BMI Vietnam Infrastructure Report Q2 2014 PDF

Q2 2014
www.businessmonitor.com
VIETNAM
INFRASTRUCTURE REPORT
INCLUDES 10-YEAR FORECASTS TO 2023
ISSN 1750-5593
Published by:Business Monitor International
Vietnam Infrastructure Report Q2

2014
INCLUDES 10-YEAR FORECASTS TO 2023
Part of BMIs Industry Report & Forecasts Series

Published by: Business Monitor International
Copy deadline: January 2014
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Vietnam Infrastructure Report Q2 2014
CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................... 9
Infrastructure SWOT .................................................................................................................................. 9
Industry Forecast .............................................................................................................. 11

Construction And Infrastructure Forecast Scenario ........................................................................................ 11
Table: Vietnam Construction And Infrastructure Industry Data, 2012-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Table: Vietnam Construction And Infrastructure Long-Term Forecasts, 2018-2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table: Factbox - Key Elements Of Vietnam's Revised Land Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Transport Infrastructure - Outlook And Overview .......................................................................................... 23

Table: Vietnam Transport Infrastructure Industry Data, 2012-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Table: Vietnam Transport Infrastructure Long-Term Forecasts, 2018-2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Table: Competitiveness Of Vietnam's Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Table: Vietnam Railway Corporation's Main Targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Major Projects Table - Transport .............................................................................................................. 42

Table: Major Projects - Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Energy And Utilities Infrastructure - Outlook And Overview ............................................................................ 58

Table: Vietnam Energy & Utilities Infrastructure Industry Data, 2012-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Table: Vietnam Energy & Utilities Infrastructure Industry Long-Term Forecasts, 2018-2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Major Projects Table - Energy & Utilities ................................................................................................... 75

Table: Major Projects - Energy & Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Residential/Non-Residential Building - Outlook And Overview ......................................................................... 93

Table: Vietnam Residential And Non-residential Building Industry Forecasts, 2012-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Table: Vietnam Residential And Non-residential Building Long-Term Forecasts, 2018-2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Major Projects - Residential/Non-Residential Construction And Social Infrastructure ..................................... 101

Table: Major Projects - Residential/Non-Residential Construction And Social Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Industry Risk Reward Ratings ........................................................................................ 105

Vietnam - Infrastructure Risk/Reward Ratings .............................................................................................
Vietnam Risk/Reward Ratings .................................................................................................................
Rewards ............................................................................................................................................
Risks ................................................................................................................................................
105
105
105
106
Asia - Infrastructure Risk/Reward Ratings .................................................................................................. 107

Table: Asia Pacific Infrastructure Risk Reward Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Market Overview ............................................................................................................. 116

Competitive Landscape ........................................................................................................................... 116
Table: Vietnam EQS Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Company Profile .............................................................................................................. 117

Cavico Corporation ............................................................................................................................... 117
Electricity Vietnam Group ....................................................................................................................... 120
Page 4
Global Infrastructure Overview ...................................................................................... 125

Africa In 2014: PPPs Cement Global Appeal .............................................................................................. 125
Asia-Pacific In 2014: Shaping Up To Be A Benign Year ................................................................................ 130
Latin America In 2014: A Prosperous Year For Infrastructure Development ..................................................... 137
MENA In 2014: Reaping Rewards Despite Risks .......................................................................................... 140
North America And Europe In 2014: Turning A Corner ................................................................................ 145
Methodology .................................................................................................................... 152

Industry Forecast Methodology ..............................................................................................................
Sector-Specific Methodology ..................................................................................................................
Risk/Reward Rating Methodology ...........................................................................................................
Sector-Specific Methodology ..................................................................................................................
152
153
157
158
Table: Infrastructure Risk/Reward Rating Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Page 5
BMI Industry View

BMI View: Vietnam's construction sector is in an upward cyclical phase, as evidenced by a real growth
rate of 5.3% y-o-y in the first nine months of 2013. We believe this could continue in 2014 and are
maintaining our growth forecasts of 5.8% for 2014. Easy monetary conditions and greater investment
interest from foreign sources in Vietnam's construction sector is likely to support growth for the year.
Furthermore, the government continues its efforts to restructure state-owned enterprises and improve its
business environment, both of which would level the playing field, free up public funds and improve
profitability, and help to attract additional investment for infrastructure development over the coming
years.
The major developments in Vietnam's infrastructure sector are:
In November 2013, the Vietnamese government approved an amendment in its Land Law (see 'Revised
Land Law A Major Step In Tackling Corruption', December 9 2013). The revised legislation, which will
come into effect on July 1 2014, is aimed at limiting land disputes by prohibiting the government from
appropriating land for socio-economic development unless such projects have been approved by the
prime minister and the Vietnamese parliament. We believe this revision is a major step in strengthening
the regulatory framework and will increase transparency for projects that are implemented under the
direction of the provincial government. It would also help reduce the risk of project delays which have
been caused by long and costly disputes over compensation.
In October 2013, the Railway Gazette reported that Line 5 of the Ho Chi Minh metro system will be
financed by three international organisations instead of two as previously announced by state officials.
The Asian Development Bank, the European Investment Bank and the Spanish government will provide
US$500mn, EUR150mn (US$206mn) and EUR200mn (US$275mn) respectively, to construct in 2015
the first 8.9km of the line that is slated to run between Sai Gon Bridge and the Bay Hien Intersection. In
October 2013, the Vietnamese government granted approval to Hanoi General Export-Import Joint
Stock Company (Geleximco) to withdraw from the build-transfer model-based Hoa Lac-Hoa Binh
expressway linking Hanoi with localities in the northwest. According to the transport ministry, the
company invested US$17mn in the project, with US$2mn in the construction and US$12.4mn in land
acquisition, over three years, but continues to face escalating investment costs which has made it difficult
for the company to reach the project deadline. Instead, the government will now look to alter the project's
investment model to public-private partnership to make it more feasible and obtain official development
assistance to help finance it.
In November 2013, event organiser FDI Vivina announced that Han & Han and Pedco, via a JapaneseKorean joint venture, had plans to construct a US$200mn waste-to-power plant in Hanoi, Vietnam. The
plant, with a daily capacity of 75 tonnes, would generate electricity from 7MW to 9MW and produce
high-value by-products, including raw materials for metal and glass. The plant would treat 100% of the
waste, while controlling and cleaning green house gases and fumes.
In November 2013, Vietnam's Phuong Nam Technology Science Institute and US-based Executive
Decision Export Services (EDES) scheduled to sign a memorandum of understanding (MoU) for the
construction of the US$3.6bn railway project in Vietnam. The project, which will be implemented via a
build, operate and transfer format, is designed to connect Hoi Chi Minh City to Can Tho City using the
technical standards of a dual high-speed railway grade 1 with international gauge of 1,435mmm. Upon
Page 7
signing the MoU, a joint venture firm will be formed by both parties, through which the feasibility studies
and project will be executed.
In December 2013, the state utility and monopoly distributor Electricity of Vietnam (EVN) and Japanbased Marubeni Corporation signed an engineering, procurement and construction contract for the
main thermal power plant of the Thai Binh Power Station in Vietnam. The project will entail an
investment of VND26.5trn (US$1.3bn), with 85% of the investment coming from the Japan International
Cooperation Agency and the remaining 15% of the cost paid by EVN. The construction of the 600MW
plant is expected to commence in Q114, with the first plant scheduled to come online in Q417 and the
second in Q218. The two-turbine plant is projected to generate about 3.3bn kWh every year.
In December 2013, a US$1.5bn contract to construct the 1,200MW coal fired thermal plant - Vinh Tan
Thermal Power Plant No. 4 - in Binh Thuan was awarded to Doosan Corporation, Mitsubishi
Corporation and two Vietnamese firms, Power Engineering Consulting Joint Stock Company 2 and
Pacific Corporation. The plant will consist of two 600MW units, and is expected to be completed by
2017 and 2018.
Page 8
SWOT
Infrastructure SWOT
Vietnam Infrastructure SWOT Analysis
Strengths
The country's strong project pipeline will sustain growth in the sector and add
capabilities for further development, particularly as transport structure improves.
Rapid growth and firm government commitment has attracted investment from many
of the world's largest infrastructure companies.
The poor state of infrastructure in the country provides easy wins for foreign investors
and construction companies.
Weaknesses
A hike in electricity prices should stimulate investment in the energy sector.
State-owned companies dominate the infrastructure market. This is especially the

case in the utilities sector, where Electricity of Vietnam (EVN)'s dominant position has
deterred investors.
Vietnam relies heavily on foreign imports and it is estimated that the country requires
2mn tonnes of steel billets to be imported a year.
The country currently presents a relatively risky environment for major infrastructure
projects, especially in relation to project finance operations.
Power outages are occurring daily in Vietnam, highlighting the country's severe
electricity problems.
Opportunities
Demand for urban infrastructure projects in transport and sanitation over our 10-year
forecast period to 2022 will rise, in tandem with urbanisation.
Severe drought is driving demand in electricity generation sources besides

hydropower, such as gas-fired and wind-powered plants.
If the government's attempts to cool the overheating economy are successful,

Vietnam will see a more stable growth trajectory over the long term.
Page 9
Vietnam Infrastructure SWOT Analysis - Continued
Greater opportunities for public-private partnerships (PPP) - the country is offering the
Dau Giay-Phan Thiet expressway project, the first road project and the largest
infrastructure project to be developed under a PPP format.
Threats
A possible shift in the Vietnamese government's focus - from driving economic

growth towards fighting inflation and addressing macroeconomic imbalances - could
have a cooling effect on the sector.
Without foreign capital, public spending cuts and tighter credit conditions are likely to
keep economic activity depressed.
Lack of energy infrastructure holds downside risk to nearly all projects and presents a
significant bottleneck to development.
Should any significant events occur to highlight Vietnam's structural difficulties,

uncertainty and downside risks in the business environment could have a negative
impact.
The EU predicts Vietnam will not become a true market economy until 2018.
Page 10
Industry Forecast
Construction And Infrastructure Forecast Scenario
Table: Vietnam Construction And Infrastructure Industry Data, 2012-2017
2012
2013e
2014f
2015f
2016f
2017f
179,301.0
191,631.0
213,842.3
238,725.9
265,584.7
295,006.6
Construction
industry value, US
$bn
8.6
9.2
10.4
11.7
13.1
14.8
Construction
industry, real
growth, % y-o-y
2.1
5.8
5.8
6.4
6.3
6.2
Construction
industry, % of
GDP
5.5
5.3
5.2
5.2
5.2
5.2
Total capital
investment, VNDbn
785,337.3
871,493.6
1,013,908.7
1,195,195.5
1,393,000.4
1,589,848.1
Total capital
investment, US$bn
37.6
41.7
49.3
58.8
68.9
79.5
Total capital
investment, % of
GDP
24.2
23.9
24.8
26.1
27.2
27.8
Capital investment
per capita, US$
414.4
454.8
532.7
629.5
731.6
837.1
Real capital
investment growth,
% y-o-y
1.9
4.1
10.0
12.0
11.0
8.8
Construction
industry
employment, '000
3,183.5
3,423.9
3,678.0
3,972.9
4,279.9
4,602.4
Construction
industry
employment, % yo-y
2.5
7.5
7.4
8.0
7.7
7.5
64,081.4
64,820.1
65,485.2
66,093.7
66,647.3
67,144.3
Construction
industry
employees as % of
total labour force
5.0
5.3
5.6
6.0
6.4
6.9
Infrastructure
Industry Value As
32.7
33.8
33.5
33.1
32.8
32.4
Construction
industry value,
VNDbn
Total workforce,
'000
Page 11
Vietnam Construction And Infrastructure Industry Data, 2012-2017 - Continued
2012
2013e
2014f
2015f
2016f
2017f
58,653.2
64,809.3
71,579.7
79,046.8
87,055.0
95,588.8
Infrastructure
Industry Value, US
$bn
2.8
3.1
3.5
3.9
4.3
4.8
Infrastructure
Industry Value Real
Growth (%)
0.9
3.9
4.7
5.2
5.1
4.9
Infrastructure
Industry Value as
% of GDP
1.8
1.8
1.8
1.7
1.7
1.7
Residential and
Non-residential
Building Industry
Value As % of
Total
Construction
67.3
66.2
66.5
66.9
67.2
67.6
Residential and
Non-residential
Building Industry
Value, VNDbn
120,647.8
126,821.7
142,262.6
159,679.1
178,529.8
199,417.8
Residential and
Non-residential
Building Industry
Value, US$bn
5.8
6.1
6.9
7.9
8.8
10.0
Residential and
Non-residential
Building Industry
Value Real Growth
(%)
1.0
-1.5
6.4
7.0
6.8
6.8
Residential and
Non-residential
Building Industry
Value as % of GDP
3.7
3.5
3.5
3.5
3.5
3.5
Cement
production
(including
imported clinker),
tonnes
47,900,158.7
49,755,167.9
54,456,929.5
60,661,903.9
67,032,460.9
72,690,571.7
Cement
production
(including imported
clinker), tonnes, %
y-o-y
1.8
3.9
9.4
11.4
10.5
8.4
47,137,388.7
48,919,480.7
53,549,192.0
59,675,315.3
65,956,456.5
71,513,269.0
% of Total
Construction
Infrastructure
Industry Value,
VNDbn
Cement
consumption,
tonnes
Page 12
Vietnam Construction And Infrastructure Industry Data, 2012-2017 - Continued
2012
2013e
2014f
2015f
2016f
2017f
Cement
consumption,
tonnes, % y-o-y
1.4
3.8
9.5
11.4
10.5
8.4
Cement net
exports, tonnes
762,769.9
835,687.3
907,737.4
986,588.7
1,076,004.4
1,177,302.6
28.3
9.6
8.6
8.7
9.1
9.4
Cement net
exports, tonnes, %
y-o-y
e/f = BMI estimate/forecast. Source: Vietnam General Statistics Office, BMI
Table: Vietnam Construction And Infrastructure Long-Term Forecasts, 2018-2023
2018f
2019f
2020f
2021f
2022f
2023f
Construction
industry value,
VNDbn
327,200.5
362,647.4
401,855.5
444,791.0
492,279.3
544,276.1
Construction
industry value,
US$bn
16.5
18.5
20.7
23.0
25.6
28.4
Construction
industry, real
growth, % y-o-y
6.0
6.0
6.0
6.0
6.0
6.0
Construction
industry, % of
GDP
5.1
5.1
5.1
5.1
5.1
5.0
1,801,170.7
2,019,760.8
2,260,645.5
2,523,111.0
2,816,049.2
3,139,996.2
Total capital
investment, US
$bn
91.0
103.0
116.2
130.4
146.3
164.0
Total capital
investment, %
of GDP
28.2
28.4
28.6
28.8
28.9
29.1
Capital
investment per
capita, US$
950.6
1,069.0
1,197.5
1,334.9
1,488.7
1,659.4
8.0
7.0
6.8
6.6
6.6
6.6
4,935.6
5,290.0
5,664.5
6,059.7
6,478.0
6,920.2
Total capital
investment,
VNDbn
Real capital
investment
growth, % y-o-y
Construction
industry
Page 13
Vietnam Construction And Infrastructure Long-Term Forecasts, 2018-2023 - Continued
2018f
2019f
2020f
2021f
2022f
2023f
Construction
industry
employment, %
y-o-y
7.2
7.2
7.1
7.0
6.9
6.8
Total workforce,
'000
67,594.9
68,011.1
68,401.6
68,772.1
69,122.4
69,448.6
7.3
7.8
8.3
8.8
9.4
10.0
Infrastructure
Industry Value
As % of Total
Construction
32.0
31.6
31.2
30.8
30.4
30.1
Infrastructure
Industry Value,
VNDbn
104,761.5
114,611.6
125,304.5
136,917.4
149,642.5
163,654.2
Infrastructure
Industry Value,
US$bn
5.3
5.8
6.4
7.1
7.8
8.5
Infrastructure
Industry Value
Real Growth (%)
4.7
4.6
4.5
4.6
4.6
4.8
Infrastructure
Industry Value
as % of GDP
1.6
1.6
1.6
1.6
1.5
1.5
68.0
68.4
68.8
69.2
69.6
69.9
Residential and
Non-residential
Building
Industry Value,
VNDbn
222,439.1
248,035.7
276,551.1
307,873.6
342,636.8
380,621.9
Residential and
Non-residential
Building
Industry Value,
US$bn
11.2
12.7
14.2
15.9
17.8
19.9
Residential and
Non-residential
Building
Industry Value
Real Growth (%)
6.6
6.7
6.7
6.6
6.6
6.5
employment,
'000
Construction
industry
employees as
% of total
labour force
Residential and
Non-residential
Building
Industry Value
As % of Total
Construction
Page 14
Vietnam Construction And Infrastructure Long-Term Forecasts, 2018-2023 - Continued
2018f
2019f
2020f
2021f
2022f
2023f
3.5
3.5
3.5
3.5
3.5
3.5
Cement
production
(including
imported
clinker), tonnes
78,287,306.3
83,577,075.5
89,075,636.5
94,775,641.8
100,851,881.0
107,329,187.8
Cement
production
(including
imported
clinker), tonnes,
% y-o-y
7.7
6.8
6.6
6.4
6.4
6.4
76,998,573.0
82,162,136.7
87,525,398.5
93,020,216.2
99,001,095.0
105,242,755.6
Cement
consumption,
tonnes, % y-o-y
7.7
6.7
6.5
6.3
6.4
6.3
Cement net
exports, tonnes
1,288,733.2
1,414,938.8
1,550,238.1
1,755,425.6
1,850,786.0
2,086,432.2
Cement net
exports, tonnes,
% y-o-y
9.5
9.8
9.6
13.2
5.4
12.7
Residential and
Non-residential
Building
Industry Value
as % of GDP
Cement
consumption,
tonnes
f = BMI forecast. Source: Vietnam General Statistics Office, BMI
BMI View: The outlook for Vietnam's construction sector continues to be increasingly positive. This is
primarily due to government policy, where the adoption of a loose monetary policy, revisions to the
regulatory framework for land acquisition and the restructuring of state-owned enterprises are increasing
the potential for greater construction investment over the coming years. This potential for greater
construction activity is reflected in our projections, with our real growth forecasts for the sector revised up
to 5.8% in 2014 (previously 5.4%) and averaging 6.2% per annum between 2015 and 2018 (previously
6.0%).
Construction activity in Vietnam has continued to recover from the lows of 2011. Latest data from the
Vietnam General Statistics Office reveals that the construction sector grew by 5.8% in real terms in 2013,
Page 15
faster than the -1.0% and 2.1% print in 2011 and 2012 respectively. This is in line with our view that the
recovery in Vietnam's construction sector will be sustained in the next few quarters.
On The Path To Recovery

Vietnam - Quarterly Construction Industry Value, VNDbn
Source: General Statistics Office, State Bank of Vietnam
Looking beyond 2013, the outlook for Vietnam's construction sector continues to be increasingly positive.
This is reflected in our projections, with our real growth forecasts for the sector revised up to 5.8% in 2014
(previously 5.4%) and averaging 6.2% per annum between 2015 and 2018 (previously 6.0%).
Page 16
Not Like Before

Vietnam Construction (And Sum-Components) Industry Value Forecasts
e/f= BMI estimate/forecast. Source: General Statistics Office, State Bank of Vietnam, BMI
This relatively optimistic outlook is primarily driven by three main factors:
Conducive Monetary Conditions. The government is seeking to boost economic growth and has
maintained its policy rate at 7.00% since May 2013, the lowest policy rate since December 2009. Given the
lagged impact of monetary easing, any positive effects of this easing could last well into 2014. Moreover,
inflation remains relatively benign, leading us to expect the Vietnamese central bank to maintain an
accommodative policy stance throughout 2014 - we are forecasting the benchmark interest rate to remain at
7.00% by end-2014. This should be favourable for construction activity as Vietnamese companies would
benefit from a lower cost of capital - making them more inclined to take up new projects or carry out
capital-intensive construction works - while municipal and provincial governments could also find the
necessary financing for their infrastructure plans.
Page 17
A Loose Monetary Policy

Vietnam - Policy Rate, % & Headline CPI - Housing & Construction Materials, % y-o-y
Source: General Statistics Office, State Bank of Vietnam
Robust Foreign Direct Investment (FDI) Inflows. Foreign direct investment (FDI) inflows into the
country have accelerated across 2013. According to the Ministry of Planning and Investment, Total FDI
inflows into Vietnam grew by 54.5% to reach US$21.6bn in 2013, significantly surpassing the government's
full-year target of US$13bn.
The sharp increase in FDI inflows bodes well for activity in the construction sector. This is because we
believe a sizeable portion of these inflows were channelled into buildings and infrastructure. To be sure, the
real estate achieved the third highest amount of FDI inflows amongst the 18 sectors between January and
November 2013, while 84.1% of Japan's total investment capital into Vietnam, the country's largest foreign
investor, was channelled into manufacturing and processing projects, according to the Ministry of Planning
and Investment. Meanwhile, we have seen several agreements signed with Asian companies over the course
of 2013 for the development of transport and power infrastructure projects in Vietnam (see 'High Tariffs
And Deregulation Bearing Fruit', October 17 2013). Financing from European banks - a major source of
finance for Vietnamese infrastructure - has also stabilised at a relatively positive growth rate of 6.5% yearon-year in Q213.
Page 18
Limited Upside
Vietnam - Foreign Claims From European Banks, US$mn And % chg y-o-y
Source: Bank For International Settlements (January 2014), BMI
Revised Land Law. On November 29 2013, the Vietnamese government approved an amendment in its
Land Law (see 'Revised Land Law A Major Step In Tackling Corruption', December 9 2013). The revised
legislation, which takes effect on July 1 2014, is aimed at limiting land disputes by prohibiting the
government from appropriating land for socio-economic development unless such projects have been
approved by the prime minister and the Vietnamese parliament. From our perspective, the revised law is a
major step in strengthening the regulatory framework with regards to land transfer and entitlement while
increasing the transparency of economic development projects that are implemented under the direction of
the provincial government. This strengthening of the regulatory framework for land acquisition and
resettlement could help to reduce the risk of project delays that are brought on by long and costly disputes
over compensation.
Page 19
Table: Factbox - Key Elements Of Vietnam's Revised Land Law
The revised Land Law is effective from July 1 2014.
Land is owned by the people and managed by the State.
Land prices are required to be valued by independent agencies based on market prices at the time of assessment as
well as land use purpose and duration.
New provisions provided on issue relating to ownership and usage of land as well as on compensation and
resettlement of residents subject to relocation.
The regulation requiring the release of the government's land price list on January 1 of every year is abolished.
The concession for all types of farming land has been increased from 20 to 50 years.
Source: BMI
Non-Residential Sector: Rising Domestic Demand
There are also sub-sectoral factors that are driving our positive outlook for Vietnam's construction sector. In
the non-residential building sector, we have seen a recovery in Vietnam's manufacturing production
activity, with the HSBC Purchasing Managers' Index above 50.0 level since September 2013 (a signal of
expansion in the manufacturing sector). While we remained concerned about the potential for deterioration
in external trade activity (particularly the potential for a renewed downturn in the Chinese economy), the
growing domestic demand for manufacturing goods could increase demand for non-residential buildings to
support production activity.
Page 20
Staying Strong
Vietnam - Purchasing Managers' Index
Source: BMI, Markit/HSBC
Residential Sector: Early Signs Of Recovery
The residential building sector is also showing early signs of improvement (see 'Early Signs Of A Recovery,
But No Property Market Boom In Sight', August 14 2013). Although the sector is still suffering from
significant oversupply and falling prices, unsold inventory of new residential units have fallen back to more
moderate levels by historical standards. Unsold apartments as a share of total units under construction fell
from 30.3% in Q412 to 27.7% in Q213, while unsold villas and townhouses fell from 54.3% to 10.7% over
the same period. In addition, the rate of decline in housing prices is slowing down, which could indicate
growing demand for property. As the accompanying chart shows, the Vietnam Real Estate Index, which
tracks transaction prices of highly liquid apartments in Hanoi and Ho Chi Minh City, fell by 8.2% y-o-y in
August 2013, significantly lower than the contraction of 15.2% y-o-y in August 2012.
Page 21
Signs Of Bottoming
Vietnam - Real Estate Index
Source: BMI, Bloomberg
Lastly, the government's plan to increase the supply of social housing to low-and middle-income groups is
accelerating, with several large-scale social housing programmes and projects being implemented. In
August 2013, the Ministry of Construction announced that there were 50 projects, valued at around US
$1bn, registered to convert 34,000 units of commercial houses to social houses.
Infrastructure Sector: Unlocking Capital
In the infrastructure sector, the Vietnamese government is also making progress with the use of publicprivate partnerships (PPPs) for infrastructure development. The government launched the initial tendering
stage for its first road PPP project in September 2013 and there could be other infrastructure projects offered
as PPPs over the near term (see 'Skeptical Over Dau Giay-Phan Thiet PPP Timeline', December 6 2013).
We have long highlighted that the Vietnamese government does not have sufficient funds to meet the
country's infrastructure needs and the use of PPPs could aid in meeting this deficit (see 'Construction
Recovery On Track', July 14 2013). According to the Ministry of Planning and Investment, Vietnam will
Page 22
need US$16-17bn per annum for infrastructure development over the next decade, but the capital raised
from traditional channels can only meet 50-60% of the funds needed.
Most importantly, the government has taken an aggressive stance in restructuring its state-owned enterprises
(SOEs, see 'Privatisation of SOEs Highly Positive For The Economy', January 8 2014). We believe this
restructuring is crucial in unlocking investment for infrastructure development in Vietnam. This is because
it could not only allow the Vietnamese government to raise funds for investment through the privatisation of
these SOEs, but also attract greater FDI due to a less protectionist investment climate. Vietnam's SOEs have
been a leading contributor of the misallocation of capital in the country, due to corruption and a lack of
competition and oversight. This has, in turn, resulted in mounting losses for public sector firms (see 'More
Restructuring To come For SOEs', September 26 2013). Due to these losses, a number of these SOEs are
unable to repay their debts, which the Vietnamese government is obliged to repay. This has undermined the
country's fiscal position and limited the government's ability to finance infrastructure projects.
Transport Infrastructure - Outlook And Overview

