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Vietnam Environmental Export Market Plan
Chapter 4 - Water Resources

Access to clean water is the largest environmental problem facing Vietnam. Polluted water is a leading cause of dysentery, which accounts for 25 percent of all childhood deaths in Vietnam. UNICEF estimates that nearly 40,000 children under the age of five die each year from this disease. Because of the direct health benefits of access to clean water, water-related projects have been prioritized by the government as well as by the donor community.

Bilateral and multilateral aid in the water resources sector will approach $1 billion by 2001. Both the Asian Development Bank and the World Bank have signed major clean-water-related loans in the past six months, presenting opportunities for American consultants, contractors, and equipment suppliers. There are currently over 50 water projects in 39 Vietnamese provinces, with a total investment of about $900 million. Another 20 proposals have been submitted in hopes of luring either direct investment or ODA.

As urban migration continues unabated, demand for clean water is outpacing construction of new water networks. Water supply plants have been completed in Hanoi and Ho Chi Minh City, but the problem has been connecting households to the network and ensuring efficient distribution with minimal leakage and contamination. In rural areas, the challenge has been to lessen the reliance on polluted surface waters.

Vietnam's cities suffer from antiquated and inadequate sewerage and drainage infrastructure. Most drainage systems are for combined usage - mixing rainwater runoff with untreated wastewater and solid wastes - thereby creating heavily polluted drains, canals, and rivers in highly populated areas. Restricted flows cause flooding during the rainy season, further exposing the population to untreated wastewater. Donors to Vietnam are squarely focused on reducing these problems, especially in Ho Chi Minh City, where Vietnam's largest environment-related projects are now underway.

Vietnam passed a Water Resources Law in 1998, which effectively gave administrative responsibility for managing the country's water resources to the Ministry of Rural and Agricultural Development (MARD). The law also provides legislation for issuing permits as a means of controlling point-source wastewater discharge into surface or ground water.

Among the projects being carried out by MARD is the National Program on Rural Clean Water and Environmental Sanitation. The government has designated the program as one of the country's seven most important development initiatives over the next 10 years.

By 2005, the government is hoping to supply 80 percent of the urban population with a daily supply of 80 to 150 liters of potable water per capita. The target also calls for 60 percent of the rural population to have their own systems of wells and purification equipment. MARD estimates that $1.23 billion is needed for the rural component alone. In 1999, $21 million in funding for water-related projects was disbursed from the national budget. The Ministry of Planning and Investment estimates that $143 million will be needed to drill 1.2 million wells to supply water to rural areas.

Water Supply

Vietnam's ground water supply is generally pure at the source, but this is not the case for surface water, much of which is generated during monsoon season, exposing the water to contamination. Ground water feeds only 30 percent of urban water systems, while 70 percent is sourced from surface water.

Surface water from reservoirs and rivers is polluted by untreated industrial effluents from small towns or, in the case of coastal towns, by seawater intrusion. During the dry season, river volumes drop, allowing seawater to contaminate water sources, in some cases as far as 70 kilometers inland. Vietnam's urban population outside Hanoi and Ho Chi Minh City must depend primarily on surface water passing through a purification plant before being piped to customers.

Hanoi and Ho Chi Minh City have sizable ground aquifers. But the large number of private wells being built directly into these two large aquifers is causing problems. While come of the wells are dug with permission and planning by town authorities, many are drilled illegally. Some of these wells have penetrated septic tanks or sewerage systems, contaminating the city's basic water supply.

A 1995 study conducted by the Hanoi Department of Science, Technology, and Environment showed that the unchecked exploitation of underground water in the city has increased its subsurface water absorption capacity from 40 percent to 80 percent over the last decade. A 1995 study of the underground water in Hanoi showed levels in the aquifer falling by approximately half a meter per year. The pumps for the city's 120 pumping stations were installed 25 meters below ground, but the 1995 study showed the water level had dropped to 27 meters below ground, thereby rendering the pumps useless.

