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VIETNAM

Opportunit per le imprese italiane nel settore delle infrastrutture







LIstituto nazionale per il Commercio Estero, con la propria rete di Uffici
nel mondo e con le attivit di promozione e di assistenza, costituisce un
osservatorio sui mercati internazionali al servizio delle imprese italiane.

LICE ha realizzato in lingua inglese la presente indagine nellambito del
Progetto straordinario Made in Italy in Vietnam finanziato dal Ministero dello
Sviluppo Economico, a cura dellufficio ICE di Ho Chi Minh City.

Lindagine, per rispetto dellambiente, disponibile via web alla pagina
http://www.ice.gov.it/paesi/asia/vietnam/index.htm, nella sezione Informazioni
Utili, e verr distribuita in formato elettronico.





Settembre 2010









Copyright Istituto nazionale per il Commercio Estero
TABLE OF CONTENTS

RAPPORTO DI SINTESI E SCHEDE PROGETTUALI ......................................................... 1
1. EXECUTIVE SUMMARY VIETNAM INFRASTRUCTURE OVERVIEW...................... 6
2. VIETNAM COUNTRY AND ECONOMIC OVERVIEW.............................................. 26
3. SECTOR ANALYSES AND RELATED OPPORTUNITIES.......................................... 35
3.1 ENERGY................................................................................................................... 35
3.1.1 BACKGROUND AND POLICY.................................................................... 35
3.1.2 KEY POWER PLANT PROJECTS.............................................................. 42
3.1.2.1 COAL FIRED POWER PLANTS................................................................... 43
3.1.2.2 GAS FIRED POWER PLANTS..................................................................... 45
3.1.2.3 HYDROPOWER PLANTS............................................................................ 47
3.1.2.4 RENEWABLE ENERGY............................................................................... 50
3.2 TRANSPORT............................................................................................................ 53
3.2.1 RAIL ........................................................................................................... 54
3.2.2 AIRPORTS...................................................................................................... 58
3.2.3 PORTS............................................................................................................ 59
3.2.4 ROADS AND BRIDGES.................................................................................. 67
3.3 ENVIRONMENTAL SERVICES, WATER AND SANITATION........................ 73
3.3.1 WATER SUPPLY............................................................................................ 74
3.3.2 SOLID WASTE TREATMENT..................................................................... 76
3.3.3 WATER TREATMENT................................................................................ 79
3.3.4 CLEAN DEVELOPMENT MECHANISM (CDM) PROJECTS...................... 81


3
4. SOURCES OF FUNDING........................................................................................... 82
5. RELATED INDICATORS COMPARED TO OTHER ASIAN NATIONS........................ 89
6. BUSINESS ENVIRONMENT....................................................................................... 93
6.1 PROCUREMENT AND OPERATION LEGAL GUIDELINES..................................... 93
6.2 GENERAL LEGISLATION AND REGULATIONS ON INVESTMENT IN
INFRASTRUCTURE ................................................................................................................ 94
6.3 TAX REGIME............................................................................................................ 94
6.4 LABOR FORCE ........................................................................................................ 96
6.5 CHALLENGES AND OPPORTUNITIES FOR DOING BUSINESS IN VIETNAM....... 97
7. PENETRATING THE INFRASTRUCTURE MARKET IN VIETNAM............................ 99
7.1 INVESTMENT AND PROJECT DEVELOPMENT...................................................... 99
7.2 ENGINEERING, CONSTRUCTION, EQUIPMENT AND SERVICES....................... 101
7.3 MARKET ENTRY.................................................................................................... 102
7.4 CASE STUDIES..................................................................................................... 104
8. CONCLUSIONS AND RECOMMENDATIONS.......................................................... 107
9. ANNEXES................................................................................................................. 108
10. LIST OF KEY PROJECTS....................................................................................... 118
11. CONSTRUCTION COMPANY DATABASE............................................................. 145





4
PHYSICAL AND POLITICAL MAP OF VIETNAM



5
MAP OF PROVINCES OF VIETNAM



6
1. EXECUTIVE SUMMARY VIETNAM INFRASTRUCTURE OVERVIEW
1.1 Vietnam Economic Review

Economic growth is expected to continue at average rates of between 6% to 8%
per year over the next five years. The expansion of the domestic private sector,
continued growth in exports, increased foreign direct investment, and stable
macroeconomic policies provide the foundation for future economic growth.

Over the past five years, infrastructure investments in Vietnam, although totalling a
fairly sizable amount, have not kept pace with average annual GDP growth of 7.3%,
trade volumes that are increasing by an average of 16% per year and implemented
foreign direct investment (FDI) that increased from an average of USD 2.2 billion per
year from 2001 2005 to USD 7.4 billion per year from 2006-2009.

With the maturing of the economy the nature of FDI has shifted from light industrial
manufacturing for export (garments, footwear, furniture, food processing) to capital
intensive projects. Many of these FDI projects are in heavy industries and large-sized
real estate developments and both require substantial infrastructure in surrounding
regions to facilitate the investments, including sufficient power supplies, road networks,
water supplies, drainage and access to ports.

The noteworthy business opportunities in the infrastructure sector, created by
economic growth but also by new and more demanding citizens expectations, design an
extremely interesting scenario for Italian companies willing to set foot in the market, both
in terms of direct investment and trade. On the other hand as in many other developing
countries, there exist risks determined by inefficiencies and gaps, to be kept in mind,
notwithstanding the slow but steady progress being made. They include protection of
inefficient state-owned enterprises in key industries, bureaucratic decision making
process that slows necessary investments in infrastructure, periodic asset bubbles in the
real estate and stock markets, and periods of sharp inflation that occur due to asset
bubbles or global commodity price increases.
1.2 Government Policies on Infrastructure by Sector and Prospects to 2015

Inadequate planning, insufficient domestic resources, complex administrative
procedures, and a reluctance to open infrastructure to private sector participation has left
Vietnam with enormous infrastructure challenges, from which stem as many business
opportunities. Existing power, pollution control, and transport infrastructure has reached
capacity and without further investment, Vietnams ability to sustain FDI inflows and
target GDP growth rates of 7% - 8% over the next decade will be limited.

Foreign and domestic businesses now cite infrastructure as one of the largest
challenges to operating in Vietnam. In surveys conducted by the Vietnam Business
Forum, the main channel for foreign businesses to collectively discuss investment issues
with the Vietnamese government, poor Infrastructure was cited as the largest bottleneck
for conducting business in Vietnam. Nearly 88% of foreign enterprises and 83% of
domestic enterprises described Vietnams infrastructure as either Bad or Very Bad. In
addition, an astonishing 95.6% of foreign trading enterprises (i.e., those involved in
import/export) rated Vietnams infrastructure quality as Bad or Very Bad.



7
These results were similar to the findings in the 2009 Global Competitiveness
Report by the World Economic Forum, where infrastructure was rated lowest in a set of
Vietnam competitiveness indicators.

Vietnams Minister of Planning and Investment Mr. Vo Hong Phuc and other
participants in the infrastructure working committee of the Vietnam Business Forum
estimate that over the next five years, some USD 139 billion of new investment is
necessary in ports, roads, rail, airports and telecoms if infrastructure supply is to meet
expected demand.

In the power sector, an additional USD 4 billion of new investment per year is
needed from 2010 2025 (USD 60 billion in total), if generation is to keep pace with
annual power demand growth of 13-14%. In the environment sector, the Ministry of
Natural Resources and Environment (MONRE) estimates USD 7 8 billion in investment
is needed to reduce industrial pollution, while the World Bank estimates USD 6 billion of
investment is needed from 2010 2020 to meet Vietnams water supply and sanitation
objectives.

In sum, to meet projected demand and development goals, Vietnams estimated
infrastructure spending requirements over the next five years alone are in the range of
USD 165 billion approximately USD 33 billion per year.

From 2010 - 2015 Mekong Research estimates that up to USD 85 billion in
infrastructure projects in the transport, energy and environment sector may be
implemented in Vietnam. This estimate does not include telecom infrastructure. Where
possible, it is based on licensed projects or projects that are in early stages of
implementation / preparation. Estimates for investment in environment sector are
primarily based on needs identified by the Vietnamese government and multilateral
agencies such as the World Bank and Asian Development Bank.

The value, in billion of USD, of infrastructure projects with construction
commencing during 2010 2015 has been estimated by this reports authors as follows.

Transportation 52.0
Ports 8.0
Roads and bridges 14.4
Railways and metropolitan rail 20.0
Airports 9.6

Energy 20.0

Environment 13.0
Water supply 6.0
Waste water management and solid waste 7.0


1.2.1 Transport

Ports
Vietnams port infrastructure is at capacity, particularly in southern provinces
where most manufacturing and FDI is concentrated. Container demand in southern ports
is an estimated 6.3 million TEU, while port capacity is 5.8 million TEU.


8
Ports in and around HCMC account for some 65% of total container throughputs in
Vietnam. The key ports in HCMC have shallow drafts and can only accommodate
container carriers, so called feeder vessels, under 30,000DWT
1
, from which cargo is
trans-shipped to oceanic container vessels of a capacity between 50,000 and 80,000
DWT or more. Feeder ships shuttle with Hong Kong and Singapore ports for trans-
shipping and this increases shipping times and costs as compared to a situation where
forwarders would have direct access to ports where oceanic vessels could dock directly.
Also Haiphong, the main port in northern Vietnam, can only receive ships of less than
30,000DWT.

For all these reasons, the Government has approved a series of new port
investments. In 2009, a consortium of Vietnamese and foreign companies opened the
first of these deep water ports, in Cai Mep Thi Vai, Bar Ria Vung Tau province. It can
accommodate ships up to 90,000 DWT, enabling direct shipments for the first time from
Vietnam to markets in the U.S. and Europe.

Key ports being developed include:
i) A port complex at the Cai Mep Thi Vai region of the southern province of Ba
Ria - Vung Tau will eventually replace Saigon Port. The plan for the complex calls for
seven container and general ports with total investment capital of USD 700 million. Five
of the ports are being developed by foreign companies, such as Hutchison Port
Holdings, Maersk, PSA Singapore Terminals. Initial phases of some of the ports have
opened already, with others in the first of multiple construction phases.

ii) In northern Vietnam, SSA Marine and Vinalines have signed preliminary
agreements to invest in a USD 100 million upgrade of Cai Lan Port, near Haiphong. As
part of the upgrade Vinalines is to dredge the passage leading to the port to
accommodate ships of up to 40,000 DWT.

iii) Vinamarine is exploring development of a deep water seaport at Lach Huyen,
also near Haiphong. The port would handle ships of 60,000 80,000 DWT with
construction scheduled to begin in 2010 and completed by 2015.

iv) In central Vietnam, the government has approved a preliminary plan to develop
an international transshipment port at Van Phong Bay, Nha Trang province. The port will
accommodate ships of up to 200,000 DWT and have a capacity of 17 million TEU per
year.

Roads and Bridges
Under the Ministry of Transport road development plan, a total of 2,160 km of new
roads are being built between 2008 and 2020. Of these, 445 km are under construction,
with an additional 1,680 km of roadways in the project preparation phase. In addition, the
Prime Minister has recently approved a plan to build a 3,041 km highway along
Vietnams coastline.

Key road projects under development in Vietnam include the following ones.


1
The DWT, or dead-weight tonne, is a standard international unit measuring a vessels
capacity and corresponds to the weight it can carry. It includes commercial cargo, fuel, drinking
and ballast water, supplies, passengers and crew.


9
i) Vietnams Prime Minister has approved a plan to spend USD 1.52 billion to build
a north south highway along Vietnams coastline. The highway will cover 3,041 km and
include construction of new road and upgrading of existing roads. Out of these funds,
USD 800 million will be spent between 2010 and 2020 to build, upgrade and improve
892 kilometres or road along the route. The rest of the funds will be disbursed later.

ii) A 264 km highway linking Hanoi to Lao Cai, on the border with China. Total
investment capital is USD 1.25 billion, with USD 1 billion financed by the Asian
Development Bank. The first of eight construction packages was awarded to Koreas
POSCO. Construction expected to be completed by 2015.

iii) A 100 km upgrade to Highway 5 linking Hanoi to Haiphong started preliminary
construction in 2008 but has faced delays due to resident relocation issues. Therefore a
significant portion of the project is still to be built. Project investors include Vietnam
Infrastructure Development and Financial Investment Corp (VIDIFI), BIDV bank and
Vietcombank. Korea's GS Construction won an initial construction package for part of
the route.

iv) A 130 km highway linking Ha Noi to Lang Son on the China border. Total
investment estimated at USD 900 million. The ADB may finance up to USD 500 million
for the project, but the loan not yet approved. Vietnam Expressway Corporation is the
project developer, with construction scheduled for 2011 to 2015.

v) A 51 km highway through HCMC - Long Thanh - Dau Giay improving transport
links between HCMC and Dong Nai province, and providing the main road route to the
planned Long Thanh International Airport. Total investment size is USD 932 million,
with Japan Bank for International Cooperation (JBIC) financing USD 516 million, the
ADB USD 410 million, and Vietnam Express Corporation USD 5.7 million. Initial
construction tenders have been awarded.

vi) The World Bank is preparing to contribute partial financing for a USD 1.4 billion
road project connecting the largest city in central Vietnam, Danang, with a newly
industrialized region in Quang Ngai province 140 kilometers south of Danang. The World
Bank is providing technical assistance to structure the investment as a Public Private
Partnership (PPP) that will combine government funds, funding from ODA sources
including Japan International Cooperation Agency and the World Bank, and financing
from private investors. The project is scheduled to start construction in June 2011.

Metro Rail
Four metro rail lines are expected to be built between 2010 2015, two in Hanoi
and two in HCMC. Preliminary activities about several more lines will also be carried out.
Relevant authorities and private companies and banks, both Vietnamese and foreign,
including some Italian ones, have expressed their interest in taking part in the
development of projects in this area.

i) In HCMC Metro Rail Line 1 is a USD 1.1 billion project funded primarily by
Japanese ODA (USD 900 million). The 19.7 km route linking district 1 to suburb of Thu
Duc includes subway and above ground tracks. A Japanese firm has been awarded the
engineering and design contract. Due to regulations applying to Japanese bilateral ODA,
construction and equipment supply firms from that country are expected to win the
majority of tenders; however, sizable opportunities to win subcontracts may be available,
in partnership with Vietnamese or Japanese contractors. The possibility to act as a sub-


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contractor in this or other projects financed through bilateral or multilateral APS is not to
be ruled out, as it could afford the opportunity to acquire some experience in the
Vietnamese market in prestigious projects and with a reasonable certainty as far as
completion times and payments are concerned.

ii) The Metro Rail Line 2 in HCMC is a USD 1.2 billion, 19 km route with funding
from the Asian Development Bank (USD 540 million), German Development Bank (USD
325 million), and European Investment Bank (USD 203 million). The majority of the route
is expected to be subway. Due to funding from ADB and European Banks, European
companies are likely to be selected for construction and design packages. Prefeasibility
studies for the route have been completed.

iii) In Hanoi, the Chinese and Vietnamese governments signed agreements for
construction of a 13-km elevated rail line. Under the agreement, the Chinese
government is to finance USD 420 million of the USD 550 million project. Construction is
to be managed by China Railway Construction Co. #6, with scheduled start date in 2010
and completion in 2014.

iv) Japans Itochu is conducting feasibility studies for a USD 700 million, 45 km rail
line linking Hanoi to Noi Bai International Airport.

Airports
The government has identified airport construction projects with expected capital
needs of USD 9.6 billion through 2020. Over the next decade the Civil Aviation Authority
of Vietnam (CAAV) intends to upgrade existing airports at Cat Ba Island (near
Haiphong), Chu Lai in central Quang Ngai province, and Phu Quoc Island.
The most significant new airport project being planned is the USD 8 billion, Long
Thanh International Airport in Dong Nai Province, 50 km to the northeast of Ho Chi Minh
City. Long Thanh is slated to become a new international airport servicing HCMC,
eventually taking over international traffic from the existing Tan Son Nhat Airport. The
Prime Minister has indicated that the project may be opened to foreign investors, built as
a BOT or BOO.
The airport is to be built in two phases, with the USD 5 billion Phase I having
design capacity of 20 million passengers per year, with a passenger terminal and two
runways. The plan for Phase II envisions four runways 4,000 meters in length and 60
meters wide, capable of accommodating heavy long-haul planes, including the Airbus
A380. Total capacity will be 80 to 100 million passengers and 5 million tonnes of cargo
per year. The CAAV has awarded a contract to Japan Airport Consulting Company
(JAC) to conduct feasibility studies and masterplanning for the airport.

1.2.2 Energy

Energy demand in Vietnam has grown by 13% - 16% per year since 2001. Total
electricity sales in Vietnam have increased by 150% from 2001 through 2008, increasing
from approximately 26,000 GWh to nearly 66,000 GWh. In its low growth scenario, the
MoIT and EVN envision electricity demand growth of 13% per year from 2010 to 2015,
and 6% per year from 2015 to 2020.



11
Although capacity at existing power plants is approximately 15,800 MW, matching
forecasted demand for electricity in 2010, actual supply falls short of demand. This is
primarily due to lower output at hydropower plants during the dry season in Vietnam.
During the dry season, hydropower plants may operate at only 40% - 50% of capacity,
resulting in shortages to the nationwide grid.

Given that Vietnams current generating capacity is approximately 15,800 MW
(and actual output is lower), it is clear that the country will require significant new
investment in plants to meet even the low-growth demand forecasts. In terms of peak
demand, EVN and the MoIT foresee total generation requirements increasing by 140%
over the next ten years, from 15,800 MW in 2010 to 38,000 MW by 2020.

In the draft of the 7
th
Power development master plan, which was under
preparation ath the time to close this Report, the most significant points for foreign
investors and equipment suppliers include the following ones.

i) The governments determination to lessen the reliance on hydropower and to
increase the role of coal-fired power plants in the countrys energy mix over the next
decade

ii) Encouragement of foreign investor participation in the coal-fired power plant
segment, while retaining Vietnamese-company focus on gas-fired and hydro power
plants.

iii) The increased role of non-EVN companies in the energy industry, especially
Vinacomin, a state-owned enterprise and leading coal producer, and PetroVietnam
Power Corporation

iv) Plans to approve, and build, enough power plants over the next 10 years to
increase domestic capacity from the current 16,000 MW to approximately 55,000 MW by
2020 an average of roughly 4,000 MW of new generating capacity per year.

v) A commitment to build Vietnams first nuclear power plant by 2020

Over the next five years, the government has planned for coal-thermal projects to
account for nearly 32% of generating capacity, up from the current 12%. The majority of
planned plants from 2010 2015 are coal-fired plants, including both domestic and
foreign-backed projects.

Key upcoming projects by type of fuel supply include:

i) Vinh Tan power complex, Binh Thuan province includes three separate coal-fired
power plants with a total capacity of 4,400 MW, and construction of a dedicated port to
receive coal barges and/or ships with capacity of 150,000 DWT. Total investment
approximately USD 1.8 billion.

ii) The Son My power complex, Binh Thuan province includes three coal-fired
power plants, 1, 2 and 3 with total electricity production capacity of 3,600 MW. Total
projected investment at the complex is estimated at USD 4.9 billion.

iii) The Mong Duong power complex in northern coastal province of Quang Ninh,
location of nearly all of Vietnams domestic coal supplies. Includes two power plants with


12
total output of 2,200 MW. First plant is under construction by Electricity of Vietnam
(EVN) with USD 900 million in financing by the ADB. Second plant is still in development
phase, a planned BOT by U.S. firm AES.

iv) The Duyen Hai coal- power plant complex is located in the Mekong Delta
province of Tra Vinh, in southern Vietnam. Plans for the complex include three coal-fired
power projects with a total power generation capacity of 4,400 MW on 641 hectares of
land. Total investment at the site is estimated at USD 5 billion.

v) The Soc Trang power complex in the Mekong Delta. Four power plants with a
total installed capacity of 4,400 MW and will be constructed in phases. The power plants
will use super critical boiler technology and use imported coal. Japan Bank for
International Cooperation (JBIC) has committed to finance one of the plants, with the
ADB possibly financing one plant.

vi) Power complexes using natural gas include the O Mon power complex near the
Mekong Delta city of Cantho. Four power plants are planned for the complex, with a total
output of 2,800 MW. In March 2010, PetroVietnam Gas Corporation, Americas Chevron,
Japanese Mitsui Oil Exploration Company and Thai PTT Exploration and Production
Company signed contract establishing a consortium to build a USD 1 billion gas pipeline
to supply power plants at O Mon. According to reliable sources, PetroVietnam Power Co
is expected to build three of the four plants and ADB is deemed to have expressed a
preliminary interest for financing them.

vii) The Nhon Trach gas-fired power plant complex in Dong Nai Province includes
one completed plant of 460 MW, developed by PetroVietnam. Plans call for an additional
three plants to be built increasing the total capacity of the Nhon Trach complex to 2,400
MW. There are concerns that the three follow-on plants may not be built if additional gas
supplies are not accessed from the Nam Con Son Basin, offshore eastern Vietnam.

1.2.3 Environment

Vietnam is facing severe degradation of its environment due to rapid economic
growth and industrialization. Although the country has passed comprehensive
environmental protection laws, enforcement is weak. Vietnam now faces widespread
industrial pollution, especially of its waterways.

Lack of government planning and investment has resulted in a deficit of water
supply and a shortage of wastewater and solid waste treatment facilities. The Ministry of
Industry and Ministry of Environment (MONRE) estimate that USD 7.6 billion (120,000
billion VND) of investment is needed to tackle pollution in 16 key industries
2
.
Approximately one half of this amount is required in the key extractive industries of oil,
gas and mining along with utilities (electricity generation) and steel.

Additional studies indicate that USD 5.6 billion of investment is needed for
wastewater treatment, urban waste management, solid waste treatment, and waste
water drainage systems in 20 major provinces alone. This estimate includes some of the
environmental services investment needed for the key industries cited above. Based on

2
Such sectors include textiles, oil and gas, coal and mining, chemical products, paper,
steel, beverages, electric power, cement, furniture and handicrafts, industrial parks, health,
agriculture, transportation, tourism and aquaculture.


13
a survey of the 20 key provinces, a total of 6 million tons of solid waste is generated in
urban centres per year.

Pollution of water bodies has become very serious, due to the acceleration in the
countrys industrialization and urbanization. The capacity of wastewater treatment plants
is limited, therefore such waters are mostly offloaded directly to rivers and canals.
According to MONRE, an estimated 2 million m3 of untreated wastewater is discharged
into the water supply each day. Serious pollution affects both small and medium-sized
rivers in urban areas and major ones, which are a source of water for main cities
downstream, such as the Red river in the north and Saigon and Dong Nai rivers in the
south.

Hazardous waste from hospitals has become a primary concern. There are some
670 hospitals and clinics operating without wastewater treatment plants, resulting in
120,000 m3 of hospital wastewater discharged into the environment each year, and an
additional 24,000 tons of hazardous solid waste that is disposed without proper
treatment.

Solid Waste Treatment
Municipal waste is usually handled by URENCOs (Urban Environment
Companies), on a city and provincial basis. These companies are owned by the state
under the local People Committee and are in charge of waste collection, disposal and
treatment. They may also have wider responsibilities for sanitation in public spaces and
buildings.

Solid waste treatment is an infrastructure sector that has seen limited but
successful investments by foreign investors in Ho Chi Minh City and Hanoi. Foreign
companies have obtained concessions to operate landfills and to construct waste-to-
energy plants at landfills. These investors have successfully negotiated tipping fees
with local governments at rates sufficient to provide returns on investment.

The Ministry of Construction, which is in charge of master planning and investment
for solid waste, recently announced a fund raising package of 44,000 billion VND (USD
2.2 billion ) sourced from state and local budgets supplemented with loans from the
Bank for Investment and Development of Vietnam (BIDV). The plan is to build 44
municipal waste treatment plants (BOT or BT) for all municipalities by 2020. The first
phase, up to 2015, will focus on municipalities in Mekong Delta. This initiative could
provide momentum in this sector and provide increased opportunities for technology
transfer and equipment sales from foreign suppliers.

With regard to medical waste, hospitals have been actively installing waste
incinerators over the last 5-7 years. Most incinerators are small and imported from either
Taiwan or Japan.

Industrial and hazardous waste disposal is similarly characterized by many small
private operators. The exceptions are two incinerators run by URENCOs in Hanoi and
Binh Duong province and a treatment plant being built in Ho Chi Minh City.

Water Supply and Wastewater Treatment
The government has set numerous targets for water supply and sanitation in urban
and rural areas for this year and out to 2020. These include 95% of urban residents
having clean water access by 2010, and 40% of urban/industrial wastewater treated. In


14
rural areas, the government is targeting 85% access to clean water by 2010. By 2020,
100% of residents in urban areas are to have access to 150 liters of clean water per
capita per day, while in rural areas 100% are to have access to 60 liters per capita per
day.

The World Bank estimates Vietnam needs some USD 600 million of investment
per year to reach these targets by 2020. This compares with some USD 1.1bn invested
in the last decade. Hence spending needs to rise by a factor in excess of five-fold to
meet these aims.

The public sector dominate existing supply under the auspices of the provincial or
municipal water supply companies (WSCs). Historically, the WSCs have been hampered
by central government price caps on water pricing, particularly for residential customers.
Low prices, combined with inefficiencies and poor management resulted in operating
losses and an inability to invest in new capacity.

The financing of urban water supply, sanitation and drainage is under the
responsibility of each provincial Peoples Committee. Due to budget shortages, the
national government provides support for capital investment and coordinates ODA funds
for water supply and sanitation projects.

Water supply projects have been opened to several trial BOT or BOO investments
by consortiums of Vietnamese companies, however there have been few foreign
investments in water supply projects due, among other factors, also to government price
caps on water supply tariffs.

1.3 Sources of Funding

Vietnam is unable to meet all of the financing needs for required infrastructure
investments. The State budget remains limited, and existing national and state-owned
enterprise debt loads cannot increase indefinitely. As a result, the government has
gradually liberalized the infrastructure sector to new domestic and foreign project
sponsors in sectors such as energy and transport previously dominated by a single
state-owned enterprise monopoly.

From 2001 2008, the World Bank estimates infrastructure investments in
Vietnam reached approximately 9.4% of GDP. Based on these estimates, total spending
on infrastructure (including telecoms) during the period was approximately USD 39.4
billion, an average of USD 4.9 billion per year. Over the past decade, the World Bank
estimates funding for infrastructure projects has come from ODA (37%), State Budget,
Government Bonds and State-bank Lending (27%), Private Sector, including foreign
investors and domestic companies (21%), final users, in the form of fees for services or
taxes (14%) and other sources (1%).

Despite greater participation by domestic private-sector companies and foreign
investment, the state budget remains the primary source of funding for infrastructure
projects in Vietnam. State budget expenditures take the form of direct expenditures
approved by the Ministry of Finance or other relevant Ministries (Ministry of Construction,
Ministry of Industry and Trade, Ministry of Natural Resources and Environment).

Investments by major state-owned enterprises active in infrastructure development
are also considered State spending. These include investments by state-owned


15
construction companies, and key companies involved in power generation including
EVN, PetroVietnam, Vietnam National Coal and Minerals Corporation (Vinacomin).

Finally, overseas development assistance (ODA) loans make up a critical
component of spending on infrastructure projects, however, the majority of these loans
are eventually placed on the government balance sheets and are included in state
budget obligations.

By infrastructure sector, the main sources of funding in order of frequency and
value are:

Transport:
Roads
i) State budget
ii) ODA
iii) Domestic consortiums building roads under BOT structures
iv) No foreign investment

Bridges
i) ODA
ii) State budget
iii) Domestic consortiums (including by private sector companies)
iv) No directed foreign investment but there some loans and export credit from
foreign banks

Airports
i) ODA,
ii) State budget
iii) No foreign investment.

Ports
i) ODA
ii) State budget
iii) Domestic consortiums (including by private sector companies)
iv) Foreign investment (including directed private investment and financial
participant from bank)

Rail
i) State budget.
ii) Future metro rail projects to be financed by ODA.
iii) Foreign investment (being arranged, in urban railway networks)

Energy
Gas-fired plants
i) State budget (through projects developed by State-owned enterprises).
ii) Foreign investment / private sector.
iii) ODA

Hydropower plants
i) State budget (through projects developed by State-owned enterprises).
ii) ODA.


16
iii) Small and medium sized hydro projects developed by Vietnamese private
companies.

Coal-fired plants:
i) State budget (through projects developed by State-owned enterprises.)
ii) ODA.
iii) From 2010 2015 expected funding from foreign investment and increased
participation by domestic private sector companies

Renewable:
i) Small and medium sized renewable energy projects developed by Vietnamese
private companies.


Environment:
Water supply and sanitation:
i) State budget
ii) ODA

Wastewater treatment:
i) Private sector (owners of industrial zones, owners of specific industrial plants /
manufacturing plants)
ii) State budget

Solid Waste:
i) State budget
ii) Foreign investments
iii) Domestic private sector investment

1.4 Related Indicators Compared to Other Asian Nations
Vietnams infrastructure ranks 94
th
out of 133 countries surveyed in The Global
Competitiveness Report 2009-2010 published by the World Economic Forum, indicating
significant need for increased investment in the sector. Vietnams outdated
infrastructure, combined with economic growth rates that are higher than most countries
in the region, heightens the importance of implementing infrastructure projects rapidly.

Vietnams infrastructure spending over the past five years has averaged between
9% and 10% of GDP, the highest rate of the region. Indeed, China and Indonesia devote
6% of their GDP to infrastructure, Thailand 3.4% and the Philippines less than 3%. The
absolute value of Vietnamese expenditures is nonetheless still lower than that of the
above-mentioned nations and it is expected to remain so during the 2010-2015 period.

Indonesias government has approved a USD 140 billion infrastructure investment
program from 2010 2015, of which USD 90 billion is open to investment by private and
foreign-invested companies.

Thailand is implementing a USD 57 billion economic stimulus program over the
next four years, of which nearly all is allocated to infrastructure investments including
mass transit lines, airports, roads and irrigation. Although political instability in Thailand
is delaying implementation of some of these investments, the government is actively
promoting private sector participation to complement the governments expenditures.


17

Vietnams commitments to infrastructure investments do compare favourably to the
Philippines. Over the past five years, annual spending on infrastructure in the Philippines
amounted to just 3% of GDP. However, the Philippines government has approved a
Comprehensive Integrated Infrastructure Program for 2009-2014 that would increase
infrastructure investments to 6.5% of GDP per year over the next 6 years, with much of
this investment coming from the private sector.

The emphasis that neighbouring countries have placed on attracting private sector
investment to meet infrastructure needs over the next five years is consistent with
historical trends in these countries. While Vietnam is taking steps to increase non-state
involvement in infrastructure projects, World Bank data indicates that Vietnam does not
compare favourably to other nations in Southeast Asia when it comes to private sector
investment in infrastructure.

According to the World Bank database on private participation in infrastructure
investments, the total value of infrastructure investments with private sector participation
from 1990 2008 sees Vietnam occupying the lowest position among non-least
developed countries of the region, with USD 6.2 billion. First is China (107.7 bn.) then
come Indonesia (45.2), the Philippines (45.1) and Thailand (35.3).

2. Legal Environment

Vietnamese procurement laws and regulations and special provisions for
foreign companies
Foreign companies operating in Vietnam are governed by the Construction Law
of Vietnam No. 16/QH 11 dated November 26, 2003 and the Tendering Law of
Vietnam No. 61/2005/QH11 dated November 29, 2005.

Foreign investors in infrastructure projects are entitled to decide preferred means
for selecting contractors, whether by open tendering, limited tendering or direct
appointment of contractors.

In projects where the Government finances at least 30% of the project costs,
appointment of contractors is subject to Vietnams Tendering law. Such projects
must select contractors using one of following methods: open tendering; limited
tendering; selection of an individual to carry out a consulting service; direct
appointment of contractors; direct procurement of goods; competitive offers; or
self implementation. The conditions to use each these methods are clarified in
the Tendering Law and Decree No.58/2008/ND-CP dated May 05, 2008, which
provides guidelines for implementing the Tendering Law

In 2010, the government issued new regulations under Directive 494/CT-TTg
requiring that projects financed by Vietnamese state capital can only issue
tenders for goods, equipment and EPC contracts to international suppliers if it is
determined that local bidders do not meet required standards. The purpose of the
directive is to encourage increased participation by domestic contractors and
equipment / materials suppliers. Projects funded by ODA are not subject to the
directive.



18
The World Bank and the Asian Developing Bank have their own the procedures
applying to all contracts for goods and works financed in whole or in part from
their loans.

Regulations on operations of foreign contractors in Vietnam
Operations of foreign contractors in Vietnam are governed by Decision No.
87/2004/QD-TTg of May 19, 2004.
According the Decision, foreign contractors can operate in Vietnam only after
being granted contracting licenses by competent Vietnamese State agencies
(including but not limited to the Ministry of Planning and Investment, Ministry of
Construction and other agencies.)

For all construction projects in Vietnam, foreign investors must enter into a
partnership with a Vietnamese contractor or use Vietnamese sub-contractors to
implement their work in Vietnam. Foreign construction companies are not
permitted to conduct 100% of the works involved in infrastructure or non-
infrastructure related projects.

General legislation and regulations on investment in infrastructure
projects in Vietnam

Since 1993, Vietnam has issued numerous build operate transfer (BOT)
regulations, pursuant to which private investors can build infrastructure under
certain favorable conditions and charge a tariff agreed with the State for the use
of that infrastructure for an agreed period of time.

Key incentives offered to foreign investors investing in BOT infrastructure
projects include reduced corporate income taxes, delayed payment of income
taxes, exemption from import duties, exemption from land use or land rent fees
for the area of land allocated to the project, loan guarantees, and fewer
restrictions related to conversion to foreign exchange, among others.

Funds to cover expenses for formulating and appraising project feasibility study
reports or project proposals, excluding project proposals made by investors, can
be allocated from the state budget and other revenue sources as appropriate.

The most recent regulation on project finance deals, Decree No.108/2009/ND-
CP, covers investment in BOT, build transfer operate (BTO), and build transfer
(BT) projects. Several foreign investors are currently exploring build own operate
(BOO) projects, though legal guidelines on such projects have not yet been
formalized.

Projects covered under Decree 108 include sectors and sub-sectors such as
roads, bridges, tunnels and ferry landings; railways and related infrastructure,
airports, ports, water supply and drainage systems, wastewater and solid waste
treatment, and power plants.

To date, nearly all infrastructure projects covered under this legislation have
been in the port and power sectors, with a limited number of waste treatment
projects approved.



19
In practice, the regulatory framework for infrastructure projects is not applied
uniformly. While the competence to decide about smaller projects has recently
been transferred to local authorities, for larger projects nearly all decisions must
be approved by the Prime Minister or Deputy Prime Minister, creating significant
delays in implementation.

According to new drafts of a Public Private Partnership (PPP) law, which should
be enacted between the end of 2010 and the beginning of 2011, the government
will contribute up to 30% of an infrastructure projects value to assist in attracting
private investment. It is expected that Government investment in such cases will
focus on creating conditions to attract private sector investment, such as access
to land, land clearance, and development of surrounding infrastructure (dredging
waterways, road construction, access to power, water and other related
infrastructure).

3. Penetrating the Infrastructure Market in Vietnam
3.1 Investment and Project Development

To this day, there are about 90 projects implemented by private investor with a
combined funding of USD 7,1 billion, coming from various sources. However, since 1993
only two projects using international commercial financing have been implemented, the
largest one being the Phu My power plants and natural gas pipeline. The government
has repeatedly stated its interest in attracting foreign investment in some infrastructure
sectors. Project financing in the form of the BOT contract, now appears regularly on lists
of priority investments preferred by the authorities. Indeed, as it will be seen later, many
initiatives are currently under study, with active support from not only the central and
local authorities but also from the major development banks, bilateral or multilateral.
Among the latter, WB (both through IBRD and IDA and through IFC) and ADB occupy a
prominent position. Given also the opening to greater foreign participation in
infrastructure development in 2008-2010, some banks and Italian companies have
begun to explore the multiple business opportunities available in the market.

More particularly, as regards to transport, there are still few foreign investments
but future opportunities are arising in a number of projects, thanks also to new financing
schemes inspired by the PPP model, which is strongly supported by multilateral banks
and the Vietnamese Government. The latter, with assistance from the former, is
preparing new legislation to encourage investments based on PPP in infrastructure,
which would build on a combination of government funds, private sector investment and
increased government guarantees to foreign project investors.

Vientamese entities invest in toll roads and highway projects, with a minimal
participation of foreign contractors, mostly involved in projects which have obtained ODA
funding.
Vietnam Expressway Corporation (VEC) under the Ministry of Transport is the
main developer of new roadways in Vietnam. The majority of roads and bridges in
Vietnam are built by state-owned construction companies including Construction
Company #1, Lilama, Cienco, and Vinaconex, among others. Therefore, most
opportunities for foreign companies in the sector are for equipment and machinery
supply rather than engineering or construction contracts. However, there are
opportunities for large-scale bridge, tunnel, and highway projects where greater
technical expertise is required or where funding is primarily from ODA sources. Given


20
the strong contribution given by Japan and the active presence of Japanese companies,
the construction of many ODA funded roads in Vietnam has been contracted to
Japanese engineering and construction firms, which have then worked with local
construction firms for project implementation.

Most airport upgrades and new terminal construction are developed by
Vietnamese aviation bodies, though projects involving ODA financing have involved
foreign contractors and designers, particularly from Japan. However, there are
opportunities for foreign investors and/or financiers in the main international airport in the
country, the one to be located in Long Thanh, close to Ho Chi Minh City, and worth an
estimated USD 8 billion. The Prime Minister has preliminarly approved its construction
with a BOT or BOO financing scheme, open to foreign investors. In the past, some
airport expansions financed through ODA have involved foreign entrepreneurs and
designers, in particular from Japan.

Projects to build bridges, urban railroads and parking garages can offer better
opportunities to foreign investors, even if to this day foreign participation has been more
sizable in the areas of design, engineering, supplies and contracting rather than in the
area of investment.

In the ports sector, a series of projects has been developed with the participation
of global port operators such as Hutchison from Hong Kong, SSA Marine from USA and
Singapore Port Authority. These projects combined private sector investment by foreign
port companies, with government commitment to build land-side infrastructure and
dredging of waterways to access the ports. Also in this area the introduction of a
legislation to foster PPP could bring renewed thrust to foreign banks and companies
presence.

Some energy projects currently under development involve foreign investors,
particularly in the case of coal-fired power plants. Opportunities to invest in natural gas-
fired power projects have bee in the past mostly confined to Vietnamese companies,
such as EVN and Petrovietnam. Nowadays, several foreign-invested projects have been
developed or are in the planning stages, however these involve companies that are
concurrently developing offshore gas reserves and pipelines. The opportunities to invest
in hydropower projects are limited as concessions have only been granted to
Vietnamese state-owned and private companies

In the environment sector, the best opportunities for foreign investment are in
sanitation, particularly solid waste landfills and treatment. Several foreign invested
projects in this sector have been approved, with one project already operating near
HCMC. Landfill waste-to-energy projects also appear to have potential, with several
foreign investors in project development stages.