Table: Vietnam Transport Infrastructure Industry Data, 2012-2017
2012
2013e
2014f
2015f
2016f
2017f
Transport
Infrastructure Industry
Value As % Of Total
Infrastructure
65.5
64.9
64.6
64.4
64.1
63.8
Transport Infrastructure
Industry Value, VNDbn
38,444.5
42,086.3
46,256.9
50,903.2
55,831.7
61,030.7
Industry Value, US$bn
1.8
2.0
2.2
2.5
2.8
3.1
Industry Value Real
Growth (%)
-3.9
2.9
4.1
4.8
4.7
4.4
Industry Value As
Percent Of Total
Construction (%)
21.4
22.0
21.6
21.3
21.0
20.7
Roads and Bridges

Value As % of
50.1
50.7
51.2
51.9
52.5
52.8
Roads and Bridges

Value, VNDbn
19,274.3
21,321.2
23,702.6
26,396.8
29,296.8
32,232.9
Roads and Bridges

Value, US$bn
0.9
1.0
1.2
1.3
1.4
1.6
Page 23
Vietnam Transport Infrastructure Industry Data, 2012-2017 - Continued
2012
2013e
2014f
2015f
2016f
2017f
Roads and Bridges

Value Real Growth (%)
-6.6
4.0
5.4
6.1
6.0
5.1
Roads and Bridges

As % of Total
Infrastructure
32.9
32.9
33.1
33.4
33.7
33.7
Roads and Bridges

As % of Total
Construction
10.7
11.1
11.1
11.1
11.0
10.9
Railways Infrastructure
Industry Value As % of
24.3
24.1
23.7
23.4
23.0
22.8
9,343.3
10,143.6
10,978.2
11,886.6
12,844.9
13,911.9
0.4
0.5
0.5
0.6
0.6
0.7
Industry Value Real
Growth (%)
14.5
2.0
2.5
3.0
3.1
3.4
Industry As % of Total
Infrastructure
15.9
15.7
15.3
15.0
14.8
14.6
Construction
5.2
5.3
5.1
5.0
4.8
4.7
Airports Infrastructure
9.5
9.1
8.9
8.7
8.4
8.4
3,643.8
3,836.3
4,129.8
4,409.8
4,712.8
5,097.6
0.2
0.2
0.2
0.2
0.2
0.3
Industry Value Real
Growth (%)
-23.7
-1.3
1.9
1.5
1.9
3.3
Infrastructure
6.2
5.9
5.8
5.6
5.4
5.3
Construction
2.0
2.0
1.9
1.8
1.8
1.7
Ports Harbours and

Waterways
16.1
16.1
16.1
16.1
16.1
16.0
Page 24
Vietnam Transport Infrastructure Industry Data, 2012-2017 - Continued
2012
2013e
2014f
2015f
2016f
2017f
Ports Harbours and

Waterways
Value, VNDbn
6,183.1
6,785.3
7,446.4
8,210.0
8,977.3
9,788.2
Ports Harbours and

Waterways
Value, US$bn
0.3
0.3
0.4
0.4
0.4
0.5
Ports Harbours and

Waterways
-4.6
3.1
4.0
5.0
4.3
4.1
Ports Harbours and

Waterways
As % of Total
Infrastructure
10.5
10.5
10.4
10.4
10.3
10.2
Ports Harbours and

Waterways
As % of Total
Construction
3.4
3.5
3.5
3.4
3.4
3.3
Value As % of
Table: Vietnam Transport Infrastructure Long-Term Forecasts, 2018-2023
2018f
2019f
2020f
2021f
2022f
2023f
Transport
Value As % Of Total
Infrastructure
63.5
63.2
62.8
62.4
62.0
61.6
66,546.5
72,393.5
78,680.8
85,464.7
92,838.2
100,764.1
3.4
3.7
4.0
4.4
4.8
5.3
Industry Value Real
Growth (%)
4.1
4.0
3.9
3.9
3.9
3.9
Industry Value As
Percent Of Total
Construction (%)
20.3
20.0
19.6
19.2
18.9
18.5
Roads and Bridges

53.1
53.4
53.7
54.1
54.4
54.7
Page 25
Vietnam Transport Infrastructure Long-Term Forecasts, 2018-2023 - Continued
2018f
2019f
2020f
2021f
2022f
2023f
Roads and Bridges

Value, VNDbn
35,331.5
38,650.6
42,265.2
46,198.4
50,488.1
55,112.2
Roads and Bridges

Value, US$bn
1.8
2.0
2.2
2.4
2.6
2.9
Roads and Bridges

4.7
4.6
4.6
4.6
4.6
4.6
Roads and Bridges

As % of Total
Infrastructure
33.7
33.7
33.7
33.7
33.7
33.7
Roads and Bridges

As % of Total
Construction
10.8
10.7
10.5
10.4
10.3
10.1
22.6
22.5
22.4
22.2
22.1
21.9
15,071.8
16,282.5
17,585.2
18,966.5
20,478.5
22,113.3
0.8
0.8
0.9
1.0
1.1
1.2
Industry Value Real
Growth (%)
3.4
3.2
3.2
3.2
3.3
3.4
Infrastructure
14.4
14.2
14.0
13.9
13.7
13.5
Construction
4.6
4.5
4.4
4.3
4.2
4.1
8.3
8.3
8.2
8.2
8.2
8.2
5,524.8
5,982.1
6,477.7
7,013.4
7,603.1
8,253.0
0.3
0.3
0.3
0.4
0.4
0.4
Industry Value Real
Growth (%)
3.5
3.5
3.5
3.6
3.7
3.9
Value As % of
Page 26
Vietnam Transport Infrastructure Long-Term Forecasts, 2018-2023 - Continued
2018f
2019f
2020f
2021f
2022f
2023f
Infrastructure
5.3
5.2
5.2
5.1
5.1
5.0
Construction
1.7
1.6
1.6
1.6
1.5
1.5
Ports Harbours and

Waterways
Value As % of
16.0
15.9
15.7
15.5
15.4
15.2
Ports Harbours and

Waterways
Value, bn
10,618.4
11,478.4
12,352.7
13,286.5
14,268.6
15,285.6
Ports Harbours and

Waterways
Value, US$bn
0.5
0.6
0.6
0.7
0.7
0.8
Ports Harbours and

Waterways
3.6
3.3
2.8
2.9
2.7
2.5
Ports Harbours and

Waterways
As % of Total
Infrastructure
10.1
10.0
9.9
9.7
9.5
9.3
Ports Harbours and

Waterways
As % of Total
Construction
3.2
3.2
3.1
3.0
2.9
2.8
The transport sector forms the bulk of infrastructure investment pipeline in Vietnam across our 10-year
forecast period, expected to account for 60-65% in 2022. In part, this is because the country still suffers
from a significant deficit in transportation infrastructure and we believe the Vietnamese government will
continue to develop this sector over the medium term. As such, we expect the transport infrastructure
industry value to grow by an average of 4.5% year-on-year (y-o-y) between 2014 and 2017.
Page 27
Table: Competitiveness Of Vietnam's Infrastructure
Rank/133 in
2009/10
Rank/139 in
2010/11
Rank/142 in
2011/12
Rank/144 in
2012/13
Rank/148 in
2013/14
Quality of Roads
102
117
123
120
102
Quality of Railroad Infrastructure
58
59
71
68
58
Quality of Port Infrastructure
99
97
111
113
98
Quality of Air Transport Infrastructure
84
88
95
94
92
Quality of Overall Infrastructure
111
123
123
119
110
Source: World Economic Forum, Global Competitiveness Report
Roads Dominant
Transport Infrastructure Value By Industry, VNDbn
e/f = BMI estimate/forecast, Source: Vietnam General Statistics Office, Local news sources, industry sources, BMI (Major Projects
Database)
Roads
Within the transport infrastructure sector, the roads and bridges sub-sector leads in terms of contributions to
total transport infrastructure industry value, accounting for 50% of total value in 2013. Although most of
Page 28
Vietnam's national road network is paved (only 26%, or 46,650km out of 180,549km, is unpaved as of
2008), surveys indicated that approximately 40% of the network is in a poor or very poor condition and will
require substantial investment to reach a maintainable condition. Indeed, according to the World Bank's
2014 Efficient Logistics report on Vietnam, it cites that higher logistical costs compared to its peers such as
China and Thailand results in higher costs for businesses, and disruptions often force them to hold higher
levels of inventories. Vietnam's Ministry of Transport and Communications has estimated that the country
will require close to US$60bn in the period up to 2020 to fund new road infrastructure projects. Reaching
this investment target will be crucial to Vietnam's long-term economic wellbeing, as roads facilitate the
transport of most freight within the country, with a market share of around 60% of domestic cargo.
Combined with increased traffic levels in Vietnam's urban areas and growing trade volumes to and from the
country, there is a need for roads.
Over the past quarters, there have been several announcements regarding new road projects being planned such as the Phap Van-Cau Gie highway build-operate-transfer (BOT) project - or being developed in
Vietnam - such as the expansion of the NH-1A Cam Ranh City-Cam Lam District (Khanh Hoa province)
BOT project, the Danang-Quang Ngai expressway and the Ho Chi Minh City (HCMC)-Long Thanh-Dau
Giay Expressway.
However, there are still ongoing concerns about the viability of toll roads in Vietnam. Since February 2012,
the Vietnamese transport ministry has been unable to find any investor intending to purchase the right to
collect toll fees for the HCMC-Trung Luong expressway (as of August 2013). BIDV Expressway
Development Company (BEDC) had previously purchased the toll collection right for 25 years, but due to
financial constraints, the company had returned the project back to the government.
We believe that this lack of investment interest in one of the highways linking Vietnam's most economically
developed cities reflects our concerns about the viability of building toll roads in Vietnam.
Page 29
Costly To Build
Investment Cost of Expressways In Vietnam, US$mn per km
Source: Vietnam the Business Times (May 3 2012)
Part of this lack of viability is due to the high cost of construction for expressways within Vietnam.
According to an official report from the Ministry of Construction in September 2012, the cost of
constructing an expressway in Vietnam is about 1.5-2.0 times higher than comparable roads in China,
Europe and Africa. The HCMC-Trung Luong expressway, for example, costs around US$9.9mn per km,
higher than an average expressway in China (US$6mn/km) and the US (US$8mn/km).
We believe there are several factors contributing to this high construction cost for toll roads:
The lack of project management and technical expertise to complete road projects within budget,
resulting in site clearance delays and cost overruns. To resolve this problem, the transport ministry is
planning to classify investors and contractors into three grades, A, B and C, with companies at each grade
developing projects of the same grade.
Corruption, with anecdotal evidence suggesting that 30% of a project's value is pocketed by the
contractor in order to pay bribes to relevant parties.
Deficiency in regulations and government institutions that effectively balance the need to safeguard the
public interest with the need for expeditious provision of land for infrastructure development. The current
regulation - Decree 69/2009/ND-CP - only gives district-level people's committees, not the central
government, the right to hire companies to settle site clearance and compensation issues.
Page 30
Difficult geological conditions, as most of Vietnam's terrain is uneven.
A lack of specialised government institutions that can mediate between developers and landowners about
compensation. Combined with the perceived potential for corruption at the district level, these
deficiencies do not provide landowners with the assurance that they are receiving the fair amount of
compensation for their land. As a result, they are unwilling to sell their land, causing delays in site
clearances and cost overruns for road projects. Site clearances have been repeatedly reported by local
media sources as the key reason for holding up major road projects in Ho Chi Minh City (HCM City),
and they include the 14km Tan Son-Nhat Binh Loi outer ring road project, the 245km Noi Bai-Lao Cai
expressway, the 55km HCM City-Long Thanh-Dau Giay Highway and the widening of the Hanoi
Highway.
At the same time, businesses and commuters are unable to support higher toll rates. Together, these two
factors increase the difficulties for Vietnam to raise financing for several road projects. According to a
master transport plan for HCM City (approved by the government in April 2013), the city will upgrade or
expand five expressways - the HCM City-Long Thanh-Dau Giay expressway, the HCM City-Thu Dau
Mot-Chon Thanh expressway, the HCM City-Moc Bai expressway, the Ben Luc-Long Thanh expressway
and the Bien Hoa-Vung Tau expressway - and build five four-lane flyovers with a total length of 70.7km.
To finance these projects, the city will need VND45trn between 2013 and 2015.
To compound the problem, the Vietnamese government is heavily burdened by the debts of its stateowned enterprises (SOEs), and the need to repay this debt is limiting the government's ability to finance
infrastructure projects. For example, Vietnam Expressway Corporation is facing the risk of falling into
insolvency as it could be unable to pay its bond holders.
To secure financing for road development, the Ministry of Transport started collecting a fee for road
maintenance from the start of 2013. This is because a number of key roads, including the National
Highway 1A, are deteriorating rapidly and the government does not have sufficient funds to boost its
budget for road maintenance - the ministry estimates that it only meets 40% of the funds needed for road
maintenance. The government is also hiking toll fees for existing roads and implementing new toll
stations on certain expressways - Intellasia reported that transport costs in Vietnam would treble by 2015
when 21 new BOT toll stations on NH-1A are operational, plus a rise of 3.5 times in road fees.
These toll and fee increases came about after the Vietnam Ministry of Transport revealed at the end of
November 2012 that its original targets for highway construction between now and 2020 - 2,000km of
expressways completed and 3,000km under construction by 2020 - are not possible due to the
government's limited budget for roads and the lack of financing from the private sector.
We do highlight that financing from foreign sources for road projects has become increasingly
forthcoming. In March 2013, Japan and Vietnam exchanged a diplomatic note which stated that Japan
will finance 12 projects worth a combined US$2.2bn, mostly in transport infrastructure (such as the third
phase of the Nhat Tan Bridge and the second phase of a road project linking Noi Bai Airport with Nhat
Tan Bridge). In May 2013, Goldman Sachs, as leader of a lending syndicate, reached an agreement with
the BT 20 Joint Stock Company consortium to provide US$250mn for the rehabilitation (first phase) of
the 110km NH-20 under a BT format.
Besides NH-20, the Asian Development Bank had announced in August 2013 that it will provide a US
$410mn loan for the Vietnamese government to develop a new arterial road. The loan would help in the
construction of Second Southern Highway, which would connect Ho Chi Minh City in Southern Vietnam
to the Mekong Delta and southern coastal regions. The project involves the construction of access and
interconnecting roads totalling 26km, as well as two cable-stayed bridges with a combined length of 5km.
The US$860mn project would also receive a loan of US$260mn from the Export-Import Bank of
Korea, while the Vietnamese government would contribute US$56mn. Additionally, the Australian
Agency for International Development would grant AUD160mn (US$143mn) for the project.
Page 31
The Vietnamese government is also making progress with the use of public-private partnerships (PPPs)
for roads. On September 19 2013, the Vietnam Ministry of Transport (MOT) and the World Bank
completed the fourth and final investor conference for the US$757mn Dau Giay-Phan Thiet expressway
project. The conference was aimed at showcasing the 98.7km expressway to international investors
interested in becoming the project's secondary investor. In July 2013, the Vietnamese government had
selected Vietnam-based Binh Minh Import-Export Production and Trade Company (Bitexco) as the
primary developer of the 4-lane project, with Bitexco providing up to 60% of total equity investment and
the remaining 40% by the secondary investor. Bitexco can, however, dilute its share in favour of the
second investor during the construction. Since the road show, the Saigon Times reported that only seven
investors, out of more than 100 participants, submitted applications to MOT. While the investors have yet
to be made known, a report from the Philippines Star in mid-November noted that Hong Kong-based
investment firm First Pacific and Philippines-based Metro Pacific Investments were both interested in
the project.
The project is due to be awarded in the fourth quarter of 2014 under a 30-year Design, Build, Finance,
Operate, Maintain and Transfer concession. The project is expected to start construction in June 2015 and
be ready for commercial operations in January 2019. That said, we believe there are a number of issues,
such as the hostile business environment that investors have to contend with, which are likely to delay the
construction of the project.
The Dau Giay-Phan Thiet expressway project is also the first road project and the largest infrastructure
project to be developed under a public-private partnership (PPP) format in Vietnam. It therefore serves as
a reflection of the country's ability to implement infrastructure projects under a PPP framework and any
failures would be a significant blow to investor confidence. As such, the Vietnamese government has
taken several steps to ensure the project's bankability and that its PPP framework meets international
standards. The project is also set to enjoy the bulk of the incentives initiated by the Vietnamese
government to spur PPP infrastructure investment. This includes a non-refundable grant from Vietnam's
viability gap financing mechanism and assistance for tax, currency exchange, site clearances (land
acquisition cost will be carried out by the MOT and funded by the Vietnamese government) among
others.
Railways
Railways will account for close to 24% of Vietnam's total transport infrastructure industry value in 2014,
according to BMI's forecasts. Vietnam's rail network stretches for 2,632km, but only 527km is standard
gauge (1.435m gauge). The network has around 1,790 bridges totalling 45km and 11.5km of tunnels. The
principal axis is Hanoi-Ho Chi Minh City (1,726km). Other lines emanating from Hanoi are to Hai Phong
(102km), Lao Cai (296km) and Dong Dang (162km).
Vietnam had previously planned to build a US$56bn north-south high-speed railway line, but this was
rejected by the Vietnamese National Assembly in June 2010. The proposed project has since resurfaced,
with Japan announcing in September 2012 that it remains keen to assist Vietnam in building this northsouth high-speed railway line by 2030. In November 2013, an amended proposal was submitted, prepared
by the Japan International Cooperation Agency, proposes to upgrade the existing north-south rail route at
the cost of US$1.8bn before commencing building a new line, which will be pushed back to 2030. This
Page 32
differs slightly from an earlier proposal made in April 2013, in which state-owned Transport Engineering
Design Inc (TEDI) suggested that work on the north-south high-speed railway project in Vietnam should be
delayed and the focus should be shifted on upgrading the current north-south track. It further proposed that
the speed of the north-south high-speed train should be slowed down to 150-200km per hour from more
than 200km per hour, while the time frame for the development of the trans-Asia railway should be
reconsidered along with the rail lines connected to seaports, industrial zones and tourist sites.
There are still plans to build a high-speed railway line between Laos and Vietnam. The US$5bn high-speed
railway project, which is close to starting construction work, will span 220km from the Laos central
province of Savannakhet to the Lao Bao border gate of neighbouring Vietnam and is expected to be
operational in the next five years.
Table: Vietnam Railway Corporation's Main Targets
Upgrading north-south railway routes and improving the running speed of passenger trains and freight trains to
100-120kph and 100kph respectively.
Upgrading west-east railway corridor so that the maximum speed of passenger trains and freight trains is 80-100kph
and 60-80kph respectively.
Paying more attention to the development of new routes between Ho Chi Minh City-Vung Tau, Ho Chi Minh City-Can
Tho, Thap Cham-DaLat, Yen Bai-Tuyen Quang-Bac Thai, Lien Chieu-Dung Quat, etc.
Carrying out surveys and preparing to link the railway network to Singapore-Kunming route is aimed at fulfilling
missing links such as Ho Chi Minh City-Phnom Penh city and Cambodia-Vietnam.
Source: Vietnam Railways
Instead of a high-speed railway line, the government is looking to increase the speed of the existing normalgauge north-south railway line. In April 2013, the Ministry of Transport said that it had assigned the
Vietnam Railway Corporation to make a detailed plan to increase the speed of the line from 90km/h to
200km/h. This could be done in two phases. The first phase would increase the speed of the line from 90km/
h to 110km/h, while the second phase would involve the construction of a new double-track standard gauge
line that increases the line's speed to 220km/h.
The government is also looking to improve its existing railway network. In March 2013, the Ministry of
Transport said that between 2013 and 2020, the Vietnam Railway Corporation needed to focus on
improving the existing railway system and building several new 1,435mm gauge dual track lines along the
existing 1,726km north-south (Ngoc Hoi-Phu Ly) railway line. Under the amended planning the railway
Page 33
sector would require around VND365.242trn (US$17.4bn) to 2020 for upgrading six existing lines, putting
into place three new arterial routes, including some lines heading seaports, economic zones and tourist sites.
Amendments relating to Vietnam's railway development planning to 2020, with a vision toward 2030 (2009
planning), have been reported by the Vietnam Railway Administration (VRA) to the Ministry of Transport
in April 2013. According to a proposal from the consultancy unit that is tasked with amending the 2009
planning, Vietnam will weigh up the construction of a trial electrified 1,435mm Ngoc Hoi-Phu Ly gauge
dual-track line, with a velocity ranging from 160km to 200km per hour. Overhauling the existing 1,726km
north-south railway is estimated to require a total investment of VND39.87trn (US$1.9bn). Of the total, the
capital demand to 2020 is set at VND18.61trn (US$886mn).
By 2015, Hanoi Railway Station is expected to emerge as the centre of the country's system. The station
will join the other means of transport and boast a multi-functional service centre. The upgraded facilities
and services are to have an annual transportation capacity of 13.7mn tonnes of freight and 17.7mn
passengers.
However, just like the roads, the railway sector suffers from a lack of financing. In October 2012 the deputy
director of the railway administration, Nguyen Van Doanh, said that a total of 20 railway projects were
earlier recommended by the VRA to be developed under the forms of BOT, build-transfer and buildtransfer-operate. This list of projects was submitted to the Ministry of Transport in early 2010, but a lack of
investors prevented them from starting. Among the 20 railway projects calling for investment in 2010-2020,
they include the 381km Lao Cai-Hanoi-Hai Phong railway line, the 114km Bien Hoa-Vung Tau route and
the 49km railway connecting Trang Bom in Dong Nai with Hoa Hung in HCM City.
Urban Railways
As most of the railway projects in Vietnam are at an early stage, we believe that it would be urban railway
projects that will drive our railways infrastructure industry value forecasts over the short to-medium term.
We believe these urban railway projects will be crucial to Vietnam's economic and social development, as
the country attempts to deal with rapid urbanisation, while successfully managing a booming economy. The
combination of rising urbanisation and steady population growth is exerting considerable pressure on
Vietnam's urban transportation systems. This urbanisation trend is felt acutely in Hoh Chi Minh City and
Hanoi, the country's largest cities and chief commercial hubs. Both cities are home to approximately 16% of
the country's total population and traffic conditions have worsened. Congestion occurs frequently at road
junctions during rush hour and average traffic speeds vary from around 10-30km/h in both cities. There is
much scope for traffic conditions to worsen further. Not only could there be a fundamental shift to cars due
Page 34
to rising incomes - for example, 90% of the vehicles in HCM City are motorcycles - but Vietnam is also
looking to accelerate the urbanisation rate in the country. According to a draft national urban development
programme approved by the government in June 2012, Vietnam will strive to achieve an urbanisation rate
of 38% with 870 urban areas by 2015, and 45% with 940 urban areas by 2020. The country is estimated to
currently have an urbanisation rate of 30%.
The development of an urban railway system will therefore help alleviate many of the problems associated
with congestion. No other system can carry more people and run on such a dependable schedule at a lower
cost, and we expect Vietnam to continue to push forward with urban railway projects. As of May 2012, the
government transport plan for Hanoi to 2030 includes eight urban railways, with a total length of 284km,
and six subway lines, linking key parts of Hanoi and its outlying areas. Meanwhile, Ho Chi Minh City aims
to complete around six metro lines with a total length of 120km by 2020.
Some of these urban railway plans have moved forward (such as Ho Chi Minh City's Ben Thanh-Suoi Tien
Metro line 1, the underground section of the Metro line 2), but just like the roads sector, several have also
faced delays. This is because they are suffering from slow site clearances (such as the Cat Linh Street-Ha
Dong District railway line in Hanoi, which is two years behind schedule), cost overruns (such as the NhonHanoi Station urban railway line No. 3), the lack of a legal framework, a lack of proper planning for
underground space and integration with other transport modes, and the lack of skilled labour.
The sector is also heavily reliant on financing, mainly official development assistance loans, from several
foreign countries and multinational development banks. This has caused delays as to access these loans
Vietnam needs to conform to the regulations of all its donors, making it difficult to coordinate construction
work for the projects. In addition, European banks are set to face difficult economic conditions and stricter
capital controls over the coming years. This could lead to a decline in European financing for Vietnamese
projects and has already transpired, with the Spanish government announcing in late November 2012 that it
would only provide 40% of the financing it had initially promised for an urban railway project in Ho Chi
Minh City (the Metro Line No.5).
Having said that, some lenders remain keen to provide funds for Vietnam's urban railway sector. In March
2013, Japan and Vietnam exchanged a diplomatic note, under which Japan agreed to finance 12 local
projects such as the first phase of the Hanoi urban railway line 1 (Gia Lam-Giap Bat).
Officials from the Ho Chi Minh City administration also pointed out in March 2013 that the Asian
Development Bank (ADB) and the European Investment Bank (EIB) will provide a combined US$735mn
for the Metro Line No.2. The loan agreement for the Metro Line No.2 was signed in July 2013. Line 5 of
Page 35
the Ho Chi Minh metro system will be financed by three international organisations, according to the
Railway Gazette. The Asian Development Bank, the European Investment Bank and the Spanish
government will provide US$500mn, EUR150mn (US$206mn) and EUR200mn (US$275mn) respectively,
to construct in 2015 the first 8.9km of the line that is slated to run between Sai Gon Bridge and the Bay
Hien Intersection.
Ports
Although roads and railways are dominating transport infrastructure, we highlight that ports, harbours and
waterways will see their share increase significantly over the coming years. Vietnam's dense river and canal
network - which measures 17,702km - provides the country with a highly developed inland waterway
system, but its port infrastructure is poor by international standards. The main ports currently in operations
are the Cam Pha Port, Da Nang, Haiphong, Ho Chi Minh, Phu My and Quy Nhon.
Vietnam's seaport network comprises many small and medium-sized entities, with inefficient distribution.
Most ports in the northern part of Vietnam are dispersed and small in scale, while most big ports are located
on rivers, such as Hai Phong and Ho Chi Minh City, with limited depth at the entrance. Some ports are
located in big cities, thus making it difficult to connect with other modes of transport due to traffic
congestion. With the exception of several new or upgraded ports, most have been operating for many years
and lack investment. The loading and unloading equipment in some ports is obsolete, leading to low
productivity. The average productivity of a Vietnamese port is only 2,500 tonnes/m per wharf, which is less
than half of the productivity of other ports in the region. As of January 2013, Vietnam was home to 266
large and small-scale seaports, but only nine ports are able to handle 50,000-deadweight tonne (dwt) ships.
Activity in the maritime sector is mainly concentrated on boosting the capacity of the southern economic
zone, especially in the Thi Vai River area. Major global port operators with interests in the region include
Hutchison Port Holdings, Singapore's PSA International, Saigon Port, Denmark's Maersk and France's
Compagnie Maritime d'Affrtement-Compagnie Gnrale Maritime (CMA CGM). These companies
have all been involved in the operation and development of major Vietnamese ports in the Thi Vai River.
BMI anticipates increasing investment into Vietnam's port infrastructure over the long term, as it is a sector
crucial to the country's economic growth. There are two major factors central to our view:
The country needs to upgrade its ports to avoid major bottlenecks, which would constrain the country's
export-led growth and investment. Vietnam's port infrastructure ranked only 113th in the 2012/13
competitiveness report published by the World Economic Forum.
Page 36
Vietnam is becoming increasingly important, not just to growing Intra-Asian trade but also on the global
stage. An increasing number of shipping companies are choosing Vietnam as their port of call as they ply
the east-west trade route. Vietnam's ports are gradually graduating from feeder stop-offs on the major
routes to boasting direct services on both the Asia-US and Asia-Europe services.
Vietnam is keen to address this deficit, but lacks the necessary fiscal strength to meet the required
investment. This keenness to meet this deficit has also been dampened recently due to feeble external
demand. The slowdown in global economic activity in 2012 and 2013 had dampened the demand for
Vietnamese goods and minerals, resulting in a glut in port capacity, particularly with deep-sea ports in
South Vietnam. This glut has become so serious that in August 2013, Vietnam's transport ministry
announced that it will not issue any licences for the construction of new container ports in Ba Ria-Vung
Tau, Ho Chi Minh City and Dong Nai until 2015. This comes as ports in Cai Mep-Thi Vai have been
carrying out operations at far below capacity. This forms part of measures by the government to enhance
operation efficiency of the port system in the three localities. Meanwhile, the government has also decided
not to expand existing ports in HCM City to move goods to Cai Mep-Thi Vai. The ministry will consider
granting permission for new ports only after 2015, depending on market demand.
Vinacomin also decided to suspend the construction of the Ke Ga deepwater port in the Binh Thuan
province, according to Vinacomin General Director Le Minh Chuan in February 2013. The company took
the decision due to a cut in bauxite production. The port was scheduled to receive bauxite from mines in
Tay Nguyen, with an annual capacity of up to 3.5mn tonnes by 2015, 17.5mn tonnes by 2020, 27mn tonnes
by 2025 and 37mn tonnes by 2030. However, the output of bauxite at Tan Rai and Nhan Co alumina
projects in Dak Nong Province is low and may reach only 1.3mn tonnes.
Besides Vinacomin, Vinalines is also selling stakes in four of its ports - namely Hai Phong, Da Nang,
Quang Ninh, Saigon and Quy Nhon - between 2013 and 2014 to pare down its high level of debts, which
were brought on by investment in under-performing ports.
As a result, Vietnam had adjusted its port development plans at the start of January 2013, with the Vietnam
Maritime Administration announcing that it would only focus on building large deep-sea ports in Hai
Phong's Lach Huyen and Ba Ria-Vung Tau's Cai Mep - Thi Vai port complexes. The administration will
also focus on converting the remaining ports in the central region and the Mekong Delta into special-use
ports to transport materials for thermo-power plants. Small ports that had been planned for development
will not be put into this time's zoning plan if they are not in urgent need.
This plan appears to be taking place, with only the Lach Huyen port project starting construction works in
April 2013. The port is scheduled to be built in two phases, with the first phase entailing the construction of
Page 37
port infrastructure, while the second phase will include the construction of two 750m wharves capable of
handling 100,000-tonne container ships. The Vietnam Maritime Administration will manage the first phase,
involving an investment of more than VND18.6trn (US$885mn), while a joint venture of Vietnamese and
Japanese enterprises will manage the second phase worth more than VND6.57trn (US$315mn). The port,
due for completion in 2016, will have modern cargo handling equipment. It will be capable of handling
container ships of up to 8,000 twenty-foot equivalent units (TEUs).
Vietnam's difficult business environment could continue to slow project implementation. In July 2011,
construction work on the US$3.6bn Van Phong International Port in Vietnam's southern central province of
Khanh Hoa was suspended, because initial feasibility studies for the port project did not sufficiently assess
the site's geology. This resulted in inconsistencies in pile design during the construction phase. Although the
project investor Vinalines had signed a deal with Netherlands-based Rotterdam Port for the port's
construction, the lack of financial strength in Vinalines has finally forced the government to suspend the
project in September 2012. In June 2013 the management of the Van Phong Economic Zone cancelled the
investment licence, held by Vinalines, to build Van Phong International Port project. Vinalines is required
to complete all procedures to liquidate the project within H114.
Another business environment issue that is hindering the growth of the port sub-sector is the lack of
coordination in developing the different types of infrastructure (roads, ports, airports, railways). Two ports
in Ho Chi Minh City - the US$17.5mn Phu Huu Port and the US$19.1mn Phu Dinh Port - have been left
unused for several years due to lack of access to key roads. These ports are connected to streets that are
either often flooded, too narrow for container trucks or lack access to highways. This could remain an issue
for other ports currently being developed. The VND2.73trn Saigon-Hiep Phuoc port was scheduled to be
completed by 2014, but as of March 2013, a harbour bridge and port routes to connect it with main
highways and roads have yet to materialise:
A shortage of qualified logistics staff is a problem, where, according to the Vietnam Freight Forwarders
Association (July 2012), only 40% of the demand for qualified logistics staff is met.
A lack of proper planning is also an issue. According to the Vietnam Seaports Association in January
2013, seaport zoning plans of Vietnam are yet to be synchronic and have still failed to meet rising sea
transport demand due to a disproportional focus on the construction of small ports, which are inefficient
in meet Vietnam's transhipment needs.
The government has also been slow in implementing regulations that support the development of a PPP
framework for port projects. A PPP framework has been on the cards for several years but has yet to be
developed, with investors still seeking incentives from the government to attract PPP investment in
August 2012.
Access to financing remains an issue, despite a sharp decline in Vietnam's interest rates. This is partially
due to Vietnam's financial regulations and the decline in government investment.
Page 38
In June 2012, Formosa Plastics Group (FPG) was reported to be facing difficulties in obtaining funds for
its steel and seaport project in Vietnam's Central Ha Tinh province. This is due to lending limitations at
foreign bank branches in Vietnam, as a foreign bank is not permitted to lend more than 15% of its own
equity for a single borrower.
During December 2012, Saigon Port Company Deputy Director Huynh Van Cuong said that the Saigon Port
relocation project has not made any considerable progress due to capital shortages. The relocation work is
moving at a slow pace despite financial assistance from the Vietnamese government. The Hiep Phuoc Port
construction project is required to be finished first in order to relocate the Saigon Port from Ho Chi Minh
City; however, construction work is only 38% completed.
There are still foreign companies keen on entering Vietnam's port sector. In June 2013, Australia-based
N&M Commodities unveiled plans to develop a US$3.5bn deep-sea port on Hon Khoai Island, Ca Mau
province. The company was completing the necessary administrative procedures for the project, which is
expected to start construction works at the end of 2016. Once completed, the Hon Khoai Seaport is expected
to become the gateway to the Mekong Delta and HCM City.
Airports
Although the airport infrastructure sub-sector accounts for the smallest portion of transport infrastructure,
the government has ambitious plans to modernise and expand the country's airport infrastructure, which
consists of 44 airports. The government's initial plans were to develop 10 international airports by 2020:
Noi Bai, Cat Bi, Phu Bai, Danang, Chu Lai, Cam Ranh, Tan Son Nhat, Long Thanh, Can Tho and Phu
Quoc; and 16 domestic airports in the same timeframe, which includes Dien Bien Phu, Na San, Lao Cai,
Quang Ninh, Gia Lam, Vinh, Dong Hoi, Phu Cat, Tuy Hoa, Pleiku, Buon Ma Thuot, Lien Khuong, Rach
Gia, Ca Mau, Con Son and Vung Tau.
This willingness by the government to get projects under way for the private sector (although this is
partially due to a lack of public funds) provides grounds for optimism and this has attracted foreign
investors to the sector. In April 2011, US-based ADC-HAS Airports presented a proposal to the
Vietnamese Ministry of Planning and Investment with regard to investing in seven airports in the country's
central region - Chu Lai, Phu Bai, Da Nang, Tuy Hoa, Quy Nhon, Pleiku and Cam Ranh airports. This plan
is still in the works. In August 2012, ADC-HAS Airports suggested a plan to develop the Chu Lai airport
into an industrial airport, while the Khanh Hoa provincial government was seeking permission for a plan to
develop the Cam Ranh airport with ADC-HAS Airports and Vietnam Airlines (VAC). ADC-HAS Airports
Page 39
is also interested in developing the Da Nang airport with VAC. In April 2013, the Airports Corporation of
Vietnam (ACV) tasked Parsons Brinckerhoff with investigating the potential to develop the Chu Lai
airport into a regional cargo hub. The study was funded by a grant from the US Trade and Development
Agency. In June 2013, ADC-HAS Airports reiterated its interest in expanding the Cam Ranh Airport and
Danang airport.
However, the lack of demand for air travel in the near term and the stiff competition from other airports in
Asia to serve as regional hubs could make it difficult for these new airports to be financially viable.
Since early 2012, Vietnam has announced that it was in the search for foreign investors to help construct
two international airports: the US$1.2bn Van Don International airport in the northern province of Quang
Ninh and the US$10bn Long Thanh International airport in the southern province of Dong Nai. The two
airports are part of a strategy to compete with neighbouring airports in Thailand and Singapore. According
to Nguyen Cong Hoan, a director for the Vietnamese airport operator ACV, foreign investors have already
expressed interest in the Van Don airport, with South Korean investors being highlighted as one of the
interested parties in late-2012. Interested investors were due to complete project documents and submit
them to provincial and central agencies in November 2012.
The Long Thanh airport, approved in 2011, also appears to be making some progress, albeit slowly. In
March 2013, the provincial government of Dong Nai disclosed a development plan for the area surrounding
Long Thanh International Airport. The government plans to develop a tourism complex, several industrial
clusters and world-class sporting, education and healthcare venues in the 21,000-hectare (ha) area. The plan
entails the development of 12 communes in Long Thanh and Cam My districts in the area, excluding the
5,000ha zoned for the terminal, by 2025. The northern part of the airport covering 5,720ha will boast
condominiums for aviation employees and locals, while the southern area covering about 4,400ha will boast
an international transhipment centre, a supporting industrial park and an area zoned for fruit farms and
industrial plants. The plan is likely to be implemented in three phases during 2012-2025, with land
acquisition estimated to cost VND10trn as of March 2013.
The terminal will also be developed in three phases, starting from 2015. The first phase (2015-2020)
requires US$5.6bn for the construction of two runways, taxiways, aircraft parking zones and two terminals
with an annual handling capacity of 25mn passengers and 1.2mn tonnes of cargo. The second phase
(2020-2030) involves the construction of a third runway and the increase in passenger handling capacity by
50%, while cargo handling capacity is increased to 1.5mn tonnes per annum. The third phase (2030-)
Page 40
involves the construction of a fourth runway and the increase in passenger and cargo handling capacity to
100mn passengers and 5mn tonnes of cargo per annum.
Both airports are part of the government's strategy to develop as many as six international airports, which
include locations such as Cam Ranh, Chu Lai, Danang and Hue. The Long Thanh airport is the centrepiece
of this expansion, as it is the largest greenfield airport project in Vietnam (and possibly in Asia), with an
eventual annual passenger capacity of 100mn per annum, a 5mn tonne cargo capacity and four runways.
While there are compelling factors driving the government to build new airports - to meet a growing
demand to travel within Vietnam's population and to unlock the growth potential of its tourism sector these airports could struggle to be financially viable if their aim is to serve as regional transit hubs. Not only
is there a lot of competition from other airports in Asia to serve as regional hubs, but these airports already
have well established airlines using them as their main point of transit.
Several airports in Vietnam, particularly in the central provinces, were already operating way below
capacity, despite the rapid rise in tourists. The Dong Hoi airport incurred losses of VND6.9bn (US
$332,000) in 2010 and VND9bn (US$432,000) in 2011. This suggests that the demand for new airports is
not broad-based throughout Vietnam, with air traffic in certain regions still immature.
Another reason for this lack of usage could be due to the small number of runways that are able to handle
international flights. Most of the international flights in Vietnam are handled by just three of the country's
21 airports, while only nine of these have runways with a length of more than 3,047m, which is a standard
requirement to handle international flights for wide-body aircraft. This suggests that Vietnam could need to
upgrade the runways in its existing airports, rather than construct new airports. As of September 2012,
Vietnam continues to find difficulty in securing financing for its airport projects and is still seeking
investment capital from different sources.
The government has since recognised this lack of financial viability for some of these proposed airports and
is shifting its focus on a few key airports such as Noi Bai, Danang and Long Thanh. The smaller airports
such as Lao Cai, Lai Chau and Quang Ninh could be developed after 2020, according to official from the
ministry of Transport in April 2013.
Page 41
Major Projects Table - Transport
Table: Major Projects - Transport
Value (US
$mn)
Capacity/
Length
Companies
Timeframe
Status
Vietnam Railway
Corporation (VRC),
Japan International
Cooperation Agency
(JICA)
-2025
At planning stage
(November 2013 Project re-proposed)
Civil Aviation
Administration of
Vietnam (CAAV)
-2020
At planning stage
-2020
Announced (January
2012)
-2020
At planning stage (April