For Ho Chi Minh City, unpolluted source water comes from the upper reaches of the Dong Nai and Saigon Rivers, as well as from the Be and La Nga Rivers. The density of organic matter and waste where treatment plants obtain water from these rivers remains low at a biochemical oxygen demand (BOD) of less than 3 mg/liter, well within clean standards set by the World Health Organization.

Current water treatment facilities in secondary cities cover only 30 percent of the clean water demand. Rural areas suffer the most because of their dependence on surface water. Seventy-five percent of the rural population get their water directly from natural sources, such as rivers, streams, and underground aquifers, all of which receive no treatment.

Urban Water Supply

Vietnam's urban population is approximately 15 million, but only 50 percent of urban residents nationwide are estimated to have access to piped water. In larger cities (Hanoi, Ho Chi Minh City, Haiphong), it is estimated that 60 percent to 70 percent of residents are end-users of piped water. In smaller cities it is estimated to be only 30 percent.

Those not using piped water receive their supplies from shallow wells, rainwater, rivers, and ponds. In some cases, urban residents obtain water from supplies transported by truck by municipal water companies or from public taps.

Most of Vietnam's 192 water supply plants date from the 1960s. The nation's total capacity for supplying water is estimated at 2.7 million cubic meters per day. The biggest supply plants in Vietnam are Ho Chi Minh City's Thu Duc Plant (750,000 m3 /day), the Hanoi Yen Phu plant (80,000 m3 /day), and the Haiphong An Duong plant (85,000 m3 /day). Dozens of other urban plants have an average capacity from 10,000 to 30,000 m3 /day and 500-5,000 m3 /day for smaller town plants.

Ho Chi Minh City

In 1999, the Binh An Water Treatment Plant,Vietnam's first water build-operate-transfer (BOT) project, began supplying water to Ho Chi Minh City. The HCMC Water Company now supplies 750,000 m3 of water per day to the city. However, demand is estimated at 1.2 million m3 per day, so that only about 50 percent of the population of HCMC have access to potable water.

Two other BOT projects are being negotiated. One is a $100 million project backed by France's Lyonnaise des Eaux (LDE). The company has not yet signed a price agreement with the HCMC People's Committee, however, LDE is reportedly asking for a price of $0.24 per m3, a price that would be locked in for seven years. The LDE plant would have a capacity of 300,000 m3 per day. The other project is backed by Grand Imperial Water Company, a consortium of Malaysian companies. This plant also has a scheduled capacity of 300,000 m3 per day.


Case Study 4.1 Being First Isn't Easy
In August 1999, the Binh An Water Treatment plant began supplying 95,000 m3 of treated water per day to the Thu Duc Reservoir. Binh An Water Co. is owned by a consortium of Malaysian companies, including Masscorp, the investment arm of the Malaysian government. The Binh An project is notable because it is the first-ever BOT project implemented in Vietnam. Achieving this feat was not easy.

According to executives familiar with the project, in order to win the license Binh An gave a 10 percent stake to a silent partner that had the connections in Hanoi to get the BOT approved by the prime minister. Binh An obtained the land for the $35.8 million project from the Vietnamese military, a factor that delayed the start of operations by some 10 months as land transfer agreements took longer than expected to complete. The project is entirely financed by Binh An Water Co. Initially, the company sought financing from the International Finance Corporation (IFC). In the end, the IFC backed away from the deal because legal guarantees from the government were considered insufficient. The Asian financial crisis of the late 1990s also delayed construction, as financing dried up for two years.

Binh An Water sources water from the Dong Nai River and supplies it to one of Thu Duc's four reservoirs. Once the water leaves the property of Binh An Water, responsibility for its purity lies with the HCMC Water Co. The capacity of the treatment plant is 100,000 m3 per day. HCMC Water Co. signed a take-or-pay contract for a minimum of 85,000 m3 per day through the year 2000. Binh An Water is charging a fixed price of $0.20 per m3 and it has recently guaranteed the HCMC People's Committee that the price will not increase through the year 2000.

