The market for environmental technologies is being driven by overseas development assistance (ODA). In general, the Vietnamese government and Vietnamese companies do not have the resources to finance pollution prevention or treatment equipment. ODA-financed projects represent the largest market for environmental technologies, equipment, and services.
Foreign manufacturers and foreign-invested industrial zones represent a shrinking market opportunity. Vietnam's economy is growing at half the rate of the mid-1990s, and levels of foreign direct investment in Vietnam are down by over 60 percent from 1996. The market trend is defined by foreign companies leaving, not entering Vietnam.
Vietnamese companies can be a promising market opportunity, but financing from the supplier, from bilateral aid grants, or from other ODA sources should be arranged. Securing bilateral grants to finance environment-related projects at large, state-owned companies has proven to be a successful approach to winning business.
T bid successfully on contracts funded by Vietnamese companies, and even those funded by ODA, it is essential to develop strong relationships with the government ministries administering the tender, as well as with the end client (often a provincial or city government). In addition, demonstrating a willingness to be flexible and to work in a legal environment less secure than what exists in developed countries can be helpful in both establishing strong relationships and in securing contracts.
Vietnam's most pressing environmental problems are providing clean water and reducing the population's exposure to polluted water. Less than 40 percent of the population has access to potable water. Most of Vietnam's largest companies dump untreated wastewater into canals, streams, and rivers. Over $1 billion in ODA have been committed to the water resources sector.
Increasingly, ODA funding is being directed toward urban-environment improvement projects. Five of the 14 largest ODA projects in the pipeline are in the urban planning and pollution control sector. These projects include rehabilitation or construction of water supply, drainage, and sewage networks. The drainage and sewage networks in Vietnam's urban centers are dual-purpose systems used for rainwater and wastewater (and often solid waste). Flooding of these systems occurs frequently, exposing the population to pollutants.
Vietnam is just starting to tackle its air pollution and hazardous waste problems. The country's first comprehensive studies on the effects of these forms of pollution are underway or in the planning stage. The best opportunities in these sectors are for vendors of monitoring and analysis equipment, as well as for companies that can undertake air quality and hazardous waste studies.
Major urban centers are unable to dispose of the volumes of solid waste being produced. Urban centers' main dumping grounds are approaching their capacities and have not been built to prevent leakage. ODA-backed projects are financing upgrades of garbage collection infrastructure and construction of new landfills.
Vietnam ’s soil environment is most threatened by continued deforestation, rapid growth in agriculture productivity, and overuse of pesticides. While some ODA has been directed away from forestry management toward urban pollution problems in recent years, 74 percent of total planned ODA (in terms of dollar value) is directed toward natural resources management.
The market for environmental services centers on consultant contracts for ODA-funded projects. The best opportunities for environmental services companies rest with preparation of feasibility studies, detailed designs, bidding documents, etc. on ODA-funded projects. Project consultant and construction supervision contracts on ODA projects are, and will continue to be, market opportunities.
U.S.companies trail those from Europe, Australia, and Japan in capturing contracts for environment-related projects in Vietnam. This is largely because bilateral financing from these countries, or co-financing on multilateral ODA projects, gives companies from the donor country the inside track for winning contracts. The U.S.position should improve with the introduction of U.S.-Asia Environmental Partnership initiatives, the signing of a bilateral trade agreement between the United States and Vietnam, as well as with the entry of the Overseas Private Investment Corporation and the Export-Import Bank to the market.
Opportunities exist for U.S.exporters of equipment related to water supply, purification, and treatment. The most commonly imported equipment used for water supply and treatment include industrial and household pumps, motors, filters, aerators, and water purification equipment/systems. U.S.brands are generally recognized in the local market for their quality and durability.