2013)
3,183km
-2020
Under construction
(October 2013 Transport Minister has
sought an additional
US$3.1bn for project;
First phase completed;
Second phase under
construction and to be
completed by 2015,
with third phase to
complete in 2020)
Six-lane Nha Trang City

[Khanh Hoa Province] Phan Thiet City [Binh Thuan 3,500
Province] PPP Expressway
Project
235km
-2020
Feasibility studies/EIA
underway (August
2012)
Urban Railway Line No. 1

(Giap Bat-Gia Lam), Hanoi
15.36km
Vietnam Railway
Corporation (VRC)
-2019
In tender/Tender
launched (July 2013)
Urban Mass Rapid Transit

Project - Railway Line No. 2,
Nam Thang Long-Tran Hung
Dao, Hanoi
11.54km
Hanoi Urban Railway

Management Board
-2018
At planning stage (July

2013 - Construction
yet to begin)
57.8km
Asian Development
Bank (ADB)[Financier],
Vietnam Expressway
Corporation, Japan
International
Cooperation Agency
(JICA)[Sponsor]
-2016
Contract Awarded
(January 2013 Construction Expected
to start soon)
14.5km
Deo Ca Investment
-2016
Under construction
(October 2013 Project is running one
Project Name
Airports
North-South High-Speed
Railway Project
Pleiku Airport Upgradation
Project (Phase 1), Gia Lai
56,000
35
0.33mn
passengers/
yr
Lao Cai International Airport 61.9
North-South (Ho Chi Minh

City - Hanoi) railway
rehabilitation project
1,800
1,726km
Vietnam Railway
Corporation (VRC),
Japan International
Cooperation Agency
(JICA)
Ho Chi Minh Road, NH-2

(Pac Bo - Dat Mui)
Ben Luc-Long Thanh

Expressway - Part of NorthSouth Highway
Ca Pass tunnel (Phu Yen
and Khanh Hoa provinces)
742.8
Page 42
Major Projects - Transport - Continued
Project Name
Value (US
$mn)
Capacity/
Length
Companies
Timeframe
Status
year behind schedule
(Delayed))
-2016
Under construction
(March 2013 - The
Ministry of Transport
(MoT) said that it will
put forth its best
efforts to finish the
upgrade)
2015-2030
At planning stage
(October 2013 - Work
will include second
runway and
upgradation of first
runway)
2015-2020
Long Thanh International

Airport, Phase 1
At planning stage
(October 2013 - Work
includes two runways,
taxiways, parking area,
operation
management area, air
traffic management
area, auxiliary area and
passenger terminal)
Quang Ninh International

Airport (Phase1), Doan Ket
commune, Van Don region,
Quang Ninh province
Six-lane road widening BOT 6,000

project, Hanoi - Can Tho
section, part of 2300km
National Highway 1
214.3
Cam Ranh International
Airport Expansion Project
7,200
Metro line 5 (Saigon Bridge

[District 2] - Bay Hien
Intersection [Tan Binh
District] - Can Giuoc Bus
Station [District 8]), Ho Chi
Minh City
Quang Tri Airport (new
terminal)
166
1,850
1887km
Government of
Vietnam[Sponsor]
5.5mn
passengers/
yr
25mn
passengers/
yr
Airports Corporation of
Vietnam, Japan Airport
Consultants
2mn
passengers/
yr
Korea Airports
Corporation (KAC),
Joinus Ltd
2015-2020

2013 - Joinus Ltd has
proposed switching
from BOT model to
PPP investment
approach)
17km
Ho Chi Minh City Urban

Railway Management
Board, Spanish
government[Sponsor],
2015-2016
Idom Ingenieria
Consultoria, GEV Corp,
Asian Development
Bank (ADB)[Sponsor]
Project finance closure

(November 2013- US
$260mn from ADB, US
$206 from EIB, US
$275 from Spanish
government;
Construction to begin
in 2015)
27
-2015
At planning stage
(February 2009Approved)
-2015
Announced (October
2013 - Work includes
two present runways
to 4,000m long, a
passenger terminal)
2.3mn
passengers/
yr
China Civil Aviation

Administration
Ke Ga deep-water port
(three-phase), Tan Thanh
Commune, Ham Thuan Nam 1,000
District, Binh Thuan
Province
3,500,000
tonnes
Vietnam Coal and

Mineral Industries (TKV) -2015
Delayed (November
2013 - construction
halted due to
reduction in bauxite
production)
Phan Thiet airport, Binh

Thuan province
0.5mn
passengers/
yr
Rang Dong Group
Approved (October
2013)
Chu Lai International Airport 190

Upgradation Project, Phase
1
50
2014-2020
Page 43
Project Name
Value (US
$mn)
Capacity/
Length
Companies
Da Nang International
Airport terminal expansion
64.5
6mn
passengers/
yr
Da Nang International
Airport
20km
HCMC Management
Authority, Asian
Development Bank
(ADB)[Sponsor]
11.2km
Obermeyer Planen &

Beraten, Tedi South,
European Investment
Bank (EIB)[Financier],
Poyry, Asian
Development Bank
(ADB)[Financier], Asian
Development Bank
(ADB)
Underground MRT Section

(Thu Thiem New Urban Area
[District 2] - An Suong
Coach Station [District 12]), 1,370
part of Mass Rapid Transit
(MRT) - Line 2
1,110
Metro line 2 Phase-1 (Ben
Thanh [District 1] - Tham
Luong [District 12])
Monorail Line 3 (between

Quang Trung street to Tan
Thoi Hiep ward) PPP
Project, Ho Chi Minh City
200
Timeframe
Status
Completed (Opening
on May 2011)
2014-2018

2013)
2014-2017

(Project has secured a
loan worth US$500
million from the Asian
Development Bank
(ADB))
8.5km
European Investment
Bank (EIB), Asian
Development Bank
(ADB), Italian Thai
Development (ITD)
-2014
Contract Awarded
(September 2012 MoU signed between
Italian Thai
Development
Company and
Management Authority
for Urban Railways of
Ho Chi Minh City)
32.3km
Transport Engineering
Design Incorporated
(TEDI), Cuu Long CIPM,
African Development
Bank, Japan
-2014
International
Cooperation Agency
(JICA), Korea
Development Bank

(April 2012 - Seeking
finance)
98.7km
Binh Minh Import Export

Production and Trading 2013-2020
Group (Bitexco)
In tender/Tender
launched (July 2013 Project attracted the
interest of many
investors)
2013-2019
Under construction
(The tender
announcement of the
initial procurement
package for
international
competitive bidding is
due in July 2013)
Ports
My Thuan-Can Tho
Expressway Project,
Southwest Vietnam
Six-lane Dau Giay-Phan
Thiet expressway PPP
project (parallal to NH-1),
Dong Nai Province
750
1,070
15km
Hanoi Urban Railway Line 1

(Gia Lam - Hanoi railway
station - Ngoc Hoi), Hanoi
Da Nang Port Upgrade

Project - Phase 2, Tien Sa
Port
350
Japan International
Cooperation Agency
(JICA), Japan Overseas
Coastal Area
2013-2018
Development Institute
(ACDI), Japan Port
Consultants Ltd (JPC),
At planning stage
(October 2013 Planning underway;
Seeking ODA funds
from JICA)
Page 44
Project Name
Value (US
$mn)
Capacity/
Length
Companies
Timeframe
Status
Japan Transport
Cooperation
Association (JTCA)
19.7km
Under construction
(August 2013Construction to begin
in Q4 2013)
Metro line 1 (Ben Thanh

Market [District 1] - Suoi
Tien [outlying District 9]), Ho
Chi Minh City
Hitachi[Equipment],
SABMiller, Vincom Joint
Stock
Company[Sponsor],
Traffic Works
Construction
Corporation No. 6
(Cienco 6)
2013-2017
[Construction],
Sumitomo[Construction]
, European Investment
Bank (EIB)[Financier],
GS Engineering &
Construction
Corporation[Constrution
]
2.9km
Under construction
(September 2013 Construction begins)
Vam Cong Bridge
Australian Agency for

International
Development (AusAID),
Asian Development
2013-2017
Bank (ADB),
Government of Vietnam,
Export-Import Bank of
Korea (Eximbank)
1,400
139.52km
Under construction
Da Nang-Quang Ngai
Expressway Project (DQEP)
Project Management
Unit 85, Nippon
Engineering
Consultants, Chodai
and Thai Engineering
Consultants, Nippon
2013-2017
Koei Group, Japan
International
Cooperation Agency
(JICA)[Financier], World
Bank[Financier]
860
26km
Korea Exim
Bank[Financier], Asian
Development Bank
(ADB)[Financier]
2013-2017

(August 2013 - US
$410mn financing from
ADB secured)
19.8km
How Yu Construction
Vietnam Company
Limited
2013-2016
Under construction
(October 2013 construction started,
project is a part of Ha
Long - Hai Phong
Highway project (25.2))
2013-2016
At planning stage
(Project is a part of Ha
Long - Hai Phong
Highway project
(25.2km))
2013-2015
Under construction
(March 2013)
2,070
271
Central Mekong Delta

Region Connectivity Project
278
Ha Long city - Bach Dang
bridge road
4.3km
SE Group Inc
Bach Dang Which Bridge

Cat Bi international airport
(first phase) upgrading
project, Haiphong, Northern 170
Vietnam
2mn
passengers/
yr
Page 45
Project Name
Value (US
$mn)
Capacity/
Length
Van Don International

Airport (Phase 1), Quang
Ninh province
Curzon Group, Airports

Corporation of Vietnam
Lach Huyen deepwater port 1,200

two-phase PPP project (four
container wharves), Hai
Phong province, east of
Hanoi
Ha Long City - Mong Cai

City expressway project,
part of Noi Bai - Halong Mong Cai expressway,
Quang Ninh province
Hue Junction Multi-level
Flyover Project, Da Nang
City
Companies
2,100
Timeframe
Status
2013-2015
Contract Awarded
(October 2013, total
project cost is USD 1.2
bn)
Japan ODA (Official

Development
Assistance), Vietnam
60,000,000
National Shipping Lines
tonnes
(Vinalines), Molyto,
2013-2015
(900,000 TEU Mitsui O.S.K. Lines
)
(MOL), Nippon Yussen
Kaisha (NYK), Itochu,
Saigon Newport
Corporation
132km
Italian Thai
Development (ITD)
85.8
Under construction
(April 2013)
2013-2015
At planning stage
(March 2013 - Work
could start from Q2
2013, project is a part
of Noi Bai - Halong Mong Cai expressway,
Quang Ninh province)
2013-2015
Under construction
(September 2013)
2013-2014
Under construction
(April 2013 - Ground
breaking ceremony
held)
12,000,000
tonnes
Electricity of Vietnam
(EVN), China
Communications
Construction Company
(CCCC)
5mn
passengers/
yr
Middle Airports
Corporation
2013-2013
Completed
(September 2013 Airport reopened after
upgrade works of six
months)
15.63km
2013-
Tan Vu-Lach Huyen

