VIETNAM WATER AND WASTEWATER MANAGEMENT – an opportunity for sustainable solutions

Vietnam has achieved rapid socio-economic development in recent decades and has positioned itself to become a global manufacturing hub. While Vietnam's economic achievements are notable, they have had a heavy toll on the environment. The country has urbanized fast and its cities are in big need for clean solutions and technologies. Water resource management, which is vital for sustainable development, is very much lagging behind and an alarming proportion of waste is not properly treated. This country outlook pictures the water and wastewater sector’s current status and practices, with an aim to help Finnish stakeholders in finding business opportunities in Vietnam.

The country context

Vietnam has a land area of 330,000 km² covered by 139,000 km² of forest (42%) and more than 65,000 km² of low land formed by river sediment over the centuries. Vietnam has a dense and diverse system of 2,360 rivers longer than 10 km and more than 2,900 natural and hydropower/irrigation lakes. The annual average precipitation is 1,840 mm. The potential of freshwater is 830 to 840 billion cubic meters (m³) per year for surface water runoff and 47.5 to 63 billion m³/year for underground water. With 9,434 m³/capita/year, the total water availability in Vietnam is abundant compared to the regional and global standards.

Vietnam is among the 10 countries most vulnerable to climate change. Severe and unpredictable weather pattern is making Vietnam more and more prone to water insecurity in the coming decades. A recent study by the World Bank painted the water situation in Vietnam as “too much, too little, too dirty” – the country suffers from floods and dangerous landslides due to excessive rain and the inability of geological terrain to contain water during the rainy season. Recently, the country has witnessed severe droughts which last several months on extensive areas of cultivation land. On top of this, the water resources in Vietnam, both surface and underground water sources, have been severely polluted due to economic activities and most of all due to the untreated waste accumulating from one year to another.

Agriculture and aquaculture are key economic pillars of Vietnam on the way toward an industrialized nation by 2045 as targeted by the government of Vietnam. Vietnam is currently a leading exporter of many known products such as rice, coffee, pepper, nuts, shrimp, and catfish. Vietnam has a population of more than 98 million and it is expected that by 2030 half of them will be living in cities.

The intensive agriculture activity, the fast growth in many industrial areas such as metallurgy, garment, paper, dairy, and furniture, and the fast urbanization, require urgent sustainable water resources management. In 2020, Vietnam consumed 3.6 billion cm³ of water for municipal activities, 7.5 billion cm³ for industry, and 94 billion cm³ in agriculture. According to a forecast, the figure would increase to 5.7 billion cm³, 15.6 billion cm³, and 103 billion cm³ respectively by 2030.

Vietnam has only 15% of its wastewater collected and treated. A large amount of wastewater from residence areas, animal husbandry and various small and medium economic activities is daily discharged into the environment without proper treatment. Municipal solid waste(Linkki toiselle web-sivustolle.) is another significant factor contributing to underground water pollution in Vietnam (ref. Seize The Opportunity: Vietnam Invests 14 Billion To Clean And Sustainable Energy Transition(Linkki toiselle web-sivustolle.)).

Regulatory environment of the water sector in Vietnam

In 2021, the Vietnamese Government adopted decision No. 1622/QD-TTg approving the master plan on water resources for the period 2021-2030 with the vision to 2050 in an attempt to address droughts and pollution problems. The master plan has highlighted key priorities in water resource control and distribution as well as the targets for wastewater treatment from now to 2030 and thereafter.

The Vietnam Water Law was issued in 1998, revised in 2012, and is currently under the 3^rd revision by the Ministry of Natural Resources and Environment of Vietnam. The revision would provide a more comprehensive framework to attain water security with more participation of the private sector in water resources management. With the 3^rd edition, Vietnamese legislators and executives aim at systematically improving water resources management. One of the foremost projects is building a digital database and a system covering the countrywide water resources and usage. A knowledge-based system will be built for water resource management in individual river basins and in underground water in critical areas of Hanoi capital, Ho Chi Minh city, and Mekong delta. It will encompass a real-time water data collecting and processing system, and produce necessary management tools for better water resource usage.

