Vietnamese water sector is leaving room for investors thanks to increasing in urban water demand by 202 as forecasted by the Ministry of Construction and capitalization of State-owned enterprises in the industry under Decision No. 1232/QD-TTg.

A World Bank report assessed that urban water service companies are being equitized to increase autonomy and open the door to private investors, with the goal of reducing the burden of heavy financial and improve connections and service quality. The list of enterprises divesting from state capital to 2020 under Decision No. 1232/QD-TTg issued by the Prime Minister on August 17, 2017 has opened up opportunities for investors as well as opportunities for businesses. Accordingly, in 3 years (from 2017-2019), the state will be comfortable capitalizing 57 water supply and drainage companies across the country, of which 24 state-owned companies own less than 50%. It will create “sources of goods” for the investors.

In turn of market demand, an estimate of HSC Securities Company in 2017 showed that the growth of water demand is very large, for many different needs, particularly the demand for civil water is about 36% (CAGR) in the period of 2017-2020. Increased demand for clean water due to accelerated urbanization, rapid population growth, attractive profit margins and openness to privatization have created opportunities for businesses to enter the water sector for private companies.

According to the Ministry of Construction, by 2020, the urban population of the country will reach 44 million people, the demand for urban water supply will increase from 9.4 to 9.6 million m3/day while the average financial need of investment per year will be VND 14,400 billion.

The local government also encourages investment in the water sector. The incentives include of capital calling for investors and businesses to invest in water supply projects in the form of socialization and introducing a loan bank with preferential interest rates.

According to the water supply planning of Hanoi capital to 2030, with a vision to 2050, the underground water plants will have a total capacity of 613,000 m3/day and gradually decrease by 2050. 

Besides, the water sector has its own attractions as an essential commodity, almost guaranteed for daily output and running, with stable returns. Moreover, the increased selling price of water will help investors to confidently invest in water plants. In Ho Chi Minh City, the retail price of clean water in Ho Chi Minh City route 2019 - 2022 will increase by an average of 5-7% per year, depending on the amount of water used. By the end of October, the Hanoi government is also planning to discuss adjusting water tariffs.

Some relevant legal frameworks:

• Decree No. 117/2007/ND-CP dated July 11, 2007 of the Government of the production, supply and consumption of clean water.