Expressway Project (Part of
Lach Huyen Port Project)
Japan Bridge &

Structure Institute
Inc(JBSI), Nippon Koei
Group, Oriental
Consultants, Japan
ODA (Official
Development
Assistance)[Sponsor]
Contract Awarded
(May 2013)
-2013
Under construction
(May 2012)
Ho Chi Minh City - Long

Thanh - Dau Giay Highway
Japan International
Cooperation Agency
(JICA), Vietnam
Expressway
Corporation, Asian
Development Bank
(ADB), Ministry of
Transport of Vietnam
Two-Phase Shipyard Project

- Phase I, Thinh Dong
Commune, Cam Ranh city
Oshima Shipbuilding
company, Department
of Investment and
Planning - Khanh Hoa
Province
2012-2016
At planning stage
(June 2012 Investment license
granted; Total project
cost estimated at US$
180 million)
Port Project in Duyen Hai

Electricity Center, Tra Vinh
province
200
Phu Bai International Airport 28.2

(Upgrade), Thu Thien-Hue
Province
568
Page 46
Project Name
Ca pass tunnel BOT project

(Dong Hoa [Phu Yen
province] - Van Ninh [Khanh
Hoa province] section), part
of National Highway 1A
Value (US
$mn)
Capacity/
Length
Companies
14.5km
VietinBank[Sponsor],
Societe
Generale[Sponsor],
Credit Agricole
CIB[Sponsor], Deo
Ca Investment[Sponsor] 2012-2016
, BOT Hai Thach
Investment[Sponsor],
Hanoi Construction
Corp, Mai Linh Group
JSC
Under construction
(November 2012 Financial closure
reached)
Mai Linh Group JSC,

Hanoi Construction
Corp, BOT Hai Thach
Investment, Deo Ca
Investment
2012-2016
Under construction
(January 2013;
Additional funding
provided by Credit
Agricole Corporate
and Investment Bank,
Societe Generale Bank
and Goldman Sachs)
9,300
Vietnam Railway
Corporation (VRC)
2012-2015
Approved (June 2012Received government

approval, preparations
being finalised)
169
15.3km
China Guangzhou
International Economic
& Technical
Cooperation Co.,
Vietnam Infrastructure
Development and
Finance Investment
Joint Stock Company
(VIDIFI), Guangdong
Provincial Changda
Highway Engineering
2012-2015
Under construction
(September 2011)
40km
Development and
Finance Investment
Joint Stock Company
(VIDIFI)
2012-2015
Contract Awarded
(September 2011 EX5 awarded by
VIDIFI, EX4 & EX6
awarded by
September and
October respectively)
12.1km
Civil Engineering
Construction
Corporation No. 4,
Japan International
Cooperation Agency
(JICA)[Financier]
2012-2015

(A Japanese ODA
Loan agreement
signed)
2km
World Bank[Financier],
Global Environmental
Facility
2012-2015
Under construction
(March 2012)
Development and
Finance Investment
2012-2015
Contract Awarded
(October 2013)
748.8
750
13.4km
Timeframe
Deo Ca Tunnel Project

Railway development plan
(includes construction of
Hanoi - HCM City railway
line, Lao Cai - Hanoi - Hai
Phong line, Hanoi - Dong
Dang line)
Gia Loc-Tu Ky section, Hai

Duong province
Package EX4, EX5 & EX6,

part of six-lane Hanoi-Hai
Phong expressway project,
Hai Duong province
Status
Rail
Noi Bai International Airport 240.2

to Nhat Tan Bridge
connecting road
construction project
Ring Road No. 2 (from Nhat
Tan Bridge to ending point 304.7
of Cau Giay Crossroad),
Hanoi
4 road projects, Thu Thiem
new urban area, District 2,
Ho Chi Minh City
480
Page 47
Project Name
Value (US
$mn)
Capacity/
Length
Companies
Timeframe
Status
Joint Stock Company

(VIDIFI), Dai Quang Minh
Real Estate
Noi Bai International Airport 960

Extension Project (T2
terminal)
10mn
passengers/
yr
Northern Airports
Corporation (NAC),
Taisei Corporation, Hoa 2012-2014
Binh Construction and
Real Estate Trading
Joint Stock Co (HBC)
Under construction
(September 2013 work is expected to
complete in December
2014, US$759mn ODA
loan from Japan)
Four-lane elevated highway,

Vinh Binh bridge (Thuan An
commune) to My Phuoc
800
town (Ben Cat district),
southern Binh Duong
province
31.5km
2012-2014
Two overpasses, part of Ho

Chi Minh City-Long Thanh- 33.8
Dau Giay (National Highway
1) expressway
1.48km
IDICO Investment
Consultancy Joint Stock 2012-2013
Company
Under construction
(February 2012 Construction started)
Saigon Bridge No. 2 project,

linking Binh Thanh District
71.5
and District 2 in Ho Chi
Minh City
1km
HCM City Infrastructure

Investment Joint Stock 2012-2013
Co (CII)
Completed (October
2013)
Four-lane Buu Hoa - Hiep

Hoa bridge, Dong Nai
province
29
1.5km
Vietnam Railway
Corporation (VRC)
2012-2013
Completed (April 2013)
Deepwater port, Mekong

Delta region
1,000
OGL Mineral and Coal

Mining Company
2012-

2012)
2012-
At planning stage
(June 2012 - initial
design rejected by
HCMC authorities)
2012-

2012)
2012-

2012)
2012-
At planning stage (May

2012 - At planning
stage, seeking
government approval,
government funds fully
disbursed, in need of
additional funds)
2012-
At planning stage
(March 2012 Agreement signed
National railway project

(involves Hoa Hung railway
station and District 3 [Hao
Hung] - Binh Chanh District
[Tan Kien] track section), Ho
Chi Minh City
Metro line 3A/3B [Ben
Thanh Market [District 1] Tan Kien, Cong Hoa
Crossroads [Tan Binh
District] - Hiep Binh Phuc
[Thu Duc District]), Ho Chi
Minh City
23km
Underground interchange/
terminals for lines 1, 2, 3A, 4 429
and, District 1, Ho Chi Minh
City
National Highway No 1
expansion BOT project,
Thanh Hoa - Vung Ang (Ha
Tinh province) - Can Tho
section
4,300
Bac Luan 2 bridge

connecting Mong Cai
Japan International
Cooperation Agency
(JICA)[Sponsor]
1,057km
Government of
Vietnam[Sponsor]
Approved (September
2011)
Page 48
Value (US
Project Name
$mn)
(Quang Ninh) and Dongxing
(Guangxi)
Capacity/
Length
Companies
340km
Transport Engineering
Design Incorporated
(TEDI)
Japan International
Cooperation Agency
(JICA) [Sponsor]
376
84 bridge upgrading project
2012-
Delayed (April 2012 Design work

completed, slow site
clearance delays the
project)
2012-
At planning stage
(August 2012)
2012-
underway (September
2012 - US$376mn loan
from JICA, at prefeasibility study stage)
Cuu Long Traffic

Investment,
Development and
Management Joint
Venture and Mekong
East Co, Petroleum and 2012Construction Joint
Stock Company,
Construction Materials
No 1
Contract Awarded
(9/1/2012; Total
Upgrade of National
Highway 20 Project
Cost: US$400 million)
50,000
tonnes
Quang Tri province,

Marine Consultant Co.
2011-2020
Under construction
(Project approved in
October 2008,
Construction
commenced in 2011)
12.5km
(57.31mn
passengers/
yr)
European Investment
Bank (EIB)[Sponsor],
Hanoi Urban Railway
Management Board,
Systra, Vietnam Bank
for Industry and
Trade[Sponsor], Asian
Development Bank
(ADB)[Sponsor],
Government of France
2011-2018
Under construction
(July 2013)
860
29.3km
Asian Development
Australian Agency for
International
Development (AusAID)
2011-2017

(August 2013; Project
includes Vam Cong
Bridge, Cao Lanh
Bridge and 23.5km of
roads)
170
300km
Asian Development
Bank (ADB)[Financier]
2011-2016
Under construction
(US$80mn loan from
ADB)
32.2km
BIDV Expressway
Development
Corporation[Sponsor],
Cuu Long CIPM
2011-2016
Under construction
(March 2011)
123km
Upgrade of National
Highway 20 Project - Phase
I (Dau Giay - Bao Loc City)
1,100
My Thuy deep water port
1,010
Urban Mass Rapid Transit
Project - Railway Line No. 3
(Nhon [Liem District] - Hanoi
Railway Station [Hoan Kiem
District])
Mekong Delta connectivity

(first phase) project
Road upgrading project,
northern provinces
My Thuan - Can Tho

Expressway Project
Status
between Vietnam and
China)
Beltway No. 2 (An Lap

intersection to Nguyen Van
Linh Parkway)
Ring Road No. 5 (Son TayPhu Ly, Phu Ly-Bac Giang;
Bac Giang-Thai Nguyen and 4,100
Thai Nguyen-Son Tay),
Hanoi
Timeframe
338
Page 49
Project Name
Value (US
$mn)
Capacity/
Length
Companies
32
60,000
tonnes
Can Tho City People`s

Committee, Vinalines
Cai Cui port project
Timeframe
Status
2011-2015
Under construction
(Phase I completed,
Phase II under
construction)
Cat Linh (Dong Da District) Yen Nghia (Ha Dong District) 552.86
urban railway line No. 2A,
Hanoi
13.08km
2011-2015
Under construction
(October 2012)
Road linking Phuc Tho and

Son Tay district
4.3km
2011-2014

(Investment finalised in
Q410)
2011-2014
Under construction
(May 2011 - Under
construction;
Financing from ADB,
Korea, Australia,
Vietnam)
2011-2014
Under construction
(May 2011 - Under
construction; (including 2 bridges
over Cai Lon and Cai
Be rivers), part of
217km)
Rach Gia section, part of

924km southern coastal
corridor project, Chau
Thanh District, Kien Giang
Province
82
50
20.8km
Government of
Vietnam[Financier],
Government of
Australia[Financier],
Asian Development
Government of South
Korea[Financier]
21km
Asian Development
5.5km
Government of
Vietnam[Financier],
Republic of South
Korea[Financier], GS
Engineering &
Construction
Corporation
2011-2014
Under construction
(December 2011 construction started,
US $100 million
sourced from the
Republic of Korea's
ODA loan.)
Kobe Steel
2011-2013
At planning stage
(January 2011)
2011-2013
Approved (October
2010-Received
government approval
for construction)
2011-2013
Under construction
(August 2011)
2011-2012
Completed (October
2012)
2011-
At planning stage
(Proposal for projects
send to Vietnamese
Minh Luong - Thu Bay

section
Roads & Bridges
137
Vinh Thinh Bridge, Hanoi
Port facility, Nghe An
province
Nguyen Van Cu-Thach Ban

Road Project, Hanoi
Ho Chi Minh City Long

Thanh Dau Giay Expressway
(HLD expressway)
Ring Road No. 3, Hanoi,

Phase II
365
11.42
3km
932.4
51km
Asian Development
Bank (ADB), Japan
International
Cooperation Agency
(JICA)[Financier],
Vietnam Expressway
Corporation
256
8.5km
Cienco4, Japan
International
Cooperation Agency
(JICA)
Seven PPP airport projects

(Chu Lai, Phu Bai, Da Nang,
Page 50
Project Name
Value (US
$mn)
Capacity/
Length
Companies
Timeframe
Ministry of Planning
and Investment (MoPI)
by ADC-HAS)
Tuy Hoa, Quy Nhon, Pleiku

and Cam Ranh)
Tan Cang-Cai Mep
deepwater container transshipment terminal, Ba RiaVung Tau province
204
1,800,000
TEU
Wan Hai Lines, Hanjin, 2011Mitsui OSK Lines (MOL)
Completed
World Bank[Financier]
2011-
Under construction
(First two bidding
package under
construction; At
December 2011 - Loan
of US$171.5bn
secured from World
Bank)
Vietnam Expressway
Corporation, Central
Japan Expressway
2011-
At planning stage
(Under negotiations for
a JV)
100km
2011-
At planning stage
((Ring road 3);
197.6km (Ring road 4)
- Vietnamese Ministry
of Transport to start a
procedure to call)
126.7km
2011-
Under construction
(May 2011)
Waterway transport
(corridors and river ports)
upgrade project (includes
Viet Tri - Quang Ninh
201.5
corridor, Lach Giang
estuary, Phu Tho port, Ninh
Binh port), northern delta,
Bac Ninh province
Overhaul of Phap Van-Cau
Gie expressway
Ring roads 3 and 4,
connecting Ho Chi Minh
City with the Ben Luc-Long
Thanh and Bien Hoa-Vung
Tau
Status
71.4
8,000
Six-lane Ninh Binh - Thanh 1,565.19

Hoa [Nghi Son] road project
30km
Contract Awarded
(September 2011 Contract awarded;
Financing from Korea
Exim Bank)
Thu Bay - Kenh section, part 47.3

of 924km Southern Coastal
Corridor Project
31km
Korea Exim
Bank[Financier],
Ssangyong Engineering 2011and Construction
Southern Coastal Corridor

Project (Vietnam - Thailand) 47.3
31km
Ssangyong Engineering 2011and Construction
Contract Awarded
(September 2011)
18,000,000
tonnes
International Transport
Development And
Investment Joint Stock
Under construction
(Construction
underway; Phase II to
complete in 2020 and
Phase III in 2030)
Cua Lo port expansion,

Nghe An
National Road No 14
crossing, Dak Nong
province
Thanh Phuoc Port, Tan

Uyen District, Binh Duong
province
Dong Lam cement port
490
2010-2030
50
Duc Long Gia Lai Group

(DLG), Vietnam
Commercial Joint Stock 2010-2022
Bank for Industry and
Trade (VietinBank-CTG)
Contract Awarded
(Credit contract
signed; September
2010 - BOT contract
announced)
65.33
Thanh Phuoc Port Joint

Stock Company, U&I
Logistics JSC., Binh
2010-2018
Duong Construction,
Nam Tan Uyen
Industrial Park JSC
Under construction
(May 2012; Phase I
completed)
64
71,000,000
tonnes
Japan Port Consultants

Ltd (JPC), International
Transport Development
And Investment Joint
Stock
2010-2017
Approved (License
granted; Phase I to
complete by 2013)
Page 51
Project Name
Value (US
$mn)
Capacity/
Length
Companies
Timeframe
Status
Saigon My Tho Railway
445
87km
Vietnam Railway
Corporation (VRC)
2010-2015
At planning stage (At

design stage)
European Investment
Bank (EIB), Asian
Development Bank
(ADB), Italian Thai
Development (ITD)
2010-2015

(July 2013)
2010-2015
At planning stage
Monorail Line 2 (between

East-West Highway and
National Road No 50) PPP
Project, Ho Chi Minh City
350
14km
Ring road No. 4, Hanoi
1,970
98km
North-South Highway
18,500
1941km
Cengiz Insaat (Holdings) 2010-2015
Under construction
(May 2013)
55km
Vietnam Expressway
Corporation, Asian
Development Bank
(ADB)[Sponsor], Japan
Bank for International
Cooperation[Sponsor],
Hashin Construction
2010-2014
Under construction
(January 2013 Significantly behind
schedule, 60%
completed at HCMCLong Thanh section)
2010-2014
Approved (December
2010)
Ho Chi Minh City-Long

1,180
Thanh-Dau Giay (National
Highway 1) expressway,
part of North South Highway
National Road No 25
expansion (ie Phu Yen
section, 21.5km; Gia Lai
section)
113
57.5km
Gemalink Cai Mep

Container Terminal (first
phase)
300
1,200,000
TEU
Tran Thi Ly- Nguyen Van

Troi bridge
513.8
0.73km
2010-2013
245km
Four-lane Noi Bai [Hanoi

Airport] - Lao Cai [Chinese
border] highway
Vietnam Expressway
Corporation, Asian
Development Bank
(ADB)[Sponsor], Doosan
Heavy Industries &
2010-2013
Construction Co.,
Keangnam, POSCO
Engineering and
Construction, Guangxi
RBEC, Vinaconex
Under construction
(January 2013 Significantly behind
schedule due to land
clearances)
Upgrading of the provincial

road No 39B, Thai Binh
province
106
29km
Maritime
Bank[Financier],
Agribank[Financier],
Southeast Asia
Bank[Financier], Tasco
Joint Stock
2010-2013
Under construction
(US$92.3mn loan
pledged by banks)
Hoa An Bridge over Dong

Nai River
56
1.3km
2010-2013
Under construction
2010-2013
Delayed (April 2012 Land acquisition

delayed,slow site
clearence delays the
project. More than 200
households have yet
to moved.)
1,500
Provincial Road 10, Long An

Province
SAMWHA, Dealim, CMA 2010-2013

CGM Group, Gemalink
Under construction (At

June 2012 construction tempo
slowed)
Under construction
Page 52
Value (US
$mn)
Capacity/
Length
Companies
Timeframe
Status
10
Vietnam Expressway
Corporation, Nippon
Engineering
Consultants, Katahira
2010-2012
Contract Awarded
A 530.5m bridge linking the

east side of Hanoi with the
Van Giang district across
the Bac Hung Hai river
26
Viet Hung Urban

Development and
Investment, Utracon
Overseas, Ultracon
Vietnam Company
2010-2012
Contract Awarded
Kon Brai Bridge, Kon Tum

province (Part of National
Highway No 24)
164
Vietnam Road
Corporation [Sponsor]
2010-2012
Under construction
(January 2011)
Project Name
Design and consultancy
contract for Ben Luc-Long
Thanh expressway
Cai Lan Port Investment

720,000 TEU Joint Stock Company, 2010-2011
Carrix, Cordiant Capital
Cai Lan International

Container Terminal
Deep water Port at Khe Ga
Cape, Binh Thuan Province
0.53km
250
3,500,000
tonnes
337
8,700,000
tonnes
Vietnam National CoalMineral Industries

Group (Vinacomin)
2009-2020
At planning stage
2009-2020
Delayed (March 2013 put on hold due to

shortage of funds;
December 2012 - 38%
completed)
2009-2020
Under construction
(October 2013)
2009-2015
Suspended
(Construction
suspended, Planning
resumed, At
September 2012 seeking investors)
2009-2015
Under construction
Saigon-Hiep Phuoc port

1,500,000
TEU
Vietnam National
Shipping Lines
(Vinalines), SSA
Holdings International,
Saigon Port
3,600
13,500 TEU
SK Engineering &
Construction, Nippon
Koei Caminosca Sisa,
Vietnam National
Shipping Lines
(Vinalines), Portcoast,
Rotterdam Port
350
21.3km
SP-SSA International
95.43
Terminal, Cai Mep River, Ba
Ria-Vung Tau Province
Van Phong International

Entreport, Khanh Hoa
Province
Highway to link Cai Mep
and Phuoc An ports
1,500
105.5km
Sumitomo Mitsui
Bank[Financier], GS
Engineering &
Construction
Corporation, Vietnam
Infrastructure
Development and
Finance Investment
2009-2015
Joint Stock Company
(VIDIFI), PSJ Holdings,
Cienco 1 Company and
Infrastructure
Development and
Finance Investment
Compan
196
42km
Becamex IDC
Corporation
Six-lane Hanoi [Gia Lam] Hai Phong [Dinh Vu dam]

expressway project
My Phuoc-Tan Van
Expressway
Completed (Secured
funding of US$127mn)
2009-2013
Under construction
(February 2013 - 33%
completed,
significantly behind
schedule)
Under construction
Page 53
Project Name
Value (US
$mn)
Trung Luong - My Thuan

Expressway Project
1,100
Mu Loi Bridge
88
Nhat Tan Bridge (includes

access roads), package No. 423
3, Hanoi
Capacity/
Length
Companies
Timeframe
Status
54km
BIDV Expressway
Development
Cuu Long CIPM
2009-2013
Under construction
(March 2011)
2009-2012
Completed
Vinaconex, IHI
Corporation, Sumitomo 2009-2012
Mitsui Construction
Completed
3,900km
Saigon International
Terminal, Phu My 1
Industrial Park
163
China Harbor
Engineering Company
(CHEC)
2009-2011
Completed
Song Bung 4 access road
Cavico Corporation
2009-2010
Completed
Ben Dam deep water

transhipment port, Con Dao 300
district, Vung Tau city
10,000,000
tonnes
Trai Thien Sea Transport

Investment and
2009Development Joint
Stock Company
Delayed (April 2010project delayed due to

disputes, April 2009licence awarded)
1A National Highway (Ngoc

Hoi - Cau Gie section)
24km
Hanoi Department of
Transportation
Completed
30,000,000
tonnes
Samsung Construction
& Trading (Samsung
C&T), Formosa Plastics 2008-2015
Group, Formosa Ha
Tinh Steel
Under construction
(September 2013 Construction
underway; At June
2012 - Project facing
financing difficulties)
100,000
tonnes
Truong Son
Construction Corp, Civil
Engineering
2008-2013
Construction Joint
Stock Co. No.6,
ODA[Sponsor]
Completed (January
2013)
50
Son Duong deep water port, 1,200

part of Vung Ang Economic
Zone, Ha Tinh Province
Cai Mep-Thi Vai
International Port (includes
roads connecting National
Highway 51 to the Cai Mep
port)
619
-2009
340
13.7km
GS Engineering &
Construction
Corporation
2008-2013
Under construction
(September 2013 - A
five-kilometre section
of the Tan Son NhatBinh Loi Outer Ring
Road in HCM City
opened.)
Phu Quoc International

airport (new airport), Phase
1
780
2.6mn
passengers/
yr
PAE Limited, CPG

Corporation Pte Ltd,
Vietnam
2008-2012
Completed (December
2012)
National Highway 61B (Vi

Thanh District [Hau Giang
Province] - Can Tho City
[Mekong Delta])
165
47.5km
2008-2012
Completed (May 2012Road opened to traffic)
2008-
Under construction
(September 2011 50% completed;
Originally to be
completed by
November 2009)
Tan Son Nhat International

Airport - Binh Loi - Outer
Ring Road BT project, Ho
Chi Minh City
16
Duong Dong - Cua Lap
road, connecting Phu Quoc
Airport
7km
508 Company, Civil

Engineering
No 5
Page 54
Project Name
Value (US
$mn)
Six-lane Cau Gie - Ninh Binh

expressway project first
phase (National Highway 1A 430
(in Hanoi) to Highway No.10
(Nam Dinh province)
74
Danang International Airport
(new passenger terminal)
Capacity/
Length
Companies
Timeframe
Status
50km
Vietnam Expressway
Corporation, Japan
International
Cooperation Agency
(JICA)[Sponsor]
2006-2012
Completed (June
2012)
6mn
passengers/
yr
Louis Berger Group,

Middle Airports
Corporation, Airport
Consultants B.V.,
National Construction
Consultants
2006-2011
Completed (December
2011)
Tien Lang International

Airport (new airport), Hai
Phong
underway (May 2012 Currently preparation
board is in the process
of submitting for
approval of 3 subprojects named (EIA),
construction works,
bomb and mine
detection)
Vung Tau airport (Relocate

to Go Gang island of Long
Son commune)
At planning stage
(October 2013 Approved from Ba RiaVung Tau authorities,
province will build a
plan and submit it to
the Government for
approval.)
Chu Lai International Airport

Upgradation Project - Phase
2
Civil Aviation
Administration of
Vietnam (CAAV)

Airport - Phase 2
Consultants

Airport - Phase 3
Consultants
Quang Ninh International

Airport (Phase 2), Doan Ket
commune, Van Don region,
Quang Ninh province
Korea Airports
Corporation (KAC),
Joinus Ltd
Pleiku Airport Upgradation

Project (Phase 2), Gia Lai
Civil Aviation
Administration of
Vietnam (CAAV)
Dung Quat II Port, Part of

Dung Quat Economic Zone,
Quang Ngai Province
Port and Waterway

Engineering Consultants
JSC, Nikken Sekkei Civil
Engineering Ltd
Contract Awarded
(August 2012)
Metro Line 4 (Nguyen Van

Linh - Ben Cat Bridge
[District 12]) PPP Project,
Ho Chi Minh City
European Investment
Bank (EIB), Asian
Development Bank
(ADB), Italian Thai
Development (ITD)

2011)
2,500
36km
Page 55
Project Name
Value (US
$mn)
Ho Chi Minh City Line (Ben

Thanh Market - Ba Son
Shipyard)
Capacity/
Length
Companies
Timeframe
Status
In tender/Tender
launched (June 2013)
2.2km
eDES Engineering
Solutions, Phuong Nam
Institute of Science and
Technology
At planning stage
(November 2013)
Urban Railway Line No. 5

PPP Project (West Lake-Ba
Vi District), Hanoi
Ministry of Transport of
Vietnam, Japan Bank for
International
Cooperation
underway (April 2012)
Trang Bom (Dong Nai) - Hoa

Hung (HCM City) Railway
550
Line Project, Ho Chi Minh
City
Vietnam Railway
Corporation (VRC),
Government of Japan
At planning stage
(September 2009)
Ho Chi Minh City - Can Tho 3,600

Province Railway Line
Bien Hoa-Vung Tau Railway

Line, Ho Chi Minh City
Lao Cai-Hanoi-Haiphong
Railway Line Project
134km
At planning stage (May

2013)
54.6km
4,286.4
381km
Railway line (Phnom Penh's

Oudong District [Kampong
Speu Province] - Vietnam's
Loc Ninh District [Binh
Phuoc Province])
Vietnam Railway
Corporation (VRC)
At planning stage
(September 2012 Seeking investors)
Government of
China[Sponsor]
Metro Line 3B (Cong Hoa

