Environmental Technologies Industries

Environmental Technologies Industries

Market Plans

Vietnam Environmental Export Market Plan

Chapter 12 - Environmental Services

Current Trends
The market for environmental services is driven by technical assistance and consulting contracts to projects funded with overseas development assistance. Such projects require numerous feasibility studies, project preparation studies, and preparation of bidding documents (terms of reference).

Larger contracts for detailed project design and supervising implementation represent the largest value contracts available in Vietnam for environmental services companies. In 1999, for example, U.S.-based Camp Dresser McKee was awarded a $958,000 contract to prepare a feasibility study for rehabilitation of a polluted canal in Ho Chi Minh City as part of a $180 million World Bank sanitation project in that city. Camp Dresser McKee is also likely to win the contract for detailed design and preparation of bid documents, valued at approximately $6 million.

A number of the large overseas development assistance projects source co-financing from bilateral aid agencies for consulting and technical assistance components of projects. These grants then go to companies from the bilateral donor's host country. For example, the Finnish development agency is financing design/technical assistance contracts to three major World Bank environment projects: Hanoi Water Supply, Haiphong Water Supply and Sanitation, and the Haiphong component of the Bank's Three Cities Sanitation project. These service contracts were awarded to Finnish companies (YME Group, Plancenter Ltd., and Soil and Water of Finland, Ltd.).

Case Study 12.1 - U.S.Success Story

U.S. engineering firm Black and Veatch has been one of the more successful American companies tapping the environmental services market in Vietnam. Black and Veatch has targeted large-scale ODA projects funded by the Asian Development Bank (ADB) and the World Bank.

Black and Veatch first established itself in Vietnam by opening a representative office shortly after the U.S. trade embargo was lifted in 1994. It has since capitalized on its reputation as a world leader in engineering and project management to win consultancy contracts on major civil works projects.

Its first project in Vietnam was a $1.2 million contract for the ADB-financed Second Provincial Towns Water Supply project. Black and Veatch served as the construction supervisor for water works projects in the northern cities of Tuyet Quang, Ninh Binh and Vinh. It won a second consultant contract with the ADB, valued at $1.7 million, for the Phuoc Hoa Multipurpose Water project in Binh Duong Province, outside Ho Chi Minh City. The project is developing infrastructure for water supply, irrigation, and salinity control.

Capitalizing on its reputation and established track record in Vietnam, Black and Veatch won a World Bank consulting contract for a small water resources project in the Mekong delta. While this project is relatively small compared to the ADB projects, it could be a key stepping stone to much larger contracts to be awarded for the World Bank's $147 million Mekong delta water resources project, which is beginning implementation in 2000.

Black and Veatch is also targeting the ADB's Ho Chi Minh City Environmental Improvement Project, the Danang component of the World Bank's Three Cities Sanitation project, and the World Bank's Ho Chi Minh City Environment and Sanitation project.

One of Black and Veatch's keys to success has been demonstrating to ministries awarding the contracts (in this case, the Ministry of Construction and the Ministry of Transport) their engineering capabilities and their capacity to solve problems. Implementing large-scale civil works projects in Vietnam inevitably means tackling unexpected difficulties. The client's vision of the project often differs from that of the project designers.

Being able to mesh the needs and demands of the local People's Committee where the project is being built with those of the project designers is a key factor in winning tenders, according to one Black and Veatch executive. "You have to show that you will be able to solve the conflicts between local interests and project interests."

Market Opportunities and Competitive Situation

Demand for monitoring services is increasing,and numerous ODA projects have provided funding in this area. Comprehensive studies and measurements of pollution levels in Vietnam are now underway.

One example is air-quality monitoring. There is no consistent database available on air pollution levels on a national, regional, or local level. The Asian Development Bank, United Nations Development Program (UNDP), the Norwegian Agency for Development Cooperation (NORAD), and DANIDA are funding projects in Ho Chi Minh City to establish accurate measuring systems and monitoring equipment. The U.S.-Asia Environmental Partnership is also providing assistance to this project. Contract awards include a technical assistance and training component to build the capacity of local staff.

Investment projects need to complete an environmental impact assessment (EIA) before they are licensed by the Ministry of Planning and Investment. For most companies, completing the assessment is straightforward and does not require the use of international consultants. As a result, local Vietnamese companies dominate the market for EIAs. Local companies also perform audits and monitoring of facilities to determine whether waste output is within standards set by the Law on the Environment. Only major polluting industries, such as the oil, gas, steel, and cement industries, have required services of international consulting companies to complete the EIAs. In general, the market for environmental services is moving away from providing EIAs to providing clean production consulting or waste-auditing services. According to directors at the Center for Environmental Technology (ECO) in Ho Chi Minh City, one of the country's largest environmental services companies, the center has shifted away from providing EIAs to providing "clean production" studies for local companies. ECO also advises companies on waste-treatment solutions.

As a state-owned company, ECO uses government networking as an effective marketing tool. The government occasionally sponsors training sessions and seminars on waste reduction. Directors at ECO speak at these events, providing a valuable opportunity to meet potential clients. ECO is well known among local DOSTEs, so when polluting companies ask DOSTE for advice on waste reduction or other environmental services, DOSTE refers them to the center.

In the past year and a half, ISO 14000 has been introduced to Vietnam, though only a handful of companies have been certified. Several American companies, such as Ford, Nike, and Indochina Building Supplies, have been ISO 14000 certified. ISO 14000 certification is in its infancy in Vietnam. While it is being promoted to a limited degree, the market for such certifications will be negligible for the near future. The government has not provided any specific incentives to companies that meet ISO 14000 standards.

One of the larger certification companies in Vietnam, Société Générale de Surveillance (SGS), has looked at the market for environmental services but has not made it one of its core businesses in Vietnam. Its environment-related business in Vietnam has been centered on the forestry industry. Furniture buyers in the European Union, for example, restrict imports of furniture that have used illegally logged timber for raw materials. SGS Vietnam monitors about 50 furniture factories in Vietnam to determine their source of origin for hardwood timber.

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