Despite the take-or-pay clause, there are still concerns about whether the investment is viable. At the moment, HCMC Water Co. is unable to use the capacity of water available to it because a pipe network doesn't yet exist to distribute it. Another concern is that the HCMC Water Company is paying more for its water than the government allows it to charge. Investors in Binh An are betting that the local infrastructure and pricing will increase before HCMC Water Co. goes under.

Hanoi

The largest water supplier in the city, the Hanoi Water Company has eight water stations and other smaller plants. The company says it is able to supply between 340,000 to 350,000 m3 of clean water per day. The company's system is supplied by over 125 artesian wells, some of which have less than 50 percent of their designed capacity left.

Capacity will increase when construction of two new water treatment plants is completed. The plants are part of the World Bank's $97.8 million First Water Supply project, which is upgrading water resources in four key northern regions: Hanoi, Haiphong, Quang Ninh, and Danang. In addition to the World Bank loans, the Finnish government is providing $1.96 million in co-financing for technical assistance and consultant contracts.

In early 1999, the World Bank awarded a $33 million construction contract for the Hanoi component to a joint venture between Korea's Kolon Corporation (51 percent) and the Vietnam Construction and Import/Export Corporation (49 percent). The World Bank is providing 85 percent of the financing for the construction contract.

The joint venture is building two 30,000 m3 per day water-supply stations. One plant is being built in Tu Liem district and the other in Tay Ho district. Four new wells will be drilled to supply water to the plants. The additional 60,000 m3 per day will bring total capacity to 410,000 m3 per day.

By 2010, authorities in Hanoi plan to install water treatment systems in Ba Dinh, Hai Ba Trung, Hoan Kiem, Dong Da, Tay Ho, Thanh Tri, and Tu Liem districts.

A U.S.firm, M-Power Corp., is developing plans to build a $134 million build operate transfer (BOT) water supply network in Hanoi. The project is in the feasibility study phase and no BOT contract has been signed. The project calls for construction of a water purification plant with a capacity of
500,000 m3 of clean water per day and rehabilitation of 56 kilometers of water drainage systems. The project aims to include construction of reservoirs and installation of water supply systems in Hanoi's suburbs, as well as steps to reduce water loss throughout Hanoi's distribution system.

Haiphong

Construction has been completed on the Haiphong component of the World Bank's First Water Supply project. The project is rehabilitating the main water supply plant for Haiphong, the An Duong Water Plant. Capacity of the plant is being increased from 60,000 m3 per day to 100,000 m3 per day. The project also involves rehabilitation of the distribution system, water intake, and pumping stations and will increase household connections to the water network. The project is scheduled to be complete by 2002.

The World Bank has signed a credit for $24.4 million to finance these upgrades. The Chinese Metallurgy and Construction Corporation will supply and install equipment worth $19.3 million over the next three and a half years.

Quang Ninh

After a three-month delay, construction has started on the Quang Ninh component of the First Water Supply project. French contractor SAUR International won the main civil works contract, valued at approximately $19 million.

By mid-2000, SAUR had started purchasing materials and equipment and had started construction of raw water lines. SAUR was also preparing the detailed design for rehabilitation of two water supply plants in Quang Ninh. When completed, the Dong Ho Water Plant will have a capacity of 20,000 m3 per day, and the Dien Vong plant will have a capacity of 60,000 m3 per day.

Danang

Danang is the fourth component of the First Water Supply project and has been the slowest in getting underway. Prequalification for bidding on the project has been completed, and bid documents for the civil works contract and construction supervision contracts were submitted on January 5, 2000. Five contractors have submitted bids. The consultant evaluating the bids, GHDK Co., is a joint venture between GHD of Australia and Kim Hien Co., a Vietnamese firm with offices in Hanoi and Danang.

Rural Water Supply

In mid-1999, the government completed a master plan for rural water supply. The study was conducted by the Ministry of Construction, the Ministry of Agriculture and Rural Development (MARD), and Danish International Development Assistance (DANIDA). DANIDA provided a $2 million grant to complete the study.

