The existing demand for clean water privatization in the community

Mr. Nguyen Quang Huan, as Vice Chairman of Vietnam Association of Clean Water and Environment, Chairman of Halcom Vietnam JSC., wishes that the State needs a transparent and strong enough mechanism to attract investors to participate in clean water privatization in order to improve the quality of clean water and guarantee the health of the people.

From current “obstacles”…

In recent years, following the Government’s policy of privatizing the water sector, many domestic and foreign companies and individuals have participated in the construction and operation of water supply works in most provinces, which contributes to improvement of the quality of water supply services, protection of people’s health and socio-economic development. Right in Hanoi and Ho Chi Minh City, there are many clean water plants invested, built and managed by private companies. However, the reality shows that private companies investing in clean water sector still have many limitations and challenges.

More and more private companies are involved in investment on clean water plants, but there are still many obstables which make the investors uninterested.

Up to now, about 60% of the national citizen still does not have access to clean water. Even in urban areas, only 86% of the population has access to clean water, 14% of residents do not have access to tap water from the centralized water supply system.

Meanwhile, the World Bank’s data suggest that from 2020 onwards, Vietnam needs at least 1 billion USD per year for water supply.

In particular, in recent years, Binh Duong province has made a fundamental change in exploiting and using water resources in a reasonable, efficient and sustainable direction, so they manage to meet the needs of the households and production that contribute to the socio-economic development of the locality.

From the state of lacking clean water in previous years, Binh Duong now has a sufficient clean water supply system for daily life and production and a backup of 10% – 15% of the existing capacity. This result will get better and better, because in many localities in the province, people still have the habit of using drilled wells, while underground water sources are decreasing day by day. If not managed and controlled well, underground water resources will lead to subsidence of the soil layer, leading to many environmental consequences.

Although there is a backup clean water source, the socialization work to improve the capacity of providing clean water to meet the needs of socio-economic development in the province needs to be further improved.

Speaking frankly about this issue, Mr. Nguyen Quang Huan – Vice Chairman of Vietnam Clean Water & Environment Association, Chairman of  Halcom Vietnam JSC. pointed out the problems that private companies face when investing in the water sector. These are asynchronous and unstable policies, incomplete implementation of laws and policies, and periodic inspection and supervision mechanisms, lack of transparency in information about calling for investment and difficulties in accessing capital, etc.

…. to the need of clear and transparent mechanism

To create incentives for private investors to participate in the water supply and drainage sector, it is necessary to transparently disclose information on the status of water supply and drainage and have an open database for each locality that is accessible to all investors and citizens; at the same time, develop policies to encourage long-term investment in the wastewater sector. In particular, it is necessary to have an open, equal and transparent investor selection mechanism to find the right investors with financial, technical and management capabilities, to avoid the situation of buying and selling projects around.

Mr. Nguyen Quang Huan – Vice Chairman of Vietnam Association of Clean Water and Environment, Chairman of Halcom Vietnam JSC., wants the State to have a transparent and strong enough mechanism to attract investors to participate in clean water privatization in order to improve water quality and guarantee people’s health

According to Mr. Nguyen Quang Huan, in order for the private sector to feel secure to invest in urban and rural clean water, localities must maintain planning stability so as not to disrupt the water market. Contractors and investors in water plants want right guarantee in water trading. However, it is also necessary to have an independent and regular inspection and to control mechanism to ensure that all water supply and drainage companies operate equally, comply with the law, and fulfill their commitments to the people and society.

Along with that, in order to attract private resources to invest, there are two main factors: a clear policy mechanism and a reasonable capital recovery mechanism for businesses. Because if private companies feel insecure about ownership rights and do not believe that they will get their investment capital back, it will be difficult to attract investment resources from the private sector, stated Mr. Huan.

For sustainable development for both water supply and drainage, revenue must be higher than expenditure so the companies can pay for loans, operation and maintenance costs and reinvestment. In addition, the inspection and supervision of water supply and drainage systems by authorities is also very important to ensure that water supply and drainage companies, whether public or private, are equal in accordance with the law and guarantee the full implementation of responsibilities and obligations with the highest moral spirit.

In particular, the fee policy is extremely important to encourage businesses to invest in this field.

Previously, at the 8th Session of the XIV National Assembly, Delegate Nguyen Quoc Khanh (Hanoi Union) also said that when doing privatization, it is great whether that’s domestic or foreign investor. It is important that the legal corridor requirements must be clearly stated in the contract so that the two parties can understand clearly and take responsibility for the quality of the water source as well as the problems arising in the process of supplying and ensuring the safety of the people.

Analyzing this issue, delegate Truong Trong Nghia (Ho Chi Minh City) affirmed that investment privatization in clean water supply works in the integration period for the purpose of divesting state-owned enterprises is absolutely the right policy. However, the type of service related to the lives of millions of people in urban areas is very important and needs to be cared for and tightly managed by the State.

“The development of policies on clean water in the coming time must harmonize the interests of clean water producers, water supply enterprises and the interests of the people. In addition, investment in infrastructure such as building a clean water plant and a distribution pipeline network requires a huge initial investment. Therefore, if the management is not stable, the water supply zoning is not clear. In a water supply area, if there are two investors, it will lead to unfair competition “- Mr. Nguyen Quang Huan said.