Looking back at to the past three years, there has been movement towards more
foreign involvement in infrastructure development. However, the main hurdles to foreign
development of infrastructure projects include:

- Long lead times to obtain government approval for infrastructure
concessions (if given at all). The Prime Ministers office usually must approve all
large scale private and/or foreign sector infrastructure investments.



21
- Approval of pricing schemes for infrastructure services. The private sector
cannot develop projects without an adequate return; yet the government places
price ceilings on key services such as electricity, water supply, and sanitation.
Negotiations over other fees, such as road tolls, are difficult to complete and
implement.

- Difficulties negotiating feedstock supply agreements, particularly in the
energy sector. Power project owners must negotiate with large state-owned
enterprises that supply coal (Vinacomin) or natural gas (PetroVietnam).

- Negotiations with end-users. In the power sector, Electricity of Vietnam
(EVN) maintains a monopoly on power distribution. It is time consuming and
extremely difficult to complete power sales agreements with EVN at rates high
enough to ensure sufficient returns to private power developers. For other
sectors, pricing must be negotiated with government bodies, such as solid waste
handling fees (city Peoples Committees), road tolls (Ministry of Transport, local
Peoples Committees)

- Obtaining sufficient government guarantees that SOEs or government
bodies will fulfill contract obligations. Without government guarantees,
commercial financing, particularly international project finance, is extremely
difficult to secure.

3.2 Engineering, Construction, Equipment and Services

Due to the large investment requirements and complexities of executing
infrastructure projects in Vietnam, the best opportunities in the sector are in the supply of
equipment and services, or in the award of engineering, procurement and construction
contracts (EPC).

The best opportunities for suppliers of equipment, services, and construction
management include:
- Projects developed wholly or in part by foreign investors
- Projects with financing from ODA or multilateral sources (World Bank,
Asian Development Bank)
- Projects with foreign project financing, including those that have secured
export credit financing

The projects above tend to use international competitive bidding practices to award
contracts, have financing in place, and have more streamlined decision making
processes than projects managed by Vietnamese firms or with financing from the state
budget.

Projects funded with bilateral ODA or export credit guarantees usually require that
a certain percentage of contracts are awarded to companies from the country providing
the financing. For example, Japan is the leading provider of ODA to Vietnams
infrastructure sector, and most projects require that at least 60% of contract values are
awarded to Japanese firms. In practice, the amounts awarded to Japanese companies
are typically higher.

While the projects above may provide the best opportunities for foreign equipment
suppliers or contractors, the majority of infrastructure projects are undertaken by


22
Vietnamese project developers, particularly SOEs. Nearly all key construction firms
involved with infrastructure development are large state-owned companies. Compared to
private companies, state-owned companies are less risky as far as payments are
concerned and apply procedures that allow all businesses having some prerequisites to
bid. On the other hand, dealing with state enterprises may take longer and prove more
complex for the following reasons.
- The common practice by purchasing managers to require commissions of up
to 10% before awarding a contract to a supplier.
- The need to bid on projects jointly with local Vietnamese suppliers
- The existence of several levels in the decision-making process, both inside
each company and in the competent Ministry (for example, EVN is owned by the
Ministry of Industry and Trade)
- The need to demonstrate international quality and competitiveness of products

Despite Directive 494/CT-TTg requiring that projects financed by Vietnamese state
capital can only issue tenders for goods, equipment and EPC contracts to international
suppliers if it is determined that local bidders do not meet required standards, most
equipment required for construction of infrastructure projects is not produced in Vietnam
and therefore will continue to be supplied via imports and international suppliers.

Below are some of the common equipment opportunities available by infrastructure
sector:

Transport
- Roads/Bridges: Bulldozers, road levelers, backhoes, cranes, bore pile
machines/drilling equipment, bitumen/asphalt plants, mobile generators, trucks,
- Ports: Cranes, container stacking equipment, dredging equipment
- Airports: Air traffic control equipment, baggage handling equipment, runway
lighting
- Rail: Rolling stock, signalling equipment

Environment
- Composting equipment, complete plants
- Complete wastewater treatment plants
- Biological and chemical treatment agents
- Leachate prevention and treatment technologies
- Pumps

Energy
- Typically EPC contractor installs or sources equipment for entire plants
- Wide range of imported equipment, including
- boilers
- turbines
- steam generators
- cooling equipment
- scrubbers (for coal-fired plants)

4. Conclusions and Recommendations

i) Vietnams greatest needs for new infrastructure are concentrated in the energy
and transport sectors. The country faces energy shortfalls annually due to an
overreliance on hydropower plants which operate below capacity during the dry season.


23
The problem was especially acute in 2010, with power outages and scheduled blackouts
affecting businesses nationwide.

ii) Similarly, insufficient road and port infrastructure is limiting the countrys export
potential and one of its greatest competitive advantages, which is to offer a low-cost
manufacturing platform for export. The combination of unreliable power supplies and
poor transport networks is reducing the countrys attractiveness as a destination for
foreign investment and threatening the governments goal of an annual GDP growth of
7% - 8% over the next five years.

iii) The government and the state-owned enterprises are unable to finance all of
the necessary investments required to meet the critical demand for new infrastructure.
As a result, the Vietnamese government in 2009 and 2010 has sped the pace of
liberalization to permit more investment by domestic and foreign private-sector
companies. Increased amounts of overseas development assistance (ODA) have also
been approved for the transport and energy sectors.

iv) Transport and energy are therefore the two sectors providing the best
opportunities for Italian project developers and suppliers of equipment and services.
Within the transport sector, the best opportunities are in port development or in supplies
of related equipment and services. In the energy sector, the best opportunities are
construction or equipment supply for coal-fired power plants. The environment sector is
still strongly occupied by local service providers and contractors, but offers undoubted
opportunities because of the scale and the complexity of the issues caused by
economic, and especially industrial, development.

v) As a whole, prospects for investing in infrastructure in Vietnam appear
promising. To face the vast necessities, well exemplified by the number of projects
approved in the energy and transportation sectors, the government has made decisions
which clearly aim at opening the market to a broader participation by foreign investors
and is adopting new laws to bring to fruition public-private partnership schemes to
finance infrastructure. In addition to the above mentioned factors, the presence in the
priority investment lists of many highly complex projects, with no precedents in the
country, allows to forecast with a reasonable degree of certainty that foreign investors
will be strongly supported both by Vietnamese authorities and by local and international
development banks. To compete in this area Italian companies shall establish a
presence in the country, select some projects and technological counterparts, such as
other Vietnamese or foreign companies, and financial counterparts, such as commercial
or development banks or export credit agencies, and establish a dialogue with the
competent administrations to get to the preparation of an offer.

vi) Projects with financing from foreign investors or overseas development aid are
the easiest to access for foreign suppliers due to international bidding practices, reduced
bureaucracy, lower payment risks and shorter delivery times. Italian contractors and
equipment or service providers should therefore focus on projects which are at least
partly developed or financed by foreign investors or overseas development aid donors.

vii) It is forecast that the demand of international-grade equipment and services will
increase thanks to the implementation of new infrastructure works and to the renovation
of the existing ones, also through the use of more advanced machinery. Imports in
almost all categories of construction equipment have significantly increased between
2004 and 2008. In the sector of construction machinery, covered by harmonized system


24
(HS) codes 8249 and 8434, the value of the main counterpart countries exports has
increased from USD 255 million in 2004 to 695 million in 2008. Flowd of Italian exports
have been recorded, in 2008, in the subsectors pumps (HS 8413), cranes (HS 8426)
and other construction machinery (HS 8431).

vi) For projects funded by the state budget, suppliers and contractors should
establish relationships and demonstrate international expertise and of being capable of
satisfying certain quality standards to relevant ministries, particularly the Ministry of
Transport, Ministry of Construction and Ministry of Industry and Trade. Similar steps
should be taken with relevant state-owned enterprises developing key infrastructure
projects, for example Vinacomin, PetroVietnam and EVN in the power sector, or
Vinalines and Saigon Port in the port sector. State entities or State-owned enterprises
may recommend that suppliers work through Vietnamese trading firms or agents. For
this reason, but also because of the limitations imposed by current legislation, it is crucial
to establish a stable presence in the country, with frequent visits or a representative
office, and start a relationship with distributors and other local counterparts, also in the
private sector and with the support of the Italian Trade Commission office in Ho Chi minh
City. Supplying in cooperation with a local partner can leverage existing relationships the
local firms have with government bodies and assist in navigating the tender process.

viii) Key risks related to supplying equipment and services to domestic entities and
domestically-financed investments include project delays, insufficient financing, payment
risk, corruption in awarding tenders, exchange-rate fluctuations that may result in
delayed payments, and extended up-front investment of time to establish relationships
and to demonstrate product superiority.

References for further information

Readers interested in further information about regulations and business
opportunities may request them from the Hochiminh City Office of the Italian Institute for
Foreign Trade (Ice), using the following contact information.

Italian Institute for Foreign Trade
11 Doan Van Bo street
Ward 12 - District 4
Ho Chi Minh City
Vietnam
Tel +84 8 38269646
Fax +84 8 38269647
e-mail hochiminh@ice.it

Readers are also recommended to consult the country webpage in Ices site, since
it includes several documents about business opportunities in infrastructure, mostly in
Italian language. The page can be reached at the following Internet address.

http://www.ice.it/paesi/asia/vietnam/index.htm

The International Organizations section of the Industrial Collaboration and
Relations with International Organizations Office in Ice Rome is available for information
and/or further details about projects financed by international lenders. Its contact
information follows.



25
Area collaborazione industriale e rapporti con gli organismi internazionali
Linea Organismi internazionali
Via Liszt 21
00144 Roma
Italia
Tel +39 06 59926979
Fax +39 06 0689280314
e-Mail organismi.internazionali@ice.it


26

2. VIETNAM COUNTRY AND ECONOMIC OVERVIEW

Geography and population
Vietnam is located centrally in Southeast Asia and lies in the eastern part of the
Indochina peninsula, bordered by China to the north, Laos and Cambodia to the west,
and the South China Sea and Pacific Ocean to the east and south.
Major agricultural products include rice, coffee, rubber, fruits and vegetables.
Vietnams major industries include manufacturing, food processing, construction, oil and
gas production, mining and quarrying.
Vietnam ranks as the thirteenth most populous country in the world with a
population of 87 million. An estimated 72% of the population lives in rural areas, with
28% living in urban centers.
Table 2.1 Population 2005-9 (000 persons)
20
05
20
06
20
07
20
08
20
09

Total
population
83,
106
84,
156
85,
195
85,
789
86,
818

Urban 22,
337
22,
824
23,
343
25,
374
25,
678

Rural 60,
770
61,
332
61,
852
60,
415
60,
959

Source: General Statistics Office of Vietnam (GSO), 2009 Estimates Preliminary

Vietnams population is growing by 1.5% per annum. Official populations of
Vietnams largest two cities are Hanoi (3.4 million) and HCMC (7.1 million).
Actual populations in these cities believed to be significantly higher due to
presence of unregistered residents that migrate to urban centers for employment. Some
urban planners estimate actual populations at over 4 million in Hanoi and 8.5 million in
HCMC
In late 2008, Hanoi annexed neighboring Ha Tay province. Hanoi province now
has a population of 6.4 million. By 2020, Hanoi population (including Ha Tay province)
expected to be between 8.1 and 9.2 million
Nationwide urban population growing at 3.4% per year, compared to 0.4% in rural
areas
Other key urban areas include the port cities of Haiphong in the north, Danang on
the Central Coast, and Cantho in the Mekong Delta in the south.
According to the United Nations Development Program (UNDP), 70% of the
population is under the age of 39 and the overall adult literacy rate is approximately 94%
among men and women (compared to an average of 65% in most low income
countries).


27
Vietnams population is young, literate, hard-working, free of significant religious
contentions, consumer-oriented, and highly motivated.

Government Structure
The Communist Party of Vietnam, founded in 1930, is the ruling party. Party
leaders are selected at Party Congresses, held every five years. In April 2006, the
Communist Party held its tenth National Congress, and the agenda included the election
of a new Central Committee. Mr. Nong Duc Manh was re-elected as General Secretary
of the Communist Party for a second term. Other key leaders include Prime Minister
Nguyen Tan Dung and President Nguyen Minh Triet.

The next Party Congress is to be held in 2011. Due to the potential changes in
leadership that can occur at Party Congresses, major decisions involving large-scale
investments, including those in infrastructure, can be delayed until after the Congresses
are complete. As a result, large infrastructure projects awaiting approval in 2010 and
2011 may be delayed until new political leadership is confirmed.
The four levels of government are the central, provincial (which includes the
provinces and the five directly administered municipalities), district and communal levels.
Under the Constitution enacted by the National Assembly in 1992 and amended in 2001,
the National Assembly is the highest organ of State power while the government is the
executive organ of the National Assembly and the highest organ of State
administration. Other central level institutions established under the Constitution include
the Presidency, the Supreme Peoples Court and the Supreme Peoples Procuracy.
There are currently 64 provinces and five centrally-run municipalities (Hanoi, HCM City,
Hai Phong, Danang and Cantho).
Economic History and Integration into the World Economy
Vietnam is a member of the Association of Southeast Asian Nations (ASEAN) and
the Asia-Pacific Economic Cooperation Forum (APEC), and is also a party to the ASEAN
Free Trade Area. In 1995, Vietnam entered into the General Agreement on Economic
Cooperation with the European Union.
In December 2001, Vietnam and the US entered into a Bilateral Trade Agreement
(USBTA). Vietnams obligations under the USBTA require it to liberalize trade and
investment, to accede to international trade agreements and to implement general
principles consistent with WTO practices. Vietnam and the US signed a bilateral market
access agreement on May 31, 2006 and as a result, legislation was passed in the US
Congress in December 2006 which granted Vietnam permanent Normal Trade Relations
status.
On October 26, 2006, the Working Party on the Accession of Vietnam to the WTO
met in Geneva for its 14th and final session. The meeting concluded eleven years of
preparation, including eight years of negotiations, with the approval by all Working Party
members of Vietnams WTO accession package. On November 7, 2006, a meeting of
the General Council of the WTO approved Vietnams membership agreement and on
January 11, 2007, Vietnam became the 150th member of the WTO.
The package of Vietnams accession documents consists of the Schedule of
Concessions and Commitments on Goods, the Schedule of Specific Commitments on
Trade in Services (the Services Schedule) and the Working Party Report. The
Schedule of Concessions and Commitments on Goods sets forth a list of tariffs, quotas


28
and ceilings on duties for agricultural and non-agricultural goods. Some of these involve
reductions phased over periods up to 2014, the precise end date varying from product to
product. The Services Schedule describes the services sectors that foreign service
providers will be granted access to, either immediately upon accession or subject to a
phase-in period, and stipulates any additional conditions including limits on foreign
ownership. Finally, the Working Party Report describes Vietnams legal and institutional
framework for trade, along with commitments Vietnam has made in many areas,
including on foreign exchange, reform of state enterprises, pricing and price controls,
trading rights, excise duties, quantitative or other restrictions, and intellectual property
rights.
Economic Growth and Structure of Economy
Vietnams economic performance has improved remarkably since it embarked on
its Doi Moi (Renovation) policy in 1986 to transform itself from a centrally planned
economy into a market economy. In the first five years after Doi Moi, GDP growth was
4.5%. Today, it has one of the fastest growing economies in the world. Annual GDP
growth has averaged 7.3% over the past five years.

Vietnams economic transition has included growing industrial and services
sectors. To date, Vietnam has had enormous success as an exporter of agricultural and
food commodities such as rice, coffee, cashews, spices and seafood. However, as
Vietnams economy begins to modernize and grow from its rural roots, agricultures
share of total GDP has declined while manufacturings share of total GDP has
increased.

Table 2.2 Gross Domestic Product by Sector 2005 2009 (% of Total GDP)
2005 2006 2007 2008 2009
Agriculture 21.0 20.4 20.3 21.9 n/a
Industry and
construction
41.0 41.6 41.6 39.9 n/a
Services 38.0 38.1 38.1 38.1 n/a
Source: IMF, GSO. 2009 Data on share of GDP by sector not yet available.

In 1990, agriculture accounted for 39% of Vietnams GDP, while industry and
construction accounted for just 23%. As Vietnams economy has modernized,
agricultures contribution to GDP has declined to 20%, while industry has grown to
40%The slowdown of investment and economic activity in the second half of 2008
resulted in lower output by the industry and construction sectors

The main drivers of GDP expansion over the past five years include consistent
export growth of over 20%, strong domestic consumption in the retail and construction
sectors, and an increase in FDI commitments from USD 6 billion in 2005 to USD 20
billion in 2009. The services sector has grown by an average of 7.5% per annum over
the past five years primarily due to increased output from the tourism,
telecommunications, trade, transportation, and finance sectors. Retail sales of goods
and services have been growing by some 20% per year over the past four years.


29
Although overall agricultural output value grew slower than value in industry and
services sectors, output in one of Vietnams key export industries, seafood production,
has risen by an average of 9.5% over the past five years.

Table 2.3 Real GDP Growth by Sector (Annual % change)
2005 2006 2007 2008 2009
GDP 8.4 8.2 8.5 6.2 5.3
Agriculture,
forestry and fishery
4.0 3.4 3.4 3.8 1.9
Industry and
Construction
10.7 10.4 10.6 6.3 5.5
Services 8.5 8.3 8.7 7.2 6.6
Source: ADB, GSO

Vietnams GDP increased to USD 87 billion in 2009, doubling in size from 2003.
However, the IMF and International Finance Corporation (IFC) estimate that the informal
economy is approximately half the size of recorded GDP. Unrecorded economic activity
is common due to the prevalence of cash-based transactions and under-reported
revenues. With informal economic activity included, Vietnams total GDP may actually be
closer to USD 120 billion.

Chart 2.1 National GDP 2003-2009














The economy expanded 5.3% in 2009 from a year earlier, down from 6.2% in
2008, according to the Asian Development Bank and General Statistical Office.
Due to rising inflation and asset bubbles that developed in the real estate and
stock markets in 2007, the government enacted tighter monetary and fiscal policies in
2008. These factors, combined with the global economic crisis, resulted in slower
economic growth in 2008 and 2009 than that seen in previous years.


Trade Liberalization
87.2
39.6
45.6
53.1
60.1
70.1
82.8
5.30%
7.3%
7.8%
8.4%
8.2%
8.5%
6.2%
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2003 2004 2005 2006 2007 2008 2009
N
a
t
i
o
n
a
l

G
D
P

(
$

b
i
l
l
i
o
n
)
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
12.0%
%

G
r
o
w
t
h
Nominal GDP
Real GDP Growth


30
Vietnam has implemented a number of trade liberalization measures in
accordance with its commitments under the ASEAN Free Trade Area, the USBTA, and
the WTO. These include a series of tariff reductions and other measures designed to
relax import restrictions, and an opening of the export sector for a wide range of goods
to the domestic private sector. The import and export of the majority of goods, including
imports of fertilizers and exports of rice, no longer require import/export licenses from the
Ministry of Trade and Industry.
As a result of these trade liberalization measures, Vietnam has achieved strong
trade growth over the past five years and domestic demand has increased for imports.
Vietnam has leveraged its low-cost and relatively high-skilled labor force to become a
leading destination for export manufacturing. Exports have surged since 2002 when the
USBTA came into force. The USBTA reduced tariffs on a wide range of goods
manufactured in Vietnam, effectively opening the worlds largest market to Vietnam.
Consequently, exports have played a major role in GDP expansion, growing by an
average of 24.5% per year over the past four years, reaching USD 56.7 billion in 2009.
Chart 2. 2 Trade Volumes (Source: Ministry of Trade, GSO)

Trade Volumes USD$ billion (2005 - 2009)
0
10
20
30
40
50
60
70
80
90
2005 2006 2007 2008 2009
Imports Exports

Some of the growth in export value is attributable to the steep increase in oil prices
as crude oil is Vietnams single largest export item by value. However, the increases in
oil exports have been accompanied by parallel increases in Vietnams other key exports,
including seafood, furniture, garments, footwear, and agricultural products such as
coffee, rice, pepper, cashews, and rubber.
Vietnams imports in 2009 reached nearly USD 70 billion, widening the trade deficit
to USD 12.3 billion. The rise in import value is attributed to higher global prices for key
commodities, particularly refined petroleum products, and increased demand for capital
and intermediate goods.

Though the trade deficit reached the highest levels seen in the past five years, it is
not considered a major concern because the currency outflows have been offset by an
estimated USD 10 billion in foreign investment inflows, USD 2 billion in ODA funding,
USD 5 billion in registered and non-registered remittances from overseas Vietnamese,
and an estimated USD 2 billion in indirect investment. Moreover, a large proportion of


31
Vietnam's imports came in the form of capital goods. Over the longer term, this should
increase Vietnam's productive capacity, boosting the economy's long-run growth
potential.
Foreign Direct Investment
As a key component of its reform policy, the government has gradually been
opening Vietnam to foreign direct investment (FDI). These reforms culminated in several
key pieces of legislation over the past two years, including:
The enactment of the Common Investment Law (CIL) in November 2005,
effective on July 1, 2006, which combines the Law on Foreign Investment with
the Law on Domestic Investment, provides more equal treatment to domestic and
foreign-invested enterprises, better defines the types of foreign investments
permitted, and clarifies the laws under which they can operate; and
Accession to the WTO in early 2007 that requires Vietnam to open more sectors of
the economy to foreign investors (particularly in services and trading), and
provides greater legal protection to foreign investors.
Foreign investors seeking to spread risk across several manufacturing bases have
included Vietnam in China + 1 strategies, investing in production bases in Vietnam to
complement existing investments in China.
The value of approved FDI in Vietnam has surged since 2004 on the back of
consistently strong economic growth, market liberalization, and Vietnams entry to the
WTO in early 2007. The total value of foreign investment projects approved by the
Ministry of Planning and Investment (MPI) reached USD 20 billion in 2009.

Chart 2.2 Foreign Direct Investment Trends (Source: MPI)

Foreign Direct Investment Trends (2004-2009)
0
10000
20000
30000
40000
50000
60000
70000
2005 2006 2007 2008 2009
Implemented FDI Registered FDI






32
FDI project implementation is increasing alongside FDI registrations, with
disbursed FDI in 2008 and 2009 reaching USD 10 billion, up from USD 3.3 billion in
2005.
With the maturing of the economy the nature of FDI has shifted from light industrial
manufacturing for export (garments, footwear, furniture, food processing) to capital
intensive projects.
Many of these FDI projects are in heavy industries and large-sized real estate
and both require substantial infrastructure in surrounding regions to facilitate the
investments, including sufficient power supplies, road networks, water supplies, drainage
and access to ports.
Some recent examples of companies committing to significant investments
include:
Formosa Heavy industries from Taiwan plans to build a steel complex and
integrated deep-water port with estimated cost at USUSD 1.2bn
Vietnam has signed a USUSD 6bn joint venture deal with Japans Idemitsu
Kosan and Kuwait Petroleum International to build its second oil refinery in northern
Thanh Hoa province
Intels USUSD 1bn chipset assembly and testing plant in the Saigon Hi-Tech
Park is expected to trigger a surge of electronics investment.
Thailands Siam Cement has formed a joint venture with Petrovietnam and
Vinachem for planned construction of a USUSD 3.5 4bn petrochemicals complex near
Vung Tau
Koreas POSCO steel planning a USD 5.8 billion steel complex
Large scale investment is flowing into new heavy-industry zones, including Dung
Quat Industrial Zone in central Vietnam (Tycoon Steel - USD 500 million, Doosan Heavy
Industries - USD 250 million, PetroVietnam refinery USD 2 billion)
Nidec Tosok (a leading Japanese electronics maker) is increasing investment
from USD 100 million to a planned USD 1 billion over the next five years;
Official Development Assistance (ODA)
Aided by assistance in the form of grants and preferential loans, official
development assistance from multilateral and bilateral official government sources and
international agencies (collectively referred to as ODA), Vietnam is also making progress
on meeting its social goals.

Over the past 10 years, the local economic boom has lifted an estimated 20 million
people out of poverty, as the proportion of the population considered by the World Bank
as poor has fallen from 58% in 1993 to less than 15% currently. The government is also
on course to meet other development goals, while social indicators such as education
enrollment and infant mortality continue to show a steady improvement.


33
ODA remains an important source of capital inflows, complementing FDI. ODA is a
primary source of financing for poverty reduction programs and infrastructure,
particularly for rural areas. For 2009, donors pledged a record USD 5.8 billion.

Inflation
Inflation is a primary concern for the government and foreign investors in Vietnam.
Rapid economic growth, expanding bank credit, and global price fluctuations have led to
periods of sharp inflation over the past three years.
In 2008, year-on-year inflation reached 25.2%. In response to increased concern
over rising inflation, the government has initiated a number of policy moves to address
the issue. These included import tax reductions on a variety of industrial and consumer
goods, and limiting new rice export contracts to try to lower food prices. The government
also required banks to limit securities investment loans and increased banks required
reserves. The central bank has imposed stricter rules for lending, and raised interest
rates.
During 2009 the government eased some of these restrictions and lowered interest
rates as part of government stimulus package during the global economic crisis. Inflation
rates eased to 6.9% in 2009.
The main causes of high inflation in Vietnam include:
Rapid economic growth and associated increases in demand;
Expanding bank credit prior to government moves to restrict bank lending
Increased foreign investment and related demand for inputs and raw materials;
A global inflationary environment that has resulted in higher industrial input costs
(petroleum, steel and other construction materials);
Higher food and construction materials prices:
Speculative activity in the stock and real estate markets and continued managed
depreciation of the local currency relative to global currencies.
Table 2.4. CPI Period average
2005 2006 2007 2008 2009
CPI period
average
8.3 7.5 8.3 25.2 6.9

Exchange Rates and Exchange Controls
Historically, the governments priority has been to maintain export competitiveness
by allowing a gradual depreciation of the VND vs. the US dollar. The State Bank has
managed a decline in value of VND of between 1% - 2% per year over the past five
years.
A significant amount of economic activity in Vietnam is conducted in US dollars.
Vietnam maintains a managed floating exchange rate regime under which the rate of


34
exchange of VND to US dollars is adjusted according to market forces, subject to
parameters set by the State Bank.
Under the managed floating exchange rate regime, the State Bank sets the official
exchange rate daily by averaging rates from the previous days interbank foreign
exchange transactions. Foreign exchange transactions must then be executed within
plus or minus 5% of the official exchange rate. A significant amount of unofficial foreign
exchange transactions occur and unofficial exchange rates may differ from the official
rate.
In 2009 and early 2010, the government revised its foreign exchange policy,
weakening the currency by 6.4% after State Bank of Vietnam devalued the dong twice to
bring the official exchange rate closer to the black-market rate.
The devaluations, combined with a shortage of foreign currency due to declines in
exports, tourist arrivals, and foreign direct investment, led to foreign currency hoarding
particularly by exporters in late 2009 and into 2010.
Both trends are notable risks for exporters of infrastructure and construction
equipment to Vietnam. Local trading companies and end users may attempt to defer
purchases or cancel contracts following any weakening of the local currency. Similarly,
due to the shortage of foreign exchange, some companies may not be able to access
sufficient funds to purchase imported products.

Table 2.5 Vietnam Exchange Rate Developments 2005 - 2009
2
005
2
006
2
007
2
008
2
009

Dong per U.S. dollar, end of
period
1
5,875
1
6,091
1
6,114
1
7,698
1
8,670

Source: IMF, Interbank rate as reported by the State Bank of Vietnam



35
3. SECTOR ANALYSES AND RELATED OPPORTUNITIES
3.1 ENERGY
3.1.1 BACKGROUND AND POLICY

State-owned Electricity of Vietnam (EVN) manages the power sector in Vietnam
and is responsible for ensuring sufficient electricity supplies nationwide. EVN is under
the direction of the Ministry of Industry and Trade (MoIT). Both EVN and MoIT report to
the Prime Minister, whose office must approve all major power projects, policies and
development plans. EVN accounts for some 80% of total domestic power generation
with the balance supplied by independent power producers (IPPs) and imports from
China. EVN manages almost all (95%) the countrys entire transmission and distribution
network.

While EVN remains the main builder of new power plants in the country, EVNs
construction of new plants has failed keep pace with energy demand growth of 13 15%
per year over the past decade. EVN has limited capability to meet projected future
demand. This is due to a number of factors, primarily increased input costs for coal and
other thermal fuels and inefficiencies in generation and transmission. EVN is unable to
pass on these increased costs to consumers due to government-imposed price ceilings
on its electricity sales. Though a series of price increases have been allowed by the
government over the past two years, EVNs profit margins remain low, restricting its
ability to invest in new plants.

Recognizing EVNs limited capability to meet electricity demand growth, in 2005
the government enacted an Electricity Law which improved the legal framework for
private participation in the power sector. It also created the Electricity Regulatory
Authority under the MoIT to oversee pricing, new investment in generation and
transmission, and gradual liberalization of the generation, wholesale and retail markets
over the coming 20 years.

The main result of the new legislation has been the introduction of new developers,
primarily state-owned enterprises which previously supplied fuels to EVN plants,
including the Vietnam National Coal Corporation (Vinacomin) and PetroVietnam. In
addition, the sector has seen new investment by private or semi-private (partially
government owned) companies which are building smaller-scale power plants. The
introduction of these new players has expanded sales opportunities for suppliers of
equipment, machinery and engineering services in the power sector.

While the number of Vietnamese companies developing power plants has
expanded over the past five years, foreign participation has been extremely limited. This
is due to a number of reasons, including: i) The negotiation and approval process is time
consuming and bureaucratic, with the Prime Minister required to approve final contract
terms and licenses, ii) The difficulty of negotiating fuel supply agreements and power-
purchase-agreements with suppliers and offtakers iii) The absence of sufficient
government guarantees provided to foreign developers.

Over the past 15 years, two large-scale foreign invested power projects have been
completed and are in operation (Phu My 2.2, Phu My 3 gas-fired power plants in Vung
Tau). The success of these plants largely depended upon one off support of the World
Bank and ADB which agreed to provide guarantees in an effort to kick-start foreign
investment in the power sector in Vietnam.


36

Foreign investors have had more success in completing smaller, micro power
projects within industrial zones or to supply electricity to specific foreign-invested
residential / industrial projects. In addition, there has been an increase in the number of
foreign-invested renewable energy projects licensed by the government (primarily in
waste-to-energy and wind.)

Despite the limited success of foreign power plant developers in Vietnam to date,
there are a series of planned or approved in principle projects involving foreign
investors that may be developed from 2010 2015. Most of these projects are coal-fired
power plants that involve co-investment with EVN or Vinacomin, rather than 100%
foreign owned BOT projects.

The government develops power investment programs through Power
Development Masterplans (PDMP). These development plans include lists of
approved power projects to be built over 5 or 10 year periods. The Ministry of Industry
and Trade is in the process of developing a 7
th
PDMP for the 2010 2020 period.

Energy Demand
Energy demand has grown by 13% - 16% per year since 2001. Electricity demand
has been driven by industrial GDP growth of between 14 and 16% per year, rising
household incomes and resulting higher electricity consumption, and increased
demands by foreign investors for reliable power supplies. Between 1995 and 2008,
household access to the grid increased from 50% to nearly 94% and the per capita
consumption increased during the same period from 156 kilowatt-hours (kWh) per
household per month to about 800 kWh. (source, ADB)

Table 3.1 Energy Demand Growth (2001-2008)
2001 2002 2003 2004 2005 2006 2007 2008
Consumption
Growth Rate
15.4% 16.9% 15.3% 13.6% 13.2% 14.6% 13.7% 12.9%
Source: MoIT, Energy & Petroleum Department

Total electricity sales in Vietnam have increased by 150% from 2001 through
2008, increasing from approximately 26,000 GWh in 2001 to nearly 66,000 GWh in
2008.















37
Chart 3.1 Vietnam Electricity Sales 2001 2008 (GWh) (Source:
MoIT)










Looking forward, energy demand is expected to continue rising at double digit
rates over the next five years. In its low growth scenario, the MoIT and EVN envision
electricity demand growth of 13% per year from 2010 to 2015, and 6% per year from
2015 to 2020.
The table below summarizes the low growth forecast from 2010 to 2020 by type of
energy consumer. In terms of peak demand, EVN and the MoIT foresee total generation
requirements increasing by 140% over the next ten years, from 15,800 MW in 2010 to
38,000 MW by 2020.

Table 3.2 Energy Consumption Forecast 2010 2020 (GWh)

Source: EVN, MoIT Energy Department
In previous electricity development plans, the governments high growth
scenarios have tended to over estimate actual demand, therefore the low growth
forecasts are provided here. Still, it is worth noting that the high-growth scenario
envisions electricity growth at 15% per year from 2010 to 2015 and nearly 7% per year
from 2015 2020. In this growth scenario, required generating capacity would be 31,194
MW by 2015 and 42,823 MW by 2020.

Sector 2010 2015 2020
Agriculture 718 951 1,105
Industry and Construction 44,056 82,830 125,381
Commercial, Hotel, Restaurant 3,958 8,502 8,973
Households 32,437 56,061 67,800
Other 3,383 7,435 5,532
Total 84,552 155,780 208,791
Peak Demand (MW) 15,803 28,574 37,950
25,858
30,228
34,841
39,596
44,837
58,412
65,923
51,368
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2001 2002 2003 2004 2005 2006 2007 2008
G
W
h
GWh


38
Given that Vietnams current generating capacity is approximately 15,800 MW
(and actual output is lower), it is clear that the country will require significant new
investment in plants to meet even the low-growth demand forecasts.

Energy supply
Total installed capacity at Vietnam power plants as of 3
rd
quarter 2009 was
approximately 15,800 MW. Hydropower and gas-fired power plants account for the
majority of capacity (combined approximately 75% because the majority of IPPs and
BOT power plants are gas-fired plants.)

Table 3.3 Installed Capacity (Q3 2009)
Installed Capacity (Q3 2009)
Type of Plant
Installed
Capacity (MW)
% of
Total Capacity
Hydropower 5,257 33.4%
Coal Thermal 1,545 9.8%
Gas Turbine 3,263 20.7%
Diesel / Small Hydro 454 2.9%
Fuel Oil Thermal 200 1.4%
IPPs, BOTs 5,044 32.0%
Total 15,763 100%
Source: EVN, Ministry of Industry
Although capacity at existing power plants matches forecasted demand for
electricity in 2010, actual supply falls short of demand. This is primarily due to lower
output at hydropower plants during the dry season in Vietnam. During the dry season,
hydropower plants may operate at only 40% - 50% of capacity, resulting in shortages to
the nationwide grid. In addition, reduced output at various plants for maintenance or
servicing issues during portions of the year is also common, resulting in supply
shortages.

Due to these shortages, Vietnam began importing electricity from China starting in
2004. Electricity imports now account for approximately 3.5% of supply. Domestic supply
sources are not meeting demand, nor are they allowing for reserve margins. Based on
the governments and MoITs power development plans, Vietnam is targeting reserve
margins of 7,000 8,000 MW of installed capacity by 2015.

The table below summarizes actual supply by source in 2009 (versus installed
capacity). There are discrepancies between share of generation in the table below and
installed capacity in the table above because: i) the data sets are different -- one
indicates share of installed capacity versus actual supply to the nationwide grid, and ii)
power plants identified as IPPs or BOTs include gas, coal and hydropower plants.



Table 3.4 Power Generation by Supply Source (2008-2009)


39
Generation by Supply Source (2008-
2009)
% of
Supply
Gas, Oil, Thermal Power Plants 47.6%
Hydropower (large & medium-size
plants)
34.9%
Coal Power Plants 12.2%
Imports (from China) 3.5%
Other 1.8%
Source: Institute of Energy

Vietnam has added an average of 1,300 MW of new generating capacity per year
over the past five years. Construction and commissioning of new plants has accelerated
over the past three years, especially due to the participation of new players such as
PetroVietnam Power and Vinacomin. In 2008 an additional 2,100 MW of generating
capacity was added to the national grid, and with 990 MW added in 2009. The table
below summarizes the largest plants commissioned in 2008 and 2009.


Table 3.5 Additions to Installed Capacity 2008 2009 (Unit: MW)

Plant Type 2008
MW
2009
MW
Investor
Dai Ninh Hydropower 300 EVN
Tuyen Quang Hydropower 342 EVN
A Vuong Hydropower 210 EVN
Ba Ha River Hydropower 220 EVN
Buon Kuop #1 Hydropower 140 EVN
Song Con II Hydropower 60 Song Con
JSC
Ca Mau I Gas 265 PV Power
Ca Mau II Gas 771 PV Power
Nhon Trach I, II Gas 300 PV Power
Nhon Trach I, II Gas 150 PV Power
Dung Quat Oil, thermal 84 PV Power
O Mon I Oil, gas
thermal
330 EVN
Tuy Phong Wind Power 7.5 Tuy Phong
JSC


40
Note: PV Power = PetroVietnam Power Co.

Power development plan to 2020
EVN and the Ministry of Industry and Trade formulate power development plans
to determine future spending on new power plants and transmission infrastructure. The
Prime Minister and Government office then approve or recommend modifications to the
plans.

These plans serve as a basic framework for budgetary requirements, the types of
power plants to be developed, specific power plants to be built, and the roles of EVN,
independent power producers, and foreign companies in developing the power sector in
Vietnam.

Although the actual implementation of these plans often differ significantly from
what is approved, the plans do contain the key objectives of the government and future
direction of the power sector.

In the current power development plans outlined in the draft 7
th
Power
Development Masterplan, the most significant points for foreign investors and equipment
suppliers include:

1) The governments determination to lessen the reliance on hydropower and to
increase the role of coal-fired power plants in the countrys energy mix over the next
decade

2) Encouragement of foreign investor participation in the coal-fired power plant
segment, while retaining Vietnamese company focus on gas-fired and hydro power
plants.

3) The increased role of non-EVN companies in the energy industry, especially
Vinacomin and PetroVietnam Power Corporation

4) Plans to approve, and build, enough power plants over the next 10 years to
increase domestic capacity from the current 16,000 MW to approximately 55,000 MW by
2020 an average of roughly 4,000 MW of new generating capacity per year.

5) A commitment to build Vietnams first nuclear power plant by 2020

Energy mix
Over the next five years, the government has planned for coal-thermal projects to
account for nearly 32% of generating capacity, up from the current 12%. The majority of
planned plants from 2010 2015 are coal-fired plants, including both domestic and
foreign-backed projects.

Hydropower will continue to be a key source of supplies, but the government and
EVN envision hydropowers share of total capacity dropping from 35% to 28% by 2020.
The installed capacity of small hydropower and renewable energy plants is expected to
double over the next ten years, but will still account for a relatively small share of total
electricity output. Numerous private Vietnamese companies are developing hydropower
plants of under 50 MW.