Crossroads [Tan Binh
District] - Hiep Binh Phuc
[Thu Duc District]), Ho Chi
Minh City
Metro Line 6 (Ba Queo - Phu
Lam Intersaction)
Road linking East-West
Avenue with the Trung
Luong Expressway
106.79
Thai Ha Bridge Over Red

River
102
2.7km
Nhieu Loc-Thi Nghe flyover

no. 1 project
1,000
La Son - Tuy Loan highway
BT project, part of NorthSouth Highway
81.7km
Japan International
Cooperation Agency
(JICA)
At planning stage
(December 2010)
No. 1, Ministry of
Construction (Vietnam)
Approved (2009)
Bach Khoa Construction

Consultant Corporation
At planning stage
(October 2012 - On
hold due to lack of
investors)
Van Tuong Co Ltd,

Volunteer Youth Group,
Traffic Works
Construction
Corporation No. 8,
Construction
Corporation No. 1,
Truong Son
Construction Corp,
Truong Thinh Group
Contract Awarded
(March 2012)
Page 56
Project Name
Value (US
$mn)
Capacity/
Length
Companies
Timeframe
Status
Joint Stock Co, Son Hai

Group Co Ltd
Nguyet Vien-Thanh Hoa
Bridge PPP
First overhead road project
(Cong Hoa Intersection Nguyen Huu Canh Street),
Ho Chi Minh City
714
Second overhead road

project (To Hien Thanh
Street - Belt road No. 2), Ho 328
Chi Minh City
11km
At planning stage
8.4km
At planning stage
(June 2012 - At
planning stage,
seeking Financing)
10.2km
At planning stage
(June 2012 - At
planning stage,
seeking Financing)
Third overhead road project

(To Hien Thanh Street Nguyen Van Linh
817
Boulevard), Ho Chi Minh
City
Fourth overhead road
project (Binh Phuoc
Junction - Cong Hoa
Intersection), Ho Chi Minh
City
547
Sa Huynh - Dung Quat

Coastal Road Project,
Quang Ngai
2.26
Lao Bao [Quang Tri

Province] - Hai Phong port
[Hanoi] (Extension of the
Khon Kaen-Tien Sa Port
Road)
At planning stage
(June 2012 - At
planning stage,
seeking Financing)
At planning stage
(June 2012 - At
planning stage,
seeking Financing)
7.7km

(September 2013)
At planning stage
(December 2012)
900km
Cao Lanh Bridge (over the

Tien River), part of the
Mekong Delta Connectivity
project
Ring road No 4 around
Hanoi
Upgradation of National
Highway 20 Project - Phase
II (Dau Giay - Bao Loc City)
145km
Mekong East Co, Cuu

Long CIPM,
Construction Materials
No 1

2013; Total
Upgradation of
National Highway 20
Project Cost: US$400
million)
na = not available. Source: BMI Key Projects Database
Page 57
Energy And Utilities Infrastructure - Outlook And Overview
Table: Vietnam Energy & Utilities Infrastructure Industry Data, 2012-2017
2012
2013e
2014f
2015f
2016f
2017f
34.5
35.1
35.4
35.6
35.9
36.2
20,208.7
22,723.0
25,322.7
28,143.7
31,223.3
34,558.1
Energy and Utilities Infrastructure Industry Value,

US$bn
1.0
1.1
1.2
1.4
1.5
1.7
Energy and Utilties Infrastructure Industry Value

Real Growth (%)
11.5
5.8
5.7
5.9
5.9
5.8
Energy and Utilties Infrastructure Industry Value

As Percent Of Total Construction (%)
11.3
11.9
11.8
11.8
11.8
11.7
Power Plants and Transmission Grids

Infrastructure Industry Value As % Of Total
Energy and Utilities
90.5
90.8
90.9
90.9
90.9
90.9

Infrastructure Industry Value, VNDbn
18,288.7
20,623.0
23,010.3
25,578.5
28,369.9
31,413.3

Infrastructure Industry Value,US$bn
0.9
1.0
1.1
1.3
1.4
1.6

Infrastructure Industry Value Real Growth (%)
12.7
6.2
5.8
5.9
5.9
5.8

Infrastructure Industry Value As % of Total
Infrastructure
31.2
31.8
32.1
32.4
32.6
32.9

Construction
10.2
10.8
10.8
10.7
10.7
10.6
Oil and Gas Pipelines Infrastructure Industry

Value As % Of Total Energy and Utilities
1.7
1.6
1.5
1.4
1.3
1.3

Value, VNDbn
341.8
356.9
377.9
398.3
419.8
442.5

Value, US$bn
0.0
0.0
0.0
0.0
0.0
0.0

-22.1
-2.2
0.1
0.2
0.4
0.5
Oil and Gas Pipelines Infrastructure Industry As

% of Total Infrastructure
0.6
0.6
0.5
0.5
0.5
0.5

% of Total Construction
0.2
0.2
0.2
0.2
0.2
0.1
Water Infrastructure Industry Value As % Of

Total Energy and Utilities
7.8
7.7
7.6
7.7
7.8
7.8
Energy and Utilties Infrastructure Industry

Value As % Of Total Infrastructure
Energy And Utilities Infrastructure Industry
Value, VNDbn
Page 58
Vietnam Energy & Utilities Infrastructure Industry Data, 2012-2017 - Continued
2012
2013e
2014f
2015f
2016f
2017f
Water Infrastructure Industry Value, VNDbn
1,578.2
1,743.1
1,934.5
2,166.8
2,433.5
2,702.3
Water Infrastructure Industry Value, US$bn
0.1
0.1
0.1
0.1
0.1
0.1
Water Infrastructure Industry Value Real Growth

(%)
7.7
3.8
5.2
6.8
7.3
6.1
Water Infrastructure Industry As % of Total

Infrastructure
2.7
2.7
2.7
2.7
2.8
2.8
Table: Vietnam Energy & Utilities Infrastructure Industry Long-Term Forecasts, 2018-2023
2018f
2019f
2020f
2021f
2022f
2023f
36.5
36.8
37.2
37.6
38.0
38.4
38,215.0
42,218.1
46,623.6
51,452.7
56,804.3
62,890.1
Energy and Utilities Infrastructure Industry Value,

US$bn
1.9
2.2
2.4
2.7
3.0
3.3
Energy and Utilities Infrastructure Industry Value

Real Growth (%)
5.7
5.7
5.6
5.7
5.7
6.1
Energy and Utilities Infrastructure Industry Value

As Percent Of Total Construction (%)
11.7
11.6
11.6
11.6
11.5
11.6

Infrastructure Industry Value As % Of Total
Energy and Utilities
90.9
91.0
91.0
91.0
91.1
91.1

Infrastructure Industry Value, VNDbn
34,748.5
38,399.3
42,414.9
46,827.7
51,722.3
57,311.6

Infrastructure Industry Value, US$bn
1.8
2.0
2.2
2.4
2.7
3.0

Infrastructure Industry Value Real Growth (%)
5.7
5.7
5.7
5.7
5.8
6.2

Infrastructure
33.2
33.5
33.8
34.2
34.6
35.0

Construction
10.6
10.6
10.6
10.5
10.5
10.5
1.2
1.2
1.1
1.1
1.0
1.0
Energy and Utilities Infrastructure Industry

Value As % Of Total Infrastructure
Energy And Utilities Infrastructure Industry
Value, VNDbn

Value As % Of Total Energy and Utilities
Page 59
Vietnam Energy & Utilities Infrastructure Industry Long-Term Forecasts, 2018-2023 - Continued
2018f
2019f
2020f
2021f
2022f
2023f

Value, VNDbn
466.0
490.2
515.7
542.0
569.6
598.7

Value, US$bn
0.0
0.0
0.0
0.0
0.0
0.0

0.4
0.4
0.4
0.4
0.4
0.5

% of Total Infrastructure
0.4
0.4
0.4
0.4
0.4
0.4

% of Total Construction
0.1
0.1
0.1
0.1
0.1
0.1
Water Infrastructure Industry Value As % Of

Total Energy and Utilities
7.9
7.9
7.9
7.9
7.9
7.9
Water Infrastructure Industry Value, VNDbn
3,000.6
3,328.7
3,693.1
4,083.1
4,512.3
4,979.8
Water Infrastructure Industry Value, US$bn
0.2
0.2
0.2
0.2
0.2
0.3
Water Infrastructure Industry Value Real Growth

(%)
6.1
6.1
6.1
5.9
5.8
5.8
Water Infrastructure Industry As % of Total

Infrastructure
2.9
2.9
2.9
3.0
3.0
3.0
Page 60
Slowly Overshadowed
Energy & Utilities Infrastructure Value And Share Of Infrastructure Value
e/f = BMI estimate/forecast, Source: Vietnam General Statistics Office, Local news sources, industry sources, BMI (Major Projects
Database)
Although the total investment in the transport sector will continue to overshadow spending on energy &
utilities, the value of the power plants and transmission grids sub-sector will increase, with real growth
averaging 5.8% annually between 2014 and 2017. Vietnam's power consumption is expected to rise sharply,
in light of both positive economic and demographic growth. The government will therefore need to step up
the country's power generation to meet growing demand and avoid the real risk of persistent electricity
shortages, which could in turn deter foreign manufacturers from using the country as an export base and
force them to direct investment elsewhere.
The government has since announced ambitious plans for the sector. Under the government's Seventh
Power Development Plan, the government has set a target of developing 75,000 megawatts (MW) of power
generation capacity by 2020, with coal-based plants taking up 48% of this investment. This plan is expected
to require an investment capital of US$48.8bn.
Vietnam does not have the fiscal strength to finance this ambitious plan, and as such, we believe that
interest from foreign investors is vital for it to succeed. That said, the current structure of the market
Page 61
suggests that this is unlikely to happen, with limited private investment, due to the bureaucratic obstacles
and rigidity of the internal market. Electricity Vietnam (EVN) enjoys a monopoly over distribution in
Vietnam's electricity market. A unified tariff is applicable across the country, and artificially low, capped
prices have long made it unprofitable for foreign infrastructure companies to invest in the power sector,
mainly because most of the equipment for power stations has to be purchased from other countries at global
market prices. They have also been deterred by an onerous negotiating process for pricing and distribution
contracts.
Addressing those two issues is clearly within the government's reach and could boost activity in the market,
helping to mitigate some of the risks to future growth inherent in the over-reliance on EVN's investment
programme. In early 2006, the country's Prime Minister approved EVN's master plan for the development
of a three-step competitive power market by 2022. This will be restricted to power generation up to 2014,
expanding to the wholesale market between 2015 and 2022, followed by the retail sector.
Bottom-Up Restructuring
Vietnam's Power Development Roadmap
Source: Electricity Regulatory Authority of Vietnam
Vietnam officially launching its competitive generation market (CGM) on July 1 2012, marking the first
phase of its power market development roadmap. The roadmap spans over 10 years and is projecting the
introduction of an electricity wholesale market in 2014 and an electricity retail market by 2022. Under the
CGM, independent power producers (IPPs) would forward their asking prices to the Electric Power Trading
Company (EPTC). These EPTCs would purchase the electricity via a competitive cost-based pool and sell it
to distribution companies and large consumers at regulated prices.
Page 62
To liberalise the power sector further, Vietnam's Minister of Industry and Trade, Vu Huy Hoang, granted
approval to establish three power generation companies in June 2012: Genco 1, Genco 2 and Genco 3.
These companies are to take over power generating plants directly under EVN. Genco 1 will manage
hydropower plants, such as Dai Ninh, Ban Ve and Song Tranh. Meanwhile, Uong Bi Thermal Power in
Northern Quang Ninh Province will serve as a backbone for Genco 1, which will also acquire EVN's shares
in the Quang Ninh thermal power plant and some other thermal project management boards throughout the
country. Genco 2, which is the upgrade of Can Tho Thermal Power, will manage the Quang Tri and An
Khe KaNak hydropower plants and the Thu Duc, Hai Phong and Pha Lai thermal power plants. The
establishment of Genco 3 is based on Phu My Thermal Power and 11 affiliates, including the Vinh Tan
thermal power plant and the Buon Kuop hydropower plant. These three companies will remain under EVN,
which will also appoint their personnel.
EVN Still Dominating Power Generation

Vietnam - 2010 Installed Capacity Mix By Owners, %
Source: Vietnam Institute of Energy 2011
Coal: Growing Foreign Participation
The first ever public-private partnership (PPP) in Vietnam's power generation sector gained momentum in
May 2009. Malaysia's JAKS Resources reportedly signed a memorandum of understanding (MoU) with
Page 63
the Vietnamese government for the construction and operation of the Hai Duong thermal power station.
This is a significant milestone for Vietnam as it indicates that opportunities to fill the investment gap left by
state-owned EVN are proliferating for IPPs.
Since then, foreign involvement in the sector has significantly accelerated, with the largest project a U
$10.6bn deal signed between Russian and Vietnamese authorities to construct Vietnam's first 2,000megawatt (MW) nuclear power plant in the Ninh Thuan province.
The coal generation sector has also been receiving significant attention from foreign investors. The Mong
Duong 2 plant in particular is representative of this growing liberalisation in the Vietnamese utilities sector,
as it is one of Vietnam's first foreign-backed build-operate-transfer (BOT) coal-fired plants. Aside from
being built and operated by foreign companies, the project is financed by foreign banks. Besides the Mong
Duong 2 plant, four other coal-fired plants (Nghi Son 2, Phu My 3, Phu My 2.2 and Hai Duong) are being
implemented by foreign independent power investors under BOT contracts.
Several BOT coal-fired power plant projects are in the pipeline.
In February 2013, Japan's Sumitomo Corporation lodged an application to secure an investment licence for
the construction of a US$2bn, BOT coal-fired power plant in Khanh Hoa. The first turbine of the 1,320MW
plant is likely to start commercial operations in 2017. The plant will use coal imported from Australia and
other nations and will deliver power to state-owned EVN. As of May 2013 negotiations with the
government over the contract terms were under way, with the BOT contract expected to be signed in Q114.
In April 2013, the Vietnamese government approved Toyo Ink Group's request to be the project investor of
the US$3.5bn Song Hau 2 thermal power plant under a BOT basis. A MoU would be negotiated and signed
by the Ministry of Industry and Trade and several government agencies with Toyo Ink on the project. As of
July 2013, the company had yet to finalise negotiation with the authorities regarding detailed terms such as
the power tariff, concession period, and fuel supply.
In June 2013, India-based electric utility Tata Power secured a contract worth US$1.8bn from the
Vietnamese government. The contract is to develop two 660MW coal-fired thermal power plants in South
Vietnam. The construction of the power project, called Long Phu 2, is likely to start in 2019. This is
believed to be the largest Indian investment in Vietnam and will support Tata Power's own aspirations in
South East Asia and India's Look East policy. The memorandum of understanding for this deal was signed
subsequently in November 2013.
Page 64
In September 2013, a department in the Ministry of Industry and Trade signed a memorandum of
understanding with Singapore's Sembcorp Industries to jointly develop the US$2bn Dung Quat coal-fired
power plant in Quang Ngai Province.
In September 2013, Vietnam approved the construction of the 1200MW Vinh Tan 1 coal-fired power plant,
with the US$2bn BOT project scheduled to be officially awarded to China Southern Power Grid in midOctober 2013.
Besides BOT contracts, the Vietnamese government is keen to award foreign players engineering,
procurement and construction (EPC) contracts for thermal (gas- and coal-fired) power plants. The
government had announced in September 2011 that it is in talks with foreign companies over the
construction of a further 12 power plants in the country. Some of the foreign companies that have won such
projects are: Chinese consortium CHENGDA, DEC, SWEPDI and ZEPC for the Duyen Hai 3 coal-fired
power plant in August 2011; Hyundai Engineering & Construction for the Mong Duong 1 coal-fired
plant in September 2011; Wuhan Kaidi Electric Power for the Thang Long coal-fired power plant in
December 2011; PHI Group for the Hai Lang coal-fired power plant in December 2011; Toyo Ink
Group for the Song Hau 2 coal/diesel oil plant in January 2012; Trisun International Development for a
US$400mn plasma-converted gas plant for power generation in Ho Chi Minh City; and Daelim Industrial
for the O Mon 1 gas-based power plant in September 2012. The 440MW Mao Khe coal-fired power plant
was also completed in April 2013 under an EPC contract, awarded to Wuhan Kaidi Electric Power and
Germany's WULFF.
Vietnam is also reliant on foreign players to provide equipment for coal-fired power plants. In May 2012, a
joint venture (JV) comprising South Korea's Daelim Industrial and Japan's Sojitz Corporation was
awarded an US$826mn contract to provide plant equipment for the 1,200MW Thai Binh 2 coal-fired power
plant. The JV signed the contract with PetroVietnam Construction Joint Stock(PVC), the construction
subsidiary of state-run oil and gas company PetroVietnam. Under the terms of the agreement, the JV
would install and test-run boilers, turbines and two generators for the US$1.6bn Thai Binh 2 plant,
according to the Vietnamese government cited by Reuters. This was followed by US-based Babcock &
Wilcox being awarded a US$300mn equipment contract for the project in August 2012. In February 2012,
PVC had signed a US$1.6bn contract with state utility EVN to provide EPC services for the Thai Binh 2
plant. If completed, the Thai Binh 2 plant would be the largest conventional thermal power plant in northern
Vietnam. The plant is expected to become operational by 2016.
Page 65
The country is also keen for foreign companies to develop a domestic power equipment manufacturing
industry in Vietnam. In July 2012, the Vietnamese government had selected three thermal power plants that
are to use locally manufactured power equipment, reports Intellasia. Through the use of local power
equipment, the government is aiming to increase the capacity of domestic power equipment manufacturers
and end low-quality power equipment imports, which arrive mostly from China. The three plants in
question are: the Vinacomin-invested Quynh Lap 1 in Central Nghe An province; the PetroVietnaminvested Song Hau 1 in Southern Hau Giang province; and the PetroVietnam-invested Quang Trach 1 in
Central Quang Binh province.
The pilot plan to use locally manufactured power equipment is expected to encourage domestic and foreign
manufacturers that have established facilities in Vietnam to boost their investment in the country. The
statement was made by Dao Phan Long, the deputy president of the Vietnam Association of Mechanical
Industry. Tran Viet Ngai, the chairman of the Vietnam Energy Association, said that Chinese contractors
have participated in 20 thermal power projects in Vietnam. Surveys have found that the weakness of
contracts has led to problems in the implementation and operation of these projects.
We highlight that coal-fired power plants that rely on domestically sourced coal are set to face rising fuel
costs, which could erode their profitability. This is because state coal miner and supplier Vinacomin has
been selling coal to power plants below the cost of production. Although the price of coal sold to the power
sector was raised on April 20 2013, this is still just equal to 85-87% of the projected production cost for
2013. Vinacomin was previously able to sustain losses from these sales as the power sector only accounted
for 10-15% of total output, while coal exports (which accounted for most of total output) were highly
profitable. However, a decline in global coal prices and an increase in demand from local power producers
(30% of total output in 2012) has led to the unwinding of the situation, and the Vietnamese trade ministry is
in the midst of determining a second rate hike.
Some coal-fired power plant projects are also facing difficulties with reaching financial closure. In April
2013, local authorities in the Kien Giang province announced that the Kien Luong Power Centre project
will likely be halted if the Tan Tao Group is unable to arrange capital required for investment, worth
around US$6.7bn. The project was licensed five years ago. The first phase of the project, thermal power
plant Kien Luong 1, was expected to become operational by end-2013. Land clearance for the construction
of the Kien Luong 1 was obtained more than 18 months ago, but no progress on it was made owing to a lack
of capital, according to ITACO, a subsidiary of Tan Tao Group. Although the Tan Tao Group still plans to
continue with the project - the group has already pumped US$240mn into infrastructure and land clearance -
Page 66
the provincial People's Committee has filed a petition with the Ministry of Industry and Trade to revoke the
investment licence for the thermal plant over the company's failure to arrange capital for it.
Hydropower: Indispensible, But Problematic
Hydropower provides more than a quarter of Vietnam's electricity. In previous years, there has been a stable
stream of investment into increasing hydropower capacity as elevated coal prices in Asia render coal plants
costly to operate. This trend has changed in recent years, with a growing number of hydropower projects,
particularly small-scale hydropower plants, being cancelled. The country has 1,021 hydropower projects,
with a combined capacity of 24,246MW, located in over 36 provinces and cities.
In October 2012, nine hydropower projects planned in the Vietnamese province of Thua Thien Hue were
cancelled by the provincial People's Committee in late-September. These nine are part of 21 small- to
medium-capacity plants planned in the province for completion by 2020, with a total combined capacity of
357MW. Reasons given for the cancellation included poor economic feasibility, a lack of progress and
environmental concerns.
In March 2013, the Vietnamese province of Kon Tum had implemented a ban on new hydroelectric power
(HEP) projects, reports Energy Business Review. The ban was imposed owing to environmental reasons,
namely the loss of forest cover and the erosion of downstream river basins, which has occurred as a result of
HEP development. There have been 21 proposed HEP projects cancelled as a consequence of the ban.
Several other Vietnamese provinces have previously imposed similar prohibitive legislation.
In June 2013, a recent report published by the Vietnam National Assembly (NA) showed that nearly half of
the 1,108 small-scale hydro-power projects in the National Master Plan for Power Development until 2020
had been cancelled. In addition, NA Deputy Truong Van Vo had also proposed that the government
withdraw the planned hydropower projects 6 and 6A in Dong Nai Province from the national master plan.
The projects have a combined capacity of 240MW, and were undergoing environmental impact
assessments.
We believe this adverse sentiment towards hydropower plants is due to three factors:
Reliability: In recent years, hydropower has proven to be an unreliable source of electricity, as severe
droughts have plagued Vietnam.
Page 67
A lack of economic feasibility: The report published by the NA stated that there was a lack of investor
interest in hydropower projects due to low profits. We believe this is due to the fact that electricity prices
are artificially capped; the government controls prices, and the average rate for electricity in Vietnam is
VND1,369 (US$0.066) per kilowatt hour (kWh), which is one of the lowest in the world. This means that
the country's sole electricity distributor, EVN, is likely to purchase electricity at an even lower rate, thus
making it hard for hydropower producers (loaded with high upfront costs) to break even within an attractive
period of time.
Environmental concerns: Environmental concerns - namely deforestation and the destruction of natural
landscapes - were key reasons cited by the Vietnamese Department of Industry and Trade in June 2012
regarding its decision to reject 52 sub-standard hydroelectricity projects for the first half of 2012. The NA
also stated that only 2.1% of the 51,000 hectares of forested land that had been used for construction of
hydro-power projects in Vietnam had been planted with new trees.
Despite this negative investment climate, there are still hydropower projects being developed. In January
2013, Alstom was awarded a contract to supply electro-mechanical equipment for a hydroelectric power
plant in Vietnam, reports Energy Business Review. Alstom will install turbines and generators at the
154MW Dong Nai 5 facility, working in conjunction with its Chinese business partner, Hydrochina
Huadong.
Nuclear: Still In The Works
Vietnam has taken the first step towards nuclear. Vietnam's nuclear ambitions stretch back to the 1980s,
when the country first considered developing the technology. According to the country's Seventh Power
Master Plan, there are plans for 10 nuclear power plants with an installed capacity of 10,700MW by
2030. Eight sites in central Vietnam are being considered as location for potential nuclear power plants,
including locations in Ninh Thuan, Binh Dinh, Phu Yen, Ha Tinh and Quang Ngai provinces. According to
a statement by the Vietnamese prime minister in March 2013, the country now plans to build 8,000MW of
nuclear capacity by 2025 and 15,000MW by 2030, representing 10% of total generation.
This ambition appears to be in process of being achieved as, in November 2011, Vietnam signed two key
agreements - one loan agreement and one consultancy agreement - with Russia for the construction of its
first nuclear power plant, the US$10bn, 2,000MW Ninh Thuan 1 nuclear project. The project is estimated to
cost a total of US$10bn, and Russia will provide up to US$9bn for the project, as well as a second loan of
US$500mn for the establishment of a nuclear science and technology centre. A Russian consortium was
Page 68
expected to complete the feasibility study of the project by late-2013, which includes the selection of the
project site. Atomstroyexport, a subsidiary of Russian state nuclear holding company Rosatom, will begin
constructing the plant in 2014, which is to become operational in 2020.
In a visit in January 2014, the International Atomic Energy Agency's chief, Yukiya Amano, agreed to
provide support to Vietnam. This includes the nuclear watchdog sending delegations of experts to discuss
infrastructure, safety and other issues, on top of funding aid through technical projects.
Thermal Dependent
Vietnam Electricity Generation Capacity Mix, 2012e
e = BMI estimate. Source: UN Data, EIA, BMI
Similarly, in September 2011 a Japanese consortium known as the International Nuclear Energy
Development of Japan (INEDJ) signed an agreement with Vietnamese state utility EVN to jointly develop
the Ninh Thuan 2 nuclear power project in Vietnam. As part of the agreement, nuclear plant operator Japan
Atomic Power conducted a US$26mn feasibility and environmental study on the project and was set to
report the results, which include an assessment on tsunamis, to EVN in July 2013. Japan Atomic will also
provide consulting to EVN on the preparation of necessary documentation for site approval for Vietnam's
Ninh Thuan 2 nuclear plant, according to the Wall Street Journal. Japan Atomic would also provide or
Page 69
secure financing and insurance of up to 85% of the project's total coast, with Japan providing loans around
US$500mn for the project.
Vietnam's Song Da 5 also signed a contract in early February with Russian company NIAEP to send some
Vietnamese workers to build Russia's Rostov nuclear power plant. This is part of the training to build the
Ninh Thuan nuclear plant, with Vietnamese workers to be sent to Japan as well.
Despite concerns over Vietnam's readiness to adopt nuclear power, the country is at a more advanced stage
than other developing countries and already has cooperation agreements in place with South Korea, Japan,
the US, Canada, China and France. Vietnam has also passed an Atomic Energy Law - which has been in
effect since 2009 - and a national nuclear safety commission responsible to the Prime Minister, which was
established in July 2010. Vietnam was also planning to set up a new National Council for Atomic Energy
Development in May 2013. The council, headed by Vietnam's science and technology minister, will advise
the government on identify strategies and draw up key policies on nuclear energy development. It will also
coordinate with various agencies, governmental bodies and localities in developing nuclear
energy. However, even in its most optimistic outlook, the Vietnamese government does not expect nuclear
capacity to come online before 2020.
South Korean companies are also keen to build nuclear power plants in Vietnam. In March 2012, South
Korea signed an agreement with Vietnam to check the viability of building a nuclear power plant. South
Korea was expected to initiate the feasibility studies in April 2012 and these were scheduled to be
concluded in mid-2013. The US also appears keen to secure any future nuclear power plant contracts in
Vietnam, as the country sent a delegation in May 2013 to discuss the development of nuclear generation in
the US and Vietnam.
Geothermal: Making A Presence
In October 2012, a 25MW geothermal power plant was scheduled to be constructed in Dakrong District in
Central Quang Tri Province, Vietnam, according to the deputy chairman of Viet Nam Thermal Association,
Ta Huong. This will be the first power plant of its kind in Vietnam and has already secured licences by
provincial authorities. The geothermal plant will have the capability to operate 24 hours a day without being
affected by weather conditions such as sunlight, wind or waves. The plant will reportedly use hot dry rock
heat mining technology to generate power.
Page 70
ADB To Support Underinvested Transmission Network
Vietnam's electricity transmission network is in a poor condition and suffers from high levels of electricity
wastages, due to an inefficient grid system. According to EVN, electricity losses in the first five months of
2012 were over 5.3bn kWh; 11% of the total electricity production and purchase. This is significantly
higher than its South East Asian peers who have an electricity loss ratio of about 4-5% according Tran Viet
Ngai, chair of the Vietnam Energy Association. According to Ngai (cited from Intellasia), the losses are due
to old transmission lines, overloading, locking connectors, distribution wires and old substations.
Significant investment is therefore required to address these transmission losses and meet future demand for
grids. According to the National Power Transmission Corp (NPT) in June 2012, total demand for
investment capital to develop the electricity transmission network to 2020 reaches about US$10bn.
Transmission projects have so far borrowed only US$4bn-worth of official development assistance (ODA)
and commercial loans; the remaining US$6bn has not been arranged.
Vietnam is looking to change this. In November 2011, the NPT announced that Vietnam will develop
300-350 power transmission projects in the period up to 2015. This would require an annual investment of
US$1bn and the country is seeking foreign investment. The Asian Development Bank (ADB) has since
agreed to provide some of the financing.
In February 2012, the ADB and the State Bank of Vietnam signed documents for the first tranche of a US
$730mn loan facility to be provided by the ADB to improve the electricity transmission network of
Vietnam. The loan will be used to finance the Power Transmission Investment Programme, which is
designed to fulfil the increasing electricity demand of the industrial sector and households. The ADB is
expected to provide the funds in four tranches, with the programme scheduled to be completed in June
2020. The first payment of US$120.5mn will be provided through ordinary capital resources and will have a
term of 25 years. The funds from the first tranche will be utilised to build 648km transmission lines with a
voltage of 500 kilovolt (kV), and 100km transmission lines with 220kV voltage.
In May 2012, Vietnamese state-operated power company Ho Chi Minh City Power Corporation (HCMC
Power) has asked the Saigon municipal government to allow it to install power lines underground, reports
The Saigon Times. HCMC needs to invest VND17tn (US$816mn) in development by 2015, but has an
annual budget of just VND600bn (US$28mn). The company has therefore proposed to install underground
power lines in order to cut costs, comprising 18km of medium-voltage power lines and 43km of low-voltage
power lines. The entire city's power network is expected to be underground by 2025. However, structural
Page 71
changes need to be made before there is sufficient investment to meet the long-term demand for grids.
Vietnam's electricity transmission price remains low, averaging 6.58% of electricity prices during the
2008-2012 period. This is much lower than the global average price and needs to be raised to 10-12% of
electricity prices.
In July 2012, NPT started implementing a US$215mn power transmission line project which involves: the
437km, 500kV Pleiku-My Phuoc-Cau Bong transmission line; the 15.94km, 220kV Cau Bong-Hoc MonBinh Tan line in HCM City; and the 13.4km 220kV Cau Bong-Duc Hoa line in HCM City. The project is
financed by ADB (US$115mn) and by the French Development Agency (US$100mn). The project aims to
transmit electricity from power plants in the central region, imported electricity from Laos and Cambodia,
coal-fired power plants in Northern Vietnam to the southern provinces.
In January 2013, the Southern Electricity Corporation announced that it would invest nearly VND4.5trn
(US$225mn) for major power projects in 2012. These projects include a 56km sea cable system from Ha
Tien to Phu Quoc island - the EPC contract for the project was awarded to Italy's Prysmian Powerlink Sri
and power transmission networks in areas inhabited by Khmer people in Kien Giang, Soc Trang and Tra
Vinh provinces.
Water Treatment: Droughts Driving Demand For Services
Vietnam has significant potential for large-scale water treatment facilities and we are forecasting real
growth in the water infrastructure industry to average 6.0% per annum between 2013 and 2017. Despite the
presence of the Mekong River, Vietnam faces severe droughts periodically, with the drought in early 2010
reportedly one of the country's worst in 100 years, according to Time Magazine.
We believe that these droughts have the potential to increase in severity over the long term. Rapid
industrialisation throughout Vietnam is polluting the country's water supply at an increasing rate and
reducing the availability of potable water.
Page 72
Driving Demand For Water Treatment Services

