The challenge Australia and Vietnam share

Along with a number of other countries in South East Asia where ANZ has operations, Vietnam is now at the start of a long reform journey. It is one similar to the one taken by Australia over the last decade.

"As urbanisation and industrialisation increases in Vietnam, there is also an urgent need to improve quality and efficiency."
Christina Tonkin, Managing Director Global Loans & Advisory at ANZ

In that period the Australian water sector experienced new climate extremes including record droughts, floods, temperatures and bushfires. Yet through these experiences, Australia's water industry emerged with greater resilience, flexibility and capabilities, strengthened by a culture of innovation and collaboration.

This experience has ensured Australia's development of water management capabilities is now considered by the industry as 'world leading'.

Vietnam's challenge is not that different. Conservation practices are beginning to be introduced, particularly in the agricultural sector. But as urbanisation and industrialisation increases in Vietnam, there is also an urgent need to improve quality and efficiency of aging supply networks to meet the demands of consumers and industry.

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SAFE & SECURE

There are many opportunities for the Australian water sector and business in Vietnam when it comes to safe, secure, efficient and sustainable water management in Vietnam.

That's why the AWA has collaborated with the Vietnam water sector and identified high demand services and products, including the development of water regulation, Public-Private partnerships for the delivery of critical infrastructure, engineering and consulting and instrumentation, software and other technologies for field testing and laboratory work.

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When Australia's drought started in the early 2000s, emphasis was placed on water conservation campaigns and demand management programs, including harsh water restrictions. As the drought worsened in the mid-2000s, decisions were made to invest in major supply augmentations.

Today, water supplies in Australia have been diversified and desalination, recycled water, stormwater, groundwater, rainwater and water conservation programs are all part of the supply/demand mix.

The Australian agricultural sector has benefited from the development of open markets water trading and the development of modern irrigation systems, helping farmers to consistently deliver high-quality produce across the globe at competitive prices.

The Australian mining sector is also highly experienced in the reuse of water, water use efficiency and in the securing of water supplies in remote, difficult-to-serve areas.

Australia of course is at a different stage of development. The water-management requirement in Vietnam is very basic and general, not localised to sectors. Most critically it is the provision of safe and secure drinking and waste water for existing populations and into the future as the population expands.

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Vietnam is one of the most rapidly urbanising countries in South East Asia. Of the current population of 86 million, the urban population is 30 per cent but is expected to rise to 37 per cent (35 million) by 2020.

Meanwhile, big urban centres receiving large migration inflows are becoming more congested and experiencing serious social and environmental problems. Infrastructure has significantly improved during the last decade, enabled by this growth, but many challenges remain regarding access to safe and reliable water. Particularly in rural and peri-urban centres.

Urban infrastructure and services are not keeping pace with economic development and thereby threaten to hold back further equitable growth and sustainable development. Moreover water and soil is often polluted by uncontrolled waste discharges, creating risks to health and development in certain regions.

Data from the Asian Development Bank indicates a wide range in access to clean water, from 70 per cent in major cities and towns to less than 15 per cent in district towns. Of the 754 towns, only a third have any form of piped water.

CHALLENGES

There is a raft of other challenges:

• Less than 10 per cent of urban wastewater in Vietnam is treated. Most households rely on on-site systems with inadequate waste management and with unreliable disposal.
• Water pollution causes long-term environmental degradation and public health risks from untreated human waste and industrial wastewater.
• Recurrent urban flooding stems from the poor management of storm and runoff water, worsening as urbanisation intensifies.
• With many towns located along the coast, rising sea level and other climate change impacts will significantly intensify flooding risks.
• Water leaking from water supply networks can be as high as 75 per cent.
• The financially sustainability of water companies has been hampered by low tariffs meaning urban water supply systems are still subsidised to a large extent by governments.
  
  

But on a positive note, surveys of affordability and willingness to pay indicate consumers are prepared to pay for improved services and the Government of Vietnam recognises the importance of realising Millennium Development Goals and national goals on water and sanitation.

The opportunities for reform to support economic growth are significant. The ongoing expansion of the economy presents substantial opportunity in Vietnam's urban areas.

The Australian Water Association together with ANZ is looking to play a key role through increasing private sector participation and knowledge sharing.

Government plans stress institutional reform, including restructuring the Ministry of Construction to refocus on effective policy formulation, guidance, and monitoring; developing the capacity of subnational government agencies; and encouraging urban services to operate as businesses.

From the perspective of Australia, the opportunities for the Australian water sector to support this transition are significant.

Australia has largely completed its reforms (and the corresponding wave of capital investments) and is now focussing on efficiency. What we have learned is knowledge which can be exported.

This I think is one of the key reasons is why this partnership is so mutually beneficial, for Vietnam and Australia, but also for the AWA and ANZ. We also hope to develop similar programs in other Mekong countries soon.

Christina Tonkin is Managing Director Global Loans & Advisory at ANZ.

• ANZ and the Australian Water Association (AWA) have announced a partnership in Vietnam, the first such venture offshore since the partnership commenced in May 2015. The partnership is designed to support water and wastewater management programs and to promote innovation and best practices in Australia and South-East Asia.