41
Several gas fired plants have been approved, but concerns about insufficient
offshore gas reserves have reduced the planned construction of new plants, with most
new facilities to be developed by PetroVietnam Power Corporation.


Table 3.6 Planned Energy Mix and Capacity 2015 - 2020



Source: Institute of Energy, Draft 7
th
Power Development Plan


The government has outlined various spending plans for the power sector over the
next five years. The actual amounts spent are likely to be different, but the plans provide
insight on the governments priorities and willingness to allow for greater participation of
companies outside of EVN.

According to the draft 7
th
power development plan, some USD 18 billion in new
power generation investments are needed from 2010 2015. An additional USD 7 billion
is needed for transmission and distribution. EVN-developed plants are to remain the
primary source of investment, but in principle the government foresees some 20% of
new power generation coming from non-EVN companies. In addition, the majority of new
investment in transmission and distribution is expected to be needed for transmission
lines under 110 kv, indicating a priority for connecting rural areas to the national grid.

In addition to government funding via investment by state-owned enterprises, a
major portion of external assistance to Viet Nam's power sector has come from ADB,
JBIC, the Swedish International Development Cooperation Agency (Sida), and the World
Bank.

JBIC has provided assistance for thermal power plants (gas and coal), hydropower
plants, and 500 kV transmission lines. The World Bank has provided loans for improving
transmission and distribution networks, rural energy projects and has assisted EVN in
developing a hydropower project for financing in 2009.
Plant Type 2015
MW
% of
Installed
Capacity
2020
MW
% of
Installed
Capacity
Hydropower 14,434 35.4% 18,167 28.0%
Coal Thermal 12,950 31.8% 20,600 31.8%
Gas / Oil
Thermal
10,388 25.5% 13,338 20.7%
Small Hydro and
Renewable
1,274 3.1% 2,824 4.4%
Nuclear - - 1,000 1.5%
Imports 1,683 4.1% 8,840 13.6%
Total Domestic
Installed Capacity
39,046 54,929


42

ADB has assisted in financing some of the low voltage distribution and
transmission lines, and more recently upgrading the 500 kV and 220 kV transmission
network in northern Viet Nam. In 2007 ADB provided assistance for Mong Duong I
thermal power plant and in 2008 assistance for the 156 MW Song Bung 4 hydropower
project.


Table 3.7 Power Sector Investment Program 2010-2015 (USD USD billion)















Transmission and Distribution
In December 2009, The Asian Development Bank approved a plan to
extend a USUSD 325 million guarantee for a 13-year syndicated loan of USD
342 million to state-owned the Electricity of Vietnam Group to support the
countrys power development. The loan will fund new transmission lines, and
upgrade rural and urban power grids, helping to expand service coverage,
reduce system losses. The ADBs participation is intended to encourage
commercial banks to syndicate a loan to EVN and help reduce EVNs
borrowing costs. ADB will also provide technical assistance on a grant basis
from its Technical Assistance Special Fund of USD 600,000 to ensure
Electricity of Vietnam to comply with procurement, and environmental and
social safeguards, in carrying out the project.

3.1.2 KEY POWER PLANT PROJECTS

Sectors
2
010
2
011
2
012
2
013
2
014
2
015 Total
Generat
ion

EVN 1
.74
2
.21
2
.36
2
.72
2
.35
2
.51
13.89
Non-
EVN
0
.65
0
.65
0
.59
0
.52
0
.72
0
.74
3.87
Transmi
ssion

220 kv -
500 kv
0
.5
0
.41
0
.4
0
.42
0
.47
0
.57
2.77
Distribu
tion

< 110 kv 0
.95
0
.78
0
.81
0
;.84
0
.87
0
.94
5.19
Total 3
.84
4
.05
4
.16
3
.66
4
.41
4
.76
24.88
Source: EVN, Draft 7
th
Power Development Masterplan


43
The sections below outline the key power plant projects by fuel type that are
expected to be developed during 2010 - 2020. The majority of new investment is in coal-
fired plants. In addition, the majority of potential foreign-developed projects are in the
coal power plant sector. These projects include joint ventures with EVN, Vinacomin and
100% foreign invested BOT or BOO projects.

3.1.2.1 COAL FIRED POWER PLANTS

Coal fired power plants are under development or planned for several key
complexes in northern and southern Vietnam. Plants in northern Vietnam are expected
to be supplied by local reserves of coal. Projects in southern Vietnam, and other projects
developed by foreign investors, will likely rely on imported coal.

Vinh Tan Power Complex, Binh Thuan Province
In south central coastal province of Binh Thuan, the national government has given
approval to two separate power complexes, Vinh Tan and Son My. The approved
complexes combined will have a total of up to six coal fired power plants and total
generating capacity of 8,000 MW. Output from the plants will be sold to EVN.

The Vinh Tan complex includes three separate coal-fired power plants with a total
capacity of 4,400 MW, and construction of a dedicated port to receive coal barges /
ships with capacity of 150,000 DWT.

Vinh Tan I: The 1,200 MW Vinh Tan 1 plant, is to be developed by China Southern
Power Grid Company and China Power International Holding Company in partnership
with Vietnam National Coal and Mineral Industries Group (Vinacomin). The investors
signed an MOU with the Ministry of Industry and Trade to invest USD 900 million for
construction of the plant, to be operated on a BOT basis for 25 years. The project is not
yet licensed.

Vinh Tan II: EVN is in process of building a 2 x 600 MW coal-fired plant. EPC
contracts have been awarded and construction is underway.

Vinh Tan III: A consortium of EVN, China Light and Power (Hong Kong), Mitsubishi
Corp, and Pacific Corp of Vietnam signed an MoU with the government of Vietnam and
Binh Thuan provincial authorities for construction of the Vinh Tan 3 power plant. Based
on the MoU, the plant will have a capacity of 3x660 MW and scheduled operation date of
2015.

Son My Power Complex, Binh Thuan Province
The Son My power complex includes three coal-fired power plants, 1, 2 and 3 with
total electricity production capacity of 3,600 MW. Total projected investment at the
complex is estimated at USD 4.9 billion. The three plants will be invested under BOO
and BOT method, with foreign developers permitted to invest. The Son My power
complex is scheduled to be built from 2010 2018.

The Ministry of Industry and Trade has granted preliminary approvals to three
groups including International Power PLC of UK, Japan's Sojitz and Vietnam's Thai Binh
Duong Joint Stock Co to invest in infrastructure works of Son My Power Centre.



44
Mong Duong power complex
The Mong Duong power complex is located in the northern coastal province of
Quang Ninh, location of nearly all of Vietnams domestic coal supplies. Two power plants
are being developed on the site.

Mong Duong 1: Mong Duong 1 is a 1,000 MW plant developed by EVN. The ADB
is providing a USD 930 million loan for the plant, accounting for 85% of the total project
costs. The plant is under construction, with initial civil works contracts awarded, including
a USD 13.7 million contract for site levelling and other infrastructure preparation to
Vietnamese firm, Infrastructure Development and Construction Corporation (LICOGI).
Prequalification for the EPC contracts is complete, with the ADB, EVN and Mong Duong
project management authorities considering up to six bids for the main EPC contract
including procurement, supply, and construction of the main power plant.

Mong Duong 2: A 1,200 MW plant being jointly developed by AES Altai (US) and
Vietnams Vinacomin. The USD 1.2 billion project is structured as a BOT investment.
AES and Vinacomin have been in negotiations with the government for over three
years, primarily regarding the power purchase agreement with EVN, Vietnam
government guarantee obligations, and other regulatory issues.

Duyen Hai Power Complex
The Duyen Hai thermal power plant complex is located in the Mekong Delta
province of Tra Vinh, in southern Vietnam. Plans for the complex include three coal-fired
power projects with a total power generation capacity of 4,400 MW on 641 hectares of
land. Total investment at the site is estimated at USD 5 billion.

Duyen Hai 1: EVN is the developer of the Duyen Hai 1 power plant. In March 2010,
EVN awarded a USD 1.4 billion contract to Chinas Dongfang Electric Corporation to
serve as the EPC contractor for the plant. Construction is expected to start in 2010, with
the plant operational by 2014.

Duyen Hai 2: The Ministry of Industry and Trade has given preliminary approval to
Malaysias Janakuasa to develop the Duyen Hai 2 plant. Janakuasa has submitted its
investment plan and feasibility study to the government, and is beginning discussions
over power purchase agreements and terms of the BOT award. The plant capacity will
be 1,200 MW. Janakuasa selected Vietnamese consulting firm Power Engineering
Consulting Company (PECC1) to provide consultancy services in preparing for the
investment.

Duyen Hai 3: The project developer for the Duyen Hai 3 plant is yet to be decided.

Soc Trang
The Soc Trang power complex is planned to have four power plants with a total
installed capacity of 4,400 MW and will be constructed in phases. The power plants will
use super critical boiler technology and use imported coal.

Soc Trang 1: Plant capacity will be 1,200 MW and financed by the Japan Bank for
International Cooperation (JBIC) for commissioning in 2013;

Soc Trang 2: Also capacity of 1,200 MW, for possible financing by ADB for
commissioning in 2013; and



45
Soc Trang 3.1 and Soc Trang 3.2: Each of 1,000 MW to be commissioned in 2015
and 2016, respectively.

Vung Anh
Located on the north central coast, the Vung Anh power complex includes 2 x 600
MW coal-fired power plants. PetroVietnam Power Corporation (PV Power) is the project
developer. The EPC contractor for the project, Lilama, has awarded 10 of 20 machine
and equipment supply contracts.

These include a boiler supply agreement signed with US based Babcock & Wilcox
Group, administrative systems with Japans Yokogawa Group, coal transporting network
with a German contractor and a cooling system from a Singaporean contractor. Foster
Wheeler Group has also won contracts for the design and supply of two steam surface
condensers.

Nghi Son power complex.
A consortium of PetroVietnam, Vinacomin and Song Da Construction Corp. have
submitted an investment proposal to the Prime Minister to build a 1,800 MW coal-fired
plant in northern Nghe An Province. Pending approval, the project is scheduled to start
construction by 2010 with completion by 2015.

Other Key Proposed Coal-Fired Projects
Koreas Taekwang Vina obtained approval from the MoIT and preliminary approval
from the Vietnamese government to build a USD 4.5 billion coal-fired power plant
complex in Nam Dinh province, 100 kilometers south of Hanoi. The complex will be on
251 hectares of land and includes two 1,200 MW plants, with the first plant scheduled to
be operational by 2017 and the second by 2021. Taekwang Vina will hold a 95% stake
the project, with Vietnams Hashinco Co. holding 5%.

Malaysias Jaks Resources is exploring development of a 1,200 MW coal-fired
power plant complex in northern Hai Duong province. Jaks is in discussions with the
government for structuring the USD 1.4 billion investment as a build-own-operate (BOO)
project. Scheduled completion date is 2015 with Vinacomin supplying the coal feedstock.
The project has not yet been licensed, nor have fuel supply agreements been signed
with Vinacomin or power purchase agreements signed with EVN. As no BOO projects
have yet been licensed in Vietnam, government approvals are likely to take longer than
with other BOT or JV projects proposed by foreign investors in the power sector.
Officials from the Hai Duong Department of Planning and Investment have indicated that
the MoIT has given approval in principle to the project, but final approvals are still
pending with the government. (Institute of Energy Report)

3.1.2.2 GAS FIRED POWER PLANTS
Gas-fired plants are expected to remain an important part of Vietnams energy mix,
but based on the power development plan from 2010 -2015, will see fewer plants
developed than the hydro or coal sectors.

This is due in part because there are concerns that Vietnams offshore gas
reserves are insufficient to supply all of the proposed gas-fired plants. Existing and
approved plants have priority to reserves, limiting the number of newly proposed plants
that can be put into operation.


46

More significantly, the government believes coal and hydro are cheaper energy
sources, and negotiations over gas prices between gas field developers and the end
user (EVN or power plant developer) have proven extremely difficult to resolve. The
negotiations for the Phu My power plant complex took over six years to complete, and
ongoing negotiations between Chevron, lead developer of the next offshore gas basin to
be developed in Vietnam, and offtakers have been ongoing for over four years.

Most activity over the next five years will be focused on three power complexes
that have already been approved and are under various stages of development. These
include the O Mon and Ca Mau power plant complexes in the Mekong Delta, and the
Nhon Trach power plants in Dong Nai province, near Ho Chi Minh City. Additional gas-
fired plants may be developed near HCMC, particularly in the Hiep Phuoc Industrial Park
region, but these projects are further behind in development and are not expected to be
built within the next five years.

The section below outlines the main gas-fired power complexes and possible new
plants built at these sites.

O Mon Power Complex
The O Mon power complex is based near the Mekong Delta city of Cantho. Four
power plants are planned for the complex, with a total output of 2,800 MW. Three of the
plants are expected to use gas for feedstock, with one plant using coal. EVN is the
primary investor in the complex and is to operate three of the four plants. The fourth
plant will be an IPP with PetroVietnam Power Co. the developer. The gas-fired plants will
be supplied by offshore reserves in the Gulf of Cambodia and delivered via a 400
kilometer pipeline.

In March 2010, PetroVietnam Gas Corporation, Americas Chevron, Japanese
Mitsui Oil Exploration Company and Thai PTT Exploration and Production Public
Company signed contract establishing a consortium to build the USD 1 billion pipeline to
supply power plants at O Mon.

EVN has completed the first phase of its O Mon I plant (300 MW) and is expected
to complete the second phase (300 MW) in 2010. The O Mon I plant includes two turbine
groups and a total investment of USD 555 million. The Japan Bank for International
Cooperation (JBIC) provided 85% of the financing for the plant.

The O Mon II, III, and IV plants are each designed as 750 MW plants. The ADB is
currently considering financing for the O Mon Power Plants No. 3 and 4, and EVN has
indicated financing of USD 1.5 billion from the ADB will be required for these plants.
PetroVietnam has also asked the ADB for partial financing for the USD 1 billion gas
pipeline.

Ca Mau Power complex
PetroVietnam operates two gas-fired 750 MW plants at the Ca Mau power and
fertilizer complex in the Mekong Delta. The USD 890 million complex includes the Ca
Mau I plant which came online in March 2008 and the Ca Mau II plant starting operations
in early 2009. Since starting operations, the plants have generated over 10 billion KWh
of electricity, sold to EVN and distributed to the national grid.



47
Vietnamese construction company Lilama was the primary EPC contractor for both
plants, with Germanys Siemens serving as the subcontractor supplying turbines and key
equipment. The power plants feedstock is sourced via pipeline from the PM3 gas field
offshore Vietnam and Malaysia and nearby fields offshore south western Vietnam.

Currently there are no plans to build additional plants at the facility. The project
operator, the Ca Mau PetroVietnam Power Company, signed a maintenance and service
contract for the first 100,000 hours of plant operations with another PetroVietnam
division, the PetroVietnam Power Services Company.

Nhon Trach Power Complex
PetroVietnam Power Co. is developing gas fired power plants at Nhon Trach, in
Dong Nai province. PV Power has commissioned the first of four planned plants at the
site. The first plant put into operations has a capacity of 462 MW and began operations
in 2009. PV Power has obtained financing for construction of the second power plant at
Nhon Trach, with Citibank the main lender.

Plans call for an additional three plants to be built increasing the total capacity of
the Nhon Trach complex to 2,400 MW.

There are concerns that the three follow-on plants may not be built if additional gas
supplies are not accessed from the Nam Con Son Basin, offshore eastern Vietnam.

Hiep Phuoc Plant - HCMC
In HCMC, Singapores Sembcorp is exploring construction of a USD 400 million,
700 MW gas-fired power plant at Hiep Phuoc heavy industrial zone in Nha Be district.
The current structure for the investment is as a BOT project operated for 30 years.
Sembcorp is completing feasibility studies for the plant and has signed a land lease
agreement with the owners of the Hiep Phuoc Industrial Park (Tan Thuan Industrial
Promotion Corp.) for renting 10 hectares of land adjacent to the Saigon River.

The company signed a Memorandum of Understanding (MoU) with HCMC
authorities who have given their approval in principle for project. However, the Prime
Minister and Ministry and Planning and Investment (MPI) need to give the final license
and approvals for the project. Sembcorp indicated the plant is still under consideration
and no timetables have been set for moving forward with the plant or starting
construction.

Although the project does not have a concrete start date, the project is worth
following due to the size and experience of the Singapore company. Sembcorp is a 30%
co-operator of one of Vietnams largest gas-fired power plants, the Phu My 3 power
complex in Vung Tau. Sembcorp also has successful experience operating some of
Vietnams leading industrial parks. Sembcorp has both sufficient financial resources to
invest in the proposed Hiep Phuoc gas power plant, and significant support from the
Government of Singapore.

3.1.2.3 HYDROPOWER PLANTS
As part of the 7
th
Power Development Masterplan, the government approved a
series of projects that would increase hydropower capacity output by 14,329MW by
2015. The government has allocated an increased number of future projects to


48
independent power producers, particularly those investing in micro hydro projects to
facilitate rural electrification.

Vietnam has an estimated 20,600 MW of hydropower potential, of which about
4,600 MW has been developed.

There are several key trends worth noting for contractors, equipment / service
providers to hydropower projects in Vietnam.

In the past year, the World Bank and ADB have for the first time agreed to provide
financing for hydropower projects in Vietnam. As projects using international bidding
procedures and confirmed financing from multilateral sources, these projects represent
the best opportunities for contractors and / equipment service providers.

The largest hydropower projects are developed by state-owned entities EVN and
Song Da Construction Corporation. Song Da both develops projects and is typically the
lead contractor for large projects undertaken by EVN.

Thirdly, an increased number of large domestic private sector companies are
becoming project developers for small and medium-sized hydropower plants. Key
companies active in developing hydropower projects include Bitexco, REE, and Hoang
Anh Gia Lai.

Trung Son Hydropower plant. 260 MW in Thanh Hoa province, northwest
Vietnam near Laos border. The countrys main electricity generator, Electricity of
Vietnam (EVN), will build the USD 380 million Trung Son Hydropower Project with
financial and technical support from the World Bank. It is the World Banks first
hydropower project in Vietnam. The main construction work for the project will begin in
2011 and will take five years to complete.

Song Bung 2 hydropower project. 100 MW. EVN is the project developer. In
March 2010 EVN obtained USD 180 million in financing from a consortium of banks,
including Japans Sumitomo Mitsui Banking Corp, Frances Societe Generale and BNP
Paribas. The loans will account for approximately 80% of the projects total investment.

Song Bung 4 power plant. The Song Bunh 4 power plant is the first major
hydropower plant financed by the ADB in Vietnam. The plant is located in central Quang
Nam province and will have a capacity of 156 MW. The plant will require total
investment of USD 267 million, of which USD 196 million will be financed by the ADB
loan. Initial civil works and road building contracts have been awarded.

US firm Mott MacDonald won a project supervision contract for the project, and will
be responsible for reviewing designs, providing technical assistance, supervising
procurement, and serving as overall construction supervisor.

Lai Chau Hydro power plan complex. Prime Minister Nguyen Tan Dung has
approved a VND35.7 trillion (USUSD 1.88 billion) hydro power plant project in the
mountainous northern province of Lai Chau. Construction of the Lai Chau Power Plant
will start at the end of this year and is scheduled for completion in 2017. The 1,200-
megawatt plant will be built by state-owned Electricity of Vietnam. The company will
cover 20 percent of the project cost while the rest will be funded by domestic and foreign
loans, according to the government. More than 9,700 residents are expected to be


49
affected by the project and the Lai Chau Province administration has been assigned the
task of compensation and relocation.

Song Da Corporation Plants
Song Da Corporation is the largest SOE involved in construction of hydropower
plants in Vietnam. In the companys 2010 business plan, Song Da plans to start
development on 13 hydropower plants with designed capacity of 2,100 MW. Of the 13,
seven are to be built in Vietnam with a designed capacity of 290 MW, and another six
are to be developed in Laos and Cambodia with combined capacity of 1,717MW.

All the projects in Laos are under a member company of Song Da - Viet Lao Power
Development company (VLP) . In this company Song Da owns 60%, EVN 10%, and the
remainder held by other construction companies. All projects are structured as BOTs
with 85% financed by VLP, 15% by Laos government.

Key upcoming projects for Song Da include:
Lai Chau Hydropower. 1,200 MW, USD 1.6 billion. EVN is project
sponsor, Song Da the general contractor. Project schedule is to start construction
at end of 2010, with finish by 2017.

Stung Treng (Cambodia). 980 MW. Initial feasibility studies are being
prepared. No start date set, but likely in 2011 at the earliest.
Huoi Quang Hydropower Plant, Son La Province, Vietnam.

Nam Thuan 4 hydropower plant. REE Infrastructure in joint venture with VC
Invest company has been awarded the right to develop the Nam Thuan 4 hydropower
plant in Laos. 150 180 MW. Conducting feasibility studies to confirm investment size,
specifications. No information yet on investment capital or specifications, depends on
outcome of feasibility studies.
Signed contract with engineering and consulting firm, AECOM from New Zealand
for the design and feasibility study.

Bitexco, a leading construction and property firm, has formed the Bitexco Ta
Trach Hydropower Joint Stock company. The company has obtained approval to build a
19.5 MW power plant in central Hue province under a BOO structure. The plant will
supply some 80 million kwh to the national grid at capacity. Bitexco had invested/built 13
hydropower plants, combined capacity 500MW. Ta Trach (21MW), Nam Muc (46MW),
Nho Que 1 (32MW), Se San 3A (108MW), Eakrongrou (28MW), Nam Mu (12MW), Nam
Ngan (14MW)

Hoang Anh Gia Lai Joint Stock Company plans to build 17 hydropower plants
with a combined capacity of 420 MW in the country and in Laos in the 2010-2012. The
firm will build power plants with a combined capacity of 310 MW in Vietnam and 110 MW
in Laos during the period. Projects in the planning stages include the Daksrong 3A,
Dakpsi 2C, Dak Lo 2, Buon Don and Buon Bra, Ba Thuoc 1, Ba Thuoc 2, Daksong 3B
and Dakspi 2B hydropower plants.


50

Table 3.8 Hoang Anh Gia Lai Planned Power Plants
Name Province Start Finish
1 &2 Daksrong
2 and 2 A (two
plants on same
river)
Gia Lai 42
MW
2007 2010
3 Daksrong
3
Gia Lai 36
MW
4
th

quarter/2009
2012

4 &5 Ba Thuoc
1 &2
Thanh
Hoa
140
MW

5/2009

5/2011
6&7 DakPsi 2B
& 2C
Kontum 24
MW
5/2009
5/2011
8&9 Iadrang
and Iakrei
Gia Lai 18
MW
2010 2012
10 Daklo
Kontum
Kontum 12
MW
2010 2012
11 Ngc Tem
Kontum
Kontum 18
MW
2010 2012
12 Serepok Dak Lak 30
MW
2010 2012
13 Nm
Kng 2
Attapeu
province, Laos
70
MW
2010 2013
14 Nm
Kng 3
Attapeu
province, Laos
30
MW
2010 2013
15 Krng
HNng
Dak Lak In
design state

16 Buon Don Dak Lak In
design state

17 Buon Bra Dak Lak In
design state



3.1.2.4 RENEWABLE ENERGY
Biogas / Waste to Energy
Early efforts to develop waste-to-energy projects by private sector investors were
unsuccessful because investors a) could not obtain sufficient service fees for receiving
waste, or b) were unable to sign power purchase agreements with EVN at commercially
viable rates. In the past two years, however, this has changed, and a number of projects
have been licensed that provide a model for future renewable energy investments.

Below are some of the key domestic and foreign investments that may serve as
benchmark projects and precedents for future investments in the sector.

In HCMC, KM Green Corp. (Korea) has formed a local company KMDK and
obtained a license for the first waste-to-energy plant in HCMC.



51
The 100% FOE plans to build gas collection plants at two of HCMCs main
dumpsites -- Dong Thanh in Hoc Mon district and Phuoc Hiep 1 in Cu Chi district. The
project is designed to collect about 4 million tons of gas from the two sites per year, with
gas then used to fuel a 9 MW power plant. HCMC Department of Natural Resource and
Environment (DONRE) officials estimate there are about 8 million tons of buried waste at
the closed landfill at Dong Thanh and some 5 million tons buried at Phuoc Hiep I landfill.

As the first of its kind, the structure of the investment provides guidance for future
waste-to-energy projects in HCMC and Vietnam. The investor worked with the HCMC
DONRE to qualify for CER credit sales and the project has been approved by the CDM
authorities in Hanoi. Department of Environment officials commented that CER credit
sales will be divided between the investor and the city, with KM Green receiving 60% of
sales revenue and 40% allocated to the city government.

DONRE also helped the company to arrange electricity sales directly to end users
and residential customers in the district where the plant is to be located. By signing
direct sales contracts with the district Peoples Committee and end users (under the
approval of the HCMC Peoples Committee), the investor eliminated the obstacle of
negotiating a PPA with EVN, typically the most challenging aspect for any independent
power producer. The investor will be responsible for building out transmission
infrastructure to connect customers to its generation plant.

DONRE officials in HCMC commented that direct distribution will enable the
investor to sell electricity at prices higher than what EVN would have paid, while allowing
the customers to purchase power at prices lower than what EVN currently offers.

In Hanoi, the main state agency for waste management, the Urban Environment
Company (URENCO) has formed a joint venture with Malaysian and Canadian firms
(PZG Company) to recover landfill gas for power generation at the Soc Son landfill. The
venture plans a similar strategy to that employed by KM Green in HCMC selling
electricity directly to end-users in the district and registering with CDM authorities to
qualify for CER credit sales.

Keppel Corporation (Singapore), Keppel Seghers has received approval in
principle from the HCMC Peoples Committee for a planned 2,000 ton per day waste - to
energy plant in Cu Chi district in HCMC. The plant will be on 32 hectares and generate
an estimated 20 MW of electricity. Keppel is now preparing the project feasibility study
as part of its investment license application.

In northern Thanh Hoa province, Canadian firm Naanovo Energy Inc. obtained a
license for a USD 48 million Build Own Operate (BOO) waste to energy plant. The 100%
foreign-owned plant will have a capacity to handle 360 tons of solid waste and generate
12 MW of power.

In Danang, PJ International Co. (Malaysia), LFGC Corporation (Canada) and the
Danang Urban Environment Company, have formed a joint venture to build a USD 3
million biogas electricity plant at the Khanh Son landfill site. According to the Department
of Planning and Investment (DPI) in Danang, the joint venture will sign electricity supply
contracts directly with the Danang government (rather than negotiating PPAs with EVN).
DPI officials commented that the venture will pay the city 10% of its turnover from
electricity sales, and 10% of its gross revenue from sales of CER credits.



52
Also in Danang, the Urban Environment Company of Danang is now in discussions
with ODA donors from Japan (Japan Bank for International Cooperation) to conduct
environmental improvement programs with a total investment of USD 80 million. One is
a waste to energy treatment plant for solid waste with a capacity of 400 600 tons per
day and electricity generation of 19,000KW. Project developers plan to register this
project with CDM authorities to qualify for CER credits. Also included is construction of a
treatment plant at the existing landfill to treat waste water leaking from the landfill with
capacity of 300m3 per day, and improvements to drainage systems in three districts to
collect and treat household waste water.

Wind Power
Vietnam is considered to have extremely strong potential for wind energy due to its
geography and meteorological conditions along its long coastline. Based on studies by
the Institute of Energy under the Ministry of Industry, Vietnam has conditions suitable to
generate an estimated 3,572MW, equivalent to 120.5 gigawatt hours (Gwh) using wind
energy.

A World Bank study of wind energy potential in Southeast Asia indicated good to
excellent areas for large-scale wind generation can be found in the mountains of central
and southern Vietnam. The coastal areas of southern and south-central Vietnam show
exceptional promise for wind energy both because of strong winds and their proximity
to population centers. On a land area basis, approximately 28,000 square kilometers of
Vietnam (8.6% of the total land area) experience good to excellent winds, according to
the study.

Total potential output in regions categorized as very good or ideal is 9,200MW.
This estimate of MW potential represents the upper range of wind energy potential
based on wind velocities and topographical conditions. Though actual developable
potential may be smaller than this estimate, the large resource pool allows for significant
investment in the sector. Much of this potential has yet to be tapped. Although numerous
wind projects have been proposed or are in the planning stages, only one project is
operational.

In Binh Thuan Province, Vietnam Renewable Energy Joint Stock Company
(REVN) is operating a 7.5 MW wind power plant. The plant is in the initial stages, and
REVNs investment license calls for eventual development of up to 30 MW. Total
investment capital for the first phase is USD 51 million. The project is located on 300
hectares of land, but area for construction will be 28 hectares. The project is licensed to
expand to 120 MW during later phases.

In the south central coast province of Binh Dinh, one of the most favorable regions
for wind-power development, two projects are expected to be the first operation
commercial wind plants in Vietnam. The Central Wind Power Joint Stock Company
(CWP) is developing a USD 35 million wind plant on 147 hectares of land. This project is
the furthest along in project planning and licensing. The project is expected to be the first
large-scale wind project operational in Vietnam. The plant will have a capacity of 21 MW.
Equipment is being supplied by Fuhrlaender of Germany who will assist in construction
and operation of the plant.

According to officials in the investment department of the Nhon Hoi Economic
Zone, the project developers are negotiating power purchase agreements with EVN,
rather than trying to sell directly to end users. The Nhon Hoi officials commented that


53
EVN has agreed to purchase power from CWP at between USD 0.04 and USD 0.05 per
KwH. CWP officials estimated that its production costs would be in the range of USD
0.08 to USD 0.085 per KwH, therefore it is seeking government subsidies to facilitate the
project. In addition the company plans to sell CER credits to generate revenue.

A second project, Phuong Mai 3, is on 140 hectares of land and will have a
capacity of 27 MW. Project developers are Saigon Invest Group, a developer of
industrial parks in Vietnam. Total capital for the project is estimated at USD 30 35
million. The developers have completed the feasibility study and the project is pending
approval from the Binh Dinh Peoples Committee before receiving its investment license
from Nhon Hoi Industrial Zone authorities. Local authorities have reportedly granted the
land use rights for the project.

Five projects are under evaluation in Ninh Thuan province, identified as a province
with extremely good prospects for wind power developments. Average wind speed can
reach 8 m/s at 60 meters and wind power density is 500 W/m2. One license has been
awarded to a foreign company, Greta Energy (Canada). The licensed project is a USD
77 million wind farm on 200 hectares with a planned capacity of 66 MW. Output from
the farm will be sold to EVN.

Officials from the Ninh Thuan Department of Planning and Investment commented
that several other locally-invested projects have been approved in principle by the Ninh
Thuan Peoples Committee and the DPI. The capacity of the proposed projects is
between 50 MW and 120 MW. Average investment amount for each project is reportedly
over USD 60 million. Investors in the proposed projects are now conducting feasibility
studies in preparation for submitting license documents.

In Phan Thiet, the capital of Binh Thuan Province, local authorities commented that
the government is considering several proposed projects, including a USD 15 million
plant developed by Truong Sanh Company Limited (Switzerland) on an offshore island.
The plant would have capacity of 3 MW in its first phase. Other projects under
consideration are the locally invested Tien Thanh wind power plant and the project at
Tuy Phong.

The Department of Planning and Investment of Ba Ria Vung Tau province
granted an investment license to Aerogie Plus Corporation (Switzerland) and its local
representative Khanh Linh Co. Ltd. The license approved an USD 18.4 million project to
build a wind power facility on Con Dao Island on a BOT basis with duration of 25 years.
Project specifications indicate the facility will have a capacity of 7.5 MW of wind power
combined with 3 MW of diesel.

3.2 TRANSPORT
Development of rail networks and deep sea ports is lagging behind Vietnams
economic growth rates and business demand for modern transportation infrastructure.
There are no modern railways or urban rail systems in Vietnam. The need for metro rail
networks has become acute as existing road infrastructure reaches capacity. There is no
nationwide expressway system and congestion on urban roads has increased
dramatically due to the growth of the vehicle fleet.
The government, Ministry of Transport, and Ministry of Planning and Investment
have developed a series of transport master plans to develop Vietnams transport


54
infrastructure. The most recent version of the plan calls for USD 72 billion in investment
in major road and rail projects from 2007-2020, and an expectation that ODA will foot
USD 63 billion of the bill through low interest loans. The plan calls for USD 14.87 billion
of investments from 2007 to 2010, and USD 57.9 billion from 2010 to 2020.
The government has identified a series of projects in the rail and port sectors open
to foreign and domestic private investment via BOTs, joint ventures, or 100% foreign-
owned companies. ODA financing at concessional rates may not be feasible starting
early in the next decade so a larger share of investment may be allocated to
independent BOT projects than is currently planned.
Proposed infrastructure spend in the transport sector from 2010 2015 is an
estimated USD 50 billion, including:
- Airports: USD 9.6 billion
- HCMC Metro Rail: USD 10 billion
- Hanoi Metro Rail: USD 11.7 billion
- Ports: USD 7.6 billion
- Roads, Bridges: (USD 14.4 billion)
- Rail projects: USD 5.6 billion (not including proposed USD 56 billion north-south
bullet train)

3.2.1 RAIL
Vietnam has a total of 2,600 km of rail lines linking major population centers. There
has been virtually no investment to upgrade existing lines or to build new routes over the
past thirty years. Trains have a maximum speed of 70 km/hour but frequently have to
slow to under 30 km/hour along older sections of track or when crossing aged bridges
along the network. The number of people travelling by train in Vietnam fell 2.6% in 2009,
to about 11 million last year, according to the General Statistics Office. There are no
subway or elevated rail lines in main urban centers of Hanoi and HCMC.
State-owned Vietnam Railways Corporation operates all the tracks and rolling
stock in Vietnam.
Metro Rail Project
In Ho Chi Minh City and Hanoi, there are a series of metro rail projects under
evaluation, including both elevated rail and subway routes. Some 19 different metro rail
projects are under consideration in these cities, however just five or six of these projects
will likely begin construction from 2010 2015.

Viable projects are dependent upon ODA funding, therefore the best opportunities
lie with projects with committed ODA funds. According to representatives from the
HCMC Management Authority for Urban Railways, private investments or BOT
investment structures are not likely to be used because cost recovery from ticket fees
and station revenues are not sufficient to cover land costs (relocation), construction and
operation expenses.

The Ho Chi Minh City government is considering plans for six subway lines totaling
107 km in length and three elevated monorail routes by 2020. The HCMC Railway
Management Department estimates total investment capital required for the planned
routes will be an estimated USD 10 billion. The HCMC Management Authority for Urban
Railways (MAUR) is the manager of, and main contact point for, metro rail projects in


55
HCMC. Of these projects, three appear most feasible due to committed ODA funding,
several foreign companies and banks are associated in the projects regarding to
opportunities to finance and/or to be contractors, including Italian ones.

Metro Line 1, Ben Thanh Suoi Tien: Preliminary construction started on the
first project, a 19.7 km subway and elevated rail line linking District 1 in downtown
HCMC with Suoi Tien suburb to the northeast of the city. The Japan Bank for
International Cooperation (JBIC) is financing some USD 904 million of the USD 1.1
billion total cost, with the remaining funds supplied by the HCMC government.
Because the project is funded with Japanese ODA, at least 60% of the contract
value must be awarded to Japanese companies. Japans Nippon Koei Co. has won
initial design and consultancy contracts, with Sumitomo Corporation and Frances
Alstom reportedly bidding for the construction packages.
The project is an estimated two years behind schedule and there are concerns that
the original project cost of USD 1.1 billion is too low due to increases in land clearance
costs and higher construction materials prices. The current scheduled completion date is
2015. Three main construction packages will be awarded, i) underground rail works, ii)
Elevated rail works, iii) Electrical engineering and materials.
According to MAUR, several contractors have already been shortlisted for the
three main packages. However it is likely that winners of the tenders for these packages
will also sub-contract work to additional firms.

Metro Rail Line 2, Ben Thanh Tham Luong: A second metro rail project in
HCMC runs from the city center towards Tay Ninh district to the northwest. The 19 km
line is expected to cost USD 1.2 billion, with the majority of the route underground.

The project has secured funding from the Asian Development Bank (USD 540
million), German Development Bank (USD 325 million), and European Investment Bank
(USD 203 million). Due to funding from ADB and European Banks, European companies
are likely to be selected for construction and design packages. Prefeasibility studies for
the route have been completed.

In 2010, tenders will be held to assign the main design and construction consultant
for the route. In 2011, tenders are scheduled to be issued for the main construction
packages. The project completion date is 2016 2017.


Metro Rail Line 5, Saigon Bridge Binh Chanh: The Government of Spain
has committed an estimated USD 300,000 to provide technical assistance for planning
of Metro Rail Line 5. In addition, the Government of Spain has signed a preliminary
Memorandum of Understanding with the Ho Chi Minh City Peoples Committee to
provide up to 500 million EURO in ODA financing for the line.

Consultancy contracts were signed with Spanish companies Idom Ingenieria Y
Consultoria S.A and with Ardanuy Ingenieria S.A to complete feasibility studies for this
project and connecting lines.

In Hanoi, some ten different plans have been submitted by domestic ministries and
foreign partners for development of elevated rail or subway networks. The city


56
masterplan calls for eight urban railway lines by 2020 with a total length of 229
kilometers and a combined investment capital of USD 11.7 billion. Of these, three
projects appear most likely to be undertaken from 2010 2015.
Hanoi Noi Bai Airport Japans Itochu is conducting feasibility studies for a
USD 700 million, 45 km rail line linking Hanoi to Noi Bai International Airport. Japanese
ODA is the most likely source of financing for the project.
Hanoi Rail Station Tu Liem District The 12.5 km subway system, including
8.5 km of elevated rails and 4 km underground, will start from Hanoi Central Railway
Station and end in Tu Liem District. Total investment costs are 504 million Euro, with 200
million EU financed by French ODA, 80 million EU from AFD, and 225 million EU from
the Vietnamese government. The project is under development, and under the
management of Vietnam Railway Corporation. French company SYSTRA, and local firm
TRICC Joint Stock Company have been awarded consultancy contracts.

The Chinese and Vietnamese governments signed agreements for construction
of a 13-km elevated rail line. Under the agreement, the Chinese government is to
finance USD 420 million of the USD 550 million project. Construction is to be managed
by China Railway Construction Co. #6, with scheduled start date in 2010 and completion
in 2014.
Four additional projects in Hanoi involve some form of cooperation between Hanoi
authorities and Japanese donor agencies (JBIC and Japan International Cooperation
Agency). The most recent is a memorandum of understanding between JICA and the
Hanoi Peoples Committee to conduct feasibility studies for a 15.2 km subway. This
subway would run from Thang Long in the suburban district of Tu Liem to Thanh Xuan
District. Japanese ODA would finance 85% of the USD 1.4 billion project.

