Transport Infrastructure to Vietnam
Trends and opportunities
The Asia Pacific region has reconfirmed its driving force position for the
global economic dynamism in the coming years. However, a substantial lack
of infrastructure in many countries in the region has made trade
competitiveness much less efficient, and the economic growth less
sustainable. Vietnam is not an exception, for both of its infrastructure
quality and quantity are far below the development requirements.
Due to severe shortage in logistics and shortages of electricity, Vietnam
has a strong project pipeline in power and transport. The Vietnamese
Government is trying to draw investment from the foreign private sector to
attract not only equity but also specialised technical knowledge into these
projects. Ongoing regulatory reforms and privatisation of state-owned
enterprises encourage the private sector to maintain and increase their
existing level of investment in infrastructure.
Vietnam – Overall ranking in Infrastructure: 79/ 144 countries
Quality of overall infrastructure
Quality of roads
Quality of railroad infrastructure
Quality of port infrastructure
Quality of air transport infrastructure
World Economic Forum, the Global Competitiveness Report 2016-2017
Between 2016 and 2020, Vietnam will need an investment of approximately
US$ 38 billion per annum for various socio-economic infrastructure projects.
These projects are mostly in transport and power infrastructure,
irrigation, water, education and healthcare. Transport infrastructure alone
will require US$ 120 billion for the whole period. Conventional funding
sources from state budget, and official development assistance (ODA) from
bilateral and multi-lateral donors and government bonds can cover just some
50 per cent of the total need. Local capital market as well as foreign
private investors are expected to step up and make their contribution in
infrastructure investment and development under Public Private Partnership
Rapid urbanisation in Vietnam is a strong growth driver for the development
of the transport and utilities sector. The rising population in major
cities in recent years has strained and exceeded capacity of the existing
connectivity networks and utilities systems. With 50 per cent of Vietnam’s
population expected to be living in cities, Hanoi and Ho Chi Minh are
building rapid transit systems exceeding US$ 22 billion in the hope of
reducing private vehicle ownership and improving air quality.
Various expressway projects are planned and underway to improve
connectivity within major cities. Similar to transport infrastructure,
urban utilities infrastructure is also struggling to cope with the rapid
rate of urbanisation coupled with effects of climate change. Both Hanoi and
Ho Chi Minh cities have recently announced multi-billion dollar projects to
build and upgrade drainage systems, pumping station and waste treatment
plans over the next decade. The nature of these projects is highly capital-intensive and technologically complex, requiring participation from
experienced international firms.
There are 44 planed PPP projects with total investment value worth up to
US$ 120 billion in the road and power sectors. However, the government lacks
fiscal capacity to meet financing requirements for large infrastructure
projects, Vietnam is gradually liberalising various industries and
embracing PPP through decisions in 2014 and 2015 to lift restrictions on
foreign real estate investments and ownership. This effort will help
improve the attractiveness of Vietnam for PPPs.
Despite a challenging business environment, foreign firms are interested.
According to Business Monitor International, half of all ongoing projects
involve a foreign partner. The government has been making efforts to break
up state monopolies and privatise SOEs. An example is in the power market -
after the government started allowing independent producers to sell
electricity to state operator EVN in 2012, IPPs now control 40 per cent of
the country's installed capacity. Similar efforts are underway to introduce
private-sector participation in the roads and rail sectors.
Austrade is working closely with key government, aid and industry
stakeholders, including DFAT/Australia Aid, to introduce relevant
Australian expertise at the early stage of these projects, including
technical assistance, design, consultancy and EPC.
It is expected that the transport infrastructure industry value alone will
grow by an average of 4.5 per cent year-on-year between 2017 and 2025
(Source: Business Monitor, Infrastructure Report Vietnam Quarter 3,
The projected growth in construction and related services in transportation
airport and urban development
industrial and residential waste treatment
The increasing adoption of Build Operate Transfer (BOT) and PPP models and
the track record and reputation of Australian infrastructure expertise,
technology, equipment and services offer significant opportunities for
businesses in the medium to long term, especially in:
consultancy services and technical assistance
Other areas of opportunity also 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 high end building materials).
Tariffs, regulations and customs
Normal tariffs for imported construction materials are subject to duties,
ranging from 5 to 35 per cent. As a general rule, higher tariffs are
applied to imported products that compete against locally produced
ASEAN-Australia-New Zealand Free Trade Agreement
will eliminate tariffs on 96 per cent of Australia’s current exports to
ASEAN nations by 2020 and may benefit certain companies. Currently, only 67
per cent of Australia’s exports to the region are tariff-free.
Marketing your products and services
Australian businesses preparing to enter the 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.
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
representative office, branch or foreign investment project.
The infrastructure sector is a highly competitive market and many
international architecture and construction services firms have a foothold
in Vietnam. However, Australian products and services can compete, owing to
the expertise and reputation for quality among 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 among potential end-users. An appropriate
agent/distributor can assist in contacting developers, potential
buyers/users, provide after sales service as well as organising 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
Asian Development Bank
Ministry of Construction
Ministry of Planning and Investment
Ministry of Transport
The World Bank Group
Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.
The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:
- develop international markets
- win productive foreign direct investment
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- strengthen Australia's tourism industry
- seek consular and passport services.
Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.
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