Vietnam - Real GDP And Organic Water Pollutant Emissions Data
f= BMI forecast. Source: BMI, World Bank, Vietnam General Statistics Office
Many countries located along the Mekong River, such as China and Laos, are also keen to utilise the river's
hydropower potential for electricity generation, damming up major tributaries further up the Mekong River.
These countries have questionable environmental licensing regulations; thus, it is unclear if water resources
used for electricity supply are environmentally sustainable. This creates significant potential for severe
environmental consequences and further reduces the availability of clean water supply to Vietnam.
Consequently, large-scale water treatment facilities are needed to make up for this decline in water supply,
and we have seen the country offer several projects under a PPP framework.
Urbanisation in major Vietnamese cities is also rapidly contaminating their water sources, while at the same
time increasing their demand for potable water. Hanoi, for example, is reliant on ground water to meet its
water needs, with clean water demand estimated to be around 550,000m3 per day according to local media
reports. With urbanisation and economic growth, this demand for potable water is expected to surge to
1.0-1.5mn m3 per day. This would create a deficit in clean water resources and necessitate the use of
surface water resources, which are potentially contaminated.
Page 73
Various multilateral financial institutions are keen to finance these water utility projects, with the ADB
having already agreed to provide US$1bn in funds to improve the country's water supply system between
2011 and 2020. Indeed, the urban water supply projects in Vietnam are now mainly funded by ODA capital
and developed by local state-owned water supply companies, said Tran Tuong Lan, head of the Department
for Infrastructure and Urban Centers under the Ministry of Planning and Investment.
Most of the country's large-scale water utility projects are located near the main cities, Hanoi and Ho Chi
Minh City.
Vietnam has also recognised the need to improve its water infrastructure, and we have seen Vietnam offer
several large-scale water utility projects (mainly water treatment facilities) under a PPP framework.
According to the Vietnam Ministry of Construction, there are around 15 large-scale urban water supply
projects worth US$500mn that are in need of investment across Vietnam.
In addition, there is also a significant deficit in wastewater treatment facilities among Vietnam's industrial
parks. In August 2012, the Vietnam Department of Environmental Crime Control (under the Ministry of
Public Security) said that only 143 out of the 232 industrial parks in Vietnam have wastewater treatment
facilities. With Vietnam set to take a tougher stance on pollution, this could prompt companies to develop
the necessary wastewater treatment facilities.
Under the law on administrative sanctions to come into force on July 2013, the maximum penalty for
environmental violations will quadruple from the current VND500mn to VND2bn. In addition, the Ministry
of Public Security is coordinating with the Ministry of Natural Resources and Environment to revise the
2005 Environment Protection Law and map out an Ordinance on the Vietnam Environment Police. This is
expected to be issued in the third quarter of 2013.
Several foreign investors have expressed an interest in Vietnam's water utilities sector, particularly Japanand Philippines-based companies. For example, Japan-based clean water companies Metawater and TSS
are believed to be building the Bay Mau wastewater treatment plant in Hanoi, a project financed by Japan's
ODA coordinator, Japan International Cooperation (JICA). Another notable example is the recent
acquisitions by Philippine conglomerate Ayala Group. In May 2012 Ayala, through its subsidiary Manila
Water, had acquired stakes in two Vietnamese water utility companies. The company bought a 10% stake
in Nha Be Water Supply, a company that supplies potable water to a district in Ho Chi Minh. Manila
Water also bought a 49% stake in Kenh Dong Water Supply, the owner of the 300,000m3/day Thu Duc
Page 74
Water Treatment Plant. This makes Manila Water the largest foreign investor in Vietnam's water utilities
sector.
There are, however, many investors still deterred from Vietnam's water utilities sector, and we believe some
of the reasons are:
The inability for investors to determine the price of water sold to customers, which is currently set by
Vietnamese authorities. Given that most countries do not allow the private sector to set the price of water,
we believe this issue has more to do with Vietnam's lack of regulatory capacity to address and manage
downside risks for private investors.
The lack of incentives to attract investors to the sector. According to the HCMC Institute of Development
Studies (cited by the Saigon Times), private companies enjoy corporate income tax reductions and
exemptions, but unlike state-owned enterprises, they do not have priority access to preferential loans.
This is particularly important at the moment due to poor credit conditions globally.
The lack of clarity regarding the PPP framework for water utility projects. The Vietnamese government
had launched a pilot PPP mechanism in November 2010, but specific regulations for the different types of
infrastructure (including water) have yet to be completed by their respective agencies.
Major Projects Table - Energy & Utilities

Table: Major Projects - Energy & Utilities
Project Name
Value (US$mn)
Capacity/ Length
Companies
Timeframe
Status
1,200
293km
Petrovietnam Gas
Corporation (PV Gas)
-2014
Contract
Awarded (July
2011)
400km (6.4 bcm/

year)
Petrovietnam Gas
Corporation (PV Gas),
Vietsovpetro Joint
Venture Co,
Petrovietnam
Construction Joint
Stock Corporation (PVC)
Contract
Awarded
(March 2010)
1,000MW
Japan Atomic Power

Company (JAPC),
International Nuclear
Energy Development
Corporation of Japan
-2027
At planning
stage
(December
2012 Feasibility
study to be
completed by
March-2013)
2,000MW
PetroVietnam, Toyo Ink

Group
-2022
Contract
Awarded
(April 2013 BOT project
received
Oil & Gas Pipelines

Nam Con Son 2
Pipeline Project,
Southern Vietnam
B-O Mon Natural
Gas Pipeline
Project
Power Plants & transmission grids

Ninh Thuan 2
nuclear power
plant Unit 4, Vinh
Hai
Song Hau 2 coalfired power plant,

Hau Giang
3,500
Page 75
Major Projects - Energy & Utilities - Continued
Project Name
Value (US$mn)
Capacity/ Length
Companies
Timeframe
Song Hau 2 Coalfired power plant,

Hau Giang
3,500
Song Hau 2 coalfired power plant

phase -2, Hau
Giang
2,000MW
1,000MW
Song Hau 2 coalfired power plant

phase -1, Hau
Giang
1,000MW
Toyo Construction

Group

Group
-2022
At planning
stage
(February
2013 Malaysia's
Toyo Ink
Group signed
a
memorandum
of
understanding
(MOU) with
Vietnam's
industry
ministry for
the project;
Project to be
built in two
phases)
-2022
Contract
Awarded
received
government
approval)
-2021
Contract
Awarded
received
government
approval)
2019-
Contract
Awarded
(November
2013 Contract
awarded
based on prefeasibility
studies;
feasibility
studies to
begin in 2014)
Long Phu 2 coalfired power plant,

Soc Trang
Province
1,800
1,200MW
Son My Power
Centre (LNG) BOT
Project, Ham Tan
District
4,667
Vinh Tan 1 thermal

power plant, part 2,000
of Vinh Tan Electric
Centre, Tuy Phong
Tata Power
Status
government
approval)
3,000MW
International Power,
Sojitz Corporation,
PacifiCorp
-2019
Feasibility
studies/EIA
underway
(Oct 2011 Feasibility
study
prepared for
1950MW Son
My 1 power
plant)
1,200MW
Vietnam Coal and

Mineral Industries (TKV), -2017
China Power
International
Contract
Awarded
(August 2013)
Page 76
Project Name
districts, Binh
Thuan
Coal-fired power
plant, Dung Quat
Economic Zone,
Binh Son district,
Quang Ngai
Value (US$mn)
Capacity/ Length
Companies
Development Limited,
China Southern Power
Grid
Timeframe
Status
2,000
1,200MW
Sembcorp Utilities
2016-2021
Contract
Awarded
(October
2013)
1,060MW
Kiev Scientific Research

and Designing Institute
(JSC KIEP), Energo
Project Technology (LLC
EPT), Atomexportstroy, 2016-2020
(EVN), Government of
Russia[Sponsor],
Rosatom, E4 Group,
VTB
300MW
An Khanh Thermo
Power Joint Stock Co., -2016
Bank of China [Sponsor]
Project
finance
closure
1,320MW
Sumitomo
Delayed
(November
2013 Investor has
not yet
started
negotiations
with the
Ministry of
Industry and
Trade (MoIT)
over a BOT
contract.)
520MW
HydroChina
Corporation, Song Da
Group, Alstom
SA[Equipment], Agence -2015
Francaise de
Developpement (AFD),
(EVN)
Under
construction
(Received US
$100mn
financing from
AFD)
600MW
Khai Dich Vu Han Power

Engineering Co Ltd,
Thang Long
Thermoelectric, Wuhan -2015
Kaidi Electricity Power
Engineering Company
At planning
stage
(January
2012)
200MW
Phu Quoc Investment

and Development
Management Board,
World Bank[Financier]
At planning
stage
154MW
Alstom SA, Vietnam

National Coal-Mineral
Industries Group
(Vinacomin), Hydrochina -2015
Huadong Engineering
Corporation
Ninh Thuan 1
nuclear power
plant Unit 2, Thuan
Nam District
An Khanh Thermoelectricity Plant 2 481

in Pho Yen District
Coal-fired Power
Plant BOT Project,
Van Phong
Economic Zone,
Khanh Hoa
2,190
Huoi Quang
hydropower plant
project
Thang Long
thermo power
plant, Le Loi
Commune, Hoanh 645
Bo Dist, Quang
Ninh
Thermoelectric
plant, Ganh Dau
Commune
356.8
Dong Nai 5
hydropower plant
310
2015-2019
-2015
Contract
Awarded
(February
2013)
Page 77
Project Name
Value (US$mn)
Mekong Delta
Wind Power
Centre, Vinh Trach
Dong Commune
Capacity/ Length
Companies
Timeframe
500MW
Vietnam Development
Bank [Sponsor], Export- -2015
Import Bank of the
United States [Sponsor]
Under
construction
(May 2012)
Duc Long Gia Lai Group -2015

(DLG)
Cancelled
(October 2013
- Government
shuts down
Vietnam's
Dong Nai 6,
6A
hydropower
projects.)
4,000MW
Japan Atomic Power

Company (JAPC),
Energy Development
Feasibility
studies/EIA
underway
(December
2012 Feasibility
study to be
completed by
March-2013,
Four units to
be
constructed)
4,120MW

(JSC KIEP), Energo
Russia[Sponsor],
Rosatom, E4 Group,
VTB
Approved
1,060MW

(JSC KIEP), Energo
Russia[Sponsor],
Rosatom, E4 Group,
VTB
Approved
1,200MW
China Power
International
Development Limited,
CSG Limited, China
Southern Power Grid
2014-2018
At planning
stage
(September
2013)
2014-2018
At planning
stage (May
2013Sanjung
Merpati Sdn
Bhd decided
to terminate
agreement)
Dong Nai 6/6A

hydroelectriciy
plant
241MW
Ninh Thuan 2
nuclear power
plant, Vinh hai
12,000
Ninh Thuan 1
nuclear power
plant, Thuan Nam
District
10,000
Ninh Thuan 1
nuclear power
plant Unit 1, Thuan
Nam District
Vinh Tan 1 Power

Plant, Binh Thuan
1,750
Hai Duong CoalFired Power Plant

BOT Project
2,260
1,200MW
JAKS Resources,
Wuhan Kaidi Electricity
Power Engineering
Company
2014-2027
Status
Page 78
Project Name
Value (US$mn)
Vinh Tan 3 thermal

power plant BOT 1,100
project, Binh
Thuan province
BOT Project, Unit
2
Capacity/ Length
Companies
1,980MW
Harbin Electric
International (HEI), Vinh 2014-2018
Tan 3 Energy Joint
Stock Company (VTEC)
Contract
Awarded
(October
2013)
JAKS Resources,
Power Engineering
Company
2014-2018
At planning
stage (May
2013Sanjung
Merpati Sdn
Bhd decided
to terminate
agreement)
2014-2017
At planning
stage
(January
2013- Jaks
terminate
contract with
existing
partners,
signed with
new partners)
600MW

BOT Project, Unit
1
Timeframe
600MW
JAKS Resources,
Power Engineering
Company
At planning
stage
(September
2013)
2014-
At planning
stage
(October
2013)
-2014
Contract
Awarded (July
2010; The
commercial
operation of
the second
unit will start
at the
beginning of
2014)
2013-2017
Under
construction
(January
2013)
Da Nhim
hydropower plant
expansion project
90.1
80MW
Japan International
Cooperation Agency
(JICA)[Financier], Da
2014-2016
Nhim-Ham Thuan-Da Mi
Hydropower JSC
Vung Ang II
Thermal Power
Plant
1,700
1,320MW
Mitsubishi Corporation,
Vapco Engineers
Kien Luong CoalFired Power Plant

Complex (KLPP)
phase 2, Vietnam
Vietnam
Distribution
Efficiency Project
201
1,200MW
China Huadian
Corporation, Tan Tao
Energy Corporation
110 kV
Vietnam Electricity
Corporation, World
Bank[Financier]
Quang Trach 1
Coal-Fired Power
Plant, Quang Binh
Undersea (110KV)
Power Cable
Project (Ha Tien
Township - Phu
Status
2,250
1,200MW
JPAWORR Group,
PetroVietnam, EPF
Power,
Sumitomo[Sponsor]
2013-2015
Under
construction
(July 2012 Seeking
funds,
selected to
use local
power
equipment)
112
58km
World Bank[Sponsor],
EVN Southern
Power[Sponsor],
2013-2014
Under
construction
(November
2013 -
Page 79
Project Name
Value (US$mn)
Quoc Island), Kien
Giang
Capacity/ Length
Companies
Timeframe
Prysmian Powerlink SRL

Group
An Khanh Thermoelectricity Plant 1 160

in Pho Yen District
100MW
An Khanh Thermo
Power Joint Stock Co.
2013-
Under
construction
(December
2013)
Hai Phong 2
Thermal Power
Plant
Trung Son
Hydropower
Project, Quan Hoa 411
District, Thanh Hoa
Province
300MW
Hai Phong Thermo

Power Joint Stock Co
-2013
Under
construction
(October 2013
- Third
generator
connected to
the National
Grid at the
capacity of
300MW; Plant
No.2 is in
progress to
connect the
fourth
generator (the
last one) to
the National
Grid)
260MW
(EVN), Samsung
Construction & Trading
(Samsung C&T), World
Bank[Sponsor]
2012-2017
Under
construction
(November
2012)
Duyen Hai 3 Coalfired Power Plant,

Tra Vinh province
1,200
O Mon IV
combined cycle
power station (part
of O Mon thermal
power complex,
793.5
Can Tho city)
Status
Installation
kicked off on
November 14,
2013, with
completion
date
announced as
January 13,
2014)
1,245MW
750MW
Bank of China[Sponsor],
(EVN), ICBC (Industrial
and Commercial Bank
of China), China
2012-2017
Development Bank,
Eastern Electrification,
Southwest Design
Institute, Zhejiang
Power Construction
Under
construction
(December
2012 commercial
operation for
the first
turbine within
46 months
and the
second one
will start
operation
within 50
months.)
AF Group, Can Tho

Thermal Power
Company Limited, Asian 2012-2017
Development Bank
(ADB)[Financier]
Contract
Awarded
(November
2012 Contract
awarded to
AF-Consult
Switzerland
OE)
Page 80
Project Name
Value (US$mn)
Quynh Lap 1 coalfired power plant,

Central Nghe An
province
1500
Grid revamping
project; 8km of
medium-voltage
power lines and
43km of lowvoltage power
lines
Capacity/ Length
Companies
1,200MW
Vietnam National CoalMineral Industries Group

(Vinacomin), No 1
2012-2016
Construction
Consultancy JSC
Under
construction
(July 2012 selected to
use local
power
equipment)
HCMC Power
Corporation
At planning
stage (May
2012)
816
Timeframe
2012-2015
Status
O Mon 2 gasbased power plant,

part of O Mon
thermal power
complex, Can Tho
city
720MW
Can Tho Thermal Power 2012-2015

Company Limited
At planning
stage (August
2012)
O Mon 3 gasbased power plant,

part of O Mon
thermal power
complex, Can Tho
city
700MW
Can Tho Thermal Power 2012-2015

Company Limited
At planning
stage (August
2012)
1,400MW
STFE, Khang Thong

Group
Feasibility
studies/EIA
underway
(Feasibility
study
contract
signed with
Russia-based
Zarubezhener
goproekt
Group (Phase
I))
500km
Power Transmission
Company No. 3, ExportImport Bank of the
2012-2013
United States[Sponsor],
General Electric
Completed
(June 2013)
Trisun International
Development, KGC
Company
2012-
At planning
stage (March
2012 contract
awarded)
2012-
At planning
stage (June
2013- ACO
Investment
Group is
seeking to
build Solar
Farm)
Thermo-power
plant, Binh Dinh
972
Pleiku-Phu Lam
500kV
transmission line,
part of NorthSouth power
transmission
Waste plasmaconverted gasfired Power Plant
Project, Ho Chi
Minh City
40
400
2012-2014
Solar Farm, Binh

Thuan province
50MW
ACO Group
Page 81
Project Name
Value (US$mn)
Phuong Mai No 1
Wind Power Plant,
Nhon Hoi
60.25
Economic Zone,
Binh Dinh province
Capacity/ Length
Companies
Timeframe
Status
30MW
Clean Energy, Phuong

Mai Windpower
2012-
Under
construction
-2012
Suspended
(April 2012 Project
suspended
due to
environmental
concerns)
2011-2020
In tender/
Tender
launched
(October
2012)
2011-2018
Contract
Awarded
(April 2013 Marubeni
Corporation
and Korea
Electric
Power
Corporation
received
contract to
construct,
own and
operate the
project)
2011-2018
Under
construction
(August 2013
- Company
targets to
commission
the two
600MW units
of the Song
Hau 1 in 2017
and 2018.)
1,200MW
Alstom SA, Electricity of

Vietnam (EVN), Song Da 2011-2017
Group
Under
construction
(May 2013 Project is
constructed in
three phases,
First phase to
be completed
by March
2016)
1,200MW
PetroVietnam Power
Corporation, Toshiba,
Babcock & Wilcox
Beijing Company
(BWBC), Petrovietnam
Under
construction
(July 2013 US Exim Bank
withdraws
Thermal power
plant, Ly Son
Island, Quang Ngai
province
Power
Transmission
Investment
Program (invovles
building 648km of
transmission lines
in first tranche)
730
860km
Nghi Son 2 Coal

Fired Power Plant
25-year BOT
Project, Thanh Hoa
2,300
1,200MW
Song Hau 1 Coalfired Power Plant,

Hau Giang
province
1,500
1,200MW
Asian Development
Bank (ADB), National
Power Transmission
Corp (NPT)
Japan Bank for

International
Cooperation, Korea
Exim Bank, Korea
Electric Power
Corporation (KEPCO),
Marubeni, Vietnam
Industries Group
(Vinacomin)
PetroVietnam, Japan
International
Cooperation Agency
(JICA)[Financier]
Lai Chau
hydropower plant,
Lai Chau province
1831
Thai Binh 2 coalfired power plant,

Thai Binh province 1,600
2011-2016
Page 82
Project Name
Mong Duong 2
coal-fired BOT
power plant
project, Quang
Ninh
Value (US$mn)
1,900
Capacity/ Length
Companies
Construction Joint
Stock Corporation
(PVC), Sojitz
Corporation, Daelim
Industrial Company
Timeframe
financing due
to
environmental
concerns.)
Doosan Heavy
Industries &
Construction Co., Posco
Energy Ltd., AES, China
Investment Company
2011-2015
(CIC), Hoa Binh
Construction and Real
Estate Trading Joint
Stock Co (HBC)
Under
construction
(September
2013)
1,200MW
Alstom SA, Teknik