National and Provincial Rail Projects
The largest rail project under consideration in Vietnam is a high-speed bullet
train rail line. The 1,555 km line would run the length of the country, linking Hanoi with
Ho Chi Minh City . If approved, the USD 56 billion project is likely to be funded primarily
by Japanese ODA. The Vietnamese government and Vietnam Railways Corporation are
in discussions with a consortium of Japanese contractors with experience in the sector,
including Sumitomo Corp., Mitsubishi Heavy Industries Ltd., Itochu Corp. and Kawasaki
Heavy Industries Ltd.

Hanoi Lao Cai. Vietnam Railways Corporation is conducting upgrades and
modernizing the 285 km rail line between Hanoi and Lao Cai, at the China border. Work
is focused on replacing worn track, building new bridges and road crossings, expanding
stations and modernizing signalling systems to allow larger trains on the route. The ADB
is financing USD 60 million of the USD 160 million project, with the French Development
Agency and French Government providing 32 million Euro. The project is scheduled for
completion in 2012.
The MPI and Ministry of Transport have developed numerous plans to invest in
new national and municipal rail projects to 2020. The government has identified eleven
rail projects that are open to BOT investments by domestic firms, foreign companies or
joint ventures. Total investment capital for the projects is estimated at some USD 3.3
billion.


57


Table 3.8 Rail Projects Calling for Investment
Project Location
Length
(km)
Capital
(million
USD)
Form
of
Investment
Upgrade of Dalat
- Thap Cham Railway
South, Ninh
Thuan, Lam Dong
Provinces
84 320 BOT
Bao Lam - Phan
Thiet Railway
South, Ninh
Thuan, Lam Dong
Provinces
100 500 BOT
Bien Hoa - Vung
Tau Railway
South, Dong
Nai, Vung Tau
Provinces
78 400 BOT
Trang Bom - Hoa
Hung Railway
South, Dong
Nai, HCMC
30 550 BOT
Saigon - Loc Ninh
Railway
South,
HCMC, Binh
Duong, Binh Phuoc
131 300 BOT
Saigon - My Tho
Railway
South,
HCMC, Mytho
87 447 BOT
Hai Van
Underground Railway
Central,
Danang, Hue
200 BOT
Total 3,247

Source: Ministry of Planning and Investment, Ministry of Transport


58
3.2.2 AIRPORTS
Vietnams Civil Aviation Authority of Vietnam (CAAV) is the main administrative
body overseeing the aviation industry in Vietnam and reports directly to the Prime
Minister. The CAAV expects air passenger traffic in Vietnam to grow 9-11% per annum
from 2010 2015 and 10-12% from 2015 2020.
Total air passenger volumes through Vietnams airports in 2009 were
approximately 17.5 million, according to the CAAV.
Vietnams airport infrastructure is currently able to meet existing passenger
throughputs and has sufficient capacity to accommodate expected volumes through
2015. Most investment in airport infrastructure is therefore in new terminals, lengthening
runways, and modernization/ upgrades to existing equipment.
Ho Chi Minh Citys Tan Son Nhat Airport is Vietnams largest airport, serving more
than ten million domestic and international passengers in 2009. In 2007, a Tan Son Nhat
Airport added a USD 200 million international terminal. The 100,000 square meter facility
has a capacity of 10 million international passengers per year. The previous terminal
was converted to serve domestic passengers, bringing total passenger capacity at Tan
Son Nhat to 18 million passengers per year.
In Hanoi, Noi Bai Airport The other airports with significant passenger throughputs
include Noi Bai Airport in Hanoi with 7.1 million passengers, Danang Airport with 1.4
million and Hues Phu Bai Airport with 520,000 passengers per year.
CAAV is in the process of converting existing airports at Cat Bi Island (near
Haiphong), Chu Lai in central Quang Ngai province, Phu Quoc Island, and Cam Ranh
from domestic to international airports.

Long Thanh International Airport
The most significant new airport project under consideration is the USD 5 billion,
Long Thanh International Airport in Dong Nai Province, 50 km to the northeast of Ho Chi
Minh City. An additional USD 3 billion investment is planned for Phase II of the airport.
Long Thanh is slated to become a new international airport servicing HCMC,
eventually taking over international traffic from Tan Son Nhat Airport. The Prime Minister
has indicated that the project may be opened to foreign investors, built as a BOT or
BOO.
The airport is to be built in two phases, with the USD 5 billion Phase I having
design capacity of 20 million passengers per year, with a passenger terminal and two
runways. The plan for Phase II envisions four runways 4,000 meters in length and 60
meters wide, capable of accommodating heavy long-haul planes, including the Airbus
A380. Total capacity will be 80 to 100 million passengers and 5 million tonnes of cargo
per year.
The CAAV has awarded a contract to Japan Airport Consulting Company (JAC) to
conduct feasibility studies and master planning for the airport. JAC was the main
designer and contractor of the USD 200 million international terminal at Tan Son Nhat
Airport. The Tan Son Nhat terminal was funded by Japanese ODA, and JAC used four
subcontractors Kajima, Taisei, Obayashi and Maeda to construct the terminal and
acquire and install the equipment.


59
The government has identified airport construction projects with expected capital
needs of USD 9.6 billion through 2020.


Table 3.9 Airport Projects Calling for Investment
Project Location Specifications
Capital
(million
USD)
Form
of
Investment
Chu Lai
International
Airport
Central
(Quang Nam
Province)
Capable of
handling 4 million tons of
cargo per year
1,000 BOT,
JV
Cam
Ranh Intl.
Airport
South-
Central (Khanh
Hoa Province)
By 2015,
throughput of 1.5 million
passengers per year, by
2025 2.65 million
190 JV
Long
Thanh Intl.
Airport
South 8-10 million
passengers per year
8,000 BOT
Cat Bi
Airport upgrade
North
(Haiphong)
n/a 35 JV
Van Don
Intl. Airport
North,
Quang Ninh
3.5 km runways, 3
million passengers per
year
210 JV
Phu Quoc
Intl. Airport
South 2 million
passengers per year,
capable of receiving
planes of capacity similar
to Boeing 777
156 JV
Total 9,591

Source: Ministry of Transport, CAAV, Ministry of Planning and Investment

3.2.3 PORTS
Vietnams port infrastructure is at capacity, particularly in southern provinces
where most manufacturing and FDI is concentrated. Container demand in southern ports
is an estimated 6.3 million TEU, while port capacity is 5.8 million TEU. Ports in and
around Ho Chi Minh City account for some 65% of total container throughputs in
Vietnam.
The key ports in Ho Chi Minh City have shallow drafts and can only accommodate
feeder vessels under 30,000DWT. Similarly, the main port in northern Vietnam at
Haiphong can only receive ships of less than 30,000DWT. These vessels stop at Hong
Kong and Singapore ports for offloading to larger ocean vessels, increasing shipping
times and costs.


60
Major FDI exporters in footwear, garments, furniture and other industries are facing
delays during peak production periods at existing ports, and the delays are expected to
worsen over the next three years.
APL Shipping Lines is expecting demand for container shipments in the south to
increase by an average of 20-25% per year over the next five years.


Chart 3.2 Southern Region Container Capacity and Demand 2002-2014 Unit: 000 TEU
















Source: APL
Note: Future demand based on growth of 20-25% per annum. Future capacity based on planned
port projects at Hiep Phuoc in HCMC and Cai Mep - Thi Vai in Vung Tau.
The government is aware that port congestion is now a critical issue threatening
Vietnams export growth and numerous projects are underway for construction of deep-
water port facilities in north, south and central Vietnam.
In December 2009, Vietnams Prime Minister approved a seaport development
plan to 2020. The plan estimates that approximately USD 20 billion of new investment is
needed to meet expected demand. Currently, the countrys ports handle approximately
250 million tons of goods per year. This is expected to double by 2015 and quadruple to
1 billion tons by 2020.


,000
,000
,000
,000
0,000
2,000
4,000
6,000
8,000
002 003 004 005 006 007 008 009 010 011 012 013 014
ear
TEU
Capacity
TEU
Demand


61

The government lacks capital to develop the necessary ports, and the
development plan indicates the state budget can finance just 12-15% of the total
amounts required. Private investors and ODA funds will be required for the balance. The
government has been aware of the funding shortfall in the port sector for several years,
and has already opened the sector to private investment, including both domestic and
foreign investors. Most of the investments by foreign companies have been structured as
BOTs and joint ventures with leading Vietnamese port and shipping companies.


62
Foreign companies are participating via joint ventures with local firms at Saigon
Premier Container Terminal in Ho Chi Minh City, the Cai Mep- Thi Vai port complex near
Vung Tau, Hiep Phuoc Port near Ho Chi Minh City, and at ports near Haiphong and Cai
Lan in the north. Five of the ports are being developed by foreign companies, including
Hutchison Port Holdings, Maersk, PSA Singapore Terminals. Initial phases of some of
the ports have opened already, with others in the first of multiple construction phases.
The most significant project completed with foreign investment is Saigon Premier
Container Terminal in Hochiminh City by a joint venture between DP World (80%) and
Tan Thuan Industrial Promotion Company (20%). The port is developed with total USD
360 million with size of vessels to be served is 2,200 teus.

The most significant projects are at a port complex at the Cai Mep Thi Vai region
of Vung Tau province that will eventually replace Saigon Port. The plan for the complex
calls for seven container and general ports with total investment capital of USD 700
million. The ports are located along the Thi Vai river where drafts are a minimum of 14
meters, capable of handling large international container ships of 50,000-80,000 tons.
The complex is 125 kilometers from HCMC and in proximity to major industrial zones
and exporters located in Dong Nai and Binh Duong provinces. The opening of initial
phases at these ports enabled the first direct shipments of goods from Vietnam to key
export markets in the U.S. and Europe, starting in 2009

Key projects in this region include

Saigon International Terminals Vietnam Port (SITV Port)
Hong Kongs Hutchison Port Holdings obtained a license to form a 50-year joint
venture with Saigon Investment Construction and Commerce Co., Ltd for construction of
a container port. The BOT venture is building a USD 260 million facility with a throughput
capacity of 1.1 million TEUs per year. The port is on 33.7 hectares of land and will have
three berths along 730 meters of quays. The port can accommodate ships of up to
60,000 DWTs.

Phase 1 of the port is already under construction. China Harbour Engineering
Company (CHEC) is the EPC contractor of the three main construction packages,
winning a contract valued at USD 163 million. Port managers indicated that upcoming
tenders in 2010 and 2011 would focus on equipment rather than construction or
engineering services.

Expected equipment needs during phase I include:
Container cranes: 4
RTG cranes: 9
Forklifts: 6
Reach stackers: 3

In phase II, expected equipment needs include:
Container cranes: 3
RTG cranes: 15
Forklifts: 3
Reach stackers: 2






63
PSA Singapore Terminals Saigon Port (PSA-SP)
Singapores PSA Terminals formed a joint venture with Saigon Port for
construction of a deep water container port in Vung Tau province. The port is on 54
hectares and includes four wharves, to be built in two phases.

Phase I cost USD 165 million and began operations in 2009, accommodating ships
of up to 80,000 DWT. Japanese firm Penta-Ocean Construction Co Ltd was the EPC
contractor for the ports first phase. Koreas Doosan supplied equipment for the terminal.

Phase II is budgeted at USD 133 million with a completion date of 2017. When
both phases are operational total throughput capacity will be 2 million TEUs per year.

Port managers indicated that Phase II construction would begin depending upon
market conditions and that previous contractors would likely be selected for construction
of the second phase.

Cai Mep International Terminal (CMIT)
Maersk A/S, Saigon Port Company, and Vietnam National Shipping Lines
(Vinalines), formed a joint venture for two-wharf container and deepwater port with
investment value of USD 200 million. Calyon Bank and EKF, the Danish government
export credit agency, signed a USD 200 million credit facility with the joint venture
shareholders to finance construction of the project.

The port is being built on 48 hectares and the wharves with total berth lengths of
600 meters. Port capacity will be 1.1 million TEUs per year. Construction started in 2008
and the port is expected to begin operations in late 2010 or 2011. Koreas Posco was
selected as the main contractor for the project. Port managers did not indicate any
upcoming equipment or construction needs for the port.


SP SSA International Terminal Port
SSA Marine (US) signed a joint venture with Saigon Port and Vinalines to build a
USD 282 million port on 60 hectares at Cai Mep Thi Vai. Plans include 600 meters of
berth frontage and container throughputs of 1.35 million TEU per year. The port will
accommodate ships of up to 80,000 DWT.

China Harbor Engineering Company won the main EPC contract for construction
of the port. The port is scheduled to be completed in 2012.

When the port is operational the port will require six ship-to-shore post-Panamax
cranes.
According to SSA Marine, the port has not yet purchased ship to ship, rubber tyre
gantry or other container handling equipment for the terminal.

Tan Cang Cai Mep Port
A container and deepwater port developed by a joint venture of Saigon New Port,
Hanjin Shipping (Korea), Mitsui O.S.K Lines (Japan), and Wanhai Lines (Taiwan). The
port is on 60 hectares and will include three wharves and 900 meter berth length. The
port can accommodate ships up to 90,000 DWTs during phase I of operations and
110,000 DWT during the second phase of operations.



64
The first phase of the port opened in June 2009 and includes a 300 meter wharf.
The port includes three post-panamax gantry cranes, three reach stalkers, 15 trailers
and three tugboats. Annual capacity is 600,000 TEUs.

The USD 196 million second phase of the investment is under construction and will
include two wharves with total berth length of 590 meters. The port will require 6 post-
Panamax cranes and has a capacity of 1,200,000 TEUs per year. The ports second
phase is scheduled to begin operations in 2011.




Saigon Premier Container Terminal (SPCT)
At Hiep Phuoc, a southern district of Ho Chi Minh City and center for heavy
industries, Dubai Port World (DP World) opened the first phase of the Saigon Premier
Container Terminal in October, 2009. The first phase includes two berths of total length
of 500 meters and storage capacity for 15,000 TEUs. Japans TOA Construction Co.
won the EPC contract for the port. DP World plans to expand the capacity of the port
over the next 2-3 years to 1.5 million TEUs per year. SPCT is a joint venture between
DP World (80%) and Tan Thuan Industrial Promotion Company (20%).

Cai Lan Port
In northern Vietnam, Vinalines, operator of ports at Haiphong and Cai Lan, signed
an agreement with SSA Marine (US) to invest in a USD 100 million upgrade of Cai Lan
Port. Under the agreement, SSA Marine, Vinalines and Quang Ninh Port have formed a
joint venture to develop and operate three container berths at Cai Lan. The joint venture
is pending government approval. Separately, Vinalines is preparing to dredge the
passage leading to Cai Lan Port to accommodate ships of up to 40,000 DWT.







Port business opportunities


65
Because construction and Phase I operations have started at many of the key
ports above, there are limited opportunities for significant EPC or construction contracts.
Port operators indicated they were likely to use the same contractors they selected for
Phase I for any Phase II construction. However, construction and engineering firms
specializing in port construction should contact port owners identified above to introduce
services and assess any potential opportunities (See Appendix I for contact details).

The main equipment sales opportunities at these partially completed ports and at
existing ports already in operation are for:
- Rubber Tire Gantry cranes (RTGs)
- Post Panamax container cranes
- Trailers
- Reach stackers
- Tugboats
- Forklifts

Other opportunities for construction firms, engineering firms or project investors for
two significant upcoming projects identified in the Port Development Plan. These
projects are in initial stages of development and are described below.

Lach Huyen Port
The Ministry of Transport has assigned Vietnam National Shipping Corporation
(Vinalines) to develop a deep water port at Lach Huyen, in northern Vietnam near
Haiphong. The port will be the largest transshipment port in northern Vietnam,
accommodating ships of 60,000 80,000 DWT. The port will include four container
terminals, two bulk cargo terminals, and five terminals for food and other goods.Total
capacity would be 35 million tonnes of goods per year.

Development of the port is divided into two phases. Component A consists of
building infrastructural works outside the port, with a total investment capital of USD 260
million sourced from ODA loans provided by the Japan International Cooperation
Agency (JICA) and capital from the Vietnamese state budget. Component B includes
construction of the port facilities.

Itochu Corporation has requested approval from the Ministry of Transport and the
Vietnamese government to partner with Vinalines for construction of the first phase of
the port. The first phase of the port will include two container terminals and total
investment of USD 165 million.

Van Phong Port
In south-central Vietnam, the government has approved a plan to develop an
international transshipment port at Van Phong Bay, near Nha Trang. The government
and Ministry of Transport intend for the port to serve as a regional transshipment hub
similar to those operated in Hong Kong and Singapore. The port will accommodate ships
of up to 200,000 DWT. Current plans for the port include construction of 25 terminals for
container ships with loading capacity of 15,000 TEUs, and 17 bulk cargo piers capable
of handling 17 million TEUs a year.

The first phase of the Van Phong project, scheduled to start in 2010 or 2011 and
finish in 2015, will see construction of two large and five small berths with a quay size of
up to 2,260 meters. This would allow the facility to handle 9,000 TEU vessels and have a
total container throughput capacity of two million TEUs per year. A second phase of the


66
project foresees the addition of four large and three small berths, with 2,377 meters of
total berthage that would allow for the handling of 12,000 TEUs ships with an estimated
container throughput of between four million to 4.5 million TEUs.

Total investment for the port is estimated at USD 3.6 billion, according to the
government-approved port development plan. Vinalines has been assigned as the
project manager for the port. The government has said the Van Phong project will be
financed either through direct investment or through Private Public Partnership (PPP)
joint ventures. It is in discussions international partners, particularly companies from
Japan, regarding construction and operation of the ports on a BOT or build-lease-
transfer arrangements.

Initial construction of phase I of the port started in November 2009. Two
contractors were awarded tenders for this stage of construction, local firm Vietnam
Waterways Construction Corporation (Vinawaco), and SK Engineering Construction Co.
(South Korea).

The Ministry of Planning and Investment and Ministry of Transport have also
identified a series of port upgrades and specialty ports (for oil and gas) open to domestic
and foreign investment.


Table 3.10 Proposed Port Projects Calling for Investment
Project Location Capacity
Capital
(million
USD)
Form
of
Investment
Nhon Hoi
Container Port
South
Central, Binh
Dinh Province
30,000DWT
ships, 1.3 2 million
tons of cargo per year
50 JV
Dung Quat
Container Port
Central,
Quang Ngai
Province
50,000DWT
ships, 12 million tons
per year
TBD JV,
100%
Foreign-
owned
Lien Chieu
Port
Central,
Danang
TBD 300 TBD
Ky Ha Port
and Commercial
Zone
Central,
Quang Nam
Province
20,000DWT
ships, 2 million tons per
year
800 JV
Petroleum
Port Sao Mai Ben
Dinh
South,
Vung Tau
Province
TBD. To be used
for planned oil refinery
in Vung Tau 2015
1,000 JV
Nghi Son Port North,
Thanh Hoa
Province
Port servicing
Nghi Son Refinery and
petrochemical complex.
2 million tons per year
100 JV,
100% foreign-
owned
Danang Port
Phase II
Central,
Danang
Two wharves, dry
docks
110 BOT
Total
Source: Ministry of Planning and Investment, Ministry of Transport


67

3.2.4 ROADS AND BRIDGES

Road remains the dominant means of transport, accounting for 67% of cargo
moved.
Roughly 85% of the national roads are paved, while only 54% of the provincial
roads, and 20% of the district roads are paved. Almost all roads are two-lane roads and
major constraints include narrow widths, poorly designed junctions, and restrictive
vehicle weight limits.

Vietnam does not have modern expressway / highway linking northern and
southern parts of the country. Route 1A running the length of the country is of varying
quality, with much of the route a single lane road of insufficient width. To address issue,
government and ODA providers planning route upgrades to key segments of the North
South highway.

To address road infrastructure constraints, the Ministry of Transportation and MPI
have developed plans for a series of road upgrades.The introduction of toll-road
concessions and BOT structures for road projects has encouraged several semi-private,
and private sector firms to participate in road infrastructure investment (Vietnam
Expressway Corporation, ITACO, CII).

In the North, the government has approved a series of road investments to
improve road links between Hanoi and Haiphong, Ha Tay to Thanh Hoa, and main
routes to border crossings with China. In addition to trade facilitation, government
prioritizing improved road links to northern regions for security reasons, improved access
for military vehicles.

The government has approved an estimated 2,160 km of new highway projects as
part of a national Transport Masterplan. The table below summarizes approved highway
projects in Vietnam to 2020.



68

Table 3.11 Summarizes approved highway projects in Vietnam to 2020.



Vietnam Expressway Corporation (VEC) has been designated as project investor
for a number of key expressway projects, including four key routes in the north. VEC is
partially state-owned and under the administration of the Ministry of Transportation.

Two of the projects in the north have started construction and have received co-
funding from ODA sources (Hanoi Lao Cai and Cau Gie Ninh Binh)

Under the Ministry of Transport road development plan, a total of 2,160 km of new
roads are being built between 2008 and 2020. Of these, 445 km are under construction,
with an additional 1,680 km of roadways in the project preparation phase. In addition, the
Prime Minister has recently approved a plan to build a 3,041 km highway along
Vietnams coastline.

Vietnam Expressway Corporation (VEC) under the Ministry of Transport is the
main developer of new roadways in Vietnam. The majority of roads and bridges in
Vietnam are built by state-owned construction companies including Construction
Company No.1, Lilama, Cienco, and Vinaconex, among others. Therefore, most
opportunities for foreign companies in the sector are for equipment and machinery
supply rather than engineering or construction contracts.



69
However, there are opportunities for large-scale bridge, tunnel, and highway
projects where greater technical expertise is required or where funding is primarily from
ODA sources. Most ODA funded roads in Vietnam have contracted Japanese
engineering and construction firms for project management, who have then worked with
local construction firms for project implementation.

Key road projects under development in Vietnam include,
i) Vietnams Prime Minister has approved a plan to spend USD 1.52 billion to build
a north south highway along Vietnams coastline. The highway will cover 3,041 km and
include construction of new road and upgrading of existing roads. From 2010 - 2020, the
government will spend some USD 800 million to build, upgrade and improve 892
kilometres or road along the route.

ii) A 264 km highway linking Hanoi to Lao Cai, on the border with China. Total
investment capital is USD 1.25 billion, with USD 1 billion financed by the Asian
Development Bank. The first of eight construction packages was awarded to Koreas
POSCO. Construction expected to be completed by 2015.

iii) A 100 km upgrade to Highway 5 linking Hanoi to Haiphong started preliminary
construction in 2008 but has faced delays due to resident relocation issues. Therefore a
significant portion of the project is still to be built. Project investors include Vietnam
Infrastructure Development and Financial Investment Corp (VIDIFI), BIDV bank and
Vietcombank. Korea's GS Construction won an initial construction package for part of
the route.

iv) A 130 km highway linking Ha Noi to Lang Son on the China border. Total
investment estimated at USD 900 million. The ADB may finance up to USD 500 million
for the project, but the loan not yet approved. Vietnam Expressway Corporation is the
project developer, with construction scheduled for 2011 to 2015.

iii) A 51 km highway through HCMC - Long Thanh - Dau Giay improving transport
links between HCMC and Dong Nai province, and providing the main road route to the
planned Long Thanh International Airport. Total investment size is USD 932 million,
with Japan Bank for International Cooperation (JBIC) financing USD 516 million, the
ADB USD 410 million, and Vietnam Express Corporation USD 5.7 million. Initial
construction tenders have been awarded.






70
In the North, the government has approved a series of road investments to improve
road links between Hanoi and Haiphong, Hanoi to Thanh Hoa, and main routes to border
crossings with China. Planning focuses on improving transport links between industrial
zones in Hanoi, Hung Yen and Bac Ninh provinces with ports in Haiphong. In addition,
road projects are underway or planned linking Hanoi to border crossings in the north to
improve China - Vietnam trade routes

Hanoi - Lao Cai, China Border
Route: 264 km. Passes through Hanoi, Vinh Phuc, Phu Tho, Yen Bai and Lao Cai
provinces
Investment: USD 1.25 billion
Financing: ADB 1.096 billion, Vietnam government and VEC the remainder
Status: First of eight construction package awarded to POSCO Korea
Scheduled Completion Date: 2012.


Hanoi Haiphong
Length: 100 km. 6- lanes.
Project Start: 2008
Investor: BIDV, Vietcombank

A consortium of domestic investors, including Vietnam Infrastructure Development
and Financial Investment Corp (VIDIFI), BIDV bank and Vietcombank, was awarded the
project to expand the existing Highway 5 route between Hanoi to Haiphong
The Highway 5 expressway project linking Hanoi and Haiphong has not started
construction and is believed to be delayed due to land compensation and relocation
issues
Korea's GS Construction won an initial construction package for part of the route






71
Ha Tay Ninh Binh
Length: 50 km
Project Start: 2007
Investor: VEC (seeking additional funds / bond sales)

Ninh Binh Thanh Hoa
(pt of North-South Hwy Project)
Length: 60 km
Investor: To be determined

A route from Ninh Binh to Thanh Hoa province is being administered by the
Vietnam Road Administration (VRA). Project investor has not been selected yet. VEC,
Thanh Hoa Cement Co, and the military-owned telecom company Viettel are reportedly
interested in bidding for the project.

Hanoi Lang Son Route
Length: 140 km. 6 lanes.
Project Start: After 2010
Developer: VEC

Halong Mong Cai
Length: 170 km, 4 lanes.
Project Start: After 2010
Developer: VEC

In the South, the main road infrastructure projects underway are intended to
improve transport links between industrial zones near HCMC and the container port
complex under development at Cai Mep-Thi Vai, near Vung Tau. Road, bridge and
tunnel projects are under construction to improve traffic flows into HCMC. Projects under
development include the Saigon Long Thanh Dau Giay Highway, the East-West
Highway and tunnel project, and plans to widen Highway 51 linking HCMC with Vung
Tau

Other road projects are focused on improved transport between HCMC and the
Mekong Delta to facilitate trade of agriculture and seafood products.

HCMC - Long Thanh - Dau Giay
Route: 51 km. Passes through HCMC and Dong Nai provinces.
Will be main route to HCMC from planned Long Thanh International Airport
(expected completion date of airport 2016 - 2017)
Investment: USD 932.4 million
Financing: JBIC USD 516.5 million; ADB USD 410.2 million; VEC USD 5.7 million
Status: First construction tender awarded
Scheduled Completion Date: 2012



72


Ben Luc (HCMC) - Long Thanh
Route: 45 km. Start from District 2 HCMC to Long Thanh, Dong Nai Province
Investment: USD 747.9 million
Financing: To be determined.
VEC project developer
Status: Planning stages
Scheduled Completion Date: Start date 2010, scheduled completion 2013.






73
3.3 ENVIRONMENTAL SERVICES, WATER AND SANITATION

Vietnam is facing severe degradation of its environment due to rapid economic
growth and industrialization while lacking adequate safeguards to deal with the resultant
pollution. Although the country has passed comprehensive environmental protection
laws, enforcement is weak. Vietnam now faces widespread industrial pollution,
especially of its waterways.

Lack of government planning and investment has resulted in a deficit of water
supply and a shortage of wastewater and solid waste treatment facilities. The Ministry of
Industry and Ministry of Environment (MONRE) estimate that USD 7.6 billion (120,000
billion VND) of investment is needed to tackle pollution in 16 key industries.
Approximately one half of this amount is required in the key extractive industries of oil,
gas and mining along with utilities (electricity generation) and steel.



Table 3.12 Pollution Remediation Investment Necessary for Key Industries
Industry
Required
Investment
(billion VND)
Textile 5,220
Oil and gas (mainly for oil spill treatment) 23,400
Coal and mineral exploration 10,800
Chemicals 7,400
Paper 8,770
Steel 12,800
Alcohol Beer Soft drink 3,700
Electricity (for reduction in air pollution at thermal
plants and disposal of transformer oils)
12,420
Cement 2,600
Furniture / Handicraft 2,900
Industrial zone 8,500
Health 3,200
Agriculture 2,100
Transportation 1,500
Tourism 3,000
Seafood (for aquaculture industry) 16,000
Total 124,310

Source: Ministry of environment and natural resources





74
Examples of inadequate waste treatment were pervasive across industry.
Government ministries estimate that 65% of wastewater from textile factories remains
untreated, much of which contains chemicals from fabric starching and dyeing. In the
paper and pulp industries, approximately 90% of the 500 paper and pulp enterprises in
operation have either no wastewater treatment plants or use outdated and ineffective
equipment. In the chemicals and related industries (detergents) just 50 of some 900
enterprises operate wastewater treatment plants.

Hazardous waste from hospitals has become a primary concern. There are some
670 hospitals and clinics operating without wastewater treatment plants, resulting in
120,000 m3 of hospital wastewater discharged into the environment each year, and an
additional 24,000 tons of hazardous solid waste that is disposed without proper
treatment.

Additional studies indicate that USD 5.6 billion of investment is needed for
wastewater treatment, urban waste management, solid waste treatment, and waste
water drainage systems in 20 major provinces alone. (This estimate includes some of
the environmental services investment needed for the key industries cited above.)

Based on a survey of the 20 key provinces, a total of 6 million tons of solid waste is
generated in urban centers per year, and an estimated 2 million m3 of untreated
wastewater is discharged into the water supply each day.

3.3.1 WATER SUPPLY
The government has set numerous targets for water supply and sanitation in urban
and rural areas for this year and out to 2020. These include 95% of urban residents
having clean water access by 2010, and 40% of urban/industrial wastewater treated. In
rural areas, the government is targeting 85% access to clean water by 2010. By 2020,
100% of residents in urban areas are to have access to 150 liters of clean water per
capita per day, while in rural areas 100% are to have access to 60 liters per capita per
day.

It is estimated Vietnam needs some USD 600 million of investment per year to
reach these targets by 2020. This compares with some USD 1.1bn invested in the last
decade. Hence spending needs to rise by a factor in excess of five-fold to meet these
aims.


ODA (Overseas Development Assistance) loans have been the primary means of
financing investment in urban water supply and sanitation accounting for 85% (USD 838
million) in the last decade. The balance, around USD 165 million, has come from the
government budget.

Major donors such as the World Bank and Asian Development Bank have
indicated that preferential loans for water and sanitation projects are unlikely to continue
at the same level over the next ten years. As a result, the target investment levels of
USD 600 million per year will need alternative funding sources. These may include
additional government budget allocations or financing through borrowing. , Wider use of
BOT (build-operate-transfer) or BOO (build-own-operate) projects would invite greater
private capital, potentially both in the form of equity and debt.


75



Table 3.13 Water Supply and Sanitation Investment Targets
Targets 2000-2010 2010-2020
Urban Water
Supply and
Sanitation
By 2010 95% urban
access to clean drinking water,
40% urban wastewater treatment
and 60% disposal of "dangerous
waste" from industry, hospitals,
etc.
100% of urban population
having access to safe water of 120-
150 l/capita/day. All urban areas
with suitable water drainage
systems and wastewater treatment
facilities.
Rural Water
Supply and
Sanitation
85% of the rural population
having access to national-
standard clean water of minimum
60 l/day and 70% of rural
households using hygienic
latrines
100% of rural population
having access to national-standard
clean water of minimum 60 l/day
Investment
Required
USD 1.8 billion USD 6 billion
Source: World Bank
................................................................................................................................................................................
The public sector dominate existing supply under the auspices of the provincial or
municipal water supply companies (WSCs). Historically, the WSCs have been hampered
by central government price caps on water pricing, particularly for residential customers.
Low prices, combined with inefficiencies and poor management resulted in operating
losses and an inability to invest in new capacity.

The financing of urban water supply, sanitation and drainage is under the
responsibility of each provincial Peoples Committee. Due to budget shortages, the
national government provides support for capital investment and coordinates ODA funds
for water supply and sanitation projects. According to the World Bank, local and
provincial governments have sufficient budgets to fund just 5% of the urban water supply
and sanitation spending requirements. The contribution of ODA and national government
funds brings this amount up to just 25% of the total required. Either new sources of
capital need to be identified or the government will have to revise its water supply goals
for 2020. In all likelihood a shortfall in capital investment will remain leading to unmet
demand in the sector and an inability to meet government service targets.

Recognizing the shortfall several steps have been taken to restructure the industry
and attract additional funds. Municipal governments have permitted gradual increases in
water tariffs to allow WSCs to cover operating costs, at a minimum. Access to short-term
debt from commercial banks has eased somewhat though restrictions remain. . Four
water companies have been equitized so as to widen the means by which they are able
to raise funds. Most significantly, the sector has been opened to independent entities
(both private and state-owned companies) to operate water supply projects on a BOT or
BOO basis.



76
The benchmark BOO project to date has been the Thu Duc Water Supply project
in HCMC. A consortium of leading State-owned companies, government entities and
private sector firms formed a joint-stock company to operate a 300,000m3 per day water
supply plant and sell output to Saigon Water Supply Co (SAWACO) at USD 0.16 per m3.
This volume represents about 20% of the citys estimated daily demand.

The consortium is led by HCMC Infrastructure and Investment Co. (CII), a partially
state-owned company that has equitized and listed on the HCMC Stock Exchange. CII
holds 40% of the project with the remainder held by other five members, including the
HCM City Fund for Urban Development (16%), General Construction Corp No.1 (20%),
Refrigeration and Electrical Engineering Co. (REE) (10%), Water and Environment Joint
Stock Co (10%), and the Thu Duc Housing Development Company (4%). The
consortium obtained a USD 65 million loan from Vietnams Development Assistance
Fund (DAF) and in 2005 signed a USD 92 million contract with Hyundai Corporation for
construction of the plant.

Central Region Rural Water Supply and Sanitation
In February 2010, the ADB signed a loan agreement of USD 45 million for the
Central Region Rural Water Supply and Sanitation Sector Project. The project will
provide clean water and hygiene sanitation facilities to some 350,000 people in the six
central coast provinces of Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Nam and
Binh Dinh.
The Ministry of Agriculture and Rural Development is the executing agency for the
project, which is due for completion around the end of 2016.

3.3.2 SOLID WASTE TREATMENT

In 2008, according the latest figures available from the General Construction
Association, the country generated 15 million tons of waste. This includes municipal
waste -12.8 million tons, industrial non-hazardous waste - 2.7 million tons, medical
waste 24,000 tons, industrial hazardous waste 130,000 ton, and agricultural hazardous
waste 45,000 ton.

Historically municipal waste was dumped at open sites on the city outskirts., With
economic growth, industrialization and urbanization, municipalities have started to invest
in proper landfill and waste treatment. Hanoi and Ho Chi Minh City first had properly
lined landfills a little over a decade ago. Other big cities such as Hai Phong and Hue
opened similar facilities around five years ago. This has further rippled down to smaller
cities (Nha Trang, Da Nang) within the last couple of years. According to the Ministry of
Construction, in 2008, there were 91 landfills in the country, but only 17 of these (a sixth
were considered sanitary in terms of dealing with pollution relatively effectively. The
remaining ones were merely dumpsites.

Municipal waste is usually handled by URENCO (Urban Environment Company),
on a regional basis (URENCO Hanoi, URENCO Bien Hoa, etc.). These companies are
owned by the state under the local People Committee and are in charge of waste
collection, disposal and treatment. They may also have wider responsibilities for
sanitation in public spaces and buildings. Households are subject to a charge for waste
disposal service but this may be insufficient to cover the respective URENCOs costs
and they may also receive subsidies from the government.



77
URENCO Hanoi manages nearly all municipal solid waste projects in the city and
is also active in other northern provinces. It is common for private sector companies,
foreign or domestic, to seek partnerships with Hanoi URENCO when entering the sector.
URENCOs main operations are at Hanois primary landfill and waste treatment site at
Nam Son in Soc Son District. They also operate three incinerators, including two for
industrial waste and municipal solid waste at Soc Son, and one for medical waste at Cau
Dien district.

Similarly, URENCO Ho Chi Minh city is operating three of the citys four landfills
(two closed,) and is constructing an industrial/hazardous waste incineration plant in
Dong Thanh, Hoc Mon District.

Most landfills are developed and operated by regional URENCOs using state
budget, ODA or multilateral support. For example, Go Cong landfill was built with ODA
money (approximately USD 19 million) from the Netherlands in 2001. It is the first
modern landfill in Vietnam completed with leachate treatment, methane recovery and
independent power generation. Da Nang Citys first sanitary landfill, Khanh Son, was
also built with a World Bank loan in 2007.

Hanoi generates 3,500 tons of municipal waste a day while the equivalent figure
for Ho Chi Minh City is close to 7,000 tons. Demand for landfill sites is strong across the
country where other cities commonly have between 200 to 600 tons of municipal waste
per day.

A prospective opportunity to supply equipment for the expansion and construction
of two landfills in Dong Hoi province will arise in 2011 (north central coast). Financing will
be led by the World Bank under the Vietnam Coastal Cities Environmental Sanitation
project. The first sanitary landfill in Nha Trang is also being constructed with funding
from this project.

Municipalities are willing to pay between USD 5 and 16 per ton for municipal waste
to be either buried or treated. At the same time municipalities are increasing waste
disposal fees charged to households. Thus there is a clear pool of revenue in this area.
The private sector has entered accordingly with landfill and waste treatment projects. In
addition in recent years the government has encouraged private sector participation in
environmental services (so called socializing environmental services) with policies to
provide free land to companies to treat, bury or recycle waste in areas zoned as waste
treatment complexes.

The first privately built and operated landfill was built by an American backed
company Vietnam Waste Solution in Da Phuoc, Ho Chi Minh City. This landfill is one of
two active landfills in the city, receiving over 3,000 tons/day at a charge of over 16 USD
per ton to the municipal authorities. Despite good economics, (USD 17.5 million revenue
implied) the site is nonetheless poorly managed. Leachate water (water leaked from the
landfill) is untreated, flies have reached plague proportions and much negative media
coverage and complaints have resulted, the latter right up to the highest government
levels. This incident prompted other landfill sites to install leachate treatment capacity.

Besides landfill, private companies have also initiated projects to treat municipal
waste (sorting and composting). Tam Sinh Nghia, a domestic company, claimed they
had invented a technology that could recover 85% of municipal waste via composting
and recycling. The company started projects in Hue, Ho Chi Minh City, Kien Giang and


78
Binh Thuan provinces. Its composting plant in Hue commenced operations in mid-2007
but has experienced ongoing problems with odor, employee strikes and the low quality
of compost produced. In the mean time, US backed Vietstar started a USD 50 million
project over 30 hectares in Phuoc Hiep waste treatment complex in Cu Chi district, Ho
Chi Minh City with technology from Minnesota based Lemna corporation. Vietstars
grand opening was earlier this year and the performance of its technology is being
closely watched.

Both Tam Sinh Nghia and Vietstar were able to enter into agreements with local
municipalities for payments ranging from USD 6 to 16 per ton of waste
composted/recycled. Other local companies have started building composting plants in
Dong Nai, Hai Phong, Da Nang, Hue to take advantage of the revenue opportunity.
Local authorities however have turned increasingly cautious following disappointments
with local composting technologies. The problems of the Tam Sinh Nghia plant in Hue
City were mentioned above and Dong Nai provincial authorities closed down the
operations of the new composting plant of Dong Xanh company due to persistent bad
odors .

