Environmental Technologies Industries
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Market Research

Pollution Control in Vietnam
Pollution Control Equipment FY98 - Vietnam

1996
1997
1998
Total Market Size
180
220
280
Total Local Production
4
5
8
Total Exports
0
0
0
Total Imports
176
215
272
Imports From The U.S.
12
21
35
The above statistics are in $millions and are unofficial estimates.

Vietnam is one of the last major untapped markets for equipment and services to protect the environment. Years of delay and neglect in addressing pollution problems has created a critical situation for the country. Recently, Vietnam has shifted its focus from reforestation efforts to water quality as the most pressing problem facing the environment.

In late 1993, Vietnam adopted the country's first Law on Environment Protection (LEP). The law is seen as not only a framework for addressing the many issues relating to the environment and pollution abatement, but also a mandate by the government for municipalities and industry to finally focus on the problems and find solutions.

Today, Vietnam is facing a combination of environmental issues, including water, air and solid waste pollution. The contributing factors include high population growth and urbanization, rising incomes, and accelerating industrialization. Urban migration has now pushed the water supply and treatment systems beyond their capacities. Dilapidated, obsolete equipment and technology have significantly reduced the quality of environmental public services.

With a population base of over 77 million and a predicted population of 100 million by 2020, government policy planning is beginning to emphasize the importance of more forcefully addressing the damaging impact on the public caused by environmental degradation. Vietnam is now successfully seeking international aid and assistance in dealing with the rising levels of pollution.

In terms of seeking bilateral and multilateral funding, both the government and donor community have prioritized the various sub-sectors requiring environmental management and control.

Water quality is now the major emphasis because of the direct correlation between disease and mortality rates linked to limited fresh water supply and poor sanitation. Today, 20% of child deaths in Vietnam are a result of dysentery from water-borne sources.

The Vietnamese government has announced a list of its priority water resource projects totaling $2.5 billion. These projects include Urban Water Supply ($872m), Urban Drainage ($890m), Irrigation, Drainage and Flood Control ($653m), Waterways ($116m) and, finally, Rural Water Supply ($30m).

Externally supported (bilateral and multilateral government aid) investment in water resources is expected to approach $1 billion between 1996 and 2000. The 1996 market for environmental equipment and services was estimated to be $180 million, growing at 30% per year for the next several years. In 1996, U.S. firms have 7% of the market, with this share expected to increase to 10% this year and continue to grow in the following years. Of the $1 billion earmarked for water resource projects, over $570 million has already been approved by the Asian Development Bank (ADB), the Overseas Economic Cooperation Fund of Japan (OECF), the World Bank (WB), and the United Nations Development Program (UNDP).

The first major ODA water-related project, the ADB Provincial Towns Water Supply and Sanitation I-III project, was initiated earlier this year. The consulting component of the $82 million Phase I, Ho Chi Minh City, project was awarded to a French and American consortium. International environmental equipment and service providers are now positioning themselves to participate in this and subsequent projects.

While the bidding for ODA-funded wastewater treatment projects is 3-4 years away, many foreign-invested companies and Export Processing Zones (EPZs)/Industrial Zones (IZs) have purchased their own water supply and wastewater treatment facilities.

The continued migration to the cities by the rural population has overloaded solid waste collection and disposal systems. Currently, the nation generates 9,000 cubic meters per day of solid waste, mostly domestic (organic) waste. Only 4,000 cubic meters per day is collected and put in landfills, with the balance burned or thrown into rivers, ponds, lakes, canals, and other uncontrolled sites. Annually, this amounts to almost 2 million cubic meters of solid waste which is dumped, unsupervised, into the environment.

Already, international firms have moved into the solid waste market segment. The Gadgil Western Group (GWG) of India has proposed a $65-million solid waste treatment plant in Ho Chi Minh City(HCM City) and Sembawang, from Singapore, is seeking a license to develop a $10-million sanitary landfill in HCM City. The GWG proposal includes a 12 MW electricity plant and a fertilizer plant, which will improve the project's return on investment.

Air pollution and hazardous waste/toxic materials abatement efforts have yet to be addressed. At the present time, there are no planned ODA projects in these sectors.

In addition to ODA-funded projects, several of the ODA agencies develop Technical Assistance (TA) programs to help the government. These are for consulting only, intended to educate the government and industry, develop policy, prepare for assistance projects, and to enhance capacity building within the government. The average contract size for TA projects is $600,000. All of the multilateral (and OECF) projects are bid using the international competitive tender process.

As the market for environmental equipment and services continues to develop, international companies are beginning to develop business relationships with the state-owned enterprise (SOEs) sector. Of the over 3,000 manufacturing SOEs in Vietnam, some have already been identified as serious polluters of the environment. Recently, HCM City identified its worst offenders. The published list contained 46 companies that are under investigation for violation of the LEP. The city announced that they would publish a second list in the near future.

The Vietnamese government is believed to be serious about its efforts to protect the environment. While it is unfortunate that Vietnam's environment may deteriorate further before it improves, high-level concern to enforce environmental legislation opens a new, untapped, market for international suppliers of environmental equipment and services.

American companies should position themselves now to benefit from the recent efforts made by the Vietnamese government and ODA funding agencies to improve environmental conditions in Vietnam. U.S.-made equipment and services are believed to offer high quality and value to buyers. The extensive experience gained already in the U.S. environmental marketplace can be directly applied to Vietnam.

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