October 2005

Vietnam waste market shows potential

As a result of the strong economic growth, a rapid urbanization, solid waste has become a pressing issue of most cities in Vietnam. A market of more than 80 million people and the economy of robust growth projected at 7.5% in the medium term, combined with strict environmental requirements, will create good business opportunities in this area.

The total market size for solid waste management is estimated to be US$ 70 million for 2005 and the average growth rate for the period of 2005-2020 is projected at 10-15% per year. Overseas Development Assistance (ODA)-financed projects represent the largest market for solid waste equipment and services. Local production and technology cannot meet the demand of the market, especially the requirements of ODA projects.

Vietnam has to import the key equipment needed for solid waste management. Among imports, U.S. products and technologies are highly regarded for their quality. Vietnam’s market of solid waste equipment and services presents good opportunities for U.S. companies.

Solid waste is one of the highest priorities of Vietnamese cities. Nearly 70 percent of the municipalities surveyed identified solid waste management as one of their top environmental priorities.

Vietnam produces over 15 million tons of waste each year from various sources. More than 80 percent (12.8 million tons/year) is from municipal sources, including households, restaurants, markets, and businesses. Industries generate over 2.6 million tons of waste (17 percent) each year, making it the second most significant source. Industrial waste is mainly concentrated in the industrial parks, especially in the South. About 160,000 tons/year (1 percent) of Vietnam’s waste is considered hazardous.

In urban areas, average collection rates are 71 percent, while in rural areas collection rates are typically less than 20 percent. Socialization programs, which devolve responsibility for waste management to local community groups, are becoming more prominent throughout Vietnam.

Waste handling in Vietnam is mainly carried out by Public Urban Environment Companies (URENCOs), which are responsible for the collection and disposal of municipal waste, including domestic, institutional, and in most cases also industrial and healthcare waste. Although there have been significant improvements by the URENCOs in handling waste, most of the municipal waste in Vietnam is not safely disposed. The dominant form of disposal of municipal waste remains open dumping. In many areas, self-disposal methods – such as burning or burying waste, or dumping in rivers, canals, and open fields – is common.

Out of the 91 disposal sites in the country, only 17 are sanitary landfills. New landfill facilities are needed across the country. The development of waste treatment and disposal systems, which includes landfills, is the Vietnamese government priority. Due to the lack of financial resources the government is constructing most sanitary landfills with ODA funding. Proper handling of hazardous waste remains severely limited. Industrial hazardous waste treatment systems are largely inadequate.

Investments in waste management have increased from US$12.3 million in 1998 to about US$67.1 million in 2003. About 87% are investments to improve municipal waste management. This is followed by medical waste management (12%) and industrial waste management (1%)

One method for U.S. companies to build a local presence in Vietnam is by establishing a representative office. A representative office can facilitate development of relationships with key industry leaders and government officials. Another issue for foreign companies to consider when entering the Vietnamese market are the restrictions placed on distribution activities. Foreign companies are not allowed to distribute goods themselves, but must rely on local firms. Financing for projects in the environmental sector in general, and the solid waste sector in particular, will continue to come mainly from the Official Development Assistance (ODA) sources. It is important to maintain contact with ODA sources and Vietnam’s Ministry of Planning and Investment (MPI) as an overall planner of investment projects and coordinator of ODA assistance.

Tracking ODA projects includes establishing relationships with implementing agencies, ministries, and project management units at the local level. The main Ministry responsible for the environment in Vietnam is the Ministry of Natural Resources and Environment (MONRE). There are three main departments within MONRE that play key roles in waste management. Additionally, five other ministries and the provincial People’s Committees (PCs) are also directly involved in waste management activities.

—Source: USDOC information, Environmental e-Market Express, www.buyusa.gov/eme/enviro.html

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