The Ministry of Construction, which is in charge of master planning and investment
for solid waste, recently announced a fund raising package of 44,000 billion VND (USD
2.2 billion ) sourced from state and local budgets supplemented with loans from the
Bank for Investment and Development of Vietnam (BIDV). The plan is to build 44
municipal waste treatment plants (BOT or BT) for all municipalities by 2020. The first
phase, up to 2015, will focus on municipalities in Mekong Delta. This initiative could
provide momentum in this sector and coupled with prevalent skepticism about the
capability of domestic technology there may be a promising opportunity for technology
transfer and equipment sales from foreign suppliers.

With regard to medical waste, hospitals have been actively installing waste
incinerators over the last 5-7 years. Most incinerators are small and imported from either
Taiwan or Japan. Advanced International JSC (AIC) is a prominent local player using
equipment from Chuwastar, its Japanese supplier

Industrial and hazardous waste disposal is similarly characterized by many small
private operators. The exceptions are two incinerators run by URENCOs in Hanoi and
Binh Duong province and a treatment plant being built in Ho Chi Minh City.

In recent years monitoring of industrial and hazardous waste disposal has been
tightened after several operators were caught dumping waste illegally. The
establishment of environmental police has been a powerful force for change in this area.
In 2008-2009 a number of treatment businesses were closed down, driving the price of
remaining services up two or even three fold (currently ranging from USD 150 to USD
500/ton). Significant amounts of industrial waste are mixed with municipal waste and
likewise much hazardous waste is disposed of illegally. Ho Chi Minh City generates an
estimated 600 tons of hazardous waste a day and only about 10% of that is treated at 11
licensed operations.

The number of modern industrial/hazardous waste treatment operations is expect
to rise steeply in the next 5 years as monitoring and enforcement continue to improve.
The government is placing more responsibility on the developers of industrial zones
where much of this waste arises. A recent regulation by the Ministry of Environment and
Resources specifies that all industrial zones must track industrial/hazardous waste to


79
ensure they are handled by licensed operations. Industrial zones have thus started to
consider this business, looking into building their own incinerators. A good point of
contact for potential suppliers is the local industrial zone authorities or the industrial
zones themselves.

3.3.3 WATER TREATMENT

Municipal wastewater treatment
Municipal wastewater treatment infrastructure is rudimentary in Vietnam. Over
90% of wastewater in Hanoi is untreated while the first large scale treatment plant in Ho
Chi Minh City only went into operation in late 2008. Wastewater treatment is non-
existent in other municipalities.

In the last five years there have been major efforts to address this problem in
Hanoi and Ho Chi Minh City. Japan Bank for International Cooperation (JIBC) is taking
an active role channelling ODA funding to build large-scale drainage systems and waste
water treatment plants for these two cities. One plant is being built in Yen So, Thanh Tri
district, Hanoi while another one is planned at Phu Do commune, Tu Liem district. These
are the first large scale treatment plants for Hanoi. The plant finished in 2008 in Ho Chi
Minh City was also funded by JIBC. According to plans for the city it will need a further
eight wastewater treatment plants in coming years.

Many municipalities have also incorporated and wastewater treatment and
drainage systems into their planning process but due to the capital cost involved few, if
any, can commence independently. They depend on state or development assistance
funding such as that being provided by the World Bank in a number of small cities.

Usually, a municipal wastewater treatment project is part of a larger infrastructure
package, managed by a Project Management Unit under city of provincial Department of
Construction or under local People Committee. If the project is funded by ODA sources,
a general contractor is often chosen from the donor country and multiple sub-contracts
are tendered to local companies.

Industrial Wastewater Treatment
Demand for industrial wastewater treatment equipment is expected to increase
significantly following recent changes to Vietnams environmental legislation. Previously,
the Law on Protection of Environment required that industrial zone owners install waste
water treatment plants once occupancy rates reach 60%. In practice, numerous zones
reached the threshold but did not install treatment facilities and the law was not
enforced.

As amended the Law now requires that industrial zones build wastewater
treatment plants as part of the initial construction and prior to tenants taking up
occupancy and commencing operations. In practice it appears the industrial zones are
requiring companies to put in place their own wastewater treatment systems before
permitting them to commence operations. However, premium zones catering to
multinational companies might conceivably gain an edge were they to provide full
wastewater treatment capacity to prospective tenants.

In July last year the Ministry of Natural Resources and Environment issued
Circular 08/2009/TT-BTNMT requiring that an industrial zone must have at least one
module of waste water treatment before any manufacturing operation that discharges


80
waste water can take up a lease in the zone. This capacity must be scaled up as
occupancy increases.

Following this Circular there has been a rush by industrial zones to build waste
water treatment plants, often using local contractors and equipment as a means to
reduce cost. Activated sludge technology (treatment using aerobic bacteria) is almost
universally used. Zones often charge around 0.3 USD per cubic meter treated.
Treatment plants capacity varies from 1,000 m3/day to 8,000m3/day depending on the
size of the zone. The required investment is around USD 100,000 to USD 170,000 per
1,000m3/day of capacity.

Waste water treatment and clean water supply are of particular concern in the
most industrialized provinces of Vietnam, including HCMC, Binh Duong, Dong Nai and
Vung Tau.

In HCMC the Department of Natural Resource and Environment estimates 1.2
million m3 of untreated wastewater flows into the citys rivers and canals each day. The
citys first significant wastewater treatment plant came online in 2009 in Binh Chanh
District. The USD 100 million plant has a designed capacity of 140,000 m3 per day and
treats some of the volumes of wastewater generated in districts 1,3,5,7 and 10. The
treatment facility is part of the Japan-funded East-West Highway and water sanitation
project now nearing completion.

In Vung Tau province, factories located in industrial zones in Tan Thanh District
(the main industrial zone area of the province) are discharging untreated wastewater into
the Thi Vai river at a rate of 33,000m3 per day, according to DONRE in Vung Tau.

According to an official at the Department of Planning and Investment in Vung Tau,
eight major industrial zones have not yet built waste water treatment facilities even
though occupancy rates have reached well above 60%, and the industrial park owners
have not built the plants despite calls by provincial environment and investment
authorities to do so.

Most major industrial zones in Binh Duong province have installed waste water
treatment systems, but waste water generated outside industrial zones is some
60,000m3 per day. The source of much of the waste water is high-polluting industries
such as dyeing, textiles, paper, rubber processing, animal breeding, chemicals and
cosmetics / consumer goods companies. At the moment, this waste is not completely
treated, does not reach environmental standards and it is discharged directly into canals
and waterways of the Saigon Dong Nai River Basin.

Despite the severity of the problem, there have been few major investments in city
or provincial waste water treatment facilities. A number of foreign companies are now
exploring investment into the sector. In Hanoi, Malaysias Gamuda Berhad is evaluating
construction of a USD 400 million infrastructure facility in Thanh Tri District. The
investment would combine construction of waste water treatment facilities and sewer
infrastructure with an associated property development. Total capacity of the waste
water treatment facility would be 190,000 m3 per day.

Treatment of waste water from certain industries such as textile, leather, paper,
metal processing and starch processing is particularly problematic for industrial zones,
as activated sludge technology is not adequate. Industrial zones would often require


81
these operations to treat water on site before discharging to zone system. This is an
area of opportunities for more modern equipment and technology transfer. For example,
AES Carbon Exchange Ltd, a Dutch Carbon trading and consulting company, has
recently helped five cassava starch processing plants in five provinces to set up project
switching from aerobic bacterial treatment to anaerobic treatment accompanied with
methane recovery. These five projects were successfully registered with the international
executive board of Clean Development Mechanism in late 2009, for emission reduction
from methane recovery.

Paper making is another potential industry with 500 paper manufacturers in the
country, of which only 10-15% has adequate waste water treatment. The industrial
pioneer, Bai Bang, a major paper manufacturer, set a recent example by installing
30,000m3/day treatment system imported from Sweden.

3.3.4 CLEAN DEVELOPMENT MECHANISM (CDM) PROJECTS

World Bank Carbon Emissions Reduction Financing
In 2010 the World Bank and other donors pledged USD 790 million for projects
related to carbon emissions reductions in Vietnam. The World Bank-run Clean
Technology Fund has pledged USD 250 million and the rest is to come from the
governments of Denmark, France and Japan. The money for Vietnam will target projects
in energy efficiency, renewable energy and enhancements to rail systems in Hanoi and
Ho Ch Minh City, among other areas.

Priority projects include hydropower where an estimated 20-30 small medium
sized plants await funding before starting construction. In addition to hydropower
investment will be available for biomass power and renewable energy projects. The
loans are often distributed via local banks led by BIDV, Vietcombank and Sacombank.

Vietnam has issued policy directives and established the administrative bodies
necessary for participating in the Clean Development Mechanism (CDM), including
Certified Emission Reduction (CER) credit trading. On August 2, 2007, the Prime
Minister issued Decision No. 130 which outlined incentives for investors in CDM
projects. The incentives include special tax treatment, lower land use / lease charges,
state investment credits and other preferences.

On July 4
th
, 2008 the Ministry of Finance and Ministry of Natural Resources and
Environment jointly issued Circular No. 58/2008/TTLT-BTC-BTN&MT (Circular 58) to
provide for the fiscal regime with respect to CDM Projects. The circular is the most
significant government decision related to CDM projects issued to date as it outlines
price subsidies available to investors in renewable energy and CDM projects.
Specifically, the circular indicates projects may be eligible for a price subsidy if they meet
the following conditions:
The products are (i) Electricity generated from wind power, solar power or ground
heat power or tides; or (ii) Electricity generated from capturing methane (CH4) from
dump sites or coal mines
The product price is evaluated by the Environment Protection Fund of Vietnam
(EPF) and the production cost is larger than the selling price under the contract (i.e. the
production price is deemed to be higher than the available selling price to off-takers such
as Electricity of Vietnam)
Sales contracts have been signed and taken effect in which the selling price is
clearly specified


82
The MONRE has issued a confirmation letter or approval letter for the project
The investor requests a price subsidy and submits an application to the EPF

The Environment Protection Fund of Vietnam will administer subsidies for CDM
projects. The Ministry of Finance will determine and approve whether the actual
expense for producing one product unit stated by the project owner is reasonable and
valid.
The Environment Protection Fund Management Council will evaluate and approve
the profit over one product unit requested by the project developer. The investor is to
submit the requested profit level to the Environment Protection Fund annually

CER Projects
The Ministry of Natural Resources and Environment and other relevant
departments responsible for CDM projects have identified approximately 110 projects
that could qualify for CER credits.

The majority of these are in the energy sector, with power projects accounting for
85% of the CDM projects under evaluation. Other CDM projects under consideration are
in energy efficiency, waste treatment and transportation.

During the first quarter 2008, Nippon Oil obtained the largest carbon credit in
Vietnam to date, receiving United Nations confirmation of a credit for 4.49 million tons of
reduced carbon emissions at its offshore Rang Dong oil field. The transaction indicated
that Vietnams CDM mechanisms are functioning in coordination with the UN's climate
control protocols.

























4. SOURCES
Table 3.14 Proposed CDM Projects in Vietnam by Sector
Project Type
# of Projects
Identified or Under
Consideration
Hydro Power 38
Biomass Power 28
Landfill CH4 Power 17
Landfill CH4 Combustion 8
Biogas Utilization 4
Windpower Utilization 4
HFCs Emission
Reduction
2
Geothermal 2
Industrial Energy
Efficiency
2
Waste Management 1
Fossil Fuel Switching 1
Energy Distribution 3
Total 110

Source: Ministry of Natural Resource and Environment


83
OF FUNDING
From 2001 2008, the World Bank estimates infrastructure investments in
Vietnam reached approximately 9.4% of GDP. Based on these estimates, total spending
on infrastructure (including telecoms) during the period was approximately USD 39.4
billion, an average of USD 4.9 billion per year. Over the past decade, the World Bank
estimates funding for infrastructure projects has come from the following sources:
ODA: 37%
State Budget, Government Bonds, State-bank Lending: 41%
Private Sector (including foreign investors and domestic companies): 21%
Other: 1%

Chart 4.1 Source of funding for infrastructure in Vietnam
Source of fund 2001-2008
41%
37%
21%
1%
State budget ODA Private sector Other

Source: World Bank


Vietnam is unable to meet all of the financing needs for required infrastructure
investments. The State budget remains limited, and existing national and state-owned
enterprise debt loads cannot increase indefinitely. As a result, the government has
gradually liberalized the infrastructure sector to new domestic and foreign project
sponsors in sectors such as energy and transport previously dominated by a single
state-owned enterprise monopoly.

Despite greater participation by domestic private-sector companies and foreign
investment, the state budget remains the primary source of funding for infrastructure
projects in Vietnam. State budget expenditures take the form of direct expenditures
approved by the Ministry of Finance or other relevant Ministries (Ministry of Construction,
Ministry of Industry and Trade, Ministry of Natural Resources and Environment).

Investments by major state-owned enterprises active in infrastructure development
are also considered State spending. These include investments by state-owned
construction companies, and key companies involved in power generation including
EVN, PetroVietnam, Vietnam National Coal and Minerals Corporation (Vinacomin).

Finally, overseas development assistance (ODA) loans make up a critical
component of spending on infrastructure projects, however, the majority of these loans
are eventually placed on the government balance sheets and are included in state
budget obligations.



84
By infrastructure sector, the main sources of funding in order of frequency and
value are:
Transport:
Roads
i) State budget
ii) ODA
iii) Domestic consortiums building roads under BOT structures
iv) No foreign investment

Airports
i) ODA,
ii) State budget
iii) No foreign investment.

Port
i) ODA
ii) State budget
iii) Domestic consortiums (including by private sector companies)
iv) Foreign investment (including directed private investment and financial
participant from bank)

Bridges:
i) ODA
ii) State budget
iii)Domestic consortiums (including by private sector companies)
iv) No directed foreign investment but there some loans and export credit from
foreign banks)

Rail
i) State budget.
ii) Future metro rail projects to be financed by ODA.
iii) Foreign investment (being arranged, in urban railway networks)


Energy
Gas-fired plants
i) State budget (through projects developed by State-owned enterprises).
ii) Foreign investment / private sector.
iii) ODA

Hydropower plants
i) State budget (through projects developed by State-owned enterprises).
ii) ODA.
iii) Small and medium sized hydro projects developed by Vietnamese private
companies.

Coal-fired plants:
i) State budget (through projects developed by State-owned enterprises.)
ii) ODA.
iii) From 2010 2015 expected funding from foreign investment and increased
participation by domestic private sector companies



85
Renewable
i) Small and medium sized renewable energy projects developed by Vietnamese
private companies.

Environment:
Water supply and sanitation:
i) State budget
ii) ODA

Wastewater treatment:
i) Private sector (owners of industrial zones, owners of specific industrial plants /
manufacturing plants)
ii) State budget

Solid Waste:
i) State budget
ii) Foreign investments
iii) Domestic private sector investment

ODA Funding
In 2010, the World Bank announced commitments of USD 5 billion for projects in
Vietnam, of which, some USD 1.7 billion is to be allocated to several key infrastructure
projects. The World Banks financing of infrastructure projects focuses on transport,
energy, urban development, rural development, community development and
environment (climate change and waste management).

Table 4.1 World Bank Infrastructure Pipeline Portfolio 2010
Project names
Total
project cost(
USD m.)
World
Bank
Commitment *
(USD m.)
VN-Trung Son Hydropower Project
IBRD/I
DA 375 330
Expressway Development Danang-
Quang Ngai Project
IBRD/I
DA 1,300 580
VIETNAM: Haiphong Urban
Transport Project
IBRD/I
DA 265.4 175
Vietnam National Urban Upgrading
Project - Mekong Delta Region
IBRD/I
DA 320 220
Vietnam Medium Cities
Development Project
IBRD/I
DA 265 200
Hospital Waste Management
Support Project
IBRD/I
DA 300 150
* Forecasted commitments. Actual amounts may be modified.
Source: The World Bank. http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS






86
The Asian Development Bank (ADB) also plays a key role in providing low-interest
loans for infrastructure development in Vietnam. The ADB estimated it disbursed
approximately USD 335 million for infrastructure projects from 2007 to 2009. The ADBs
project pipeline for infrastructure investments from 2010 2012 includes average annual
financing by the ADB of USD 1.5 billion and average annual financing of USD 2.5 billion
by private sector investors. The ADBs loans for infrastructure are concentrated in
transport, small and medium sized power plants, and water resource and sanitation
projects.

Table 4.2 Indicative Assistance Pipeline for Infrastructure Lending Product
2010-2012 (USD million)
ADB fund
Year
Sector/Program
name
Total
cost OCR Loans Grants
Govt's
fund
Co-
financing
2010 Energy

Vinh Tan 3
Thermal Power 1,540 120 0 0 20 1,400

Energy
Efficiency Program in
the Industry Sector 45 40 0 0 5 0
Transport

Ben Luc-Long
Thanh Expressway 900 300 0 0 100 500

Hochiminh City
Metro Rail 1,100 500 0 0 100 500

Second
Northern GMS
Transport Network 85 0 75 0 10 0

Central
Mekong Delta
Transport
Connectivity 620 220 0 0 100 300

Hochiminh City
Urban Mass Rapid
Transit Line 2 25 0 20 0 5 0

Hanoi Metro
Rail System 832 293 0 0 100 439
Water supply

Hai Phong
Water Supply 30 27 0 0 3 0

Hue Water
Supply 35 30 0 0 5 0

Da Nang Water
Supply 60 50 0 0 10 0

Hochiminh City
Water Supply 140 125 0 0 15 0
2011 Energy

Energy
Efficiency Program in
the Industry Sector 105 40 0 0 25 40

Power
transmission sector 250 130 0 0 20 100
Rural 25 0 20 0 5 0


87
renewable energy

O Mon 4
Thermal Power 600 350 0 0 0 250
Transport

Transport
connection in
Northern
mountainous
provinces 90 0 80 0 10 0

Hochiminh City
Metro Rail 1,100 500 0 0 100 500

My Thuan- Can
Tho Expressway 575 175 0 0 100 300
Water supply

Hochiminh City
Water Supply 140 125 0 0 15 0

Hanoi Water
Supply 140 125 0 0 15 0
2012 Energy

O Mon 3
Thermal Power 370 200 0 0 70 100

Vinh Tan 3
Thermal Power 180 160 0 0 20 0

Soc Trang 3.1
Thermal Power 785 450 0 0 335 0

O Mon 4
Thermal Power 660 100 0 0 86 474

Soc Trang 3.2
Thermal Power 735 400 0 0 335 0

LAO-VIE
Power
interconnection 94 30 0 0 4 60
Transport

My Thuan- Can
Tho Expressway 575 175 0 0 100 300

GMS Ha Long-
Mong Cai
Expressway 900 500 0 0 100 300

HCMC Second
Ring Roads 270 240 0 0 30 0

HCMC Third
and Fourth Ring
Roads 1,000 300 0 0 100 600
Water supply

Vinh Water
Supply 60 50 0 0 10 0

Sanitation
Development
Program 225 210 0 0 15 0

Ha Noi Urban
Redevelopment 170 100 10 0 20 0

Can Tho Water
Supply 60 50 0 0 10 0
ADB = Asian Development Bank, OCR = ordinary capital resources, Govt = government


88
Source: Country Strategy and Program Vietnam 2007-2010/ Asian Development Bank
estimates.

Vietnam also receives bilateral funding for infrastructure projects, with Japan by far
the most important lender. Japan provided some USD 15.5 billion in ODA funds to
Vietnam from 1992 2009. An estimated 20% of this amount has gone towards
infrastructure projects. In 2009, Japan committed USD 1.46 billion in ODA to Vietnam,
the highest amount for a single year seen in the past decade.
Projects funded by ODA from the World Bank and Asian Development Bank
require international open bidding. Bilateral ODA funding is normally tied to use of
contractors or suppliers from the country providing the financing. ODA from Japan for
example requires that 60% of contract awards for the projects go to Japanese firms. In
addition, the primary contractor must be from Japan, and in cases of joint ventures with
other companies, the Japanese party to the venture must hold the majority stake.
In cases where projects are funded through bilateral ODA, most opportunities will
be as sub-contractors to the primary contractor or as an equipment supplier.

Private Sector Funding
Recently the government sought a stronger involvement of the private sector in
developing infrastructure projects, but investors have been reluctant to reply to this call
for various reasons, including a vague regulatory framework.

The Public Private Partnership ( PPP) model is to be developed as a cornerstone
in the process of securing fund for infrastructure development. A new PPP financing law
is expected to be approved in late 2010. According to the draft of the framework, the
government could fund 30% of required investments of projects or up to 50% for specific
projects with longer gestation period, higher cost recoveries or catering to the poor.

The government expects the tool will motivate the private sector contribute 35 % of
total infrastructure financing needs over the next decade.

The International Financial Corporation has committed in supporting private sector
participation and infrastructure in Vietnam. Its Advisory Services program has recently
targeted cleaner production and environmental sustainability, improved labor and social
conditions. In the infrastructure sectors, the corporation gives investment preference to
energy (hydro power and renewable energy), water sanitation and waste treatment, and
transport and logistic (road, airport, industrial park, service storage). Recently (IFC) has
introduced InfraVentures ( IV) which is a fund to pro-actively supporting to the
development of private and PPP infrastructure projects. Through IV, IFC acts as an
active investor and a co-developer on early stage infrastructure projects (projects before
Financial Close stage) providing: (1) risk capital for project development activities and
(2) dedicating an experienced group of IFC staff to pro-actively support the development
of the projects and bring them to the stage of financial close. IFC IV provides funding, up
to a maximum of USUSD 4 million per project or maximum 50% of total project
development expenses whichever is less. The total exposure of IFC for a project after
the financial close including both debt and equity is normally not exceeding 25% of the
total project cost.



89

5. RELATED INDICATORS COMPARED TO OTHER ASIAN NATIONS
Vietnams infrastructure ranks 94
th
out of 133 countries surveyed in The Global
Competitiveness Report 2009-2010 published by the World Economic Forum, indicating
significant need for increased investment in the sector. Vietnams outdated
infrastructure, combined with economic growth rates that are higher than most countries
in the region, heightens the importance of implementing infrastructure projects rapidly.

Vietnams infrastructure spending over the past five years has averaged
between 9% and 10% of GDP, the highest rate of the region (China: 6%,
Indonesia: 6%, Thailand 3.4%, Philippines: less than 3%). In fact, the absolute
value of such spending is still lower than other nations in the region at
comparable levels of development. In particular, the level of private sector
involvement in infrastructure investments in Vietnam remains well below other countries
in Southeast Asia.

Indonesias government has approved a USD 140 billion infrastructure investment
program from 2010 2015, of which USD 90 billion is open to investment by private and
foreign-invested companies.

Thailand is implementing a USD 57 billion economic stimulus program over the
next four years, of which nearly all is allocated to infrastructure investments including
mass transit lines, airports, roads and irrigation. Although political instability in Thailand
is delaying implementation of some of these investments, the government is actively
promoting private sector participation to complement the governments expenditures.

Vietnams commitments to infrastructure investments do compare favorably to the
Philippines. Over the past five years, annual spending on infrastructure in the Philippines
amounted to just 3% of GDP. However, the Philippines government has approved a
Comprehensive Integrated Infrastructure Program for 2009-2014 that would increase
infrastructure investments to 6.5% of GDP per year over the next 6 years, with much of
this investment coming from the private sector.

The emphasis that neighboring countries have placed on attracting private sector
investment to meet infrastructure needs over the next five years is consistent with
historical trends. While Vietnam is taking steps to increase non-state involvement in
infrastructure projects, World Bank data indicates that Vietnam does not compare
favorably to other nations in Southeast Asia when it comes to private sector investment
in infrastructure.

According to the World Bank database on private participation in infrastructure
investments, the total value of infrastructure investments with private sector participation
in Vietnam and comparable nations in the region from 1990 2008 is as follows
Indonesia (USD 45.2 billion), Thailand (USD 35.3 billion), Philippines (USD 45.1 billion)
China (USD 107.7 billion), Vietnam: USD 6.2 billion

The Global Competitiveness Report 2009-2010 published by the World Economic
Forum highlighted the weakness of infrastructure in Vietnam (ranks at 94). According to
the report, quality of roads, quality of port infrastructure and quality of electrical supply
are most serious problems contributed to the low quality of overall infrastructure in those
countries.


90

Table 4.4 Infrastructure ranking of the Asia Pacific region and some other countries 2009-
2010
The Asia Pacific region Some others countries
Rank/133 Rank/133
Australia 9 Denmark 12
China 46 France 3
Hong Kong 2 Greece 47
India 76 Germany 1
Indonesia 84 Ireland 52
Japan 13 Italy 59
Korean.Re
p 17 Mexico 69
Malaysia 26 Netherlands 15
Pakistan 89 Peru 97
Philippines 98 Slovenia 31
Singapore 4 Spain 22
Taiwan 16 United States 8
Thailand 40
United
Kingdom 20
Vietnam 94
United Arab
Emirates 6
Source: The Global Competitiveness Report 2009-2010. Rank above 90
denotes disadvantage for the country

Table 4.5 Quality of infrastructure global ranking out of 133 countries
Vietnam Philipines China India Thailand Indonesia Pakistan
Quality
of roads 120 104 50 89 35 94 65
Quality
of railroads 58 92 27 20 52 60 51
Quality
of port
infrastructure 99 112 61 90 47 95 73
Quality
of air
transport
infrastructure 84 100 80 65 26 68 76
Quality
of electrical
supply 103 87 61 106 41 96 124
Source: The Global Competitiveness Report 2009-2010


91
The rapid growth of air transport, container port traffic, and electricity use, among
other indicators, highlights the need for greater investment in infrastructure in these and
other sectors.

Table 4.6 Growth of some infrastructure sectors in Asia countries

Air transport, registered
carrier departures worldwide
Container port traffic
(TEU: 20 foot equivalent units)
Electric Power
consumption (hWk per capita)
2005 2008
%
of
change
2005 2008
%
of
change
2005 2008 of
change
China 13,493 18,531 37 672 1,151 71 1,783 2,332
Hong Kong 1,227 na na 226 245 8 5,878 5,899
India 3,305 5,923 79 50 66 33 476 542
Indonesia 3,207 3,452 8 55 68 23 512 566
Japan 6,519 6,555 1 171 188 10 7,804 8,502
Korea, Rep. 2,214 2,503 13 151 178 18 3,177 3,667
Malaysia 1,762 1,765 0 122 157 29 81 94
Pakistan 489 522 7 17 19 15 455 474
Philippines 589 723 23 36 45 23 582 586
Singapore 771 na 232 299 29 8,507 8,514
Thailand 1,243 1,259 1 51 66 29 1,899 2,055
Vietnam 544 747 37 25 44 73 573 728
Source: World Bank

Despite the clear need for additional infrastructure spending and the governments
inability to provide all of the funding necessary, the private sector still has limited
participation in Vietnam.

Through 2008, there were only 30 projects in Vietnam with private participation at
a total investment of approximately USD 6 billion. The majority of this amount financed
an offshore gas development and related pipeline and power plants. The private sector
is playing an increased role in road and bridge infrastructure, but has not yet made
significant contributions to the rail, airport, water treatment / sanitation, or energy
sectors.









Table 4.7 Total infrastructure projects with private participation by primary sector
and sub-sector (USUSD million) 1990-2008


92

Source: World Bank Private Participation in Infrastructure Database
China Vietnam Indonesia Philippines Thailand
Sector
Sub-
Sector
No.P TI No.P TI No.P TI No.P TI No.P
Electricity 174 33062 17 1783 30 14773 62 18836 54 13235
Natural
Gas
182 4277 1 1300 2 719 1 432 3
Energy
Total
Energy
356 37339 18 3083 32 15492 63 19268 57
14585
Telecom 4 14518 3 2013 17 24972 10 14280 8 15691
Telecom
Total
telecom
4 14518 3 2013 17 24972 10 14280 8
15691
Airports 17 2766 1 15 0 0 1 520 2
Railroads 8 6084 0 0 0 0 1 655 3
Roads 133 25397 1 133 23 2444 4 1392 2
Seaports 62 13202 5 732 6 1299 7 911 11
Transport
Total
Transport
220 47499 7 880 29 3746 13 3478 18
Treatment
plant
273 5543 2 213 5 131 0 0 6
Utility 31 2884 0 0 5 889 5 8071 10 Water
and sewerage
Total
Water and
sewerage
304 8427 2 213 10 1020 5 8701 16
Total 884 107732 30 6189 88 45228 91 45096 99 35314
Note No.P = Number of projects, TI = Total of investment


93
6. BUSINESS ENVIRONMENT

The section below provides an overview of the legal environment and operating
conditions for companies developing or providing services to infrastructure projects in
Vietnam.

6.1 PROCUREMENT AND OPERATION LEGAL GUIDELINES

Foreign companies operating in Vietnam are governed by the Construction Law
of Vietnam No. 16/QH 11 dated November 26, 2003 and the Tendering Law of
Vietnam No. 61/2005/QH11 dated November 29, 2005.

Foreign investors in infrastructure projects are entitled to decide preferred means
for selecting contractors, whether by open tendering, limited tendering or direct
appointment of contractors.

For all construction projects in Vietnam, foreign investors must enter into a
partnership with a Vietnamese contractor or use Vietnamese sub-contractors to
implement their work in Vietnam. Foreign construction companies are not
permitted to conduct 100% of the works involved in infrastructure or non-
infrastructure related projects.

In projects where the Government finances at least 30% of the project costs,
appointment of contractors is subject to Vietnams Tendering law. Such projects
must select contractors using one of following methods: open tendering; limited
tendering; selection of an individual to carry out a consulting service; direct
appointment of contractors; direct procurement of goods; competitive offers; or
self implementation. The conditions to use each these methods are clarified in
the Tendering Law and Decree No.58/2008/ND-CP dated May 05, 2008, which
provides guidelines for implementing the Tendering Law

In 2010, the government issued new regulations under Directive 494/CT-TTg
requiring that projects financed by Vietnamese state capital can only issue
tenders for goods, equipment and EPC contracts to international suppliers if it is
determined that local bidders do not meet required standards. The purpose of the
directive is to encourage increased participation by domestic contractors and
equipment / materials suppliers. Projects funded by ODA are not subject to the
directive.

The World Bank and the Asian Developing Bank have their own the procedures
applying to all contracts for goods and works financed in whole or in part from
their loans. (See World Banks Guideline Procurement Under IBRD Loans and
IDA Credits and ADBs Procurement Guideline and ADBs Guideline on The Use
of Consultants)

Operations of foreign contractors in Vietnam are governed by Decision No.
87/2004/QD-TTg of May 19, 2004. According the Decision, foreign contractors
can operate in Vietnam only after being granted contracting licenses by
competent Vietnamese State agencies (including but not limited to the Ministry of
Planning and Investment, Ministry of Construction and other agencies.)



94
6.2 GENERAL LEGISLATION AND REGULATIONS ON INVESTMENT IN
INFRASTRUCTURE
Since 1993, Vietnam has issued numerous build operate transfer (BOT)
regulations, pursuant to which private investors can build infrastructure under certain
favorable conditions and charge a tariff agreed with the State for the use of that
infrastructure for an agreed period of time.
Key incentives offered to foreign investors investing in BOT infrastructure
projects include reduced corporate income taxes, delayed payment of income
taxes, exemption from import duties, exemption from land use or land rent fees
for the area of land allocated to the project, loan guarantees, and fewer
restrictions related to conversion to foreign exchange, among others.

The most recent such regulation, Decree No.108/2009/ND-CP, covers
investment in BOT, build transfer operate (BTO), and build transfer (BT) projects.
Several foreign investors are currently exploring build own operate (BOO)
projects, though legal guidelines on such projects have not yet been formalized.

Projects covered under Decree 108 include sectors and sub-sectors such as
roads, bridges, tunnels and ferry landings; railways and related infrastructure,
airports, ports, water supply and drainage systems, wastewater and solid waste
treatment, and power plants.

To date, nearly all infrastructure projects covered under this legislation have
been in the port and power sectors, with a limited number of waste treatment
projects approved.

In practice, the regulatory framework for infrastructure projects is not applied
uniformly, and nearly all decisions related to such projects must be approved by
the Prime Minister or Deputy Prime Minister, creating significant delays for
implementation of such projects.

Expenses for formulating and appraising project feasibility study reports or
project proposals, excluding project proposals made by investors, shall be
allocated from the state budget and other revenue sources.

According to new drafts of a Public Private Partnership (PPP) law, the
government will contribute up to 30% of an infrastructure projects value to assist
in attracting private investment. It is expected that Government investment in
such cases will focus on creating conditions to attract private sector investment,
such as access to land, land clearance, and development of surrounding
infrastructure (dredging waterways, road construction, access to power, water
and other related infrastructure).


6.3 TAX REGIME
In 2009, the government introduced major new laws affecting corporate taxation.
These include the Law on Corporate Income Tax (Law No.14-2008-QH12), Value
Added Tax Law (Law No. 13-2008-QH12) and Special Consumption Tax Law
(No. 27-2008-QH12).



95
Corporate Income Tax (CIT)
An enterprise established pursuant to the law of Vietnam is subject to CIT on
worldwide income. The regular tax rate of enterprises established in Vietnam is
normally 25%

An enterprise established pursuant to foreign law (hereinafter referred to as an
foreign enterprise) with or without a resident establishment in Vietnam is subject
to CIT on income arising in Vietnam or arising out of Vietnam which is related to
the operation of the resident establishment in Vietnam. The regular corporate
income tax rate is 25%.


Foreign companies and organization doing business in Vietnam not under the
Law on Investment and the Law on Enterprise or having income generated in
Vietnam shall pay CIT and VAT under the Circular on Withholding Tax on
Foreign Contractors (Circular 05/2005/TT-BTC dated January 11,2005)

Investment incentives
Newly established enterprise investing in development infrastructure facilities of
the State, in areas with specially difficult socio-economic conditions, in economic
zones and in high-tech zones is applied the tax rate of 10% for 15 years of newly
establishment.

Enterprise operating in the sectors of the environment is applied tax rate of 10%
during the whole operational period.

Newly established enterprise investing in development of especially important
infrastructure facilities of the State, in areas with specially difficult socio-economic
conditions, in economic zones and in high-tech zones may enjoy tax exemption
for 04 years and a 50% reduction of the payable tax amount for the subsequent
09 years from the year of establishment.

Enterprise engaged in the sector of production, construction and transportation
which employ many female employees shall be entitled to a reduction of CIT
equal to the addition amount of expense incurred for female employees.

Other significant tax
Value added tax (VAT): goods and services used for manufacturing, business
and consumption in Vietnam shall be subject to value added tax. Tax rates for
VAT are o% for exported goods and services, 5% to certain essential goods and
services and 10% to all other goods and services subject to VAT.

Export is encouraged and this, almost goods and services being exported are
exempt from tax. Export duties are only charged on a few items, basically natural
resources.

Generally, import tax is duty of all goods crossing Vietnamese borders. Rates
range from 0%-50%. Since almost machineries engaged in transportation
construction, energy and environment sector are not yet domestic produced,
many kind machineries are entitled of import tax rate of 0%-5%.




96
6.4 LABOR FORCE
Increased levels of foreign investment and growth of domestic private enterprises
is causing shortage of skilled labor. Wages for skilled labor (engineers, managers), are
rising significantly due to this shortage.
Staff turnover rates are high due to wage inflation (Nike reports turnover rates of
2% per month at its sub-contractor factories in Vietnam, compared to turnover of 2% per
year at factories in Indonesia)
With 1.5 million new entrants to the job market each year, there is an abundant
supply of unskilled labor. Much of the unskilled labor actually consists of literate
workers who have received at least some primary school education, enabling rapid skill
acquisition and easier training.
Due to heavy levels of industrial activity and FDI in southern provinces, the labor
market for unskilled workers is tight in regions surrounding HCMC. There is a larger pool
of unskilled labor available in northern provinces, with a portion of this labor force
migrating to the south for permanent or seasonal employment opportunities.
The lack of skilled workers is particularly acute in the construction sector. The
shortage of trained engineers, project managers, and on-site construction staff has led
some foreign-invested construction projects and contractors to import labor, typically
from China.
Foreign invested firms generally praise the Vietnamese work force for
productivity, work ethic and ability to learn new skills. However, these firms also note the
high staff turnover and wage inflation for skilled managers as two of the most
challenging aspects of doing business in Vietnam.
In January 2010, Vietnam implemented an 11.7% increase of the minimum wage,
from 1.2million to 1.34 million dong per month (USD 1USD=19,100vnd). However, this
represents an increase of only 5.7% from the previous year when converted to dollars,
due to the decrease in the value of the dong. (Source: JETRO)
While the official minimum wage is approximately USD 70 per month, surveys of
Japanese companies with manufacturing operations in Vietnam indicate actual monthly
wage rates in the commercial capital Ho Chi Minh City are approximately as unskilled
labour USD 100, engineer USD 293, manager USD 669
Strikes / Risks: Vietnam faced a series of strikes at foreign invested enterprises
in early 2006 when the government increased the minimum wage for the first time in 7
years. Foreign invested firms found it difficult to adapt to the 40% increase in the
minimum wage, with some delaying increasing salaries. The sudden and unclear
implementation of the wage hike and inability of foreign firms to adapt, led to the strikes.
Government organizations responsible for managing labor issues and
employment include, the Ministry of Labor, Invalids, and Social Affairs (MOLISA) and
provincial Departments of Labor, Invalids and Social Affairs (DOLISA). Labor unions
exist within each individual enterprise


97
Vietnams labor laws detail procedures for resolving labor disputes before
workers are legally allowed to strike. Despite these regulations, workers have tended to
strike first, rather than follow the procedures outlined below:
- Company labor unions and the representatives of the labor union are to
communicate problems / issues to employers. Following declaration of problems,
internal company Conciliation Committee is supposed to meet to discuss / resolve
issue
- If issue cannot be resolved internally, problem is to be submitted to provincial
labor office for arbitration
- If issue cannot be resolved via local arbitration council, problem is submitted to
local Peoples Court
- If issue is still unresolved, workers legally permitted to strike

6.5 CHALLENGES AND OPPORTUNITIES FOR DOING BUSINESS IN VIETNAM
Opportunities
Vietnam has massive infrastructure requirements, particularly in the transport
and energy sectors.
The government recognizes that its economic growth targets are dependent
upon improving the countrys infrastructure
The government is keen to boost macroeconomic growth through demand-side
policies that include infrastructure spending initiatives.
Liberalization of the sector has encouraged greater participation by new
Vietnamese firms, foreign investors, and the domestic private sector, creating more
opportunities for project investors and vendors of equipment and services
Vietnam is amending and improving the legal guidelines for infrastructure
investment. In particular, the government is improving conditions for build operate
transfer (BOT) infrastructure projects, and projects combining public and private
financing, or Public Private Partnerships (PPPs)
Vietnams construction industry is consistently one of the driving forces of the
national economy. However, the industry is dominated by state-owned construction
companies that lack international-quality management and equipment. These firms
require international expertise and equipment, providing opportunities for foreign
vendors of these services and materials.
Vietnam has large and low -cost workforce

Challenges
Corruption and bureaucracy remain as major threats. Vietnams score in
Transparency Internationals 2008 Corruption Perception Index was 2.7, placing it in 20
th

place in the Asia-Pacific region

Bidding for projects (either as investors or as equipment / service providers) is
complex and not transparent. Collusion and/or corruption in bidding process is common.
Strong relationships with relevant government ministries or procurement officers typically
required to win contracts.