The plan focuses on supplying clean water to rural households, building household sanitary facilities, and preventing diseases caused by polluted surface waters by the year 2020. The government and National Assembly have designated the project as one of Vietnam's "seven most important" development programs.

By 2005, the government objective will provide 80 percent of the rural population with clean water and 50 percent of the rural population with adequate sanitation facilities. In order to achieve these rates of penetration, the plan's authors estimated an investment of $132.3 million per year will be needed. In total, the master plan calls for $2 billion to implement the project.

The majority of the financing for rural clean water and sanitation projects will come from overseas development assistance sources. Since the program started, MARD reports that 750,000 farming families have been able to access clean water supplies, bringing the total number of rural users nationwide with access to clean water to 19.7 million. This marks a penetration rate of 33 percent of the rural population.

The program is also designed to provide hygienic toilets to 50 percent of all rural families and to install wastewater treatment facilities for 30 percent of rural water users. The government has spent over $5 million on the program since the beginning of the year. Approximately $16.2 million in funds for the project are also being supplied by DANIDA, the World Bank, UNICEF, and the Asian Development Bank. Denmark is also financing a $1.8 million water supply and sanitation project in the north-central province of Ha Tinh.

AusAID has provided $45 million in financing for rural water supply projects in Bac Giang, Bac Ninh, Ha Tinh, Tra Vinh, and Vinh Long provinces.

Between 1990 and 1997, UNICEF dispersed $14.8 million in funding as part of a rural water supply program to 20 million people, covering all of Vietnam's 61 provinces. The program has installed 180,000 clean water stations, including 500 small water plants. Half of the water installations have been set up in rural areas, with 15 percent in mountainous zones and 11 percent at kindergartens, schools, and local clinics. The remainder were set up for the families of war veterans.

Distribution

While the quality of treated water in Vietnam usually meets World Health Organization standards, once it leaves the treatment plants, it is exposed almost immediately to contamination. Between 40 and 50 percent of the water pumped out of the country's treatment plants is lost on its way through Vietnam's 119 rusted and leaky distribution networks.

The majority of the 14,800 kilometers of water pipes in urban systems are either cast iron, concrete, or steel and are in extremely poor condition. With the unsealed pipes and low water pressure comes greater exposure to contaminants from outside the pipes.


Case Study 4.2 Relationships Count
Hong Kim Co. is a local Vietnamese company based in Ho Chi Minh City. For four years it served as an agent for a Canadian-American water purification company based in Nevada called Vector Corp. Vector sold water purification equipment under the brand name Diamond Rain. The equipment retailed for between $30,000 and $200,000, with the primary markets being hospitals, schools, and bottled water companies.

Last year, Vector Group left Vietnam to focus on other markets, but it licensed the trademark to Hong Kim Co. After four years serving as an agent, Hong Kim Co. knows the technology and provides sufficient after-sales service. The Diamond Rain trademark is established, and the system is considered durable and of high quality. Hoping to build on its success of distributing U.S.-made purification equipment, Hong Kim Co. executives have traveled to the United States to meet with other companies, such as Ametek and Universal Aqua.

The government's $2 billion rural water supply program could turn out to be a gold mine for Hong Kim Co. The government is allocating overseas development assistance funds to most of Vietnam's provinces to implement the program. In one province, Australian aid has already funded construction of a 200,000 gallon/day purification system, and the province has funds from other sources, including the UNDP, to install another 60 purification systems.

In addition to having a solid product with a proven track record in Vietnam, Hong Kim Co. has a trump card: Several of its employees are directly related to the chairman of the province awarding the contract. While this many not necessarily win the deal for Hong Kim, this small distributor of American-built purification technology is now on the inside track to win several parts of this sizeable rural water supply initiative.

Vietnam's water companies are extremely inefficient. Not only does a huge amount of leakage and waste occur, but the companies continually fail to earn enough income to offset operating costs or upgrade their distribution systems.