Janakuasa Sdn Bhd
2011-2015
Project
finance
closure (To
start
construction
in 2011;
Project fully
financed by
Huadian
Engineering)
1,080MW
Vietnam Electricity
LILAMA Vietnam
Machine Installation
Corporation[Equipment],
Export-Import Bank of
2011-2015
Korea (Eximbank)
[Sponsor], Asian
Development Bank
(ADB)[Sponsor],
Hyundai Engineering &
Construction
Under
construction
(June 2013 boiler drum
successfully
installed in
the plant)
Petrovietnam Technical
Services Joint Stock
Corporation (PTSC)
2011-2014
At planning
stage (Project
is comprising
with two units
of 600MW
each)
2011-2014
Contract
Awarded (July
2012 - GE will
supply one
steam turbine
generator for
the project)
2011-2014
Under
construction
(November
2013 Temporary
operations
begins,
project is due
for
completion in
Q1 2014)
12,40MW
Duyen Hai 2 CoalFired Power Plant,

Tra Vinh Province
1,500
Mong Duong 1
Power Plant Coalfired PPP Project,
Vietnam
1,700
Long Phu 1 coalfired power plant,

Soc Trang
Province
1,200
Cong Thanh CoalFuelled Power

Plant, Nghi Son
Economic Zone,
619
Thanh Hoa
1,200MW
660MW
Pleiku-My PhuocCau Bong 500KV

Transmission Line
Project
447
Status
437km (500 kV)
General Electric, Cong

Thanh Corporation
National Power
Transmission Corp
(NPT), Asian
Development Bank
(ADB), Agence
Francaise de
Developpement (AFD)
Page 83
Project Name
Nam Cong 2 & 3
power plants,
Attapeu, Laos
Value (US$mn)
135
Capacity/ Length
111MW
Companies
Timeframe
Status
2011-2013
Under
construction
(February
2011; Licence
Granted)
PetroVietnam, Dakdrinh
Hydropower Joint Stock 2011-2013
Company
Under
construction
(US$178
credit
contract
signed with
Credit
Agricole Corp;
First turbine
to be
operational in
September
2013 with the
second in
December
2013)
Hoang AnhAttapeu
Electric
Dadrinh
Hydropower Plant,
along Tra Khuc
River, Quang Ngai
Province
170
Solar power
generation plant,
Quang Binh
province
125MW
14
Wind Power
Project, Tram
Hanh Commune,
Da Lat City, Lam
Dong
300MW
Ninh Loan Wind

Power Plant, Duc
Trong District, Lam
Dong
Dakrinh
hydropower plant,
Kon Turn province
160
2011-2013
At planning
stage (July
2011)
2011-2013
Under
construction
(July 2011)
125MW
PV Power,
PetroVietnam, Dakdrinh 2011-2013
Hydropower Joint Stock
Company
Under
construction
(December
2012 - Project
will be put
into operation
in December
2013.)
1,200MW
PetroVietnam, Toshiba,
Japan Bank for
International
Cooperation[Sponsor,
Sumitomo Mitsui
2011-2013
Bank[Sponsor], LILAMA
Vietnam Machine
Installation Corporation,
Sojitz Corporation
Under
construction
(October 2013
- Project
should be
completed by
December
2013, project
is divided into
two units of
600MW
each.)
Vung Ang 1 Coalfired Power Plant,

Ha Tinh province
1,595
2011-2013
Project
finance
closure (June
2011- US
$12mn loan
approved
from Korea
Eximbank)
Page 84
Project Name
Value (US$mn)
Capacity/ Length
Companies
Timeframe
Status
128.17km (220 kV)
Vietnam Electricity
Corporation, National
Power Transmission
Corp (NPT)
2011-2013
Completed
(October
2013)
66MW
Hoang AnhAttapeu
Electric
2011-2013
Approved
(February
2011; Licence
Granted)
45MW
Hoang AnhAttapeu
Electric
2011-2013
Approved
(February
2011; Licence
Granted)
2011-
At planning
stage
(February
2011 Feasibility
studies
completed)
Chugoku Electric Power

Co, Sumitomo Mitsui
Bank, Nippon Export
2011and Investment
Insurance of
Japan[Sponsor]
Project
finance
closure
(February
2011 - US
$51mn loan
granted by
Sumitomo
Mitsui
Financial
Group)
715MW
Electricite de France
(EDF)
2011-
Project
finance
closure (EDF
selected as
investor)
Da M'bri
Hydropower Plant, 85.36
Lam Dong
75MW
DONG Energy, Southern 2011Region Hydropower
Under
construction
A solar and wind

power
development, Ninh 249
Thuan province
124.5MW
220KV Dak NongPhuoc Long-Binh 67

Long Transmission
Line Project
Nam Cong 2
power plants in
Attapeu, Laos
Nam Cong 3
power plants in
Attapeu, Laos
78.98
55.97
1.1mn-volt ultra
high voltage (UHV)
electric power
transmission
project near Ho
Chi Minh City
Tokyo Electric Power

Company Co. (TEPCO)
Hydropower plant
62.5
Phu My 2.2
thermal power
station
Hai Phong 1
thermo power
plant
Duyen Hai 1 Coalfired Power Plant,

Tra Vinh province 1,570
The Vinh Tan 2

thermopower plant 1,130
300MW
2011-
Approved
(Received
investment
licences)
-2011
Completed
(Q2 2011 Generator No
1 and 2 joined
national grid)
1,245MW
Chinese Oriental Power

Group, Electricity of
2010-2015
Vietnam (EVN)
Under
construction
(January 2013
- Financing
secured)
1,244MW
(EVN)
Under
construction
(April 2013)
2010-2014
Page 85
Project Name
Wind Farm, Bac
Lieu, Cuu Long
Province, Mekong
Delta
Value (US$mn)
247
Capacity/ Length
99.2MW

Complex (KLPP)
phase 1
Companies
Cong Ly Construction,
General
Electric[Equipment]
Timeframe
Status
2010-2014
Under
construction
(October
2012- first
phase (15MW)
completed;
Secured
credit for II
phase)
1,200MW
China Huadian
Corporation[Constructio 2010-2013
n], Tan Tao Energy
Corporation
Under
construction
(July
2010; The
commercial
operation of
the first unit
will start at
the end of
2013)
Coc San
hydropower plant, 41
Vietnam
29.7MW
Zhejiang Power
Construction, Colben
Energy JSC
2010-2013
Under
construction
(February
2013)
Dak Mi 2
Hydropower plant
96MW
Song Da Group
2010-2013
Suspended
(October 2012
- Construction
halted)
64MW
Viet A Joint Stock

Commercial
Bank[Financier], Buon
Don Hydropower Joint
Stock Co
2010-2013
Completed
(November
2013 - Project
is going to
become
operational
soon)
200MW
Trung Nam Investment

and Construction
2010-
Under
construction
(September
2013)
1,200MW
Tan Tao Energy

Corporation, China
Harbor Engineering
Company (CHEC)
2010-
Delayed
(October 2013
- Yet to reach
financial
closure)
2,000MW
Tan Tao Energy

Corporation, China
Harbor Engineering
Company (CHEC)
2010-
Delayed
(October 2013
- Yet to reach
financial
closure)
440MW
Wuhan Kaidi Electric

Power Company Ltd,
Power Engineering
Company, Vietnam
2009-2013
Industries Group
(Vinacomin), BNP
Paribas[Sponsor], Bank
2,000
Srepok 4A
Hydropower Plant
Project
128
55
Wind farm in
Thuan Bac district, 500
Ninh Thuan
Kien Luong Coalfired Power
Complex (Phase
2), Kien Giang
Province
Kien Luong Coalfired Power
Complex (Phase
3), Kien Giang
Province
Mao Khe CoalFired Power Plant,
Quang Ninh
Province
577
Completed
(April 2013)
Page 86
Project Name
Value (US$mn)
Capacity/ Length
Luoi hydroelectric
plant, Thua Thien
Hue
202.1
170MW
Ba Thuoc 2
hydropower plant
project
Hua Na
Hydropower Plant,
Que Phong, Nghe 286
An Province
Nam Chien
hydropower plant
BO project, Son La
province
300
2009-2012
Completed
(April 2012)
760MW
PetroVietnam
Completed
(November
2011)
180MW
PetroVietnam Power
Corporation, LILAMA
Vietnam Machine
Installation Corporation, 2008-2013
Hua Na Hydropower
Joint Stock Co
Completed
(The plant
was
inaugurated in
September
2013)
Vietnam National CoalMineral Industries Group

(Vinacomin)[Financier], 2008China National Heavy
Machinery Corporation
(CHMC)
Suspended
(January
2013;
Construction
halted as
chinese
contractor
quit in August
2012; 55%
completed)
170MW
Central Hydropower
JSC, Cavico
Corporation
2007-2012
Completed
141MW
Construction
Corporation No. 1,
Dakdrinh Hydropower
Joint Stock Company
2007-2011
Completed
(October 2011
- Completed
without
foreign
guidance)
253.3
Dak R'Tih
hydropower plant,
Gia Nghia town,
Dak R'Lap district, 192
Dak Nong province
Status
Under
construction
Nong Son thermal

power plant
A Luoi Hydropower
Plant, Thua Thien 155.5
Hue Province
Cavico Corporation,
Vietnam Bank for
Agriculture and Rural
Development
Timeframe
Hoang Anh Gia Lai Joint

Stock Company (HAGL),
Hoang Anh Thanh Hoa 2009-2012
Hydroelectric Joint
Stock Company
72
Nhon Trach 2 gasbased power plant,

Ong Keo Industrial 470
Park, Dong Nai
province
Companies
of China[Sponsor],
WULFF
2009-2011
200MW
Song Da Group, Bharat 2005-2013

Heavy Electricals (BHEL)
Under
construction
(February
2013 - First
100MW unit
commissione
d)
Son La
hydropower power
plant, Muong La
2900
district, Son La
province
2,400MW
(EVN)[Sponsor]
Completed
Wind power plant,

BinhThuan
440
200MW
Saigon Invest Group
2005-2012
Approved
(October
2010)
Page 87
Project Name
Value (US$mn)
Wind power
project in Vinh Tan
and Vinh Phuoc,
Soc Trang
Capacity/ Length
Companies
Timeframe
Status
300MW
EAB Group, Trasesco
At planning
stage
(November
2013)
10MW
ScottishPower
Renewables
Approved
(May 2011)
Coal-fired power
plant, Hai Lang
District, Quang Tri
Economic Zone
3,000MW
PHI Group, Sao Nam

Group
Contract
Awarded
(January
2012-MoU
signed)
Song Bung 4
hydropower EPC
project, Bung River
156MW
Alstom SA, Hydrochina

Huadong Engineering
Corporation
Contract
Awarded
(February
2012)
Tidal energy farm
40
Coal-fired power
plant, Quang Tri
province
EGAT
Pedco Waste-topower plant, Hanoi
Han & Han, Pedco

Complex (KLPP)
phase 3, Vietnam
2,000MW
China Huadian
Corporation, Tan Tao
Energy Corporation
Ninh Thuan 2
nuclear power
plant Unit 2, Vinh
Hai
Japan Atomic Power

Company (JAPC),
Energy Development
Ninh Thuan 2
nuclear power
plant Unit 3, Vinh
Hai
Japan Atomic Power

Company (JAPC),
Energy Development
Lai Chau
hydropower plant
phase 1, Lai Chau
province
400MW
Alstom SA, Electricity of

Vietnam (EVN), Song Da
Group
Thermo-power
plant, Binh Dinh
STFE, Khang Thong

Group
Thermo-power
plant, Binh Dinh
STFE, Khang Thong

Group
Song Hau 2 Coalfired power plant

(Phase I), Hau
Giang
Toyo Construction
Toyo Construction
Contract
Awarded (July
2010)
Under
construction
(May 2013;
Project is
constructed in
three phases,
First phase to
be completed
by March
2016)
Page 88
Project Name
(Phase II), Hau
Giang
Value (US$mn)
Capacity/ Length
Companies

(Phase II), Hau
Giang
Toyo Construction
Wind Farm Phase

I, Bac Lieu, Cuu
Long Province,
Mekong Delta
General
Electric[Equipment]
Wind Farm Phase

II, Bac Lieu, Cuu
Long Province,
Mekong Delta
General
Electric[Equipment]
Timeframe
Status
-2020
Project
finance
closure (April
2013)
2015-2020
At planning
stage
(September
2013 Seeking PPP
Investment)
2015-2020
At planning
stage
(September
2013 Seeking PPP
Investment)
2015-2020
At planning
stage
(September
2013 Seeking PPP
Investment)
2015-2019
Project
finance
closure (July
2013; Project
is part of US$
470 million
HCMC
Environmental
Sanitation
Project/
Scheme
which also
includes
improvement
of drainage
system in the
Nhieu Loc Thi Nghe
canal)
Water
Yen Xa Water
Treatment Plant
PPP, Hanoi
642.85
Song Hau 1 Water

Treatment Plant
PPP Project Phase I, Can Tho 600
City
Song Hau 2 Water
Treatment Plant
PPP Project Phase I, Can Tho
City
Song Hau 3 Water
Treatment Plant
PPP Project Phase I, Can Tho
City
98.55mn m3 per
year
Hanoi Water Drainage

Company, ODA
[Sponsor]
182.5mn m3 per
year
365mn m3 per year
73mn m3 per year
Thanh My Loi
Ward Wastewater
Treatment Plant
World Bank
Page 89
Project Name
Value (US$mn)
Capacity/ Length
Western West
Lake waste water
treatment plant,
Hanoi
144
22.41mn m3 per
year
Nhieu Loc-Thi
Nghe wastewater
treatment plant
(second phase),
Thanh My Loi
Ward, District 2,
Ho Chi Minh City
480
Companies
310.25mn m3 per
year
Timeframe
Status
-2015
At planning
stage (July
2012)
2014-2019
At planning
stage (July
2013; July
2012 Received
HCM City
approval)
Phuc Hoa Water

Resource Project,
Ho Chi Minh City
Asian Development
-2014
Government of Vietnam
Project
finance
closure (June
2011;
Financing is
for the
construction
of two new
irrigation
systems for
agricultural
development)
Tan Hiep 2 water

treatment plant,
Ho Chi Minh City
100
109.5mn m3 per
year
Saigon Water Supply

Corporation (Sawaco)
2013-2024
At planning
stage (August
2013)
Thu Duc 4 water

treatment plant,
Ho Chi Minh City
130
109.5mn m3 per
year
Saigon Water Supply

2013-2024
At planning
stage (August
2013)
Tan Hiep 3 water

treatment plant,
Ho Chi Minh City
162
109.5mn m3 per
year
Saigon Water Supply

2013-2024
At planning
stage (August
2013)
Thu Duc 5 water

treatment plant,
Ho Chi Minh City
176
182.5mn m3 per
year
Saigon Water Supply

2013-2024
At planning
stage (August
2013)
109.5mn m3 per
year
Commerzbank[Sponsor]
, Construction
Corporation No. 1,
Saigon Clean Water and 2013-2014
Investment Joint Stock
Company, PassavantRoediger
Under
construction
(April 2013)
10.95mn m3 per
year
Saigon Infrastructure
Real Estate Investment
(SII), HFIC Investment
Joint Stock Company,
Tuan Loc Company
2013-2014
Under
construction
10km
Saigon Water Supply

Corporation (Sawaco),
Asian Development
2012-2014
Project
finance
closure (June
2012 - US
$138mn loan
from ADB)
Thu Duc 3 water

treatment plant,
Linh Trung Ward,
Thu Duc District,
Ho Chi Minh City
58
Water supply
project, Pleiku, Gia
Lai province
9
Water pipeline
system project
(Binh Thai
intersection [Thu
Duc District] - Dien 154
Bien Phu Street
near Saigon
Bridge), Ho Chi
Minh City
Page 90
Project Name
Value (US$mn)
Capacity/ Length
29
Japan International
Cooperation Agency
(JICA), Metawater,
4.86mn m3 per year Environment Investment 2012-2014
Construction, Hanoi
Water Drainage
Company
Tra Bong water

supply project,
Binh Son district,
Quang Ngai
province
190
73mn m3 per year
Anh Phat Water Supply

Group Joint Stock Co
2012-
Under
construction
(April 2013)
Ha Dong waste
water treatment
plant (first phase),
Hanoi
20
73mn m3 per year
ODA [Sponsor]
2012-
At planning
stage (July
2012)
Bay Mau PPP

WWTP under II
Hanoi Drainage
Project , Vietnam
Companies
Timeframe
Status
Under
construction
(November
2012)
Water supply
project, Van Phong 4.8
Economic Zone,
Khanh Hoa Provinc
10.95mn m3 per
year
2012-
Under
construction
(May-2013)
Son Tay water

treatment plant,
Hanoi
3.27mn m3 per year
2012-
At planning
stage (May
2013)
-2012
Completed
(June 2012)
Saigon Water Supply

2011-2015
Under
construction
(September
2011)
Japan International
Cooperation Agency
(JICA), Center of Urban
Flood Control
2011-2015
Under
construction
12
Water pipeline
system project
(Binh Thai
intersection - Thu
Duc water plant),
Ho Chi Minh City
12.4km
Seven water
supply projects,
Ho Chi Minh City
240
Binh Hung
wastewater
treatment plant
second phase,
Binh Chanh
District, Ho Chi
Minh City
80
210.2mn m3 per
year
Water supply and

irrigation system
project, south of
Vietnam
Wastewater
Treatment Plant,
Binh Duong
Asian Development
Bank (ADB), Saigon
Water Supply
329
Asian Development
Bank (ADB)
2011-2014
Project
finance
closure (US
$85mn loan
from ADB and
French
government;
The rest from
Vietnamese
government)
95
Binh Duong Water

Supply Sewerage
Environment Co Ltd
(BIWASE), Japan
International
Cooperation Agency
(JICA)
2011-2013
Completed
(June 2013)
6.4mn m3 per year
Page 91
Project Name
Value (US$mn)
Capacity/ Length
Companies
Timeframe
Status
2011-2012
Approved
(September
2011 Received
approval from
Tay Ninh
provincial
People's
Committee;
Capacity 300 tonnes/
day)
190
Nihon Suido
Consultants, JFE
Holdings, Japan
International
Cooperation Agency
(JICA)[Sponsor]
2011-
Project
finance
closure
(December
2012 - US
$2mn from
JICA for
feasibility
study)
Yen So
Wastewater
Treatment Plant
250
PPP Project,
Hoang Mai District,
Hanoi
Japan International
Cooperation Agency
(JICA), Hanoi Water
Drainage Company,
Gamuda
2008-2013
Completed
(September
2013)
World Bank[Sponsor],
Asian Development
Bank (ADB)[Sponsor]
2003-2012
Completed
(April 2012 US$317mn
first phase
under
construction;
Second
phase to cost
US$470mn)
Kenh Dong Water

Supply Joint Stock Co,
Manila Water Company
(MWC), Ayala
Corporation
2003-2012
Completed
(April 2012)
Sewage treatment
plant, Ben Rong
commune, Go Dau
district, Tay Ninh
Vietnam Green
Environment Company
14.4
Hoa Lien
Wastewater
treatment PPP
project, Da Nang
city
Nhieu Loc-Thi
Nghe Canal Basin
environmental
sanitation project
787
Kenh Dong water

treatment BOT
project, Ho Chi
Minh City
Phu Do
Wastewater
Treatment Plant
PPP, Hanoi
73mn m3 per year
73mn m3 per year
144
700
Green waste
treatment plant,
Thu Thua district,
Long An Province
73.55mn m3 per
year
Hanoi Water Drainage

Company
At planning
stage (June
2012 Seeking
Finance)
Vietnam Waste
Solutions Co. (VWS)
At planning
stage (August
2012 Design,
feasibility,
geological
study
completed;
Capacity 40000 tonnes/
year)
Page 92
Project Name
Value (US$mn)
Capacity/ Length
Companies
Timeframe
Status
Yen So waste
water treatment
plants, Ha Noi
Bay Mau Lake
waste water
treatment plants,
Ha Noi
Dam Bay and West
Lake waste water
treatment plants,
Ha Noi
Yen Xa waste
water treatment
plants, Ha Noi
Western West
Lake waste water
treatment plants,
Ha Noi
Son Tay Nine
waste water
treatment plants,
Ha Noi
na = not available/applicable. Source: BMI Key Projects Database
Residential/Non-Residential Building - Outlook And Overview

Table: Vietnam Residential And Non-residential Building Industry Forecasts, 2012-2017
2012
2013e
2014f
2015f
2016f
2017f
Residential and Non-residential

Building Industry Value As % of
Total Construction
67.3
66.2
66.5
66.9
67.2
67.6

Building Industry Value, VNDbn
120,647.8
126,821.7
142,262.6
159,679.1
178,529.8
199,417.8

Building Industry Value, US$bn
5.8
6.1
6.9
7.9
8.8
10.0

Building Industry Value Real
Growth (%)
1.0
-1.5
6.4
7.0
6.8
6.8

Building Industry Value as % of
GDP
3.7
3.5
3.5
3.5
3.5
3.5
Page 93
Table: Vietnam Residential And Non-residential Building Long-Term Forecasts, 2018-2023
2018f
2019f
2020f
2021f
2022f
2023f

Building Industry Value As % of
Total Construction
68.0
68.4
68.8
69.2
69.6
69.9

Building Industry Value, VNDbn
222,439.1
248,035.7
276,551.1
307,873.6
342,636.8
380,621.9

Building Industry Value, US$bn
11.2
12.7
14.2
15.9
17.8
19.9
Energy and Utilities Infrastructure

Industry Value As % Of Total
Infrastructure
6.6
6.7
6.7
6.6
6.6
6.5

Building Industry Value as % of
GDP
3.5
3.5
3.5
3.5
3.5
3.5
We expect the residential and non-residential building sector to see a significant recovery in 2014. Real
growth for the sector is forecast to contract by 1.0% in 2013, while we believe the pace will pick up to reach
6.4% in 2014. Our optimistic outlook for Vietnam's buildings sector is primarily driven by the country's
easy monetary conditions, which will make it conducive for developers to start building and help lift
demand for commercial property. In an attempt to boost economic growth, the central bank brought its
policy rate down to 7.00% in May 2013; the lowest policy rate since December 2009. Inflation remains
relatively benign, thus we believe the Vietnamese central bank will continue to maintain an accommodative
policy stance throughout 2013 and 2014 (we are forecasting the benchmark interest rate to remain at 7.00%
by end-2014).
Page 94
Recovering After 2012

Residential And Non-Residential Building Industry Forecasts
10
200,000
100,000
2018f
2017f
2016f
2015f
-5
2014f
2012
2011
2013e
300,000
Building Industry Value, VNDbn (LHS)