New government regulations requiring that state-funded infrastructure projects
must select domestic contractors / suppliers, and can only choose foreign suppliers if
necessary equipment and / or expertise is not available domestically.



98
Though market for infrastructure development has been opened to a degree,
large state-owned enterprises still dominate in project development and construction of
transport, energy and water supply/sanitation infrastructure.

Large state owned construction firms and their trading arms are the largest
suppliers of imported construction equipment and materials. Penetrating the equipment
supply market may require partnerships or distribution agreements with these firms.





99
7. PENETRATING THE INFRASTRUCTURE MARKET IN VIETNAM
7.1 INVESTMENT AND PROJECT DEVELOPMENT

To this day, there are about 90 projects implemented by private investor with a
combined funding of USD 7,1 billion, coming from various sources. However, since 1993
only two projects using international commercial financing have been implemented, the
largest one being the Phu My power plants and natural gas pipeline. The government
has repeatedly stated its interest in attracting foreign investment in some infrastructure
sectors. Project financing in the form of the BOT contract, now appears regularly on lists
of priority investments preferred by the authorities. Indeed, as it will be seen later, many
initiatives are currently under study, with active support from not only the central and
local authorities but also from the major development banks, bilateral or multilateral.
Among the latter, WB (both through IBRD and IDA and through IFC) and ADB occupy a
prominent position. Given also the opening to greater foreign participation in
infrastructure development in 2008-2010, some banks and Italian companies have
begun to explore the multiple business opportunities available in the market.

More particularly, as regards to transport, there are still few foreign investments
but future opportunities are arising in a number of projects, thanks also to new financing
schemes inspired by the PPP model, which is strongly supported by multilateral banks
and the Vietnamese Government. The latter, with assistance from the former, is
preparing new legislation to encourage investments based on PPP in infrastructure,
which would build on a combination of government funds, private sector investment and
increased government guarantees to foreign project investors.

Vientamese entities invest in toll roads and highway projects, with a minimal
participation of foreign contractors, mostly involved in projects which have obtained ODA
funding.
Vietnam Expressway Corporation (VEC) under the Ministry of Transport is the
main developer of new roadways in Vietnam. The majority of roads and bridges in
Vietnam are built by state-owned construction companies including Construction
Company #1, Lilama, Cienco, and Vinaconex, among others. Therefore, most
opportunities for foreign companies in the sector are for equipment and machinery
supply rather than engineering or construction contracts. However, there are
opportunities for large-scale bridge, tunnel, and highway projects where greater
technical expertise is required or where funding is primarily from ODA sources. Given
the strong contribution given by Japan and the active presence of Japanese companies,
the construction of many ODA funded roads in Vietnam has been contracted to
Japanese engineering and construction firms, which have then worked with local
construction firms for project implementation.

Most airport upgrades and new terminal construction are developed by
Vietnamese aviation bodies, though projects involving ODA financing have involved
foreign contractors and designers, particularly from Japan. However, there are
opportunities for foreign investors and/or financiers in the main international airport in the
country, the one to be located in Long Thanh, close to Ho Chi Minh City, and worth an
estimated USD 8 billion. The Prime Minister has preliminarly approved its construction
with a BOT or BOO financing scheme, open to foreign investors. In the past, some
airport expansions financed through ODA have involved foreign entrepreneurs and
designers, in particular from Japan.



100
Projects to build bridges, urban railroads and parking garages can offer better
opportunities to foreign investors, even if to this day foreign participation has been more
sizable in the areas of design, engineering, supplies and contracting rather than in the
area of investment.

In the ports sector, a series of projects has been developed with the participation
of global port operators such as Hutchison from Hong Kong, SSA Marine from USA and
Singapore Port Authority. These projects combined private sector investment by foreign
port companies, with government commitment to build land-side infrastructure and
dredging of waterways to access the ports. Also in this area the introduction of a
legislation to foster PPP could bring renewed thrust to foreign banks and companies
presence.

Some energy projects currently under development involve foreign investors,
particularly in the case of coal-fired power plants. Opportunities to invest in natural gas-
fired power projects have bee in the past mostly confined to Vietnamese companies,
such as EVN and Petrovietnam. Nowadays, several foreign-invested projects have been
developed or are in the planning stages, however these involve companies that are
concurrently developing offshore gas reserves and pipelines. The opportunities to invest
in hydropower projects are limited as concessions have only been granted to
Vietnamese state-owned and private companies

In the environment sector, the best opportunities for foreign investment are in
sanitation, particularly solid waste landfills and treatment. Several foreign invested
projects in this sector have been approved, with one project already operating near
HCMC. Landfill waste-to-energy projects also appear to have potential, with several
foreign investors in project development stages.

Looking back at to the past three years, there has been movement towards more
foreign involvement in infrastructure development. However, the main hurdles to foreign
development of infrastructure projects include:

- Long lead times to obtain government approval for infrastructure
concessions (if given at all). The Prime Ministers office usually must approve all
large scale private and/or foreign sector infrastructure investments.

- Approval of pricing schemes for infrastructure services. The private sector
cannot develop projects without an adequate return; yet the government places
price ceilings on key services such as electricity, water supply, and sanitation.
Negotiations over other fees, such as road tolls, are difficult to complete and
implement.

- Difficulties negotiating feedstock supply agreements, particularly in the
energy sector. Power project owners must negotiate with large state-owned
enterprises that supply coal (Vinacomin) or natural gas (PetroVietnam).

- Negotiations with end-users. In the power sector, Electricity of Vietnam
(EVN) maintains a monopoly on power distribution. It is time consuming and
extremely difficult to complete power sales agreements with EVN at rates high
enough to ensure sufficient returns to private power developers. For other
sectors, pricing must be negotiated with government bodies, such as solid waste


101
handling fees (city Peoples Committees), road tolls (Ministry of Transport, local
Peoples Committees)

- Obtaining sufficient government guarantees that SOEs or government
bodies will fulfill contract obligations. Without government guarantees,
commercial financing, particularly international project finance, is extremely
difficult to secure.


7.2 ENGINEERING, CONSTRUCTION, EQUIPMENT AND SERVICES

Due to the large investment requirements and complexities of executing
infrastructure projects in Vietnam, the best opportunities in the sector are in the supply of
equipment and services, or in the award of engineering, procurement and construction
contracts (EPC).
The best opportunities for suppliers of equipment, services, and construction
management include:
- Projects developed wholly or in part by foreign investors
- Projects with financing from ODA or multilateral sources (World Bank,
Asian Development Bank)
- Projects with foreign project financing, including those that have secured
export credit financing

The projects above tend to use international competitive bidding practices to award
contracts, have financing in place, and have more streamlined decision making
processes than projects managed by Vietnamese firms or with financing from the state
budget.

Projects funded with bilateral ODA or export credit guarantees usually require that
a certain percentage of contracts are awarded to companies from the country providing
the financing. For example, Japan is the leading provider of ODA to Vietnams
infrastructure sector, and most projects require that at least 60% of contract values are
awarded to Japanese firms. In practice, the amounts awarded to Japanese companies
are typically higher.

While the projects above may provide the best opportunities for foreign equipment
suppliers or contractors, the majority of infrastructure projects are undertaken by
Vietnamese project developers, particularly SOEs. Nearly all key construction firms
involved with infrastructure development are large state-owned companies. Nearly all
key construction firms involved with infrastructure development are large state-owned
companies. Compared to private companies, state-owned companies are less risky as
far as payments are concerned and apply procedures that allow all businesses having
some prerequisites to bid. On the other hand, dealing with state enterprises may take
longer and prove more complex for the following reasons.
- The common practice by purchasing managers to require commissions of up
to 10% before awarding a contract to a supplier.
- The need to bid on projects jointly with local Vietnamese suppliers
- The existence of several levels in the decision-making process, both inside
each company and in the competent Ministry (for example, EVN is owned by the
Ministry of Industry and Trade)
- The need to demonstrate international quality and competitiveness of products



102
Despite Directive 494/CT-TTg requiring that projects financed by Vietnamese
state capital can only issue tenders for goods, equipment and EPC contracts to
international suppliers if it is determined that local bidders do not meet required
standards, most equipment required for construction of infrastructure projects is not
produced in Vietnam and therefore will continue to be supplied via imports and
international suppliers.

Below are some of the common equipment opportunities available by
infrastructure sector:

Transport
- Roads/Bridges: Bulldozers, road levelers, backhoes, cranes, bore pile
machines/drilling equipment, bitumen/asphalt plants, mobile generators, trucks,
- Ports: Cranes, container stacking equipment, dredging equipment
- Airports: Air traffic control equipment, baggage handling equipment, runway
lighting
- Rail: Rolling stock, signalling equipment

Environment
- Composting equipment, complete plants
- Complete wastewater treatment plants
- Biological and chemical treatment agents
- Leachate prevention and treatment technologies
- Pumps

Energy
- Typically EPC contractor installs or sources equipment for entire plants
- Wide range of imported equipment, including
- boilers
- turbines
- steam generators
- cooling equipment
- scrubbers (for coal-fired plants)

7.3 MARKET ENTRY

The majority of large infrastructure projects with foreign participation are structured
as joint ventures between foreign developers and relevant Vietnamese state-owned
enterprises. The joint ventures then obtain investment licenses to operate under a BOT
structure or other licensing vehicle.

Foreign investors are permitted to establish 100% FIEs in environmental services
and as independent power producers (IPPs). Historically, however, most major
infrastructure investments in energy and transport (i.e. ports) have been via joint
ventures with Vietnamese firms in the relevant fields, with most local partners being
major state-owned enterprises.

The main benefits of working with a local partner include:
Local partner has established experience in the field in Vietnam, but is looking to
expand services/production and in need of foreign partner with technical expertise,
equipment and financing


103
Local partners existing ownership of land or ability to access to land / sites for
investment
Local partners ability to negotiate service contracts with government entities, for
example power purchase agreements with EVN, or service contracts to local DONREs /
Peoples Committees for solid waste treatment.
Local partners relationships with government officials and familiarity with
navigating government bureaucracy

For projects seeking to sell electricity or in the renewable energy (wind power,
waste-energy projects), joint ventures with a local partner are especially beneficial.
Challenges to working with local partners via joint ventures include:
Local partners frequently do not make any capital contribution to a venture and
instead receive a share of the profits in return for land-use rights which may be
overvalued to increase their percentage of the venture.
Decision making by local partner can be slow and bureaucratic, particularly if the
local partner is a state-owned company which must seek approvals from multiple
ministries / government agencies before making any investment or business decision.
The interests of the foreign and local partner may not be aligned. It is common for
Vietnamese businesses / managers to think more about short term profits rather than
long term development and strategy. This may include local partner preference for
investing in non-related fields, rather than investing in development of the core business.
Attitudes towards business ethics / corrupt business practices may be
significantly different between the local partner and the foreign investor

When selecting a local partner and negotiating contracts with local entities, there
are numerous points to consider.

Due diligence and personal background checks are highly recommended before
forming any long term partnership with a local company. There are various international
firms in the market that can provide due diligence services and reputational history of the
potential partner.

Upon arrival in Vietnam, investors should retain a highly experienced foreign law
firm to assist in contract negotiations with the government or local partner. Several
international law firms have particular expertise working on foreign invested projects in
infrastructure and BOT contracts in Vietnam, including Freshfields Law Firm, Allens
Arthur Robinson, and Baker & McKenzie.

Many Vietnamese companies do not retain the services of law firms and are
unfamiliar with the role and usefulness of lawyers. Instead, business contracts are
conducted based on relationships, trust, business networks and referrals. Foreign
investors may need to emphasize the need to sign detailed contracts outlining the terms
and conditions of each party to a joint venture.

Simultaneously, however, it is extremely helpful if foreign representatives develop
social or non-work relationships with the prospective local partners as part of the due
diligence process. While good social relations and implicit trust cannot, and should not,
be relied upon solely, they are extremely helpful in the business culture of Vietnam.

Any joint venture contract with a local partner should include operational details
regarding certain key topics. Of particular importance are:
- clauses related to trademark and intellectual property protection;


104
- inventory control monitoring and measuring;
- accountability and reporting of financial conditions at regularly scheduled
intervals;
- strict codes of conduct and definitions of corrupt practices; it is common practice
in Vietnam for purchasing managers to receive kickbacks and commissions from
suppliers and equipment vendors (See Section 7.0 below on Risks)
- clear mechanisms for dispute resolutions;
- guidelines on adjustable equity stakes in the event the venture needs additional
capitalization.

Contracts with local partners or with government agencies often first take the form
of memorandums of understanding or MOUs. These draft documents provide an
outline for the terms and conditions of the agreement but are non-binding and are
frequently amended before a final contract is signed. However, even when a final
contract is signed by both parties, it is not uncommon for the Vietnamese party to seek
amendments or changes to key provisions. This tactic has led some foreign
businesspeople to comment that, In Vietnam, the negotiations begin after the contract
has been signed.

A reputable and experienced law firm in Vietnam can assist in drafting final
contracts with joint venture partners and government entities. As a rule, try to have the
agreements consider all potential difficulties / conflicts and have them set forth clear
methods for resolving such difficulties.

Similarly, ensure that the joint venture investment license document issued by the
Department of Planning and Investment explicitly states all approvals and investment
incentives required for the operation of the business.


7.4 CASE STUDIES

Phu My Bridge BOT Company

The Government is aware that it cannot finance Vietnams enormous infrastructure
needs over the next decade entirely from the state budget or ODA loans. Investments in
power and transport that were once undertaken only by state-owned monopolies, are
now being made by consortiums of domestic private firms or firms with only partial
government ownership.

Phu My Bridge BOT Company (PMB) is one such company, and is a potential
partner for construction and engineering companies specializing in transport
infrastructure. The company is majority held by a private firm, Thanh Danh, but has
several key SOE entities as shareholders including Hanoi Construction Company,
Cienco, Company 620, and CII, an infrastructure developer partially owned by the Ho
Chi Minh City government.

Participation of the state-owned firms and CII was crucial in winning approval for
the Phu My Bridge project, and the 30-year concession to operate tolls on the bridge
under a BOT investment. The 705 meter long cable-stayed bridge spans the Saigon
River, and was built from 2007 2009.



105
The participation of CII and Hanoi Construction Co. were also crucial in financing
the USD 150 million project as it enabled PMB to obtain government guarantees from
the HCMC Peoples Committee, and subsequently export credit guarantees from
Germany, France and Australia and an estimated USD 50 million loan from Societe
Generale.

As part of the export credit guarantees, a minimum of 50% of the total contract
value has to be awarded to companies from France, Germany and Australia.

Germanys Bilfinger Berger and its Australian subsidiary Baulderstone was the
main contractor for the bridge, winning the USD 104 million EPC contract. Other
members of the consortium included Freyssinet International (cable stays and stressing),
the Vietnamese company CC620 (concrete, formwork) French design consultant
Arcadis, and engineering firm Cardno, (design of the approaches.)

Due to the success of the project, Phu My Bridge Co. has obtained preliminary
approval to construct two additional bridges from 2010 2015. These include a cable-
stayed bridge, Saigon Bridge II, and a bridge in the Nhon Trach region of Dong Nai
province, nearby Ho Chi Minh City. Bilfinger Berger Baulderstone has again been
selected as the main EPC contractor for the Saigon II bridge, whose project cost is
estimated at USD 145 million.

PMB is also in discussions with the HCMC government for construction of a tram
line running along the recently completed East-West Highway that runs through southern
HCMC. An EPC contractor has not yet been selected, but PMB indicated it plans to use
guided bus system from Frances Translohr.

Financing for PMBs upcoming projects are again expected to use a combination
of funding from Societe Generale, export credit guarantees and domestic state banks.
The company is also in discussions with Goldman Sachs regarding issuance of a USD
700 million international bond issue to finance PMBs future projects.


Foreign invested bot power project

The majority of generating capacity (68%) is owned by state-owned entities. While
independent power producers (IPPs) account for about 32% of capacity, this is mainly
due to just two large plants at the Phu My Power complex near Vung Tau. Other IPPs
are mainly small generation facilities set up by foreign investors and industrial zones to
supply their own requirements with excess sold to EVN.

With the passage of the Electricity Law , the government has indicated stronger
support for IPPs, including participation by foreign investors for up to 20% of total
nationwide capacity. The government has formally approved various investment
structures, including BOT or BOO investments owned by local private investors or state-
owned entities other than EVN (e.g. Vinacomin, Petrovietnam), joint venture BOT or
BOO investments between EVN and local or foreign partners, and foreign invested BOT
projects. IPPs are also being established by EVN subsidiary companies that have been
equitised or in the process of becoming joint stock companies.

For security reasons, the government has indicated that 80% of Vietnams power
output should be supplied by companies majority-owned by Vietnamese entities. Some


106
of the largest upcoming projects and IPPs are therefore by EVN and major state-owned
fuel suppliers such as Petrovietnam Power Co (PV Power) and Vietnam Coal and
Minerals Corporation (Vinacomin, TKV power division of Vinacomin).

Over the past decade, Vietnam has seen limited success in completing foreign-
invested BOT power projects. Lack of an adequate legal framework, government
reluctance to provide guarantees, and inability to reach power purchase and fuel supply
agreements with state-owned entities have hampered foreign investment in the sector.

However, two major benchmark projects have been successfully completed and
are in operation at the Phu My power complex near Vung Tau. One is the 716 MW gas-
fired Phu My 2.2 power plant. Electricitie de France, Sumitomo Corp, and Tokyo Electric
Power Co. won the competitive bidding for the project. The World Bank was an active
participant in the deal, providing technical assistance to the government on deal
structuring and providing a USD 75 million partial guarantee to project sponsors and
commercial lenders.

The second is the 726 MW Phu My 3 plant completed on a negotiated basis by
lead project sponsor, BP. Here too, multilateral participation was vital with the World
Bank putting up USD 140 million in guarantees and the ADB providing loans and a
political risk guarantee of up to USD 35 million to commercial lenders. BP has since sold
off part of the project to Singapores Sembcorp and a consortium of Japanese investors.

The Phu My projects serve as a foundation for future international IPPs and
provided vital experience to the government on the structuring of complex, integrated
BOT projects involving fuel supply and electricity sales. However, both projects benefited
from special circumstances.

The ADB, World Bank, and Japan Bank of International Cooperation stepped in to
provide financing and guarantees in an effort to promote public-private partnerships in
the energy sector. In the second project, the lead sponsor was BP which had
spearheaded development of the Nam Con Son gas field and pipeline project. BPs role
in these vital upstream and midstream developments helped in negotiating the Phu My 3
deal.

Other foreign-invested IPPs have been small scale plants to supply industrial
zones or to ensure sufficient supplies for company operations, with excess capacity sold
to EVN. These include Formosa (150MW) and VEDAN (72MW) plants in Dong Nai, and
Holcim Cement (33 MW) in Rach Gia. Plants built to supply industrial zones include Hiep
Phuoc (375 MW) in HCMC, Nomura (58 MW) in Haiphong, Bourbon (24 MW) in the
Mekong Delta, and Amata (12 MW) in Dong Nai.

The government is now considering numerous foreign-investment proposals for
construction of independently owned power plants.


107

8. CONCLUSIONS AND RECOMMENDATIONS

i) Vietnams greatest needs for new infrastructure are concentrated in the energy
and transport sectors. The country faces energy shortfalls annually due to an
overreliance on hydropower plants which operate below capacity during the dry season.
The problem was especially acute in 2010, with power outages and scheduled blackouts
affecting businesses nationwide.

ii) Similarly, insufficient road and port infrastructure is limiting the countrys export
potential and one of its greatest competitive advantages, which is to offer a low-cost
manufacturing platform for export. The combination of unreliable power supplies and
poor transport networks is reducing the countrys attractiveness as a destination for
foreign investment and threatening the governments goal of an annual GDP growth of
7% - 8% over the next five years.

iii) The government and the state-owned enterprises are unable to finance all of
the necessary investments required to meet the critical demand for new infrastructure.
As a result, the Vietnamese government in 2009 and 2010 has sped the pace of
liberalization to permit more investment by domestic and foreign private-sector
companies. Increased amounts of overseas development assistance (ODA) have also
been approved for the transport and energy sectors.

iv) Transport and energy are therefore the two sectors providing the best
opportunities for Italian project developers and suppliers of equipment and services.
Within the transport sector, the best opportunities are in port development or in supplies
of related equipment and services. In the energy sector, the best opportunities are
construction or equipment supply for coal-fired power plants. The environment sector is
still strongly occupied by local service providers and contractors, but offers undoubted
opportunities because of the scale and the complexity of the issues caused by
economic, and especially industrial, development.

v) As a whole, prospects for investing in infrastructure in Vietnam appear
promising. To face the vast necessities, well exemplified by the number of projects
approved in the energy and transportation sectors, the government has made decisions
which clearly aim at opening the market to a broader participation by foreign investors
and is adopting new laws to bring to fruition public-private partnership schemes to
finance infrastructure. In addition to the above mentioned factors, the presence in the
priority investment lists of many highly complex projects, with no precedents in the
country, allows to forecast with a reasonable degree of certainty that foreign investors
will be strongly supported both by Vietnamese authorities and by local and international
development banks. To compete in this area Italian companies shall establish a
presence in the country, select some projects and technological counterparts, such as
other Vietnamese or foreign companies, and financial counterparts, such as commercial
or development banks or export credit agencies, and establish a dialogue with the
competent administrations to get to the preparation of an offer.

vi) Projects with financing from foreign investors or overseas development aid are
the easiest to access for foreign suppliers due to international bidding practices, reduced
bureaucracy, lower payment risks and shorter delivery times. Italian contractors and


108
equipment or service providers should therefore focus on projects which are at least
partly developed or financed by foreign investors or overseas development aid donors.

vii) It is forecast that the demand of international-grade equipment and services will
increase thanks to the implementation of new infrastructure works and to the renovation
of the existing ones, also through the use of more advanced machinery. Imports in
almost all categories of construction equipment have significantly increased between
2004 and 2008. In the sector of construction machinery, covered by harmonized system
(HS) codes 8249 and 8434, the value of the main counterpart countries exports has
increased from USD 255 million in 2004 to 695 million in 2008. Flowd of Italian exports
have been recorded, in 2008, in the subsectors pumps (HS 8413), cranes (HS 8426)
and other construction machinery (HS 8431).

vi) For projects funded by the state budget, suppliers and contractors should
establish relationships and demonstrate international expertise and of being capable of
satisfying certain quality standards to relevant ministries, particularly the Ministry of
Transport, Ministry of Construction and Ministry of Industry and Trade. Similar steps
should be taken with relevant state-owned enterprises developing key infrastructure
projects, for example Vinacomin, PetroVietnam and EVN in the power sector, or
Vinalines and Saigon Port in the port sector. State entities or State-owned enterprises
may recommend that suppliers work through Vietnamese trading firms or agents. For
this reason, but also because of the limitations imposed by current legislation, it is crucial
to establish a stable presence in the country, with frequent visits or a representative
office, and start a relationship with distributors and other local counterparts, also in the
private sector and with the support of the Italian Trade Commission office in Ho Chi minh
City. Supplying in cooperation with a local partner can leverage existing relationships the
local firms have with government bodies and assist in navigating the tender process.

viii) Key risks related to supplying equipment and services to domestic entities and
domestically-financed investments include project delays, insufficient financing, payment
risk, corruption in awarding tenders, exchange-rate fluctuations that may result in
delayed payments, and extended up-front investment of time to establish relationships
and to demonstrate product superiority.


9. ANNEXES
Imports of related machinery and equipment

Product HS Code: 8406 Various kinds of Turbines


Leadin
g Suppliers in
2008
2004 2005 2006 2007 2008
Japan 2,127,653 5,612,269 145,226 61,620,938 72,615,889
China 1,739,204 46,141 389,161 20,974,234 47,516,065
Poland 0 0 0 0 8,491,285
USA 80,374 29,450 59,123 482,709 513,067
India 83,067 26,967 498,538 551,831 512,758
Italy 0 7,269 339,503 77,552 47,595
Other 18,979,164 1,729,189 13,024,544 14,727,014 1,001,238
Total 23,009,461 7,451,284 14,456,095 98,434,278 130,697,898

Source: ITC Trade Database


110


Product HS Code: 8410 Hydraulic Turbines USD USD


Leading
Suppliers
2004 2005 2006 2007 2008
China 765,462 11,353,516 31,344,738 51,715,981 93,457,751
India 2,120 345,938 1,629,249 1,092,436 3,163,205
Spain 0 0 919 0 1,057,683
Belgium 0 340,736 0 771,810 830,858
France 0 0 225,985 5,198,386 506,645
Italy 0 0 0 0 0
Other 317,513 3,816,551 2,821,901 1,165,174 918,746
Total 1,085,095 15,856,741 36,022,792 59,943,787 99,934,889

Source: ITC Trade Database


111
Product HS Code: 8413 Various kinds of pumps USD USD


Leading
Suppliers
2004 2005 2006 2007 2008
China 15,273,122 21,113,528 17,898,670 27,044,246 50,322,033
Japan 12,645,729 14,002,785 11,027,906 22,925,245 34,458,870
Singapore 4,206,099 5,642,781 7,596,507 14,239,475 16,534,883
Thailand 3,795,641 4,090,145 3,971,264 10,042,153 11,917,604
South
Korea 6,495,382 5,542,501 5,113,931 16,683,774 10,926,050
Italy 4,879,759 4,267,542 5,032,205 27,315,823 5,575,857
Other 15,829,137 21,911,422 21,210,729 48,803,748 41,550,783
Total 63,124,869 76,570,704 71,851,212
167,054,46
5 171,286,079

Source: ITC Trade Database


112

roduct HS Code: 8426 Various kinds of cranes USD USD


Leading
Suppliers
2004 2005 2006 2007 2008
China 9,505,992 18,343,239 29,725,184 73,551,652 135,891,883
Japan 17,773,622 7,862,127 25,896,969 59,965,735 45,959,602
South
Korea 4,036,456 2,340,235 2,504,591 8,824,795 27,015,333
Germany 14,638,427 8,135,298 10,926,050 20,296,335 15,096,931
Singapore 3,979,230 17,197,538 11,280,148 14,518,797 11,178,205
Italy 212,728 811 855,229 1,492,693 1,812,337
Other 13,008,068 6,363,264 17,978,460 25,067,106 26,553,286
Total 63,154,524 60,242,513 99,166,633 203,717,112 263,507,577

Source: ITC Trade Database


113

Product HS Code: 8429 construction machinery USD USD



Leading
Suppliers
2004 2005 2006 2007 2008
Japan 99,068,800 103,930,969 106,576,690 178,702,164 224,940,212
South
Korea 16,549,065 17,222,108 18,123,519 30,799,255 43,435,877
China 6,339,974 9,626,401 9,042,357 16,569,229 28,889,200
Thailand 1,363,452 919,904 1,325,460 2,584,481 5,375,335
Indonesi
a 473,827 352,649 2,052,791 4,369,612 5,112,031
Italy 44,720 47,882 885,768 57,086 0
Other 11,799,347 10,037,456 13,178,658 10,455,256 12,262,309
Total 135,639,185 142,137,368 151,185,243 243,537,083 320,014,964

Source: ITC Trade Database


114
Product HS Code: 8430 Boring and drilling machines
USD USD


Leading
Suppliers
2004 2005 2006 2007 2008
China 6,293,354 4,942,830 7,200,453 15,045,168 27,696,563
Japan 6,865,408 13,781,853 11,772,617 18,175,314 23,173,687
Singapore 376,394 1,628,419 2,214,822 3,523,133 4,491,588
Finland 4,771,717 1,979,307 3,508,865 2,079,384 3,533,012
Indonesia 0 718,128 0 13,854 3,489,850
Italy 7,503,718 177,858 0 116,108 0
Other 9,292,627 14,779,690 11,825,221 10,064,124 17,859,092
Total 35,103,219 38,008,085 36,521,978 49,017,086 80,243,791
Source: ITC Trade Database




115
Product HS Code: 8431 other construction machine
USD USD


Leading
Suppliers
2004 2005 2006 2007 2008
Singapore 64,725,894 95,280,692 87,104,201 122,449,316 187,895,091
USA 19,386,933 12,008,937 16,049,291 29,045,676 36,055,554
China 6,680,546 5,893,570 8,736,513 13,329,170 29,236,724
Germany 5,764,469 9,684,219 21,438,721 10,643,068 23,087,951
Japan 3,311,807 6,267,670 4,345,649 7,723,054 13,516,929
Italy 1,108,420 1,037,756 2,891,145 2,559,854 2,763,019
Other 19,484,572 22,668,793 34,017,096 57,077,726 83,253,485
Total 120,462,641 152,841,637 174,582,616 242,827,863 375,808,752

Source: ITC Trade Database


116
Product HS Code: 86 Various railway cars, locomotives, trams
USD USD


Leading
Suppliers
2004 2005 2006 2007 2008
China 31,669,139 4,180,081 9,972,720 19,959,886 15,736,116
Malaysia 3,542,189 3,185,335 1,662,135 396,082 5,031,266
USA 1,932,225 829,073 128,952 1,581,354 1,099,839
Norway 0 64,024 0 0 449,079
Singapore 185,943 423,293 102,199 152,913 443,642
Italy 115,842 228,480 0 0 50,869
Other 2,807,453 4,851,795 23,485,111 56,291,407 1,292,844
Total 40,252,791 13,762,081 35,351,117 78,381,643 24,103,653

Source: ITC Trade Database

Other Equipment
Other types of equipment and machinery typically imported by large
construction companies involved with infrastructure projects include:
- Earthworks and Roadwork Equipment: Excavators, bulldozers, loaders,
rollers, dump trucks, graders, back hoes
- Asphalt Concrete Construction Works: Asphalt pavers, bitumen distributors,
asphalt mixing plants
- Concrete Construction Works: Concrete mixing plants, concrete pavers,
mixing trucks, concrete pumping machines and pump-booms
- Piling Works and Bridge Works: Diesel hammers, vibrating hammers, piling
rigs, drilling equipment for bored piles, tunnel drilling machines, crawler cranes,
rubber tire cranes
- Other Equipment: Welding machines, compressors, generators, machine
tools, hydraulic jacks, measuring and testing devices



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10. LIST OF KEY PROJECTS
ENERGY

1) Huoi quang hydro power, son la province
Project Description
Will be fourth largest hydropower plant in Vietnam after Son La, Hoa Binh and
Lai Chau plant
Size of Project, Source of Funding
520 MW capacity 1.9 billion kWh/year
USD 430 million
Of the USD 430 million, USD 100 million is ODA from French International
Development Agency (AFD), USD 200 million is from loan provided by a BIDV led
syndicate (BIDV,Vietcombank, Agribank, PetroViet Finance and EVN Finance). USD
130 million financed by EVN
Management Agency or Main Contractor
Project sponsor: Electricity of Vietnam (EVN)
General Contractor: Song Da Holdings
Other contractors: Vinaconex 15, Hung Lo Construction company, Lilama,
Power Construction JSC No1.
Project Status
Resettlement in progress; Broke ground in Jan 2010, estimated 6 year
construction.
Equipment needed: N/A
Contact Information for Management Agency or Main Contractor:
Song Da Holdings
Address: G10 Building -Thanh Xuan Nam - Thanh Xuan Hanoi
Mr Le Van Chau Vice President Tel: (84-4) 38541164 - 38541160 / Fax: (84-
4) 38541161


2) Nho que 3 hydro power, ha giang province

Project Description
Medium scale hydro-power plant,
Than Uyen district, Lai Chau province and Muong La district, Son La province
Size of Project, Source of Funding
110 MW capacity 507 million kWh/year
USD 106 million (project sponsor Bitexco Corporation, loan from BIDV)
Management Agency or Main Contractor
Project sponsor and developer: Bitexco
Project Status
Resettlement in progress. Ground breaking in December 2009, estimated 2-3
year construction period
Equipment needed: N/A
Contact Information for Management Agency or Main Contractor:
Bitexco Hanoi Office
Add: 2A Lang Ha, Ba Dinh, Hanoi
Tel: 84-4-38353303


3) Thuong kon tum hydro power, kon tum province

Project Description
Medium scale hydro-power plant,


119
Kon Plong district, Kon Tum province
Size of Project, Source of Funding
240 MW capacity 1048 million kWh/year
USD 250 million
Management Agency or Main Contractor
Project sponsor and developer: Vinh Son Song Hinh Hydropower JSC
Project Status
Resettlement in progress; Ground breaking in September 2009, expected
completion in 2014
Equipment needed
n/a
Contact Information for Management Agency or Main Contractor:
Vinh Son Song Hinh Hydropower JSC
Address: 21 Nguyen Hue, Quy Nhon City, Bnh Dinh Province
Tell: 84-(56) 389 27 92 Fax:84-(56) 389 19 75
Email nmtdvson@dng.vnn.vn
Website http://www.vshpc.evn.com.vn


4) Muong gion hydropower

Project Description
Small Medium hydro-power plant with reservoir
Muong Gion, Chieng On communes, Quynh Nhai district, Son La
Size of Project, Source of Funding
20 MW capacity -80,636 KWh/year
USD 20 million
Project sponsor and investor: Ha Thao Construction Investment and
Trading Joint Stock Company; Energy and Environment Consultancy
Joint Stock Company; ORBEO (France)
Management Agency or Main Contractor
Ha Thao Construction Investment and Trading Joint Stock Company
Project Status
Arranging loans
Equipment needed
Equipments for: Dam, intakes, tunnels, pressurized wells, penstocks,
power house with 2 units (Each unit has a turbine and power generators) and
discharge channels
Nearly all equipment expected to be imported. No tender dates set.
Contact Information for Management Agency or Main Contractor:
Ha Thao Construction Investment and Trading Joint Stock Company
Add: No 45, Unit 3, Quyet Thang Ward, Son La town, Son La Province
Telephone: +84 913 511 630
FAX: +84 22 625 006
Director Ha Van Thao. Direct tel: +84 913 511 630
Personal e-mail: hathaocompany@yahoo.com.vn


5) An diem ii hydropower, quang nam province

Project Description
Small Medium hydro-power plant with dam, intake tunnel, pressurized well,
penstock, power house with 3 units and a discharge channel in Ba commune, Dong
Giang district, Quang Nam province
Size of Project, Source of Funding
15.6 MW capacity, 77.52 MWh/year


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USD 16 million
Project sponsor and investor: Song Vang Hydropower Joint Stock Company,
Energy and Environment Consultancy Joint Stock Company
(VNECC), MGM Carbon Portfolio S.a.r.l (United Kingdom)
Feed-in tariff: 608 VND/kWh
Management Agency
Song Vang Hydropower Joint Stock Company
Project Status
Finalizing financing
Equipment needed
General Contractor: Vietnam Machinery Erection Corporation (Lilama)
Lilama will import turbines, generators and transformers from Yunnan Yuxi
Hydroelectric Equipment Co., Ltd (China)
Contact Information for Management Agency or Main Contractor:
Song Vang Hydropower Joint Stock Company
Add: No 298, 2/9 street, Hoa Cuong ward, Hai Chau district, Da Nang city
Telephone: + 84 5113643865 FAX: + 84 5113 643866
E-Mail: songvang@vnn.vn
General Director: Bui Son Truong + 84 511 3643865


6) Song bung 4 hydro power, quang nam province

Project Description
Medium - large hydro power plant, Ma Coi commune, Dong Giang district,
Quang Nam province
Size of Project, Source of Funding
156 MW capacity -623,8 million kWh/year.
USD 213 million of which USD 196 million financed by Asian Development
Bank. Balance financed by project sponsor
Project sponsor: EVN
Management Agency or Main Contractor
Main contractor: Hydraulic Construction Corporation No.4 Joint Stock Company
(Hyco4 JSC)
Project Status
Construction started in September 2009, expected completion by 2013
On going tender process for different bidding packages. Bidding completed
for resettlement infrastructure and transmission line installation.
Equipment needed
Tenders ongoing.
Contact Information for Management Agency or Main Contractor:
Song Bung 4 Hydropower Project Management Board
Address: 78A, Duy Tan Street, Danang city, Vietnam
Telephone: +84 0511 2488800-Facsimile numbers: +84 0511 3621535
Email: tuyentt@asb4.vn


7) Suoi tan hydro power, son la province

Project Description
Small run- of river hydro-power plant
Chieng Khoa commune, Moc Chau district, Son La province
Size of Project, Source of Funding
24.187 MWh/year
USD 5million
Project sponsor and investor: Suoi Tan Hydropower Joint Stock


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Management Agency or Main Contractor
Suoi Tan Hydropower Joint Stock Company
Project Status
Approved by provincial authorities
Approved by Vietnam and International CDM authority
Construction in progress
Equipment Supplier
Most equipment supplied by Chinese firms
Turbines: Hong Ha Equipment Joint Stock Company (Vietnamese), Hang Chau
Electricity Equipment Factory (China):
Generators: Chongqing Electric Machine, Federation Ltd CMF (China)Hang
Chau Electricity Equipment Factory(China)
Governors: Vu Han Valve Factory (China), Tanaka Suiryoku Co., Ltd (Japan)
Contact Information for Management Agency or Main Contractor:
Suoi Tan Hydropower JSC.
Add: No. 8, Lane 95, Chua Boc street,Dong Da district, Hanoi
Telephone: 84-4-5639353
FAX: 84-4-5639353
Director: Mr. Pham Ngoc Luong, Cell phone: 84-912-257-323


8) Vinh tan 1, Binh Thuan province

Project Description
1,200 MW coal-fired power plant
Size of Project, Source of Funding
Estimated investment cost of USD 900 million
Built under BOT basis
Management Agency or Main Contractor
Project managed by Vinacomin group
Foreign partners for the project include China Southern Power Grid Company
and China Power International Holding Company.
Project Status
Investment not licensed yet. Memorandum of Understanding for the project
approved by the Ministry of Industry and Trade
If licensed, Vinacomin will be a minority shareholder in the project. The
Chinese / Hong Kong investors in the project will hold main decision making
power for selecting contractors, equipment suppliers. Vinacomins main
participation will be as supplier of coal feedstock for the plant.
Contact Information for Management Agency or Main Contractor:
Vinacomin
226 Le Duan Street,Dong Da District, Hanoi
Telephone: 84-4-35161605
FAX: 84-4-35161610
Mr.Nguyen Chien Thang, General Director of TKV and also Vice General
Director of Vinacomin
Ms.Van - Head of the Investment Management Agency of Power Holding
Corporation Limited (TKV). Tel: 84-4-37958317