Because of unreliable piped water supplies, authorities have been unsuccessful in controlling the use of ground water sources. Well digging at the household, neighborhood, and industrial levels continues unregulated in many urban and rural areas. This is resulting in both contamination and depletion of ground water supplies in some urban areas.

Charging less than their operating costs, municipal water companies are losing money and have no funds to upgrade their infrastructure, creating the supply inefficiencies. After years of debate, the government finally agreed to raise water prices effective March 1, 2000, but prices remain below operating costs.

The recently completed Binh An Water Treatment plant supplies the HCMC Water Company with 95,000 m3 per day. The company pays a fixed price of $0.20 per m3 on a take-or-pay basis. Meanwhile, the company can charge residential customers a maximum of $0.18 per m3.

A second problem is the lack of accurate water meters. Installation of water meters is usually included in ODA or bilateral/multilateral projects to the water sector. In Hanoi, for example, over 70 percent of households lack water meters. Because of the poor distribution network, the water pressure is so low that meters cannot measure accurately. Water supply companies therefore charge a flat fee, resulting in overuse by some consumers and continuing losses for water companies.

According to one estimate by the Hanoi Water Supply Company, households pay $0.43 –$0.55 month, per person, for the equivalent of four cubic meters of water per person; $0.107 cents per cubic meter of water is well below prices recommended by multilateral donors funding water-supply projects in Vietnam.

Ho Chi Minh City

The water distribution network in Ho Chi Minh City (HCMC), much of it built during the French colonial period and not repaired since, is in desperate need of overhaul. Dilapidated pipe systems and weak water pressure have forced the HCMC Water Co. to use large water tanks to deliver clean water to many of HCMC's districts.
Table 4.1 Water Prices in Vietnam, per Cubic Meter
Before 03/01/00
After 03/01/00
Residential
$0.09
$0.12 (1-4 m3)
$0.18 (4-6m3)
Industrial
$0.18
$0.23
Luxury/Entertainment
$0.29
$0.36

Note: Prices are given in U.S. dollars.
Source: Ho Chi Minh City Water Company.

While BOT projects are lined up to supply HCMC with enough capacity to meet demand, the challenge will be efficiently distributing water to consumers. Therefore, if the two other BOT water-supply projects were to come on line, there would be no way to distribute the water, because HCMC's primary water distribution network is unable to handle large volumes of water. HCMC Water Co. is unable to distribute at capacity because higher volumes will cause the old piping networks to crack. Another problem is the small diameter of many of the pipes in five key districts in HCMC-Districts 1 through 5- pipe capacity needs to be expanded or rehabilitated so that the HCMC Water Co. can reach its customers.

Hanoi

Hanoi's primary water distribution network is in better shape than Ho Chi Minh City's. Its main system is a 330-kilometer-long network built in 1985 with funding from the Finnish Development Agency. This network meets European health standards and delivers water to over half a million customers. Hanoi has a second main distribution network, which is 217 kilometers long. This network, however, was built in the early 1900s by the French and needs rehabilitation.

While HCMC's biggest problems are leakage and the need to rehabilitate existing pipelines, Hanoi Water Supply Co. suffers from administrative weakness. According to the Hanoi Water Supply Co., 65 percent of the water distributed is either lost in transmission or goes unpaid. Of this, 25 percent fails to reach customers because of leakage, 10 percent is siphoned off from illegal taps, and the remaining 30 percent reaches the customer but is not paid for.

As part of the World Bank's $33 million First Water Supply project for Hanoi, Korea's Kolon will install a 407-kilometer pipe network. In addition, 30 network water meters and 75,000 household water meters will be fitted.
Table 4.2 Industrial Water Demand Estimates for Industrial Estates & Export Processing Zones
Size (in hectares)
LocationIndustrial EstatesExport Processing ZonesTotalAnnual Water Demand*Percent of Total Demand
Hanoi
1,700
760
2,460
0.492
8.4
Haiphong
800
100
900
0.180
3.1
Quang Ninh
200
100
300
0.060
1.0
Quang Nam-Danang
1,010
470
1,480
0.296
5.1
HCMC
22,800
360
23,160
4.632
79.5
Vung Tau
600
100
700
0.140
2.4
Can Tho
150
150
0.030
0.5
Total
27,110
2,040
29,050
5,830
100.0

*Water demand is given in millions of cubic meters per year.
Source: World Bank, Vietnam Water Resources Sector Review (May 1996).

