1. What opportunities are there in wastewater for international players in Vietnam?
• The process of urbanization and industrialization in Vietnam is happening very fast. Meanwhile, the treatment of domestic wastewater in urban areas reaches only about 13%.
• The Government is in need of funds to upgrade and expand the construction of the wastewater treatment system.
2. What have been the challenges with wastewater PPPs in Vietnam?
• Investors have to use their own equity and borrowed capital to implement the project at the beginning. Meanwhile, current regulations related to disbursement of capital have led to inadequacies, are not attractive to investors.
• There are no clear and detailed regulations on the responsibility of the State in case of delay in disbursement according to schedule.
• The provisions in the current PPP legislation (laws, decrees, circulars, decisions) are mainly related to BOT contracts as a specific type of PPP project contract. Other project contracts such as BTO, BOO, O&M, BLT, BTL do not receive as much attention as they deserve.
• There is no regulation on which competent authority shall settle disputes arising in the process of handling the increase or decrease in revenue.
• The participation of all economic sectors in wastewater treatment activities mainly relies on ODA capital and state budget. However, this source of capital is increasingly limited and cannot meet the demand.
• The investment mechanism for the wastewater treatment sector is to provide the basic services to the society. Meanwhile, there are not many preferential policies on finance and operations to attract and encourage the private sector to participate in the sector. The fee schedule is not suitable, the unit price of clean water and wastewater treatment is still low, which make the recovery of construction investment costs low, while the cost of operating and maintaining the wastewater treatment system requires high and continuous funding.
• The preferential conditions and procedures are not synchronized, so investors still face many difficulties in accessing opportunities and organizing project implementation.
• Some localities have not yet established a one-stop mechanism in the project appraisal process. There is still lack of specific commitments and support to create a favorable and safe investment environment for investors.
• The planning on water supply and drainage has many shortcomings, causing many challenges and difficulties for businesses.
• The infrastructure for wastewater treatment is not keeping up with the process of urbanization and industrialization.
3. We are aware of the North Saigon 1 WWTP being the first PPP wastewater project since the new PPP law of 2020. What kind of structure is this project likely to take within a PPP framework?
There is no official information yet but we expect it to be in the form of Build – Transfer – Operate.
4. Are other WWTPs in the City likely to change to a PPP framework in the near future, if so, which projects specifically?
Yes, the HCM authorities plan to change the following projects to new framework: Binh Hung Hoa (a combination of West Saigon – Tan Hoa – Lo Gom projects), North Saigon 2, Cau Dua, Northwest, West Saigon and Suoi Nhum.
5. Is the HCMC government serious about bringing international investment in, and do you think the new PPP law will protect investors to a greater extent than before? If so, in what ways?
Ho Chi Minh City strives that by 2025, about 80% of the city’s total wastewater (nearly 2.6 million m3/day) will be collected and treated up to standards before being discharged into the environment.
According to Deputy Director of Ho Chi Minh City Department of Construction Dang Phu Thanh, the current obstacle is that the investment cost of the drainage and wastewater treatment system is quite large. Ho Chi Minh City has also called for ODA capital from the Japan
International Cooperation Agency, the World Bank, the Asian Development Bank; promoted the socialization of investment in drainage and wastewater treatment works, called for investment in the form of public-private partnership to receive more capital.
Regarding the protection of investors, we are afraid that the new PPP Law does not reach the investors’ expectation. In reality, the current legal system on PPP has many very basic limitations, such as only one PPP Law, two implementing decrees and a number of related decrees and circulars. These documents have very sketchy and brief content, so they are not enough to comprehensively adjust the problems arising in PPP investment practice. In addition, a core issue that investors and project businesses are very interested in has not yet been resolved: whether they own the project works they make and if not, what rights do they have over the property? The specific protection mechanism of the State for the right to operate construction works of investors and project enterprises has not been clarified. In particular, one of the property rights that investors and project enterprises have is the right to operate the project. Failure to exercise this right will be considered as an investor or project enterprise failing to achieve its goals. Although provided for by law, in practice this right has been violated on a regular basis.
In conclusion, we believe that the intention of the lawmakers was very good. However, there is still lack of strong political will to fully implement PPP projects regularly and on large scale. This needs to be improved; otherwise, we cannot achieve the set targets of the PPP Law.
Please do not hesitate to contact Dr. Oliver Massmann at email@example.com if you have any questions. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.