Chairman's Insights

Concerns of Foreign Investors heard and understood

Many foreign investors have been expressing concern  about the several areas of pollution that have been building up in the major cities, as I recently expressed to The Prime Minister in a presentation I made to the Vietnam Business Forum last week.

“Air pollution is clearly and visibly increasing at an alarming pace and this will start to have an impact on people willing to move families to Vietnam, which in turn could well have a negative impact on FDI. We believe that a major part of the problem is the lack of monitoring and enforcement of the established environmental control regulations, particularly in the industrial zones and of course the increasing traffic emissions.

Noise pollution is also an issue, in particular open Karaoke bars in residential areas that often operate at hideous noise levels late into the night, because the local police have no incentive to close these places down at appropriate hours.

Traffic congestion is a growing problem in the cities of Hanoi and Ho Chi Minh City, in particular. Without adequate public transport it is difficult to address the traffic issue, however the growth in the number of small cars as opposed to motor scooters is quite evident and maybe this is something that could be addressed.

Flooding is another serious issue, which has become more prevalent this year, as a result of poor drainage in many areas, resulting in real danger to residents travelling at peak times and severe inconvenience to workers. Some of this is we believe being caused by lack of environmental compliance on construction sites”

Not only does this affect and impact foreigners and families living in Vietnam if the problems are not addresses then this will ultimately affect new foreign direct investment. The Government responses acknowledged the problems and there were commitments to address some of these problems.

This was further supported in a meeting with Vice Chairman Liem of the Ho Chi Minh City Peoples committee this morning, where there was an acknowledgement that the Government and local authorities had under invested in infrastructure relative to the growth of the economy and urban population and that public transport does not meet current demands. The authorities have been dependent on aid funding because of lack of resources and a lack of regulations as prevented the development of PPP. Now the PPP regulations are clearer it is expected that there will be more investment in infrastructure through PPP models.

Ho Chi Minh City has already started a program to reduce flooding and by 2020 13 of the cities districts are projected to be flood free. There are three main reasons for flooding Tidal, rain storms and waste water drainage. For tidal flooding the city has already started construction of 8 kilometers of flood prevention and additional drainage. The city is also seeking investment through PPP to address the flooding from rain water and will strengthen inspection and regulations to deal with waste water discharge and the blocking of current waste drainage channels.

Like all emerging markets investors do not expect a quick fix overnight but the commitment to strengthen control and management will help solve many of the current issues whilst the longer term investment into infrastructure and public transport will also help in the longer term to resolve many of the issues currently being faced in the two largest cities.

Ken Atkinson