Market Opportunities and Competitive Situation

Water Supply Equipment Market

The largest customers for imported water supply equipment are government-executed but foreign financed water supply projects for major cities, provincial capitals, and rural areas. Hospitals, schools, and industrial zones are also large customers.

The market for pumps, filters, water meters, and valves has increased steadily over the past four years. Industrial and household pumps represent the largest market, and foreign companies supply the majority of the equipment. The market for industrial pumps has primarily been to ODA-financed water supply systems, sewerage and drainage, and irrigation projects. Other customers have been manufacturing plants, industrial zones, and real estate developments.

Foreign suppliers account for 85 to 90 percent of the market demand. Market leaders include:
Table 4.3 Sample Product Lines for Water Treatment Equipment
Brand
Product
Capacity
Cost*
Osmonic (USA)Water treatment systems (including filters, water softener, RO membrane, ozone purifier)30 m3/day$21,450
Diamond Rain (USA)Water treatment systems
Meytoroy (USA)Metering pump for wastewater treatment1 m3/hour$3,000
G.A. (USA)Valves150
20 mm		$3,000
$500
Charlotte (USA)Pipes10 inches, 3 m$413
AmetekIndustrial filter STBC25 m3/hour$1,300
Tsurumi (Japan)Air blower5 m3/minute$3,500-$4,000
Alpha-Laval (Holland)Mud pressing10 m3/hour$30,000
Ebara (Italy)Sewage pump10 m3/hour$500
Caprari (Italy)Sewage pump20-60 m3/hour$1,000
Flygt (Sweden)Sewage pump20-80 m3/hour$1,000-$1,200
Tsurami (Japan)Sewage pump20-80 m3/hour$750
Trominelc (Germany)Tossing pump20-120 liters/hour$300-$2,000
Aldos (Germany)Tossing pump20-120 liters/hour$300-$2,000
Dosatron (Italy)Tossing pump20-120 liters/hour$150-$1,000
Kohn (Germany)Flow meter60 m3/hour$750
Flygt (Sweden)Air diffuser
Polymer (Singapore)Mud treatment chemicals$8/kg
* In U.S. dollars.
Source: Center for Environmental Technology (ECO), Ho Chi Minh City.

These firms supply the market via bids on ODA-finance projects or via distributors and trading companies with an established presence in Vietnam.

Household-sized pumps are used in urban and rural areas to increase water pressure supplied from a city's supply system or to source from drilled wells. The market for household pumps is dominated by Asian suppliers. Companies from Taiwan, such as Kutaz and Kikawa, and Korean companies, such as Goldstar, Hanil, and Shinil, control an estimated 60 percent of the market share. Chinese-made pumps own a 20 percent market share.

The filter and purifying system market is also supplied by imports. Along with foreign competitors such as Elga and Doulton from the U.K., several U.S.companies are active in this sector of the market. American products from Pura, Instapure Water, Diamond Rain, Osmonic, and Water Pur International are distributed locally and have gained a reputation for high-quality, durability, and reasonable price.

