparency in the bidding and procurement process are popular constraints to ease of doing business in Vietnam. Language can also be a barrier to market entry.
Links and industry contacts
Government, business and trade
The Government of Vietnam
The Ministry of Agriculture and Rural Development
The Ministry of Construction
The Ministry of Finance
The Ministry of Health
The Ministry of Natural Resources and Environment
The Ministry of Planning and Investment
The Vietnam Water Supply and Sewerage Association
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