Environmental Industries

Market Overview

Vietnam has an unenviable environmental record: the 2002 Environmental Sustainability Index funded by the World Economic Forum ranked Vietnam 94^th of 142 countries. Vietnam is a predominantly agricultural country, which has recently witnessed industrialization, and growing environmental concerns. Environmental regulations have been weak and enforcement poor, particularly when the polluter has been state-owned enterprises, which remain dominant in Vietnam despite economic reforms. In general, environmental regulations are enforced more regularly on foreign direct invested projects, and on those projects funded multilaterally or bilaterally, which have the capacity to pay for remediation..

Opportunities

Opportunities arise within the confines of projects funded by international financial institutions (IFIs) such as the World Bank and the ADB, those enforced upon foreign direct invested companies (which represent some 25% of the non-farm economy), or residual procurement from state agencies and state-owned enterprises (SOEs).

According to the comprehensive 1998 survey of environmental needs in Vietnam conducted through CIDA's Vietnam/Canada Environmental Project, the priority areas for Vietnam are wastewater treatment technology, water treatment technology, refuse management, biomedical waste management and air pollution control technology. An area which is well-funded is remediation of war damage (UXO, Agent Orange).Vietnam is a densely populated country, largely agricultural, but with concentrations of some heavy polluting industries (coal, metallurgy, textiles, leather). There are no reliable figures, but the total market size is in the area of USD 300-400 million per annum, most of which is accounted for by procurement within the major IFI-funded projects (total MOSTE budget is reportedly less than USD 30 million). Both World Bank (IDA) and Asian Development Bank fund major long-term projects with environmental components, including wastewater management projects for urban centres.

Market Access Issues

Although there is considerable international funding available, most bilateral funds are "tied", with opportunities only available in sub-contracting. Vietnam is not a major producer of environmental equipment and goods, and imports of these products are not necessarily discriminated against. All imports must be through registered import agents; some of these are newly-established and with uncertain reputations, so the usual caution, especially concerning financing is warranted. Interested Canadian firms should consider attending key industrial events and familiarize themselves with all aspects of the market.

Competition

There are few qualified domestic firms in Vietnam; most of the expertise belong to state-owned enterprises, involved in civil, mechanical and industrial engineering. There are few representatives of foreign environmental companies resident, although nearly all major engineering companies from France, US, Japan, Korea and other countries are represented here, often supporting projects associated with ODA projects.