Mekong Delta Water Resources

In August 1999, the World Bank and the government of Vietnam signed a $101.8 million credit for the $147 million Mekong Delta Water Resources project. The project will increase agricultural productivity, reduce pollution of surface water in the affected areas, and increase the clean water supply to over 280,000 people. It will provide domestic water supply through wells, pumps, and piped systems for remote communities and improve sanitation. Finally, it will strengthen water resources management and planning at the provincial, communal, and farmer levels. The project is scheduled to be completed by 2005.
Table 4.4 Sample Product Lines for Water Supply Equipment
Brand
Product
Capacity
Costa
LG-Goldstar (S.Korea)High-pressure pump
1.0 hp
$111
LG-Goldstar Lifting pump
2.5 hp
$267
LG-Goldstar Industrial pump4.0 hp$342
Ebara CMA100 (Italy)High-pressure pump1.0 hp $125*
Pentax MB200 (Italy) Lifting pump2.2 hp$214*
Teco (Taiwan)Industrial pump4.0 hp$296*
Teco (Taiwan)Industrial pump5.0 hp$403*
Viking Johnson (USA)Flexible couplings
Flange adapters
Tapping tee
G.A.Industries Valves
a. In U.S. dollars.
* Includes 5 percent of value-added-tax.
Source: Dai Viet Trading Co. (HCMC); Duc Quang Trading Co. (HCMC).

Civil works contracts will be awarded for canal dredging and excavation, and construction or repair of sluices, bridges, and canal-connected roads. Nearly 200 sluice gates will be repaired or built. Over 3,000 kilometers of irrigation/drainage canals, embankments, and structures will be upgraded. Works for the irrigation component (valued at $2.3 million) and the rural water supply component ($5.3 million) will be procured through local shopping procedures. Consulting services will be required to assist in engineering design, implementation supervision, and water management studies.

The Central Project Office at the Ministry of Agriculture and Rural Development (MARD) is implementing the project. The Vietnam National Mekong Committee will also supervise project implementation. Two subproject implementation offices, already established by MARD, will carry out all procurement for water resources infrastructure.

Second Provincial Towns Project

The Asian Development Bank has committed $69 million to improve public health in seven provincial capitals by increasing access to clean water supplies. The cities include: Tuyen Quang, Ninh Binh, Vinh, Dong Hoi, Dong Ha, Quy Nhon, and Ben Tre. The project has included investments to rehabilitate or build new sewerage and drainage systems. The project was started in 1997 and is scheduled to be completed by 2002. In December 1999, construction started on a $12.9 million component of the project in Dong Ha, Quang Tri province. The project will include a treatment facility capable of supplying 15,000 m3 per day, 63 kilometers of raw water piping, 11 kilometers of concrete sluices for the city's drainage system, and 11 wells. Once complete, the supply plant and distribution network will supply 85 to 90 percent of the population of Dong Ha with clean water.

Phuoc Hoa Multipurpose Water Resources

The Asian Development Bank has identified the Phuoc Hoa Multipurpose Water Resources project in its firm loan pipeline for 2000. The $140 million project will focus on developing a reservoir and associated infrastructure for irrigation and municipal and industrial water supply for Ho Chi Minh City and the Bien Hoa - Vung Tau economic triangle. A feasibility study has been completed and preliminary and detailed engineering designs are being developed. The project started in 1999 and is scheduled to be completed by 2005.

Red River Delta and Third Provincial Towns Projects

The Asian Development Bank has identified the Second Red River Delta Water Resources project and the Third Provincial Towns Water Supply and Sanitation project for its 2001 loan pipeline. The bank estimates it will provide $60 million for the Red River Delta Water Resources project and $60 million for the Third Provincial Towns Water Supply project.

Second Water Supply Project

According to a World Bank official in Hanoi, a Second Water Supply project is in the conceptual stages. Instead of targeting water supply/distribution projects for specific cities, the World Bank would establish a water supply fund. Qualifying water supply companies from each city or region would then apply to access funds for specific projects. This design would decentralize project planning and allow local governments to design water-resource projects based on local needs.

If such a fund is established, it will be essential for vendors and contractors to develop strong ties to municipal water supply companies, departments of planning and investment, and People's Committee officials. Opportunities may exist for foreign contractors to co-design projects directly with these local authorities and subsequently apply to the World Bank fund for financing.

World Bank officials estimate that if a Second Water Supply project along these lines is approved, it would not be implemented until 2002 or 2003 at the earliest.

Bilateral Aid Projects

Numerous bilateral aid projects have financed water-supply improvements in both rural and urban areas. Finland has been among the most active supporters of such programs.