9) Vinh Tan 3, Binh Thuan province

Project Description
3 x 600 MW coal-fired power plant
Size of Project, Source of Funding


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Investment cost to be determined
Built under BOT basis
Management Agency or Main Contractor
Project managed by EVN
Foreign partners for the project include China Light and Power (Hong Kong),
Mitsubishi Corp, and Pacific Corp of Vietnam
Project Status
Investment not licensed yet. Memorandum of Understanding for the project
approved by the Binh Thuan provincial government
If licensed, EVN will be the majority shareholder.
Contact Information:
EVN Hanoi
Add: 18 Tran Nguyen Han, Hanoi
Tel: 04 22201268
Department of Planning: 04 2220 1269/1289 or 04 2220 0997/970


10) Son My power complex, Binh Thuan province

Project Description
Three phase power plant complex, each with capacity of 1,200 MW
Size of Project, Source of Funding
Total investment cost estimated at USD 4.9 billion
Built under BOO or BOT basis
Management Agency or Main Contractor
Government has given preliminary approval to three investors to co invest in
the main infrastructure works for the project
Companies exploring development of the project include International Power
PLC of UK, Japan's Sojitz and Vietnam's Thai Binh Duong Joint Stock Co
EVN may also co invest as a developer, though their participation not yet
confirmed

Project Status
Ministry of Industry and Trade has granted preliminary approval for joint
investment by the three companies cited above.
Construction is scheduled to take place in phases from 2010 or 2011 to 2018
Contact Information:
Sojitz Vietnam, Ho Chi Minh City Office
Add: 183 Ly Chinh Thang Street, District 3, Ho Chi Minh City, Vietnam
Tel: +84 8 3931 8100
Fax: +84 8 3931 8110

11) NGhi Son power complex

Project Description
Two coal-fired power plants, each with capacity of at least 600 MW. Nghi Son
Economic Zone, Thanh Hoa Province
Size of Project, Source of Funding
First power plant costs estimated at USD 1.4 billion
85% of financing from Japan ODA loan through Japan International
Cooperation Agency
Management Agency or Main Contractor
Marubeni is main contractor
Opportunities for equipment supply or subcontracts may exist


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Project Status
Ground breaking ceremony held in mid-2010
First power plant complex expected to be in operations by 4
th
quarter 2013
Schedule for construction of second plant to be determined
Contact Information:
EVN Hanoi
Add: 18 Tran Nguyen Han, HaNoi
Tel: 04 22201268
Department of Planning: 22201269/1289 or 22200997/970


12) Nhon Trach power complex

Project Description
Gas-fired power plants in Dong Nai province
Size of Project, Source of Funding
Plant I has capacity of 462 MegaWatt
Second power plant under construction and two others planned
When all four plants completed total capacity at complex will be 2,400 MW
PetroVietnam financing construction of plants through internal financing and
loans from domestic state-owned banks.
Management Agency or Main Contractor
PetroVietnam Power Corporation
Project Status
First power plant at Nhon Trach began operations in 2009
Second power plant under construction
Additional two plants in the planning stages
Development of future plants may depend upon securing sufficient natural
gas supplies.
Contact Information:
Nhon Trach PetroVietnam Power Company:
Add: Hamlet 3, Phuoc Khanh Ward, Nhon Trach District, Dong Nai Province
Tel: 061 3572133
Fax: 061 3572095

Hanoi Head Office PetroVietnam Power Corporation:
Tel: 04 2221 0288
Mr.Vu Van Loi Vice Head of Investment Management Board
Mobile: 098 9352756
Email: vuvanloi@pv-power.vn


13) O Mon power complex

Project Description
Four gas fired power plants and gas pipeline near Cantho, Mekong Delta
Size of Project, Source of Funding
Total output of four plants 2,800 MW (4 x 700 MW)
Investment cost for gas pipeline alone estimated at USD 1 billion
Power plant investment estimated at USD 2 billion
Investment in gas pipeline by consortium including PetroVietnam Gas
Corporation, Americas Chevron, Japanese Mitsui Oil Exploration Company
and Thai PTT Exploration and Production
Investors in power plants to be determined, with PetroVietnam likely to be
primary investor


124
Asian Development Bank may co-finance one or more of the power plants
Management Agency or Main Contractor
PetroVietnam (Note: PetroVietnam officials indicated O Mon power complex
would be developed by PetroVietnam Corporation, rather than its subsidiary
company PetroVietnam Power Company.)
Project Status
Gas pipeline consortium formed in 2010
Construction of pipeline and first of four power plants expected to start in late
2011
Contact Information:
Hanoi Head Office PetroVietnam
Tel: 04 3825 2526 (ext 7401-7424) for Planning Department


PORTS

14) Saigon International Terminal Vietnam Port (sitv port, Vung Tau)

Developer and Project Description
A 50-year joint venture between Hutchison Port Holdings (Hong Kong),
Saigon Investment Construction & Commerce Co. Ltd (Vietnam).
Container and deepwater port, built at Thi Vai-Cai Mep area in Ba Ria-Vung
Tau province, about 75kms from HCMC. The port is 33.7hectares in area, with 3
berths along 730 meters of quay.
Capacity of 1.1 million TEUs per year. Capable of handling ships of up to
60,000 DWTs
Total investment of approximately USD 260 million. Built under BOT
investment structure.
Status
SITVs Phase 1 is currently under construction. The commencement of
commercial operations is planned for Q1, 2010 with completion of Phase 1
scheduled for 2011.
Phase 2
Opportunities
China Harbour Engineering Company (CHEC) is the general contractor of the
port's three construction packages totally valued at more than USUSD 163 million.
Port managers indicated that upcoming tenders in 2010 and 2011 would
focus on equipment rather than construction / engineering.
Contact Information:
Saigon International Terminals Vietnam
Ho Chi Minh Town Office
Address: Unit 902, Royal Centre Tower A, 235 Nguyen Van Cu Boulevard,
District 1, Ho Chi Minh City
SR Vietnam
Tel: 84 - 8 -39251366
Fax: 84 -8 -39251365
Tender Information: Ms.Phuong
Tel: 84 - 8 -39251366, extension 105


15) SP-PSA port (Vung Tau)

Developer and Project Description
Joint venture between Singapore's PSA (49%) and Saigon Port (51%)


125
Container and deepwater port, built at Thi Vai-Cai Mep area in Ba Ria-Vung
Tau province.The port is 54 hectares in area with 4 wharves and will be built in 2
phases: Phase I cost USD 165 million, Phase II is budgeted at USD 133 million
Capacity of 2 million TEUs per year
Status
Phase I was completed by late May 2009.
Phase II has planned completion date of 2017.
Opportunities
Phase I: Japanese firm Penta-Ocean Construction Co Ltd contracted to build
the first phase. Doosan (Korea) selected as primary equipment supplier.
Phase II: To be determined, though Doosan likely selected as equipment
supplier for this phase.
Contact Information:
SP-PSA International Port Co., Ltd
Tel: +84 64 3 92 4567
Tender Information: Ms Ngoc, PR department (ext 104)
Handphone: +84 90 888 1976
E-mail: hanhp@sp-psa.com.vn


16) Cai Mep International Terminal (CMIT, Vung Tau)

Developer and Project Description
Joint venture between Maersk A/S and Saigon Port & Vietnam National
Shipping Lines - Vinalines.
Container and deepwater port, built at Thi Vai-Cai Mep area in Ba Ria-Vung
Tau province. The port is 48 hectares in area with 600m berth length, 2 wharves.
Total investment: USD 187million
Capacity of 1.1million TEUs per year
Status
Start operating in 2010 or 2011
Construction began in Apr 2008 with estimated opening time in the Q4 of
2010
Opportunities
Posco (Korea) is the main contractor for the project.
Contact Information:
Cai Mep International Terminal
Address: 5th Floor, 139 Pasteur, District 3, Ho Chi Minh City
Tel: +84 8 38242161
Website: www.cmit.com.vn


17) SP-SSA International Terminal Port (Ssit Port, Vung Tau)

Developer and Project Description
Joint venture between SSA Holdings International - Vietnam (49%), Saigon
Port and Vinalines (51%).
Container and deepwater port, built at Thi Vai-Cai Mep area in Ba Ria-Vung
Tau province. The port is 60.5 hectares in area with 600m berth length, 2 wharves.
Total investment: USD 282million
Capacity of 1.35million TEUs per year . Capable of handling ships of up to
80,000 DWTs
Status
Expected completion date in 2010
Opportunities


126
Construction: c Thnh - Hong Long An - Bng Dng joint venture
conducted infrastructure and land clearance works.
Contact Information:
SP-SSA international container services joint venture company
Address: Unit 805, 8th Floor, Melinh Point Tower, No. 2 Ngo Duc Ke Street,
District 1, Ho Chi Minh City, Vietnam
Tel: +84 (08) 3 910 6866
Website: http://www.ssit.com.vn/


18) Tan Cang Cai Mep Port (Vung Tau)

Developer and Project Description
SNP + Hanjin Shipping (Korea), Mitsui O.S.K Lines (Japan) and Wanhai
Lines (Taiwan), 30-year joint venture.
Container and deepwater port, built at Thi Vai-Cai Mep area in Ba Ria-Vung
Tau province. The port is 60 hectares in area with 900m berth length, 2 wharves.
* First phase: 20ha, 300m berth length
* Second phase: 40ha, 2 wharves, 590m berth length
Total investment: Phase 2 USD 196million
Capable of handling ships of up to 80,000 DWTs
Status
Phase 1: open in June 2009
Phase 2: to be determined
Opportunities
Construction and equipment opportunities for phase 2
Contact Information:
Tan Cang-Cai Mep joint-stock company
Address: Tan Phuoc commune, Tan Thanh, Ba Ria-Vung Tau
Tel: +84 (064) 3938006
Fax: +84 (064) 3938005
Website: http://www.tancangcaimep.com.vn


19) The Saigon Premier Container Terminal (Spct Port, Hcmc)

Developer and Project Description
Joint venture UAEs DP World, holding a 80% stake, and State-owned Tan
Thuan Industrial Promotion Company (IPC)
Located along the western shore of the Soai Rap River within the Hiep Phuoc
Industrial Park, located approximately 16km from center of Ho Chi Minh City. The
port has 950 meters of quay line, 40 hectares of adjoining land and 10 ship to shore
cranes and associated equipment.
Total investment: USD 360million
Capacity: 1.5 million TEU annually
* Phase 1: 20ha, 500m berth length. Nominal capacity of 3,500 5000TEUs
simultaneously.
* Phase 2: ~20ha, 450m berth length, annual capacity of approximately 1.5
million TEUs.
Status
Phase 1: Completed in Oct 2009.
Phase 2: Schedule to be determined
Opportunities
The main construction company used for phase 1 is Japans TOA.
Procurement decisions made from DP World Hong Kong office.
Contact Information:


127
Saigon Premier Container Terminal
Address: Plot C17, - Hiep Phuoc Industrial Zone, Hiep Phuoc Commune
Nha Be District, Ho Chi Minh City, Vietnam
Tel: + 84 8 3873 4488
Fax: + 84 8 3873 4216
Website: http://www.spct.com.vn


20) Saigon Hiep Phuoc Port (Hcmc)

Developer and Project Description
Developer of Phase 1 is Saigon Port Co., phase 2 is Saigon Port Company
and the Saigon Port-Hiep Phuoc Joint Stock Company
Located along the Soai Rap River. The port is 100 hectares in area
Total investment: USD 324million
Capacity: The port complex is expected to receive 60 million tons of cargo in
2010 and 225 million tons in 2020.
* Phase 1: USD 153million, three wharves totaling 800 meters in length,
accommodate ships of up to 50,000 DWTs, capable of 8.7million ton of cargo every
year
* Phase 2: the ports pier length will increase to 1,800 meters with capacity of
18 million tons of cargo a year.
Status
Phase 1: Ground breaking held in May 2009
Phase 2: Construction to start in 2011, completion by 2014
Opportunities
Vietnam Waterway Construction Corporation the primary contractor for the
port
Contact Information:
Saigon-Hiep Phuoc Co. Ltd.,
Address: 3 Nguyen Tat Thanh, District 4, Ho Chi Minh City, Vietnam
Tel: + 84 8 39400161
Tender Information: Mr Phuong (ext 833)


21) Cai Lan Port (Quang Ninh)

Developer and Project Description:
Joint venture between Vinalines and SSA Holdings International Vietnam, Inc
(USA)
Located in Quang Ninh province.
Total investment: USD N/A.
* Phase 1: 80m berth length, capable for 40,000DWT ship,
2010: 1446m berth length, 40,000DWT ship
2020: 1946m berth length, 40,000DWT ship
* Phase 2:
Status
Phase 1: Began operations in May 2009, wharves 5, 6, 7.
Phase 2: wharfs No 2, 3, 4 in an area of 155,685 square metres, with the total
investment capital of USUSD 103 million, expected to complete by 2014
Contact Information:
Ports name:QUANG NINH PORT
Under: Vietnam National Shipping Lines
Address: 1 Cai Lan St., Bai Chay ward, Ha Long City, Quang Ninh Province.
Tel: (84.33) 3 825 627
Fax: (84.33) 3 826 118


128
Email: quangninhport@vnn.vn,
Website: www.quangninhport.com.vn
Director: Mr. VU KHAC TU, Tel: (84.33) 3625889
Vice Director (Business Department), Mr. BUI QUANG DAO, Tel: (84.33)
826312

SSA HOLDINGS INTERNATIONAL VIETNAM REPRESENTATIVE OFFICE
(HANOI)
Representative: Mr. Tien Nguyen
Position: Director
Address: Suite 701, Ocean Park Bldg., 1 Dao Duy Anh St., Hai Ba Trung
District, Hanoi
Tel: (84-4) 35771349
Fax: (84-4) 35771350


22) Lach Huyen Port (Hai Phong)

Developer and Project Description
Developer: Vinalines
Located in Cai Hai, Hai Phong province.
Total investment: N/A Phase 1: USD 90million
Capacity: 50,000 DWTs
Phase 1: 6million ton of cargo annually
2020:35-50million ton of cargo annually
Status
Expected completion of phase 1 in 2010
Opportunities
Belgium's port of Zeebrugge is expected to participate in the main construction
and equipment supply contracts; however subcontractor opportunities may be
available.
Contact Information:
MARINE PROJECTS MANAGEMENT AGENT N.1 (under Vinalines)
Director: Mr. SON
Address: 7
th
Floor, Ocean Park Bldg, 1 Dao Duy Anh St., Dong Da District,
Hanoi.
Tel: (84)-4-3577 2406/ 2218 9686/
Fax: (84)-4-3577 2407
Email: mpmu1@vinalines.com.vn


23) Tan Cang South Do Son Port (Hai Phong)

Developer and Project Description
Developer: Saigon Newport
Located in Hai Phong province.
Total investment:
Capacity: including 4 phases (2010-after2020). Phase 1 on area 10.4ha, 300m
berth length, annual vol 1mil ton, vsl capacity 10,000DWT
Status
Feasibility study completed in 2008
Project documents now reviewed by Royal Haskoning (Holland)
Project is still under consideration and not yet approved by Ministry of Transport.
Amendments to the original project scope may be considered.
Contact Information:


129
Project Management Team: 08 3899 0696 Mr. Diem - Manager.


24) Hai Phong Port

Developer and Project Description
Developer: Vinalines
Located in Hai Phong province.
Total investment: USD 1.4billion
Capacity:
* 2015: 300m berth length, 30,000DWT ship
* 2020: 3200m berth length, 80,000DWT ship
Status: N/A
Opportunities: N/A
Contact Information:
Port's name: HAI PHONG PORT (Under: Vietnam National Shipping Lines)
Address: 8A Tran Phu Street, Hai Phong city
Tel. No.: 84.31.3859945 / 3859456
Fax No.: 84.31.3552049 / 3859973
E-mail: haiphongport@hn.vnn.vn
Website: www.haiphongport.com.vn
President: Mr. Duong Thanh Binh. Tel: (84.31) 3859906
General Director: Mr. Ngo Bac Ha. Tel: (84.31) 3859953
Vice director (Operations): Mr Truong Van Thai. Tel: (84.31) 3859906


25) Van Phong Port (Khanh Hoa Province, Central Vietnam)

Developer and Project Description
Developer: Vinalines
Located in Khanh Hoa Province.
Total investment: USD 3.5 billion.
Capacity: include 25 wharfs for container carriers up to 15,000 TEU and 12 other
wharfs for vessel containers, with total area of 750 hectares, 150,000DWT ship
Status
Started construction on Oct 31st, 2009.
1> 1st place (2010-2015), total area: 118-125 ha, total berth length: 1680-2260m
2> 2nd phase (up to 2020), with total area: 405 ha
Phase I of basic port infrastructure scheduled to be completed by 2013.
Opportunities
According to the construction plan, two main contractors for port construction
include Vietnam Waterways Construction Corp (Vinawaco) and SK Engineering
Construction Co (South Korea)
Contact Information:
MARINE PROJECTS MANAGEMENT AGENT N.1 (under Vinalines)
Director: Mr. SON
Address: 7
th
Floor, Ocean Park Bldg, 1 Dao Duy Anh St., Dong Da District,
Hanoi.
Tel: (84)-4-3577 2406/ 2218 9686/
Fax: (84)-4-3577 2407
Email: mpmu1@vinalines.com.vn


METRO RAIL LINES



130

26) Ben Thanh Suoi Tien (Line No.1)

Developer and Project Description
Developer: Metro Rail Authority HCMC (MAUR)
Length: 19.7 km, including 2.6km subway and 17.1km as elevated rail.
Subway and elevated rail linking District 1 to northeast suburb, running thru
districts 1,2,9, Binh Thanh, Thu Duc district and a small part of Binh Duong,
underground length 2.6km.
Total investment: USD 1.1billion, including USD 940million from Japanese
ODA (83%) and USD 186million from HCM city budget
Capable for transporting over 500,000 passengers per day. Metros travel
speed is 40km per hour (e.g. it will take 30 minutes to travel from Ben Thanh to Suoi
Tien).
Status
Initial consultancy contracts awarded
Scheduled completion date by 2015.
Opportunities
The General consultant was awarded to Nippon Koei (JP).
There are 3 main packages:
Package 1: Underground rails works
Package 2: Elevated rails works
Package 3: Electric and Material
Loton Company chosen as constructor for the depot
MAUR has short listed companies for the three main tender packages; There
may be opportunities for subcontractor contracts with the winners of these tenders.
Contact Information:
The Management Authority for Urban Railways (MAUR)
Tel: (08)3930.9495 - (08)3930.9496
Fax: (08)3930.9497
Add: 29 Le Quy Don Street, Ward 7, District 3, Ho Chi Minh City.
Tender Information: Mr. Quoc (Vice Chairman)


27) Ben Thanh Tham Luong (Line No.2)

Developer and Project Description
Developer: MAUR
Length: 19 km
Routing: Ty Ninh station Truong Chinh street Tham Luong street Cach
Mang Thang 8 street Ben Thanh market Thu Thiem street. Majority of route to be
underground
Total investment: Estimated cost of USD 1.3 billion. Co-funding by:
Japan ODA: USD 300million
European Investment Bank: USD 200million
Asian Development Bank: USD 500million
Status
Phase 1: 11km from Ben Thanh market to Tham Luong
Phase 2: 8km from Tham Luong to Cu Chi
The pre-feasibility study is completed.
Opportunities
Unlike the Line#1 which procurement is influenced by Japan who is the
donor, Line#2 is likely to have tenders among companies from various countries in
Asia and Europe (not from the America)
Contact Information:
The Management Authority for Urban Railways (MAUR)


131
Tel: (08)3930.9495 - (08)3930.9496
Fax: (08)3930.9497
Add: 29 Le Quy Don Street, Ward 7, District 3, Ho Chi Minh City.
Tender Information: Mr. Quoc (Vice Chairman)


28) Ben Thanh Mien Tay Terminal (Line No.3)

Developer and Project Description
Developer: MAUR
Length: 23km
Routing: High way No 13 East Station Xo Viet Nghe Tinh street Nguyen
Thi Minh Khai street Tran Phu street Hung Vuong street Hong Bang street
Cay Go street
Total investment: to be determined
Capacity: to be determined
Status
Pre feasibility study being conducted
Opportunities
To be determined
Contact Information:
The Management Authority for Urban Railways (MAUR)
Tel: (08)3930.9495 - (08)3930.9496
Fax: (08)3930.9497
Add: 29 Le Quy Don Street, Ward 7, District 3, Ho Chi Minh City.
Tender Information: Mr. Quoc (Vice Chairman)


29) Go Vap District 7 (Line No.4)

Developer and Project Description
Developer: MAUR
Length: 24km
Routing: Bn Cat Bridge Thong Nhat street 26/3 (intended) Nguyen
Oanh street Nguyen Kiem street Phan Dinh Phung street Hai Ba Trung street
Ben Thanh market Nguyen Thai Hoc street Khanh Hoi street - Le Van Luong
street Nguyen Van Linh street
Total investment: The research work is done by Shanghai company, but
Shanghai will not give ODA on this. Received ODA offer from Russian
Capacity:
Status
There is 2 phases:
Phase 1: 11km from Ben Thanh market to Tham Luong
Phase 2: 8km from Tham Luong to Cu Chi
Opportunities

Contact Information:
The Management Authority for Urban Railways (MAUR)
Tel: (08)3930.9495 - (08)3930.9496
Fax: (08)3930.9497
Add: 29 Le Quy Don Street, Ward 7, District 3, Ho Chi Minh City.
Tender Information: Mr. Quoc (Vice Chairman)


30) Sai Gon Bridge District 8 (Line No.5)



132
Developer and Project Description
Developer: MAUR
Length: 17km
Routing: New Can Giuoc bus station Tung Thien Vuong street Ly Thuong
Kiet street Hoang Van Thu street Phan Dang Luu street Bach Dang street
Dien Bien Phu street Sai Gon bridge
Total investment: Technical assistant from Spain (some hundred thousand).
Co-funding is likely to take place.
Capacity:
Status
Idom Ingenieria and Ardanuy Ingenieria are working on feasibility study
Contact Information:
The Management Authority for Urban Railways (MAUR)
Tel: (08)3930.9495 - (08)3930.9496
Fax: (08)3930.9497
Add: 29 Le Quy Don Street, Ward 7, District 3, Ho Chi Minh City.
Tender Information: Mr. Quoc (Vice Chairman)


31) Long Thanh International Airport, Dong Nai Province

Project Description
New international airport to replace Tan Son Nhat International airport in Ho
Chi Minh City
Size of Project, Source of Funding
Total cost USD 8 billion
USD 5 billion for Phase I of airport
Financing to be determined. Preliminary comments from government indicate
state agencies, companies and shareholders will hold 70% stake in the airport, with
30% investment from other sources. Government has expressed interest in public-
private partnership combining government financing with BOT investment by
domestic or foreign investor. ODA funding may come from bilateral donors, but
unlikely from multilateral donors such as World Bank or ADB.
Management Agency or Main Contractor
Project manager: Civil Aviation Authority of Vietnam and Southern Airports
Corporation. Due to size of project, Prime Ministers office will likely need to approve
major decisions and contract awards, and numerous ministries will also participate in
decision-making process.
CAAV has awarded initial feasibility study contract to Japan Airport
Consulting Company, consultant used in masterplanning for new international
terminal at Tan Son Nhat Airport.
Project Status
Feasibility studies and masterplanning for airport underway. Site selected and
site clearance taking place.
Scheduled completion date between 2016 and 2020
Contact Information for Management Agency:
Southern Airports Corporation
Tan Son Nhat Airport, Ho Chi Minh City
Ms. Huong
Email: huong.nguyen@sac.vn, or
Ms. Minh at dinhminh@sac.vn
Tel: (08) 3848 5383 - 3102.
Fax: (08)3844 5127


32) Noi Bai International Airport Expansion, Hanoi


133

Project Description
Expansion of existing Noi Bai International Airport. Construction of terminals 3
and 4 to increase capacity to 50 million passengers a year.
Size of Project, Source of Funding
Total cost to be determined
Japan provided ODA to fund construction of second terminal at Noi Bai
Airport but has not yet made commitments to finance terminals 3 and 4.
Management Agency or Main Contractor
Project manager: Civil Aviation Authority of Vietnam and Northern Airports
Corporation.
Project Status
Feasibility studies and masterplanning for additional terminals underway.
Contact Information for Management Agency:
Northern Airports Corporation
Address: International airport of Noi Bai, Soc Son District, Hanoi
Phone:(04) 3886 5047
Fax: (04) 3886 5540
Email: contact@nacorp.com.vn
Website: http://nacorp.com.vn


33) Hanoi Lao Cai Highway

Project Description
264 kilometer route linking Hanoi with northwest border crossing with China at
Lao Cai
Size of Project, Source of Funding
USD 1.25 billion
Asian Development Bank financing USD 1.096 billion, with remainder
financed by Vietnam government and Vietnam Expressway Corporation (VEC)
Management Agency or Main Contractor
Asian Development Bank and VEC
First of eight construction packages awarded to POSCO (Korea)
Project Status
Construction started
Scheduled completion date between 2012 - 2014
Contact Information for Management Agency:
Mr. Tran Xuan Sang
General Director
Vietnam Expressway Corporation (VEC)
Linh Nam Road, Hoang Mai District, Hanoi
Tel: 04 3643 0275
Fax: 04 3643 0275
(Other contact: Mr. Pham Quang Minh, Project Department)


34) Ho Chi Minh City Long Thanh Dau Giay Expressway

Project Description
51 kilometer highway through HCMC and Dong Nai provinces to improve
road links between manufacturing zones and ports.
Size of Project, Source of Funding
USD 932 million
Japan Bank for International Cooperation USD 516.5 million; ADB USD 410.2
million; VEC USD 5.7 million


134
Management Agency or Main Contractor
Vietnam Expressway Corporation, Asian Development Bank
Project Status
Initial construction started
First construction tender awarded
Completion date 2013 - 2014
Contact Information for Management Agency:
Mr. Tran Xuan Sang
General Director
Vietnam Expressway Corporation (VEC)
Add: Linh Nam Road, Hoang Mai District, Hanoi
Tel: 04 3643 0275
Fax: 04 3643 0275
(Other contact: Mr. Pham Quang Minh, Project Department)


35) Hanoi Haiphong Highway

Project Description
100 kilometer, six lane expressway linking Hanoi with port city of Haiphong
Size of Project, Source of Funding
N/A
Consortium of domestic investors including Vietnam Infrastructure
Development and Financial Investment Corp (VIDIFI), and state-owned banks Bank
for Industrial Development (BIDV) and Vietcombank investing in project on BOT
basis
Management Agency or Main Contractor
BIDV Expressway Development Corporation (BEDC) project manager
Project Status
Initial construction started, but project facing delays due to land compensation
and relocation issues
First construction tender awarded to Koreas GS Construction
Completion date 2013 - 2014
Contact Information for Management Agency:
Mr. Phan Hong Quang - General Director
BIDV Expressway Development Corporation
Add: BIDV Tower, 35 Hang Voi St., Hanoi
Tel: (+84-4)-22205544 (+84-4)-22200484-
Fax: (+84-4)- 22200399
Email bidv@hn.vnn.vn
Website: www.bidv.com.vn


36) Danang Quang Ngai Highway

Project Description
Total length of 140 km, 4- 6 lanes. Expansion of existing Highway 1 road link
between central coast city of Danang and Quang Ngai city, site of Vietnams first oil
refinery and related industrial zones.
Size of Project, Source of Funding
USD 1.4 billion
World Bank is assisting Vietnamese government to develop the highway
under a Public-Private Partnership or BOT basis. Funding likely to come from a
combination of sources, including government budget, ODA financing from Japan
and the World Bank, and domestic investors.
Management Agency or Main Contractor


135
World Bank. Vietnam Expressway Corporation in discussions to serve as
local investor in the project.
Project Status
Project feasibility study completed
Construction scheduled to start in June 2011
Contact Information for Management Agency:
World Bank
Add: 63 Ly Thai To Str. Hanoi, Vietnam
Tel: (84-4) 39346600;
Fax: (84-4) 39346597
Paul Vallely, Team Leader
http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=732
30&theSitePK=387565&menuPK=387599&Projectid=P106235


ENVIRONMENT

37) Aic Municial Waste Treatment Plant

Project Description
Municipal waste sorting, composting and recycling plant
2,000 tons of waste/day, capacity up to 7,000 tons/day
Nam Son commune, Soc Son district, Hanoi 15 hectares
Size of Project, Source of Funding
USUSD 31 million. From AIC (Advanced International JSC) and other private
sources
Advanced International JSC (AIC) (Vietnamese name: Cng ty C phn
u t Tin b). AIC is active in medical waste treatment having built around 100
waste incinerators and waste water treatment units for hospitals.
Equipment Supply Agents (if any)
For this project AIC is considering equipment from Germany and Malaysia. The
company has existing supply relationship with Japanese equipment suppliers,
Chuwastar and Kubota for incinerators and waste water treatment equipments
respectively.
Project Status
Hanoi People Committee gave approval for BOT status
Waiting assignment of land from Hanoi People Committee
Equipment Needed
Sorting equipment, aerobic composting, compressing and palletizing
equipment
Anti-odour chemicals
Contact Information for Management Agency or Main Contractor:
Advanced International JSC
No.69 Tue Tinh Str., Nguyen Du Ward, Hai Ba Trung Dist., Hanoi, Vietnam.
Tel: (+84)-43-978-5023 Ext: 639
Fax: (+84)-43-719-4499
Mr. Tran Viet Phuong, Investment Department: 0913205088


38) Sonadezi Waste Treatment Complex, Dong Nai Province

Project Description
Industrial and municipal waste treatment and landfill complex
130 hectare, Quang Trung commune, Thong Nhat District, Dong Nai province
Size of Project, Source of Funding


136
Sonadezi, a state company under Dong Nai Provincial People Committee, a
major developer in Dong Nai, owner of a series of industrial zones.
Management Agency or Main Contractor
Directly in charge of the project is Sonadezi Service, a daughter company of
Sonadezi. Sonadezi Service takes care of various environmental, security and
catering services for Sonadezi industrial zone system.
Equipment Supply Agents (if any)
Project Status
A small industrial waste landfill is being built on site
Ordered two small waste incinerators from France and Germany
Will develop the complex in the next five years into a large waste treatment
complex for industrial waste in the province, also for handling local municipal waste.
Equipment Needed
Equipment and technology transfer pertaining to hazardous waste, industrial
waste treatment and burial.
Contact Information for Management Agency or Main Contractor:
Sonadezi Corporation
Add: No.115 116, Plot C2, An Binh Area, Bien Hoa City
Tel: 061 8860784 87. Fax: 061 8860783
CEO: Mrs. Hang 0903921399
Daughter Company: Sonadezi Service
Ass: No.22B, 3A Street, Bien Hoa 2 IZ, An Binh Ward, Bien Hoa City, Dong
Nai.
Tel: (061) 8890 888 Fax: (061) 8890 199
Mrs. Hien: 0913982340


39) Bien Hoa Urenco Waste Treatment Complex, Dong Nai Province

Project Description
Municipal and Industrial waste treatment complex
Landfill and waste treatment for Bien Hoa City, Dong Nai province and
surrounding
Size of Project, Source of Funding
State funding through URENCO (Bien Hoa Urban Environment Service
Company, a state company)
Management Agency or Main Contractor
URENCO Bien Hoa
Equipment Supply Agents (if any)
Project Status
40 hectares of land assigned
Detailed planning for the complex is being prepared.
Equipment Needed
Equipment and technology transfer pertaining to municipal waste landfill,
leachate treatment and possibly energy recovery
Contact Information for Management Agency or Main Contractor:
URENCO Bien Hoa
Contact: Mr. Hien, Director: 0917463979


40) An Phat Municipal Waste Treatment Plant, Hue Province

Project Description
Municipal waste composting and recycling. 400ton/day
Size of Project, Source of Funding
USD 20 million


137
Investor: An Phat Environment Ltd, subsidiary of An Phat Corporation (this
corporation is in construction business)
Management Agency or Main Contractor
Investor: An Phat Environment Ltd
Equipment Supply Agents (if any)
Project Status
Investment license approved and land assigned
Equipment Needed
Equipment and technology transfer pertaining to sorting, composting and
plastic/paper recycling.
The project sponsor initially considered domestic equipments but is leaning
toward US equipments since they got a funding source from the US.
Contact Information for Management Agency or Main Contractor:
An Phat Environment Ltd
Address: No. 35, Plot E37, No 6, An Cuu, Hue City, Thua Thien Hue Province.
Tel: 054.6533144
Mrs Luong Thi My Dung, CEO: 0905902550


41) World Bank Coastal Cities Environmental Sanitation Project In
Vietnam

Project Description
Rehabilitate and expand existing Long My landfill
Build a sanitary landfill in Dong Hoi City
Equip two cities with solid waste collection equipment
Size of Project, Source of Funding
World Bank. USD 24 million
Management Agency or Main Contractor
Quy Nhon and Dong Hoi Project Management Unit
Equipment Supply Agents (if any)
For this project AIC is considering equipment from Germany and Malaysia. The
company has existing supply relationship with Japanese equipment suppliers,
Chuwastar and Kubota for incinerators and waste water treatment equipments.
Project Status
Bidding process is ongoing for the Preparation of Construction Investment
Project Report, Detailed Engineering Designs and Bidding Documents
Equipment Needed
Determined by the investment report and design
Contact Information for Management Agency or Main Contractor:
Dong Hoi City Environmental Sanitation Project Management Unit
No 34, Tran Quang Khai Road,
Dong Hoi, Quang Binh, Vit Nam
Phone: +84 52 820 374 Fax: +84 52 840 734


42) Thanh My Loi Wastewater Treatment Plant, Ho Chi Minh City

Project Description
Municipal wastewater treatment facility
Thanh My Loi ward, District 2, Ho Chi Minh City 36 hectares
Size of Project, Source of Funding
850,000 m3/day capacity (largest in Vietnam), part of the larger infrastructure
projet Environmental Sanitation Project Phase II funded by a World Bank loan of
USD 245 million.
Management Agency or Main Contractor


138
Flooding Prevention Center was assigned by Ho Chi Minh city People
Committee to be the project sponsor
Equipment Supply Agents (if any)
SCE Company (France) was chosen to be technical advisor
Project Status
Feasibility study in progress, expected to finish in July 2011
Equipment Needed
Will be determined by the feasibility study
Contact Information for Management Agency or Main Contractor:
Ho Chi Minh City Flood Prevention Center - 176 Hai Ba Trung, Dist.1


43) Yen Xa Wastewater Treatment Plant, Hanoi

Project Description
Municipal wastewater treatment facility
Yen So, Hoang Mai district.
Size of Project, Source of Funding
270,000 m3/day capacity - 135,000m3/day for Phase I.
Investment 253 million Japanese Yen.
Funding source: Japanese ODA, part of Japanese ODA package for Hanoi
Drainage Phase II project
Management Agency or Main Contractor
General Contractor: Garmuda Corporation, Malaysia
Technical Advisor: Nippon Koei
Equipment Supply Agents (if any)
Project Status
Construction in progress
Expected completion October- 2010
Equipment Needed
Phase II equipment
Contact Information for Management Agency or Main Contractor:
Hanoi Department of Transportation
Address: 52 Le Dai Hanh Street- Hai Ba Trung Ward Ha Noi
Tel: 04 3976 1294
Fax: 04 3976 1295


44) Phu Do Wastewater Treatment Plant, Hanoi

Project Description
Municipal wastewater treatment facility
Me Tri, Tu Liem district.
Size of Project, Source of Funding
84,000 m3/day capacity.
Investment USD 20 million
Funding source: Japanese ODA, part of ODA package for Hanoi Drainage
Phase II project
Management Agency or Main Contractor
Project Manager: Hanoi Department of Construction
Technical Advisor: Nippon Koei
Equipment Supply Agents (if any)
Project Status
Planned location is being adjusted to better fit with future residential
developments nearby
Equipment Needed


139
Determined by general contractor
Contact Information for Management Agency or Main Contractor:
Hanoi Department of Transportation
Address: 52 Le Di Hanh Street- Hai Ba Trung Dist. - Ha Noi
Teli: 04 3976 1294 - Fax: 04 3976 1295


45) Quy Nhon Waste Water Treatment Plants, Binh Dinh Province

Project Description
1 treatment plant piloting Chemically Enhanced Primary Treatment (CEPT)
technology with secondary treatment by trickling filters (7000m3/day)
Size of Project, Source of Funding
World Bank Global Environment Facility -GEF Coastal Cities
Environmental Sanitation Project
Total project USD 7.1 million. The plant is one project component.
Management Agency or Main Contractor
Coastal Cities Environmental Sanitation Project Management Unit
Project Status
Detailed engineering design and bidding document contract was awarded to
Danish Carl BroA/S in March 2010.
Equipment Needed
To be determined by the design study and procured via international bidding
Contact Information for Management Agency or Main Contractor:
Project Management Unit
Mr: Phuc Huynh Huu
Address: 379 Tran Hung Dao, Quy Nhon city, Binh Dinh province, Vietnam
Telephone: +84 56 3818318
Fax: +84 56 3817249


46) Soc Son Landfill Leachate Treatment, Hanoi

Project Description
Landfill leachate treatment facility
Equipment and technology for treating waste water at Soc Son waste
treatment complex. Capacity of 500 m3 per day using biological / chemical treatment
methods
Size of Project, Source of Funding
USD 15 to USD 20 million. MONRE Hanoi state-budget.
Management Agency or Main Contractor
URENCO Hanoi
Project Status
Main EPC contractor selected
Contractor preparing equipment tenders
Expected completion date 2012
Equipment Needed
Complete wastewater treatment plant
Biological, chemical treatment agents
Pumps
Contact Information for Management Agency or Main Contractor:
URENCO Hanoi
Contact: International Relations Dept.: Mrs. Nguyen Thi Hoang Lan, Mrs.
Luong Mai Huong
Address: 18 Cao Ba Quat, Ba Dinh District, Hanoi
Tel: +84 (4) 37473302


140
Fax: +84 (4) 37473301
Email: urenco@netnam.org.vn.
Website: http://www.urenco.com.vn

INDUSTRIAL WASTEWATER TREATMENT


47) Ba Ria-Vung Tau Province

Ba Ria Vung Tau, east of Ho Chi Minh City, has 14 industrial zones. Only 5
have water treatment plants. The rest 9 are: Phu My II, My Xuan I, Cai Mep, My Xuan
1 Dai Duong, Long Son, Long Huong, Phu My III, Dat Do, Chau Duc
Contact Information
Baria - Vung Tau Industrial Zones Authority
Address: 124 Vo Thi Sau, Vung Tau City, Ba Ra Vung Tau Province.
Tel :(84-64) 816640 Fax : (84-64) 858531
Mr. L Minh Chu Head of the Authority, Phone: 0903 901 378