The 2023 Environment Law requires all residential areas to have adequate wastewater collection and treatment system. Water supply and drainage are currently regulated in Vietnam by Decree 117/2007 and Decree 80/2014 respectively. The Ministry of Construction of Vietnam has proposed a new law on water supply and drainage to the Government with expected rectification by the National Assembly in 2025. The need for a law regulating the sector’s business is high among stakeholders. Together with his peer colleagues, Mr. Ho Minh Nam, General Director of Da Nang Water Supply Joint Stock Company emphasized the need for a legislation for specialized sectoral planning on water supply and drainage for all urban areas containing predetermined plant location, water source location, and pipeline network location. Such a safe water supply and drainage plan is to be approved by the local government prior to investment activities and construction of water supply and drainage projects.

Private and public actors and international partners in the water sector

In Vietnam, the Ministry of Natural Resources and Environment is in charge of water resource management while the Ministry of Agriculture and Rural Development is in charge of irrigation lakes and systems. The Ministry of Industry and Trade is in charge of the hydropower cascade, and the Ministry of Construction is in charge of water supply and drainage for residential areas.

The drainage system in most Vietnamese urban areas is used for both storm water and wastewater. Most wastewater treatment systems for urban areas in Vietnam are currently financed by public funds. The residence wastewater collection and treatment remain exclusively at the expense of local authorities. An environment fee of 10% of the water consumption fee is currently allocated to wastewater management. The management of drainage systems and wastewater treatment varies between the local water company and the local Urban Environment Company (URENCO) in different localities. The investment is substantially financed by the public investment fund and is subject to the country’s public investment law and procurement law. A project usually takes time for preparation due to the number of required approvals. The construction work depends largely on how efficiently the locally engaged construction firm would handle the site work and locally required paperwork. The international partner, if any, in a project would be much more effective by devoting itself to the strict quality control and equipment supply chain during the project implementation.

Clean Water supply is attracting more and more private investment. However, the quality of water remains an issue. The general tap water is not yet drinkable in Vietnam. Local construction companies are capable of designing and building large-scale water supply projects, but most critical equipment and technology are still imported. Some avenues to introduce advanced equipment and technology to Vietnamese water companies and their investors are the annual Vietwater exhibition in Ho Chi Minh City and Vietnam Water Week organized by the Vietnam Water and Sanitation Association. Both events are usually scheduled in September/October each year.

Underground water in Vietnam provides more than 13% of water usage for residential areas. Diminishing surface water, pollution from the surface together with excessive underground water exploitation have degraded seriously the quality and quantity of underground water in Vietnam in recent years. With the coming water law, the government of Vietnam is looking for tools to effectively moderate the underground water condition and usage. For this purpose, the Vietnam Water Authority is planning a thorough survey project on underground water exploitation and, particularly, its impact on land surface subsidence in the Hanoi city area, Ho Chi Minh City, and the Mekong Delta. The survey would require deep expertise, extensive experience, and advanced technology.

International development partners including World Bank (WB), International Finance Corporation (IFC), Japan International Cooperation Agency (JICA), Agence Francaise de Development (AFD), Asia Development Bank (ADB), Netherlands Development Organisation (SNV), and United Nations Development Program (UNDP) continue financial and technical support to promote investment in the water sector in Vietnam. A few projects are in preparation:

• Hue city Wastewater and Drainage Project;
• Project in Hue for flood early warning system in rivers;
• The Ho Chi Minh water environment improvement project (3^rd phase) in the southern Ho Chi Minh City;
• The 30,000 m³ wastewater treatment plant in the Cai Rang district of Can Tho City;
• Ho Chi Minh City Climate Resilient Urban Services Projects: Tham Luong – Ben Cat and West Saigon Drainage Catchments;
• 16 urban projects (Tay Ninh, Ha Tinh, Thai Nguyen, Vinh Phuc, Thanh Hoa, Lao Cai, Hoa Binh, Hue etc.) in the pipeline focusing on road, river flooding and storm water flooding, river embankment, etc.; 
• Secondary Cities Environment Improvement Projects.

The urgent need for wastewater solutions is there. The revision of the Law on Water Resources and the coming law on water supply and drainage are expected to create a favorable framework for business development in the water sector in Vietnam. Financing mechanisms are available both within the country's budget and from international partners, including the Finnish Public Sector Investment Facility (PIF). Vietnam and Finland signed a Framework Agreement for the use of Finnish PIF funding in January 2021.

Once the country’s public investment process becomes more efficient, the business opportunities for good technology and expertise in wastewater treatment in Vietnam will be great, contributing steadily to Vietnam's sustainable development.