Finland ’s Development Agency (FINNIDA) has been instrumental in upgrading water supply and distribution facilities in northern Vietnam. In addition to the water distribution project it financed in 1985, FINNIDA has financed water supply projects in Haiphong since 1990. FINNIDA is providing co-financing for technical assistance and design studies for three World Bank-financed projects: Hanoi Water Supply ($2.5 million grant), Haiphong Water Supply and Sanitation ($6.1 million grant), and the Haiphong component of the Bank's Three Cities Sanitation project ($1.3 million grant).

Denmark has also been an active player in the water-resources sector. Most recently, Danish Per Aarsleff A/S won a contract to supply equipment as part of Hanoi's water upgrade project. The purchases are being financed via a 12-year, $6 million loan from ABN AMRO bank and the Ministry of Finance to the Hanoi Water Company. The Eksport Kredit Fonden is providing loan-enhancement measures. The Ministry of Foreign affairs is providing interest and insurance premium supports.

The Australian Agency for International Development (AusAID) has been active in financing water projects, especially as part of the Rural Water Supply project. To date, AusAID has provided $45 million in financing for water supply projects in Bac Giang, Bac Ninh, Ha Tinh, Tra Vinh, and Vinh Long provinces.
Table 4.5 Vietnam's Imports of Water Equipment by Exporting Country, 1998 (U.S. dollar value)

Water pumps for domestic use
Country
Value
Country
Value
India2,597 United States20,783
Belarus92,400Russia107,574
Belgium1,002Japan995,085
Taiwan710,436Australia7,067
Denmark10,968France17,469
Germany212,987Philippines9,061
Netherlands108Singapore449,941
South Korea690,638Spain7,572
Hong Kong75,900Thailand70,742
Indonesia167,621Sweden237
Italy680,810China1,010,618
Malaysia540,680
Total: $5, 822,296
Industrial pumps
Country
Value
Country
Value
India364,832United States1,273,056
England33,972Norway5,623
Austria2,346Russia48,443
Belgium11,421Japan4,186,714
Canada70,209Australia256,081
Taiwan346,799Finland11,090
Denmark3,247France77,837
Germany1,133,982Philippines8,730
Netherlands42,199Singapore1,842,881
South Korea1,004,449Spain12,294
Hong Kong218,479Thailand909,580
Indonesia89,200Sweden226,807
Iran570Switzerland18,137
Italy1,143,120China332,277
Malaysia88,223Ukraine8,018
Mexico194,353
Total: $13, 964,691
Spare parts
Country
Value
Country
Value
India112,463Italy106,740
England1,123Malaysia11,099
Belarus32,330United States38,480
Belgium2,068Russia26,619
Canada4,428Japan66,463
Taiwan81,920Australia5,473
Denmark4,528France51,761
Germany14,278Singapore93,245
South Korea524,565Thailand6,479
Honduras46,893Sweden8,207
Hong Kong18,815China73,586
Indonesia25,916
Total: $1,360,479
Water filters
Country
Value
Country
Value
India4,929Malaysia1,907
England8,218United States282,231
Austria5,118Japan21,245
Taiwan113,983Australia896
South Korea16,205France318,005
Hong Kong1,618Singapore424,690
Indonesia15,600Spain32,961
Italy26,690Thailand258,592
Laos3,950China782
Total: $1,540,620
Valves
Country
Value
Country
Value
India250Japan18,176
Canada7,187Singapore22,999
Taiwan94,656Spain3,492
Hong Kong18,507Thailand197,355
Italy42,332China60,399
Malaysia3,064Yemen14,540
United States780,506
Total: $1,263,463
Water meters
Country
Value
Country
Value
Taiwan46,407Malaysia43,905
Denmark274,447Australia78,490
Germany625,003Finland95,930
Hong Kong60,079France67,190
Indonesia1,848,290Thailand151,411
Italy299,177China413,538
Total: $4,003,867
Source: General Department of Statistics, Vietnam.

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