48) Bac Ninh Province

A northern province, bordering Hanoi. Have eleven industrial zones with five
in operation, of which two are without water treatment plants: Yen Phong I and Dai
Dong- Hoan Son. The ones yet to commence operations will eventually need to have
treatment plants.
Contact Information
Bac Ninh Industrial Zone Authority
Add: No.10 - Ly Thai To - Bac Ninh
Telephone: (0241) 3825232
Fax: (0241) 825236
Email: bacninh_iza@bacninh.gov.vn


49) Da Nang City

Have six industrial zones and four do not yet have water treatment plants:
Lien Chieu, Hoa Cam, Hoa Khanh Minh, Tan Vinh
Contact Information
Da Nang city industrial zone authority
Address: 58 Nguyen Chi Thanh Street, Hai Chau I Ward, Hai Chau Dist., Da
Nang.
Tel: (84.511) 830017- Fax: (84.511) 830015
Website: www.iza.danang.gov.vn
Email: diepza@dng.vnn.vn


50) Dong Nai Province

Dong Nai, east of Ho Chi Minh City, has 27 industrial zones with 21 in
operation. Ten have operating wastewater treatment plants; a further nine rushed to
construct treatment plants last year and will finish this year. The remaining two
without treatment plants are Thanh Phu industrial zone in Vinh Cuu district and Ong
Keo in Nhon Trach district
Contact Information
Dong Nai Industrial Zone Authority (DIZA)


141
Address: No. 26, 2A Street, Bien Hoa II IZ, Bien Hoa City, Dong Nai, Vietnam
Phone: 061.3892378
Fax: 061.3892379
Email: diza@diza.vn
Website: http://www.diza.vn


51) Tay Ninh Province

Tay Ninh province is west of Ho Chi Minh City, bordering the city. Tay Ninh
has seven industrial zones of which four are in operation. Among these two do not
yet have water treatment planst: Phuoc dong- Boi loi and Bourbon-An Hoa
Contact Information
Tay Ninh Industrial Zone Authority
Address: Km 32, Highway 22, An Tnh, Trang Bang, Tay Ninh Province.
Phone: 84.66.882300
Fax: 84.66.882395
Email : kcntayninh@chinhphu.vn ; info@taniza.vn
Websiste: http://www.taniza.vn/v


52) Adb Pipeline Project Water Supply (Hcmc/Da Nang/Hue/Hai Phong)

Project Description
Improve water supply to four major cities: HCMC, Da Nang, Hue and Hai
Phong
Size of Project, Source of Funding
USD 127.00 million from ADB, plus host country contribution
Management Agency or Main Contractor
Not yet identified.
Project Status
Concept was approved early April 2010, fact finding and appraisal will be
done this year to get Board approval in December 2010
Equipment Needed
To be determined later
Contact Information for Management Agency or Main Contractor:
Hubert M. Jenny - hjenny@adb.org
Southeast Asia Department, Division Energy and Water Division, SERD


53) ADB Central Region Rural Water Supply And Sanitation Sector
ProjecT

Project Description
New project to improve water supply and sanitation in six provinces of the
central coastal region of Viet Nam: Thanh Hoa, Nghe An, Ha Tinh, Quang Binh,
Quang Nam, Binh Dinh:
Size of Project, Source of Funding
ADB loan USUSD 45.0 million
Management Agency or Main Contractor
Central Project Management Unit is being established at National Center for
Rural Water Supply and Environmental Sanitation. Provincial Project Management
Units will be set up in each beneficiary province.
Project Status
Loan Approved Feb -2010. Project management structure is being
established


142
Equipment Needed
24 piped water supply systems for 30 communes, each consisting of: (a) a
raw water source: either a deep well or a surface water intake; (b) transmission
mains; (c) a treatment plant; (d) a pumping station if required; (e) a central elevated
reservoir; (f) a distribution system; and (g) house connections or communal taps, with
water meters.
Contact Information for Management Agency or Main Contractor:
National Center for Rural Water Supply and Environmental Sanitation
Address: 73 Nguyen Hong, Dong Da, Ha Noi
Tel: 04.38355964 Fax: 04.37760439
Email: cerwass@fpt.vn


54) World Bank Red River Delta Rural Water Supply And Sanitation
Project Phase 2 Pipeline Extension

Project Description
Improve water supply and sanitation for12 provinces in the Red River Delta:
Phase 1 2005-2010 Nam Dinh, Thai Binh, Hai Duong, Ninh Binh
Phase 2: 2010 -2013 and beyond: Quang Ninh, Phu Tho, Vinh Phuc, Ha Tay
(now part of Hanoi), Bac Ninh, Hung Yen, Ha Nam, Thanh Hoa:
Size of Project, Source of Funding
The total project cost is USD 265.51 million,
Additional funding of USD 65.7 million is in pipeline
Management Agency or Main Contractor
Project Management Units were established for each city
Project Status
Phase 2 is ongoing and will extend beyond 2013 if additional funding comes
in.
Project document for additional funding completed February 2010 Expect
Board Approval June 2011
Equipment Needed
Water supply systems and drainage for rural communes
Contact Information for Management Agency or Main Contractor:
National Center for Rural Water Supply and Environmental Sanitation
Address: 73 Nguyen Hong Street, Dong Da District, Ha Noi
Tel: 04.38355964 Fax: 04.37760439
Email: cerwass@fpt.vn
Dean A. Cira Title: Lead Urban Specialist - World Bank Hanoi
Tel: 5777+362 / 84-4-3934-6600
Email: Dcira@worldbank.org


55) World Bank Pipeline Project Medium And Small Cities Development

Project Description
General water, sanitation and flood protection, urban transportation and urban
infrastructure administration for three medium side cities: Vinh, Phu Ly and Lao cao
Size of Project, Source of Funding
The total project cost is USD 265.51 million, of which USD 200 million will take
the form of a World Bank loan. Counterpart funding constitutes over 25% of total
project costs. The allocation of WB funding for Lao Cai and Phu Ly will be USD 55
million each, with USD 90 million for Vinh
Management Agency or Main Contractor
Project Management Unit will be established for each city
Project Status


143
Project document completed February 2010 Expected Board Approval June
2011
Equipment Needed
Equipment for primary and secondary infrastructure in drainage, wastewater
collection and treatment and in limited cases, water supply.
Equipment need will be determined later
Contact Information for Management Agency or Main Contractor:
Dean A. Cira Title: Lead Urban Specialist - World Bank Hanoi
Tel: 84-4-3934-6600 Email: Dcira@worldbank.org


56) Ho Chi Minh City Environmental Sanitation Project, Extension

Project Description
Reduce wastewater pollution and the occurrence of flooding in the area
surrounding the Nhieu Loc-Thi Nghe (NLTN) by constructing drainage, wastewater
collection and treatment
Size of Project, Source of Funding
The original project cost is USD 223 million
Additional funding of USD 90.0 million is in pipeline
Management Agency or Main Contractor
Project Management Unit in Ho Chi Minh city.
Project Status
Project was set to finish in 2007, was subsequently delayed to 2011. Fund
was not enough to cover several components. Additional funding is in pipeline
Additional funding expect to be approved in early 2010
Equipment Needed
Among the additional funding: Wastewater collection component - USUSD
29.0 million and USUSD 55.5 million for drainage component.
Contact Information for Management Agency or Main Contractor:
Ho Chi Minh City Environmental Sanitation Project Management Unit,
35-37 Ben Chuong Duong, District 1, HCMC
Director: Phan Hoang Dieu
Tel: 84 8 39142866; Fax: 84 8 9142983
Dean A. Cira Title: Lead Urban Specialist - World Bank Hanoi
Tel: 5777+362 / 84-4-3934-6600 Email: Dcira@worldbank.org


57) Hospital Waste Management Support Project

Project Description
Pine line project: Strengthening Policy and Institutional Capacity for hospital
waste management. Construct facilities for hospital waste management.
Size of Project, Source of Funding World Bank planned commitment is USD
150 million, plus host country contribution
Management Agency or Main Contractor
Project Management Unit in Ho Chi Minh City.
Project Status
Project document completed Jan 2010 Expect Board Approval Sep 2010
Equipment Needed
To be determined later.
Contact Information for Management Agency or Main Contractor:
Ta Thanh Van, Ministry of Health
138A Giang Vo Street, Hanoi, Vietnam
Tel: (84-4) 6273-2273 Fax: (84-4) 3846-4051
tathanhvan@hotmail.com


144
Contact: Toomas Palu Title: Lead Health Specialist
Tel: 5777+384 / 84-4-3934-6600
Email: tpalu@worldbank.org
Location: Hanoi, Vietnam (IBRD)


145
11. CONSTRUCTION COMPANY DATABASE
The section below provides a listing of key companies involved providing
construction, engineering, and consulting services for major infrastructure projects in
Vietnam. It also includes a list of equipment / machinery suppliers and construction
materials trading companies / distributors that are active in supplying to infrastructure
projects in Vietnam.
Leading Construction and Engineering Firms

1.Civil Engineering Construction Corporation No. 6 (CIENCO 6)
Activities
Build infrastructure facilities in the country and overseas.
Build civil & industrial constructions.
Fabricate & trade in construction materials and precast concrete elements.
Process steel beams, steel structures and other steel products.
Provide & im-export materials and equipment for Transport & Communication
works.
Consult investment of transport constructions.
Invest and preform projects in forms of BT, BOT.
and Sample Projects:
Hai Van Pass Tunnel
My Thuan Bridge
TSN Airport runway
Rach Mieu Bridge
Holcim Port
Cat Lai Port
Trung Luong-My Thuan road section is part of the Trung Luong-My Thuan-Can
Tho expressway that is 82 kilometers long to connect Tien Giang Province with Can
Tho City in the Mekong Delta.
Company Information:
Year established: 1995
number of employees: 5,635
Legal capital: billion VND
State owned company. Authority in charge: Ministry of Transport
Contact Information:
127 Dinh Tien Hoang St, Binh Thanh Dist, Ho Chi Minh City, Viet Nam
Tel : 84-8 3510 1863 -3510 1867
Fax: 84-8-3510 1858
Email: cienco6@cienco6.com.vn
Website: www.cienco6.com.vn



146
2. COMPANY NO. 508.
Activities
Consulting, supervising, designing transport, irragation hydropower, civil, and
industrial projects.
Investment and crrying on business insfrastructure of industrial, inhabitant
and real estate zones.
Investing, trading and transfering domestic and overseas projects according
to BOT form.
Expoiting and trading construction materials and transport machines and
equipments.
and Sample Projects:
Trung Luong-My Thuan road section is part of the Trung Luong-My Thuan-
Can Tho expressway (November 30, 2009, Saigon Times)
Rach Mieu Bridge (Ben Tre)
Company Information:
Year established: 1995
number of employees: 851, Revenue: 101 billion, profit 6 billion vnd.
Legal capital: 68 billion VND
State owned company. Authority in charge: Ministry of Transport
Contact Information:
Head Office: Zone 6, Bai Chay Precinct, Ha Long Town, Quang Ninh.
Tel: 84-33-362 2362/ 364 0393
Fax: 84-33-362 2361
Email: cienco508@yahoo.com
Website: www.company508.com.vn

HCMC Branch: 106, Road No. 8, Riverside Residental Area, Tan Phong Ward,
District 7
Tel: 84-8-3776 0677
Fax: 84-8-3776 0688
Director: Vo Ke Tuan

3. TRANSPORT ENGINEERING AND DESIGN INC. SOUTH (TEDI SOUTH)
Activities

and Sample Projects:
Thu Duc Interchange (QL1A to QL52)
Ong Lon Bridge
My Thanh 1 Bridge
An Suong An Lac highway


147
Nguyen Van Cu Bridge Road
HoChiMinh-Long Thanh-Dau Giay express way
Trung Luong-My Thuan road section is part of the Trung Luong-My Thuan-Can
Tho expressway (November 30, 2009, Saigon Times)
Company Information
Year established:
number of employees:
Legal capital: billion VND
State owned company. Authority in charge: Ministry of Transport

4. SONG DA CORPORATION
Activities
Construction of hydrolic and hydro-power projects.
Construction of infrastructure projects.
Power lines and transformer station 35-220KV
Water supply and sewerage projects.
Transport projects
Industrial manufacture of construction materials (construction steel, cement,
broken stone, sand, concrete, power pile, cement package cover)
Sample Projects:
Son La Hydropower Factory
Can Don Hydropower Factory
Ri Ninh Hydropower Factory
Na Loi Hydropower Factory
Nam Si Luong Hydropower Factory
Highway 1A, package 4 (Hanoi Bac Ninh)
Highway 1A, package 6 (Hanoi Cau Gie)
Highway 1A, package 3 (Thai Binh)
Ho Chi Minh Road
Tunnel of Hai Van Pass
Water Supply Project for 4 provinces (Long Xuyen, Nha Trang, Phan Thiet,
Pleiku).
(VACC directory, Songda.com.vn website)
Company Information
Year established: 1995
Number of employees: 20,000
Paid-up capital: 492 billion VND
State owned company. Authority in charge: Ministry of Construction
Contact Information:


148
Head Office: G10, Thanh Xuan Nam, Thanh Xuan District, Hanoi
Tel: 84-4-3854 1164 3854 3805
Fax: 84-4-3854 1161
Email: tct@scd.com.vn
Web: www.songda.com.vn
Chairman: Eng. Le Van Que
General Director: Eng. Duong Khanh Toan

5, SAIGON CONSTRUCTION CORPORATION SGC
Activities
General constractor and construction execute of civil, industrial, transport,
irrigation, hydroelectric, aeronautical, post office, commercial works
Technical infrastructure projects for urban area and industrial zones
Electrical line and transformer station; ground levelling and filling.
Sample Projects
Company Information:
Year established: 1996, re-established in 12 april 2007
number of employees: 12,800
Legal capital: ~680 billion VND
State owned company. Authority in charge: HCMC Peoples Comittee.
Contact Information:
Head Office: 18A Dinh Tien Hoang St., Dakao Ward, District 1, HCMC.
Tel: 84-8-3910 4801/ 3910 4803/ 3910 4805
Fax: 84-8-3910 4800
Emal: sgc-c@hcm.vnn.vn

6. CIVIL ENGINEERING CONSTRUCTION CORPORATION NO.1 (CC1)
Main activities
Industrial plants, roadwork, irrigation, energy plants, bridges, ports and
airports, technical infrastructure, power transmission lines and substation.
Production, trading, export and import of building materials, advanced
construction technology.
Sample Projects:
DakRtih Hydropower Plant with the capacity as 144MW Dak Nong Province
Nhon Trach 1 Thermal Power Plant with the capacity as 450W.
Thu Thiem Bridge & Nguyen Huu Canh Underpass
Dong Nai Bridge
Connecting road from Thu Thiem to Dong Tay highway
Project of improving and upgrading Nguyen Huu Canh road, Van Thanh 2
Bridge


149
Hanoi Haiphong highway project
(www.cc1.net.vn)
Company Information:
Year established: 1979 re-established in 2006 as Parent-Subsidiary
Company model.
Number of employees: 476
Legal capital: 346.216 billion VND
State owned company. Authority in charge: Ministry of Construction
Contact Information:
Head office: 111A Pasteur, Ben Nghe Ward, District 1, HCMC
Tel: 84-8-3822 2059
Fax: 84-8-3829 0500
Email: info@cc1.net.vn
Website: www.cc1.net.vn

7. VIETNAM CONSTRUCTION AND IMPORT EXPORT JOINT STOCK
CORPORATION (VINACONEX)
Main activities:
Construction of civil, industrial, transportation, hydro power, thermal power,
wind power, atomic electricity works, electricity transmission lines and up to
500KV transformer station, technical and social in frastructuure for urban
areas, indsutrial park, hightech zones, underground works, culture, sport,
recrecation and entertainment works....
Expoitation, production, processing and doing business of building
components and materials including stone, sand, gravel, tile, cement, glass...
and Sample Projects:
Bai Chay Bridge (2003-2006)
Nga Tu So intersection (2005 -2006)
Lang-Hoa Lac highway
Thanh Tri Hanoi Bridge (2004-2005)
Song Da water plant in Hoa Binh
Doc Cay Hydorelectricity Plant in Thanh Hoa.
Company Information:
Year established: 2006.
Number of employees: 41,684 (as of 31/12/2008)
Charter capital: 1,500 billion VND
State owned company. Authority in charge: State Capital Investment
Corporation SCIC
Contact Information:
Head Office: VINACONEX building, Trung Hoa, Nhan Chinh new urban area,
Nhan Chinh Ward, Thanh Xuan District, Hanoi.
Tel: 84-4- 2224 9250/ 2224 9212


150
Fax: 84-4-2224 9208
Email: info@vinaconex.com.vn/ Website: www.vinaconex.com.vn

8. VIETNAM INVESTMENT CONSTRUCTION AND TRADING JOINT STOCK
CORPORATION (CONSTREXIM)
Main activities
Excut, construction installing of civil, industrial works.
Trading commercial
and Sample Projects:
La Ngau, Buon Tua Srah Hydroelectric plant
Company Information:
Year established: 1982
Number of employees:
Charter capital:
State owned company. Authority in charge: Ministry of Construction.
Contact Information:
Head Office: HH2 Building, Yen Hoa new urban area, Cau Giay District, Hanoi.
Tel: 84-4-6281 2000
Fax: 84-4-3782 0176
Email: constrexim@fpt.vn
Website: www.constrexim.com.vn

9. VIETNAM LILAMA CORPORATION
Main activities
Consultancy of design, management, installation and construction
synchronized produciton and supply of industrial and civil engineering
projects.
The EPC constrctor and investor of industry plant in the field of hydro power,
thermal power plant, petroleum chemical...
and Sample Projects:
Son La Hydroelectric plant
Vung Ang thermoelectric plant
Nhon Trach 1 thermoelectric plant
Company Information:
Year established: 1995
Number of employees: 25,000
Charter capital:
State owned company. Authority in charge: Ministry of Construction.
Contact Information:
Head Office: 124 Minh Khai, Hai Ba Trung District, Hanoi.
Tel: 84-4-3863 3067/ 3863 2059


151
Fax: 84-4-3863 8104
Email:
Website: www.lilama.com.vn
Representative office in HCMC: 9/19 (8
th
floor) Ho Tung Mau St., D.1, HCMC
Tel/Fax: 84-8-3914 2628

10. THANH AN CORPORATION (ARMY CORP. NO.11)
Main activities
Construction civil, industrial, transport, hydroelectrical works, post office,
power lines and transformer stations, water supply and sewerage, publick
project and other fundamental works.
and Sample Projects:
Highway no. 1A (Hanoi Lang Son, Quang Ngai, Nha Trang)
Noi Bai International Airport, No Bai T1 Platform.
Company Information:
Year established:
Number of employees: 10,000
Charter capital: ~ 115 billion vnd
State owned company. Authority in charge: Ministry of Defence.
Contact Information:
Head Office: 141 Ho Dac Di St., Dong Da District, Hanoi
Tel: 84-4-3857 3077/ 3857 2793
Fax: 84-4-3857 3112

11. BACH DANG CONSTRUCTION CORPORATION
Main activities
Construction of Industrial factories/ plants, housing, high buildings,
infrastructure as road, bridge jetty, airport... uran infrastructure, industrial
parks, etc...
and Sample Projects:
Pha Lai 2 Thermal Power Plant Hai Duong
National Highway No. 18 (Package 2) Bac Ninh Chi Linh
Lach Tray Fly Bridge Hai Phong
Jetty for Phuc Son Cement Plant Hai Phong.]
Company Information:
Year established: 1996
Number of employees: 6,318
Charter capital: ~ 114 billion vnd
State owned company. Authority in charge: Ministry of Construction.
Contact Information:
Head Office: 268 Tran Nguyen Han, Le Chan Ward, Hai Phong
Tel: 84-31-385 6251/ 385 6529


152
Fax: 84-31-385 6451
Emal: kt@bachdangco.com
Website: www.bachdangco.com

12. VIETNAM INDUSTRIAL CONSTRUCTION CORPORATION (VINAINCON)
Main activities
Construction installation of industrial works, civil works, transport works,
power lines and electric station work up to 500KV
Manufacture of prefabricalted steel, mechanical procss, prefabricalted
concrete and construction materials.
and Sample Projects:
Cao Ngan (Thai Nguyen) Thermal electricity Plant
Quang Tri Hydropower Hydraulic Plant
The Power lines 500KV North-South system circuit No.1, No. 2
Company Information:
Year established: 1998
Number of employees: 20,000
Charter capital: ~ 263.111 billion vnd
State owned company. Authority in charge: Ministry of Industry and Trade
Contact Information:
Head Office: 5 Lang Ha St., Ba Dinh District, Hanoi.
Tel: 84-4-3514 2145/ 3514 2406
Fax: 84-4-3856 0629
Email: headoffice@vinaincon.com
www.vinaincon.com.vn

13. CIVIL ENGINEERING CONSTRUCTION CORPORATION NO.1 (CIENCO 1)
Main activities
Constructing transport works at home and abroad; constructing industrial, civil
works
Consulting investing construction of traffic works
and Sample Projects:
National Highway No.5 (km0 km12) & sections
Lang Hoa Lac road
Hiep Phuoc brigge (HCMC)
Da Rang railway bridge
Chua Ve Port
Saigon Port
Da Nang Airport
Noi Bai intl airport
Company Information:


153
Year established: 1995
Number of employees: 11,264
Charter capital: 250 billion vnd
State owned company. Authority in charge: Ministry of Transport
Contact Information:
Head Office: 623 La Thanh, Ba Dinh District, Hanoi
Tel: 84-4-3835 0930/ 3835 0099/ 3835 0924
Fax: 84-4-3772 1232/ 3835 1101
Email: cienco1@hn.vnn.vn
Website: www.cienco1.com.vn

14. CIVIL ENGINEERING CONSTRUCTION CORPORATION NO. 4 (CIENCO
4)
Main activities
Construction of road and bridge works, industry works, civil architectural
works, irrigation works, electrical energy works
Design of road and bridge works
Manufacture and repair of construction facilities and equipment and
fabrication of steel bridge girder, steel structure and other mechanic products.
and Sample Projects:
National highway No.1
Ho Chi Minh Trung Luong Highway Construction Project
Express highway construction project, package 3.2, Gie-Ninh Binh section.
Company Information:
Year established: 1995 re-established as parent company: 2007.
Number of employees: 6384
Charter capital: 151 billion vnd
State owned company. Authority in charge: Ministry of Transport
Contact Information:
Head office: No. 29, Quang Trugn Street, Vinh City, Nghe An Province.
Tel 84-38-384 4198
Fax: 84-38-384 3329
Email: tctctgt4@vnn.vn
Website: www.cienco4.com

15. CIVIL ENGINEERING CONSTRUCTION CORPORATION NO. 5 (CIENCO
5)
Main activities
Construction of transport works at home and abroad
Constructing civil and industrial works
and Sample Projects:
Binh Trieu, Rach Mieu bridge


154
Saigon Trung Luong expressway
Nation Road no.1: Hoa Cam Hoa Phuoc route (BOT)

Company Information:
Year established: 1995
Number of employees: 6,816
Charter capital: ~ 134 billion vnd
State owned company. Authority in charge: Ministry of Transport

Contact Information:
Head Office: 77 Nguyen Du street, Da Nang City
Tel: 84-511-389 4414 / 388 6832
Fax: 84-511-389 4420
Email: cienco5@dng.vnn.vn
Website: www.cienco5.com.vn

16. CIVIL ENGINEERING CONSTRUCTION CORPORATION 8 (CIENCO 8)
Main activities:
Constructing transport works
Building civil and industrial works
Import, export and trading (transport materials, informatic equipment)
and Sample Projects:
Highway 1A: Xuan Loc HCMC
Highway from HCMC to Phnompenh (Vietnam component)
Ring road No. III of Hanoi (Mai Dich Trung Hoa section)
Company Information:
Year established: 1995
Number of employees: 10,000
Charter capital: ~ 180 billion vnd
State owned company. Authority in charge: Ministry of Transport
Contact Information:
Head Office: 18 Ho Dac Di St., Dong Da District, Hanoi.
Tel: 84-4-3857 2767/ 3857 3028
Fax: 84-4-3857 2798
Emal: info@cienco8.com
Website: www.cienco8.co

17. VIETNAM WATERWAY CONSTRUCTION CORPORATION (VINAWACO)
Main activities:
Construction of national waterway transportation: river-port, sea-port, ...
Bridge and road construction, drainage, irrigation.


155
and Sample Projects:
Waterway projects: Nha Be- Tan Thuan container port (HCMC); Vung Ang
port, Cai Mep Thuong port...
Bridge and road projects: No.10 highway (pkg 3); Hai Van pass tunel
highway project; HCMC-Trung Luong highway construction...
Company Information:
Year established: 1995
Number of employees: 5,832
Charter capital: ~ 205 billion vnd
State owned company. Authority in charge: Ministry of Transport
Contact Information:
Head Office: 40 Phung Hung St., Hoan Kiem District, Hanoi.
Tel: 84-4-3928 5109/ 84-4-3928 5136
Fax: 84-4- 3928 5124
Emal: vinawaco@hn.vnn.vn
Website: www.vinawaco.com.vn

HCMC branch: 18E3 Chu Van An St., Binh Thanh District, HCMC.
Tel: 84-8-3511 7787
Fax: 84-8-3511 0927

18. THANG LONG CONSTRUCTION CORPORATION
Main activities
Constructing industrial and civil projects
Constructing railways and roads, bridges, ports, airports...
Constructing hydrauic and national defense projects
Producing construction materias and pre-cast concrete structures
and Sample Projects:
Viet Tri, Phong Chau Bridge (Vinh Phu province)
Hanoi-HCMC railway bridge rehatilitation project, package 2 (6 bridges)
National highway No. 10, improvement project Haiphong Bypass section.
Phu My port (Ba Ria Vung Tau)
Lotus Port (HCMC)
Company Information:
Year established: 1995
Number of employees: 9,630
Charter capital: ~ 2,500 billion vnd
State owned company. Authority in charge: Ministry of Transport
Contact Information:
Head Office: 72 Nguyen Chi Thanh st., Dong Da District, Hanoi


156
Tel: 84-4-3834 3087
Fax: 84-4-3834 5212
Email: tlc.mot@hn.vnn.vn
Website: www.thanglonggroup.com.vn

HCMC Branch: 127B DinhTien Hoang St., Binh Thanh District, HCMC
Tel: 84-8-3841 2467 / Fax: 84-8-3841 7161
Mr. Trinh Van Hieu (Director) 0913 974 257

19. Infrastructure Development And Construction Corporation (Licogi)
Main activities:
Civil, industrial and traffic works construction (road, railway bridge, bridge,
airport, oirt, railway station, tunnel; underground works; hydropower plant;
thermal power plant...)
and Sample Projects:
Thac Ba, Hoa Binh, Thac Mo, Yaly hydropower plants.
Highway 5, Highway 5 (Moc Chau Son La)
Highway 51
Pha Lai bridge, Tra Khu bridge

Company Information:
Year established: 2006
Number of employees: 13,000
Charter capital: ~ 643 billion vnd
State owned company. Authority in charge: Ministry of Construction
Contact Information:
Head Office: G1 Blgd, Thanh Xuan Nam, Thanh Xuan District, Hanoi.
Tel: 84-4-3854 2365/ 3854 2364
Fax: 84-4-3854 2665
Email: info@licogi.com.vn
Website: www.licogi.com.vn





157

Leading Equipment and Machinery Suppliers

Name of Company:

1. Construction Machinery Corporation
Activities Manufacturing and trading on construction machinery, include:
machines, tools, spareparts, accessories and other product serving construction,
construction material production, operating civil and industrial projects infrastructure
projects of urban areas and industrial zone....and Sample Projects:
Supply of hydro-mechanical equipment for Can Don Hydro Power Plan
Fabrication of towers for 500KV Pleiku-Phu Lam Transmission Lin
Fabrication of towers for 500KV Pleiku-Doc Soi-Danang Transmission Line
Supply of hydro-mechanical equipment for Srok Phumieng Hydropower Plant
Upgrading and rehabilitation of 636A road and 636B Binh Dinh-LaiNghi and
Cam Tien Nhon Trach Km21-39, Highway; Km 39-67, 26 highway.


Company Information: State Owned (Mininstry of Construction)Year of
establishment: 2005Legal capital: 420 billion VNDTotal employee: 6002
Contact Information:Head quater: 125D Minh Khai, Hai Ba Trung District, Hanoi
Tel: 04- 3863 1122
Fax: 04- 3863 1216
Website: www.coma.com.vn Email: coma@hn.vnn.vn

2. Transport Material Equipment Supply Joint Stock Company
(Transmeco)
Main activities:
Manufacturing & Trading construction materials, Import and export
infrastructure construction equipment: excavator, bull dozer, concrete mixing
machine...and Sample Projects
Company Information:
Year established: 2003
Number of employees: >200
Charter capital: 14 billion vndState owned company.
Authority in charge: Ministry of Transport
Contact Information:
Head Office: Khuat Duy Tien St., Nhan Chinh Ward, Thanh Xuan Distric, Hanoi
Tel: 84-4-3854 4363 / 3854 4359 Fax: 84-4-3854 3678
Website: www.transmeco.com.vn Email: info@transmeco.com.vn
3. Megastar Engineering And Construction One Member Liability Company
Limited (Megastar E&C)


158
Main activities: Producing, trading, processing, manufacturing, asembling,
maintaining mechanical equipments, industrial equipments (especially lifting
equipments, cranes, tower crane, electric hoists,...)
Sample Projects: Supplying and installing crane for Lilama, Coma, Hanaka,
Company Information:
Number of employees: 150
Legal capital: 150 billion vnd
Revenue in 2008: 250 billion vnd
Join stock company
Authority in charge: Vi Na Megastar Group J/S co.
Contact Information:
Head Office: Trung Hung Industrial Zone, Yen My District, Hung Yen Province.
Tel: 84-321-396 0548 Fax: 84-321-396 0550
Website: www.megastar.com.vn Email: Mec@megastar.com.vn

4. Asia Industry And Commerce Co., Ltd (AICOM)
Activities: Trading in construction machinery and equipment, spare part, new
and second hand machinery imported from Russia, Korea, China, Japan, USA and
Europe. Supplying: excavator (crawler/ wheel), loader (crawler/ wheel), bulldozer,
bored/drill, drilling rig, crushing plant, concrete batching plant... from manufactures
such as KOBELCO, SAKAI, KOMATSU...Supplying: concrete pump, mixer truck....
Company Information:
Year established: 2001
Number of employees: 157
Legal capital: 10 billion vnd
Revenue in 2008: ~347 billion vnd
State owned company. Authority in charge: Hanoi Planning and Investment
Department
Contact Information:
Head Office: 142 Tran Duy Hung St., Cau Giay District, Hanoi.
Tel: 84-4-3784 5989 Fax: 84-4-3784 5988
Website: www.aicomgroup.com.vn Email: aicomgroup@vnn.vn





5. Vietnam Import-Export And Co-Operation Investment Joint Stock
Company (Vilexim)
Activities: Import truckcrane; excavator, bulldozer;
Company Information:


159
Legal capital: State owned company. Authority in charge: MOIT
Contact Information:
Head Office: 170 Giai Phong St., Thanh Xuan District, Hanoi
Tel: 84-4-3869 4171 / 3869 4169 Fax: 84-4-3869 4168
Website: www.vilexim.com.vn Email: vilexim@hn.vnn.vn
HCMC Branch: 36/22 D2 St, Binh Thanh District, HCMC
Tel: 84-8-3512 6062/3 Fax: 84-8-3512 6059
Email: vilexim-hcm@hcm.vnn.vn

6. Cat Nhat Trading And Service Company
Cat Nhat imports excavator, bulldozer, wheel loader, motor grader, truck crane,
crawler crane.Cat Nhat mainly sells excavators, 70% of which are Komatsu, Kobelco
or Hitachi
Year of establishment: 2005
Legal form: Limited Liability
Number of employees: 50
Office staff: 10.
Sales staff:10
After sales technicians:30
Contact add : Hanoi Road, Ward Phuong Long A, Dist.9, HCM City
Tel : 84-8-731 4938 Fax : 84-84-8-7314939
E-mail: catnhat-sales@hcm.vnn.vn
Director:Mr. Tran Hai An
Contact person:Mr. Nguyen Minh Hoa, cellphone: 0903.778.636

7. Vinh Hung Phat Trading And Services Company
Vinh Hung Phat imports excavator, bulldozer, wheel loader, motor grader, truck
crane, crawler crane.
Year of establishment: 1999
Legal form: Limited Liability
Number of employees: 50. Office staff: 5Sales/Technical staff: 45, including
sales staff and technicians
Contact add :174 Highway 1,Trung Dung Ward, Bien Hoa City, Dong Nai
province, Vietnam
Tel :84-84-613-828 119 Fax:84-84-613-819.026
E-mail: vinhhung2@hcm.vnn.vn
Director/Contact Person: Mr. Phan Thanh Vu, cell phone : 0918.013.976

8. H & A Company Limited


160
The companys highest sales volumes are for excavators, 70% of which are
Komatsu with 10% Kobelco. H&A imports excavator, bulldozer, wheel loader, motor
grader, truck crane, crawler crane.
Year of establishment: 2005
Legal form: Limited Liability
Number of employees: 25. Office staff: 5. Sales staff: 20
Contact add : 429/17 Nguyen Kiem St, Ward. 19, Phu Nhuan Dist, HCMC

Tel :848 -845 2023 Fax : 848 -845 2023
E-mail: huynhtamhoa@yahoo.com / huynh.huuhung@gmail.com
Director/Contact: Mr. Huynh Huu Hung, cell phone : 0903.373.700

9. Hai Cong Nong Trading And Services Company
Hai Cong Nong imports excavator, bulldozer, wheel loader, motor grader, truck
crane, crawler crane.The company mainly sells excavators
Year of establishment: 2004
Legal form: Limited Liability
Number of employees: 15, including sales staff and technicians
Contact add : 16 Bui Thi Xuan street, Ward.2, Tan Binh Dist, HCM City
Tel :84-8-844 8681 Fax : 84-8- 9975 804
E-mail: haicongnong@yahoo.com
Director: Mr. Truong Ba Long, cell phone : 0908.238.627
Contact person: Mr. Nguyen Hoang Hai - Chairman, cell phone: 0903.826.395
10. Thai Son Company Limited
Thai Son imports excavator, bulldozer, wheel loader, motor grader, crawler
crane.The company mainly sells excavators and bulldozers
Year of establishment: 2001
Legal form: Limited Liability
Number of employees: 20. Office staff: 20, including sales staff and technicians
After sales technicians: Yes (did not provide number)
Contact add : 91 Nguyen Thai Binh street, Nguyen Thai Binh Ward, Dist.1,
HCM City
Tel: 84-8-821 8783 Fax : 84-8-821 8784
Distribution Center: (In Binh Duong province, but near Dong Nai Bridge: Tel:
0650-774 068)
E-mail: thaisoncorp@vnn.vn
Director/Contact: Mr. Pham Dinh Khai, cell phone : 0903.805.748

11. Ngan Hai Trading And Services Company Limited
Ngan Hai imports excavator, bulldozer, wheel loader, motor grader.The vast
majority of product was excavators.


161
Year of establishment: 2005
Legal form: Limited Liability
Number of employees: 15 Staff and Technicians:15
Contact add : D7/12 Highway 1, Tan Tuc Town, Binh Chanh Dist, HCM City

Tel :84-8-760 0808 Fax:84-8-7600808
E-mail: nganhaicompany@vnn.vn
Director/Contact: Mr. Doan Van Duc, cell phone :0903.724.508

12. Duc Minh Import - Export And Construction Joint Stock Company
(Dimexco)
Duc Minh imports excavator, bulldozer, wheel loader, motor grader.Nearly all of
the company imports were excavators and bulldozers, an estimated 70% of which
were Komatsu brand
Year of establishment: 2002
Legal form: Joint stock company
Number of employees: 15. Office staff: Sales staff: 05
After sales technicians: 10
Contact add : 78 Bach Dang street, Thanh Luong Ward, Hai Ba Trung Dist,
Hanoi.
Tel :84-4-987 3202 Fax : 84-4-984 1367
E-mail : eximcentin@hn.vnn.vn
Director: Mr. Nguyen Manh Tung, cell phone: 0903.254265
13. Tuyen Quang Production And Import Export Company Limited
Tuyen Quang imports excavator, bulldozer and truck crane.The company sells
excavators almost exclusively
Year of establishment: 2003
Legal form: Limited Liability
Number of employees: 90. Office staff: 70, including sales staff
After sales technicians: 20
Contact add : No. 87, To 53, Dong Anh Townlet, Dong Anh Dist, Hanoi
Tel: 84-4-8822 033 Fax : 84-4-8820 333
E-mail: minhanhco@hn.vnn.vn
Director: Mr. Nguyen Ba Tung
Contact person: Mr. Ngo Xuan Thuy, cell phone: 0913.206.602
14. Lexim Company Limited
Lexim imports excavator, bulldozer, wheel loader, motor grader.The majority of
its imports are for excavators
Year of establishment: 2001
Legal form: Limited Liability


162
Number of employees: 40. Office staff: 10. Sales staff: 10
After sales technicians: 15-20
Contact add : Km9; Highway 5; Phu Thuy Commune; Gia Lam District; Ha
Noi City (office and distribution center)
Tel :84-4-678 2177 Fax : 84-4-678 2155
Web :www.lexim.com.vn Email: leximvn@gmail.com / lexim@vnn.vn
Director: Mr. Nguyen Thu Ha, cell phone: 0913219501
Contact person: Mr. Nguyen Viet Chan, cell phone : 0903286796
15. Phuong Anh Trading Company Limited
Phuong Anh Co mainly sells excavator. But Phuong Anh is not an importer
(Phuong Anh Co. purchases from suppliers in Japan, then imports through state-
owned traders Tocontap, HAPRO. Once the products are imported, Phuong Anh
sells to local customers.)
Year of establishment: 2005
Legal form: Limited Liability
Number of employees: 6. Office staff: 6, including sales staff
After sales technicians: None
Contact add : Room 405, Block C, Alley 5, Luong Khanh Thien, Tuong Mai
Ward, Hoang Mai Dist., Hanoi
Tel: 84-4-576 3808 Fax : 84-4-576 3808
E-mail: consmachinery@fpt.vn
Director: Mr. Nguyen Viet Nam, cell phone: : 0983535269
16. Linh Anh Investment And Trading Company Limited
Linh Anh does not import product directly. They usually source product from
VILEXIM.
Year of establishment: 2006
Legal form: Limited Liability
Number of employees: 14. Office staff: None. Sales staff: 9
After sales technicians: 5
Contact add : No. 71, Phuong Lien Ward, Dong Da Dist., Hanoi City
Tel :84-4-678 6642 Fax : 84-4-678 6596
E-mail: linhanhtrading@vnn.vn
Director/Contact: Mr. Nguyen Thanh Tung, cell phone: 0903.222.971