Building Industry Value Real Growth (%) (RHS)
e/f = BMI estimate/forecast. Source: BMI, Vietnam General Statistics Office
We believe that this recovery will be driven by the non-residential buildings sector, rather than the
residential building sector. Large inflows of foreign capital into the real estate market, poor economic
conditions in Vietnam and loose monetary policy in recent years have led to an oversupply in the residential
building sector. This oversupply of units has prompted a sharp decline in land and real estate prices as
investors aggressively lower their asking prices to offload their units.
To compound the problem, many of the real estate companies have taken on large amounts of debt to fuel
their building activity in previous years. With a sizeable part of their real estate stock unsold, many of them
are facing difficulties repaying their loans and are unable to take on new projects. Indeed, Vietnamese banks
are wary about providing credit to real estate developers as they already account for a significant portion of
their debts - 13% of total bad debts in the banking system according to the State Bank of Vietnam in
December 2012.
Although the aggressive rate cuts taken by the government in recent months could reignite demand for
housing, but the scale of the oversupply makes any quick price escalation unlikely. According to
Page 95
Vietnamese investment group Dragon Capital in September 2012, the current stock of apartments could
take seven years to be fully absorbed by the market unless demand stimulus measures are executed.
We do believe, however, that the residential building sector is starting to show early signs of improvement.
Although the sector is still suffering from significant oversupply and falling prices, unsold inventory of new
residential units has fallen back to more moderate levels by historical standards. Unsold apartments as a
share of total units under construction fell from 30.3% in Q412 to 27.7% in Q213, while unsold villas and
townhouses fell from 54.3% to 10.7% over the same period. In addition, the rate of decline in housing
prices is slowing down, which could indicate growing demand for property. The Vietnam Real Estate Index,
which tracks transaction prices of highly liquid apartments in Hanoi and Ho Chi Minh City, fell by 8.2% yo-y in August 2013, significantly lower than the contraction of 15.2% y-o-y in August 2012.
Signs Of Bottoming
Vietnam - Real Estate Index
Source: BMI, Bloomberg
We have also seen an increase in foreign investment into the Vietnamese residential sector. According to
statistics from the Ministry of Planning and Investment, the real estate sector attracted US$588.1mn worth
of FDI inflows in the first eight months of 2013. The sector achieved the second highest amount of FDI
Page 96
inflows amongst the 18 sectors during that period, accounting for 4.7% of the country's total FDI inflows.
This increase in FDI inflows into the residential sector could continue over the coming years as the
government is set to lift existing restrictions on foreign ownership of real estate in Vietnam. The proposal
for these measures, submitted by the Ministry of Construction, is expected to be approved by the end of
2013.
The proposal will allow foreign organisations including investment funds, banks, representative offices of
multinational companies, as well as individuals who possess a valid visa, to purchase and own residential
properties in Vietnam. The proposal has been well received by local developers, while surveys conducted
by various real estate agencies suggest that foreign investors generally view the move as a highly positive
development for the property market. At present, only 427 out of 80,000 expats in Vietnam are eligible to
own properties in Vietnam, but there is growing demand to ease this regulation and allow all foreigners to
own properties in Vietnam.
However, foreign investors have also highlighted complicated regulations, inefficiencies with the regulatory
authorities, the lack of liquidity, and other delays throughout the entire process of purchasing a property, as
key factors making the Vietnamese market less attractive relative to the region. Accordingly, we believe
that more aggressive reforms will be needed to boost foreign participation in the Vietnamese property
market over the long run (so far, progress has been slow on this front). For now, we believe that domestic
investors will remain the main driver of the property market, and given that general sentiment towards
Vietnam's economic prospects in 2013 and 2014 remain relatively cautious, we believe that demand for
residential properties will remain weak going into 2014.
Besides relaxing foreign ownership, the Ministry of Construction (MoC) was also seeking approval from
the government in April 2013 to turn commercial housing into houses for lease. This could ease financial
pressures on real estate companies and allow people from low-income groups to secure housing. At present,
rented houses account for more than 6.3% of people who own houses in Vietnam, according to the MoC.
Around 14% and 19% of all housing in Hanoi and in HCM City are for rent respectively, with the rest of the
cities around 5%. A national housing strategy approved in 2011 had aimed to raise the proportion of rental
housing to 20% by 2015 and 30% by 2020. As of June 2013, the MoC was still finalising the rental housing
plan.
In June 2013, the Vietnamese government approved a VND30trn stimulus package to provide loans for
purchasing and completing low-cost housing, though the impact of the stimulus package is expected to be
limited given its relatively small scale. The demand for affordable houses is still robust, as residential
Page 97
development in the past has largely focused on high-end customers. The Vietnamese government is keen to
meet this demand. For example, there are plans to build 2.7mn m2 of social housing by the end of 2015 in
HCM City. The social housing programme is expected to provide accommodation for 100,000 college
students and 93,000 workers, as well as 17,500 apartments for low income earners. In Hanoi, city
authorities have announced in July 2013 that they will supply 15,500 apartments for low-income people by
2015. The project, which is in its first phase, is expected to cost US$402mn.
The MoC had also introduced Circular No 02/2013, which allows companies to convert the apartment
structure of commercial housing projects to low-cost housing. As of August 2013, 50 housing projects,
valued at around US$1bn, had been given permission to convert to low-cost housing.
Besides government measures, other upside risks for the residential sector are Vietnam's attractive
macroeconomic and population fundamentals. Rising incomes among Vietnamese consumers and rapid
urbanisation rates will boost demand for housing and commercial construction projects, such as malls and
hotels, over the coming years. Meanwhile, the country's private consumption growth is expected to remain
resilient, while the unemployment rate will remain at historical lows over the long term. These factors
would also ensure that the demand for housing and commercial projects remains robust over the long-term.
Non-Civil Building To Outperform
We believe that the main driver of growth for the residential and non-residential building sector is the nonresidential sector. Although the lack of external demand for Vietnam's manufacturing goods is set dampen
the demand for industrial buildings (such as factories and warehouses) over the coming years, the demand
for Vietnam's resources could remain robust and this could drive demand for energy-related facilities and
non-residential buildings. A key sector is the petrochemicals industry. Around nine petrochemicals projects
are at the planning stage and are expected to be completed by 2025, with foreign investment to be sought
for six of the plants managed by PetroVietnam. The country is racing to meet growing demand for
petrochemicals - to reach about 5.4mn tonnes per annum by 2020 - and a supply shortfall is expected to
remain, even after the completion of the planned projects. The projects include a facility with 1mn tonnes
per annum (tpa) polyethylene, 500,000tpa polypropylene and 400,000tpa PVC capacity, according to the
director of PetroVietnam's Research and Development Centre for Petroleum Processing, Phan Minh Quoc
Binh, as quoted by Plastics News.
One of the largest projects is the Long Son petrochemical complex. In February 2012, Siam Cement
Group (SCG), QPI Vietnam, PetroVietnam and Vietnam National Chemical Corporation (Vinachem)
signed a joint venture agreement to invest in a US$4.5bn petrochemical complex in Southern Vietnam.
Page 98
Under the deal, SCG is to acquire a 46% stake in the project. The fully integrated complex, which will use
ethane, propane and naphtha as feedstock, will be situated on Long Son Island at Ba Ria-Vung Tau
province. The complex, which is likely to start commercial operations within four years, will have an annual
production capacity of 1.4mn tonnes of olefins. As of August 2013, 400ha of cleared land has been handed
over to the project investors and the project is expected to start construction works in early 2014.
Another key project is the US$8bn Nghi Son oil refinery in the central province of Thanh Hoa. The US
$2.1bn engineering, procurement and construction (EPC) contract for the project was awarded to GS
Engineering and Construction and SK Engineering & Construction making it Vietnam's largest ever
EPC contract for the oil and gas sector. Under plans first unveiled in 2008, Nghi Son refinery is a joint
venture between PetroVietnam with a 25.1% stake, Kuwait Petroleum International with 35.1%, Japan's
Idemitsu Kosan with 35.1% and Mitsui Chemicals with 4.7%. The project is expected to be completed by
2017 and have an annual capacity of 10mn tonnes of crude oil, or 200,000, 1.5 times greater than Dung
Quat's current capacity.
Vietnam's relatively low cost of labour could also still attract investors to develop manufacturing capacity in
the country. In March 2013, Samsung started building a US$3.2bn high-tech complex in the Thai Nguyen
province, which will house Samsung's largest mobile phone factory in the world.
Tourism - Gambling On A Trend
Another key driver of growth in the non-residential buildings sector is the tourism sector. We expect
tourism - both domestic and regional - to become a growing source of value creation for the sector, as
disposable income levels rise across the Asia Pacific region and short-haul travel becomes more accessible
to an expanding middle-class population. As such, there is a growing demand for hotel rooms. For
example, Ho Chi Minh City's tourism authority had projected an additional supply of 27,000 hotel rooms by
2020 as part of its master plan. As of April 2013, Ho Chi Minh City had 49,900 hotel rooms, with 27% of
them three- to five-star units.
The Vietnamese government is turning to its nascent gaming industry to help boost tourism revenues and
attract foreign direct investment from multinational casino operators. Despite concerns that liberalising the
gaming industry could invite social problems including increased organised crime and addiction to
gambling, the success that Singapore and Macau have had with managing these risks in recent years will
give Vietnamese policymakers the confidence to adopt a more aggressive stance on developing the industry.
Singapore and Macau have enjoyed tremendous success in boosting tourism revenues and creating new jobs
Page 99
for the economy by effectively targeting the region's burgeoning class of wealthy elites. Given that Chinese
visitors contribute the largest share of gaming revenues in these countries, Vietnam's proximity to China
naturally makes the country an attractive target for multi-national casino and hotel operators.
A key project is a US$7.5bn casino and hotel complex project in Van Don and multi-billion project that will
line a 1,800-hectare economic zone with casinos, hotels, and other tourist attractions. Located next to
Halong Bay, one of the country's most popular tourist destinations, the development of the Van Don
Economic Zone is expected to bring in millions of tourists from the region each year.
However, the development of the gaming industry has not been all smooth-sailing. In September 2012
Genting Malaysia, a subsidiary of Genting Group, withdrew from a US$4bn resort project (Nam Hoi An
project) in the Quang Nam province. The project was to be jointly developed with VinaCapital, but the
Malaysian gaming conglomerate chose to pull out because the Vietnamese government does not allow
Vietnamese to enter gaming facilities.
Meanwhile, a US$1bn hotel project site invested by Vietnam's Kinh Bac City Development in Hanoi
remains a wasteland. The project has been in a limbo since 2009, where Japan's Riviera Group pulled out
of the project due to financial difficulties and Kinh Bac stepped in to take over the investment. As of
December 2012, the project is used for agriculture, parking and football pitches.
In June 2013, Vietnamese media reported that local authorities had cancelled 93 projects on Phu Quoc
Island - including a EUR2.6bn luxury resort project proposed by Swiss Trustee Group - because the
investors of these projects were unable to find sufficient financing
The US$4.2bn Ho Tram Strip is also facing a delay in its opening due to the pull-out of its first resort's
operator and financing problem. In March 2013, the developer of the Ho Tram Strip - Asian Coast
Development (Canada) Limited (ACDL) - announced that MGM Resorts International (MGM) would
no longer be able to manage the first of the Ho Tram Strip's five resorts in Ba Ria-Vung Tau province.
ACDL had signed an agreement with MGM for the first resort in November 2008. The Ho Tram Strip,
valued at US$4bn, is the largest tourism complex in Vietnam, with five five-star hotels, two of which have
casinos and golf courses. ACDL is building the second hotel tower of the first resort, with 559 five-star
rooms, while an eight-hole golf course designed by Greg Norman is under construction.
Besides the Ho Tram Strip, the US$4.3bn New City project, developed by Brunei's New City Group, is still
undergoing site clearance as of August 2013 even though it received its investment license in 2008. This
was the same case for a similar project in the Ba Ria-Vun province.
Page 100
The lack of proper planning and delays in the development of the Ke Ga seaport has also adversely affected
resort investors in the Binh Thuan Province. The construction of the Ke Ga seaport required the land of 12
resorts, which the government prompted requested to be shut down for the seaport. The resort investors
were expected to be compensated, but Vinacomin delayed their disbursement of compensation, resulting in
losses for the resort investors.
There are also concerns about the potential for an oversupply in hotel rooms. Room rental rates in Hanoi
had decline in H113 and this could worsen over the near term as the hotel room supply in Hanoi is expected
to reach nearly 10,000 rooms by the end of the year, up 13.5% from the previous year.
To increase the viability of casinos in Vietnam, the government announced during a meeting in August
2013 that it had lifted entry restrictions on citizens, allow those that meet certain criteria to gamble in a
casino to be built in the Van Don Economic Zone, Quang Ninh Province.
Major Projects - Residential/Non-Residential Construction And Social

Infrastructure
Table: Major Projects - Residential/Non-Residential Construction And Social Infrastructure
Project Name
Value (US$mn)
Capacity/ Length Companies
Timeframe
Status
1,350,000 square
metres
-2020
Approved
(September 2013)
-2015
Under construction
(August 2013)
2012-
At planning stage
(Project was
announced in July
2012)
Commercial Construction
Casino ecotourism resort
4,000
project, Phu Quoc
Riviera Point
Condominium
complex (Three
condominiums),
Ho Chi Minh City
57.8
549 units
Ecotourism centre
(includes 20km
bridge), Southern 142.14
Hon Khoai Island,
Ngoc Hien District,
Ca Mau Province
Tokyu Binh Duong
Garden City
(includes 7,500
apartments, and
1,200
commercial/
entertainment
facilities), Binh
Duong province
1,100,000 square
metres
Long Thanh
international
airport area
210,000,000
square metres
Ssangyong
Engineering and
Construction,
Keppel Land
Becamex IDC
Corporation, Tokyu 2012Corporation
2012-
Under construction
(It will encompass
over 7,500
apartments,
commercial areas,
services, and office
spaces)
At planning stage
(Work underway
on the Loc An
Page 101
Major Projects - Residential/Non-Residential Construction And Social Infrastructure - Continued
Project Name
Value (US$mn)
Timeframe
Status
residential area,
the roads
connecting the
area with the Ho
Chi Minh City Long Thanh - Dau
Giay Expressway,
and parts of the
International
Training Center)
2,000
35,000,000 square Sanderson Group

metres
2011-2014
Under construction
(October 2012)
development plan
(Phase 1),Dong Nai
province
Happyland
Vietnam
Entertainment
Complex project
(includes US
$600mn
Happyland theme
park project and
US$140mn Movie
World), Ben Luc
District, Long An
Province
Empire Residences
and Resort project
(include 5-star
476
hotel), Ngu Hanh
Son District
21,294 square
metres
Thanh Do
Construction and
Investment
2011-2014
Under construction
(July 2011)
SSG Tower, Binh

Thanh District, Ho
Chi Minh City
5,983.2 square
metres
Ryobi Kiso
Holdings, Phu
Cuong
2011-2013
Under construction
(July 2011)
11.3
Wonderland World
Vung Tau complex
(includes a fivestar hotel, 4 fourstar hotels, an
1,300
entertainment
centre), Nguyen An
Ninh Ward, Vung
Tau city
Good Choice
-2011
Suspended
(October 2011 Investor's license
cancelled)
Eight ibis hotels in

Vietnam's major
cities
Accor, Benthanh
Group
2010-
At planning stage
(1st hotel to open
in 2012)
South Hoi An
resort project, Chu 4,000
Lai Open
Economic Zone
(OEZ), Quang Nam
21,000,000 square VinaCapital

metres
At planning stage
(November 2013 VinaCapital looking
for preferred
partner; October
2012 - Genting
withdraws from the
project)
Long Thanh
international
airport area
development plan
(Phase 2), Dong
Nai province
Long Thanh
international
airport area
Page 102
Project Name
development plan
(Phase 3), Dong
Nai province
Value (US$mn)
Timeframe
Status
-2017
Under construction
(October 2013 Project to be built
on 400 hectares
area in Nghi Son
economic zone)
Long Thanh
international
airport area
development plan
(Dong Nai
province)
Industrial Construction
200,000 b/d
(10,000,000
tonnes)
Vietnam Oil and

Gas Group, Nghi
Son Refinery and
Petrochemica,
Mitsui Chemicals,
Idemitsu Kosan,
Kuwait Petroleum
International (KPI)
1,650,000 tonnes
(4,000,000 square
metres)
Siam Cement, QPI

Vietnam,
PetroVietnam,
Vietnam National 2013-2016
Chemical
Corporation
(Vinachem)
Delayed (August
2013 - Land
acquired;
Construction
expected to begin
in 2014)
Solar Cell Factory Phase I, Dong

700
Nam Industrial
Park
First Solar Group
Project finance
closure (March
2011)
Solar Cell Factory Phase I, Dong

300
Nam Industrial
Park
First Solar Group,

First Solar Vietnam 2011-2012
Manufacturing Co
Ltd
Project finance
closure (January
2011)
Industry Company
Limited (ICE),
IndoChina Energy
Company
Delayed (Indochina
Energy Industry Co
ltd has requested
Chu Lai Open
Economic Zone
Management
Board to extend
the timeline for
completing the
project)
9,000
Nghi Son Oil
Refinery and
Petrochemical
Complex, Tinh Gia
Long Son Island

Petrochemical
Complex, Ba RiaVung Tau
Solar modules
manufacturing
plant, Chu Lai
Open Economic
Zone
4,500
390
238MW
120 MW (120.000
square metres)
-2012
Residential Construction
Development of
60mn square
metres of
residential space
(public housing)
Commercialresidential
complex, Hanoi
19,700
188
600,000 units
Daewoo
Engineering &
Construction
Company, Hi
Brand Vietnam,
Inpyung
2015-2020
At planning stage
-2013
Contract Awarded
(April 2011)
Page 103
Project Name
Value (US$mn)
Residential
developments and 291
manufacturing
projects

Keppel Land,
CapitaLand,
PepsiCo
Timeframe
Status
2010-
Contract Awarded
na = not available/applicable. Source: BMI Key Projects Database
Page 104
Industry Risk Reward Ratings

Vietnam - Infrastructure Risk/Reward Ratings
Vietnam Risk/Reward Ratings
Vietnam has achieved a score of 54.6 in BMI's Asia Pacific infrastructure Risk/Reward Ratings (RRRs). It
remains firmly in the lower half of the rankings at 11th position, out of 16 countries. That said, the country
has actually one of the fastest-moving business environments in the region. Rapid expansion has raced
ahead of the regulatory environment and the country is a clear outperformer among emerging South East
Asian countries in terms of rewards. That said, corruption and heavy delays to project development continue
to represent significant downside risk.
Rewards
Industry Rewards
Vietnam's score in this category is higher than the regional average. This is indicative of a dynamic market
and reflects our view that Vietnam will continue to be one of the most active and attractive infrastructure
markets in the region. The long-term risks to the market are generally to the upside. Based on BMI's Key
Projects Database, around 330 infrastructure projects with a combined value of around US$328bn are
currently listed as under construction or under consideration in Vietnam. As such, the country achieves a
relatively high score for sector growth in this category.
Country Rewards
In terms of country structure components, which include financial and labour market infrastructure,
Vietnam disappoints, coming in below the regional average. The predominant cause is a lack of sufficient
financial infrastructure. Lending in Vietnam is characterised by poor lending standards and dominated by
the four state-owned banks, while gaining access of foreign capital can be difficult. These poor lending
standards have also resulted in very high loan-to-deposit ratios in Vietnam's banking sector. In the event of
a liquidity shortage, or insolvency triggered by economic stress, a financial crisis would be a plausible
scenario, further restricting funding to the construction sector. There are some risks to the upside, given that
the banking sector has witnessed a raft of privatisations and increased involvement from foreign
development banks - something that may liberalise the sector which could bode well for the construction
sector in the long term.
Page 105
Risks
Industry Risks
Industry Risks represent the largest hurdle for Vietnam at present, as the country scores only 40 in this
category. This is indicative of structural weaknesses in the infrastructure sector, which in turn pose longterm risks to investors. The transparency of the tendering process is rated very poorly, scoring only three out
of 10. The competitiveness in the infrastructure and construction sector remains limited and road building,
as well as the energy & utilities sector, is dominated by state-owned firms. The ports and urban railways
sector is where there is the greatest level of foreign investor penetration in the infrastructure sector and we
have seen growing foreign private participation in the power plant and transmission sector.
Vietnam has also been pushing for the faster implementation and development of public-private
partnerships (PPPs) for upcoming infrastructure projects. While PPPs have the potential to address the
country's infrastructure needs, this method is wholly predicated upon the creation of a regulatory PPP
framework to govern the sector. In November 2010, the prime minister had launched a mechanism piloting
PPP investment model via Decision 71/QD-TTg, which came into force from January 15 2011. Under this
legislation, concerned agencies were tasked to craft regulations that allow projects to be developed under a
PPP model and to evaluate and award projects for investment under a PPP model. Companies under the PPP
model would enjoy corporate tax reductions and exemptions, as well as land use fee or land rental
exemptions. Companies are also allowed to buy foreign currencies for project execution. Investors under the
PPP model would not have to worry about site clearance as it would be done by the local officials.
This pilot ruling was meant to be replaced by new PPP guidelines or a full PPP law in 3-5 years, but
progress was slowed by an inability for sub-sovereign governments and state agencies to carry out the
necessary project assessments.
However, progress on these tasks is proceeding very slowly and the PPP framework for areas such as
payments for land rental, land clearance and compensation remained unclear. The Ministry of Planning and
Investment has since introduced draft amendments to Decision 71/QD-TTg, but it remains to be seen if they
are effective. Over 20 projects have been proposed for development under the PPP format, but only the Dau
Giay-Phan Thiet expressway is at an initial tendering stage, with the rest in the pre-feasibility study stage.
Page 106
Country Risk
Corruption is prevalent in Vietnam, resulting in poor scores within the Country Risk ratings. Investors see
official corruption as one of the biggest hindrances to running a business in Vietnam, with anecdotal
evidence suggesting that 30% of a project's value is pocketed by the contractor to pay bribes to relevant
parties. For example, at the end of 2011, the World Bank banned Vietnam's Social and Environmental
Development and its Managing Director, Nguyen Xuan Doan, for five years, following allegations of fraud
among World Bank-financed water supply projects. Joint ventures with state-owned enterprises are
particularly prone to corruption and graft, though surveys indicate that while corruption affecting businesses
is fairly prevalent, the amounts involved are usually quite small. Rapid economic growth provides
opportunities for graft to grow more quickly than government systems evolve. Vietnam scored 2.7 out of 10
in BMI's rating for corruption and also rates poorly for its external risks and legal framework.
There are gradual changes to its political system, which could speed up economic reforms and improve
Vietnam's business environment. In June 2013, the Communist Party of Vietnam (CPV) made an
unprecedented move by allowing for a no-confidence vote on the performance of senior government
officials, setting the stage for increased accountability for party members going forward. Government
officials who received 'Low Confidence' votes from two-thirds of the 500-member National Assembly (NA)
will face another vote, which could lead to their dismissal. Meanwhile, those who received more than 50%
in 'Low Confidence' votes for two years consecutively will be asked to relinquish their post.
The move symbolises a significant milestone in Vietnam's evolving political system towards a more
accountable and gradually more democratic system of government. This is crucial to maintaining political
stability over the long term. Not only is the CPV struggling to cope with a more informed population due to
the rapid adoption of internet technologies such as social media, but policymakers are also facing mounting
pressure to allow for democratic reforms due to an increasingly vocal and highly educated population of
young Vietnamese citizens.
Asia - Infrastructure Risk/Reward Ratings

BMI View: The average Risk/Reward scores for the Asian infrastructure sector remain largely unchanged
from the previous quarter. However, the risk/reward profiles for several countries have changed slightly,
with greater risks being presented by several of the larger emerging markets and lesser risks by others.
Overall, the potential for returns in Asia's infrastructure sector remains considerable, reinforcing the
region's status as the world's most concentrated infrastructure and construction market.
Page 107
The average Risk/Reward scores for Asia's infrastructure sector this quarter remain relatively unchanged
from the previous quarter. There is still a substantial disparity in the demand for infrastructure throughout
Asia. This translates into a significant divergence in rewards and risks among the Asia Pacific infrastructure
markets, and a sizeable 40-point differential exists between the top- and bottom-ranked countries in our
regional infrastructure ratings table. This wide dispersion presents investors with a range of rewards for
different risk appetites.
The key findings from this quarter's update can be summarised as follows:
The more developed countries in the region continue to present the most attractive business environments
to realise their relatively sizeable rewards, with some of these markets (i.e. Australia and Japan)
experiencing an improvement in policy continuity - a major criterion to project execution and viability following their parliamentary elections.
That said, exposure to the Chinese economy is a threat to the demand for infrastructure in some exportoriented economies - namely Taiwan and Hong Kong.
The most populous countries in the region continue to present sufficient scope in rewards to overcome
risks, but these risks are rising. Policy inertia and continuity continue to be a problem in India and
Indonesia, suggesting that risks at a grass-roots level will remain considerable for these countries.
Emerging South East Asian (SEA) countries continue to offer sizeable rewards for their level of risk,
though recent events have changed their individual level of risks, with some markets (such as Thailand
and Cambodia) presenting greater risks, while others (such as Vietnam and the Philippines) offering
fewer.
Page 108
A Mixed Bag
Asia Pacific - Infrastructure BE Risk/Reward Ratings, Scores out of 100
Source: BMI
Developed Markets: Favoured
The top spots in our Asia Pacific Risk/Reward infrastructure regional ratings table continue to be dominated
by countries that have attained developed market status in terms of their infrastructure market maturity, with
Australia, South Korea, Singapore and Japan coming in at first, second, third and fourth place respectively.
Despite their maturity, these markets still offer significant greenfield opportunities. The average score for
rewards in these developed markets is 57.8 out of 100, higher than the other 10 Asian markets (higher
scores indicate higher rewards) which have an average of 50.7. Meanwhile, they offer the best business
environments for realising these investment returns as they are highly developed in terms of their legislative
and regulatory environments and present very little in the way of risks to sponsors and financiers. The
average score for risks in these developed markets is 78.2 out of 100, significantly higher than the other 10
Asian markets (higher scores indicate lower risks) which have an average of 49.1.
Page 109
Greatest Potential To Realise Rewards

Developed Countries In Asia - Infrastructure Rewards (LHS) And Risks (RHS) BER, Scores out of 100
*Higher Score = Lower Risks. Source: BMI
Looking at the individual countries, Australia and Japan have experienced an improvement in policy
continuity - a major criterion to project execution and viability - following their parliamentary elections. In
Japan, the Liberal Democratic Party's success in the Upper House elections has increased the potential for
policy formation and execution, which could speed up the country's reconstruction process and see the
implementation of reforms that could lift long-term infrastructure demand. In Australia, the LiberalNational coalition's victory in the federal elections and the party's dominant political clout at the state level
creates a strong potential for greater coordination between state and federal governments over infrastructure
development across Australia. This could lead to an improvement in project execution for all public-led
infrastructure projects in Australia.
However, the infrastructure sectors of countries that are heavily reliant on trade activity with China namely Hong Kong and Taiwan - appear highly vulnerable to the deleterious effects of a languorous
Chinese economy. Although the recent resurgence in credit aggregates has once again boosted economic
activity in China, we believe that it might not last and that China's structural downturn could come back into
focus in 2014. Taiwan is also set to hold elections in five major municipalities in 2014 and the lack of
political clarity could deter investors from taking on infrastructure projects.
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Giants Of Asia: Rewards Sizeable, Risks Sizeable
These developed markets however, do not offer the highest rewards to investors. Asia's largest emerging
economies - China, India and Indonesia - continue to head the group in terms of industry rewards, securing
second, third and fourth place respectively for this category. The combination of high industry values,
positive long-term macro fundamentals, large fiscal expenditure on infrastructure and expectations of
relatively high growth in construction and infrastructure industry value underpin the high scores in this
category. However, they also present numerous risks, as indicated by their below-average risks scores.
Below Average Risks

China, India And Indonesia - Infrastructure Rewards (LHS) And Risks (RHS) BER, Scores out of 100
*Higher Score = Lower Risks. Source: BMI
China, for example, is expected to face greater threats to its rewards in the near-future, and this is reflected
by our downward revision of its rewards score from 68.4 to 66.8. The country's infrastructure market still
presents considerable opportunities, but these are increasingly located in tier-two and tier-three cities - areas
where the economic viability for some projects is highly questionable. In addition, the new government has
been quick to implement changes to the infrastructure programmes in China, starting with the break-up of
the powerful Ministry of Railways and greater considerations towards environmental issues. These changes
suggest to us that the new government is re-thinking several of its previously announced infrastructure
projects in transport (especially railways) and power generation. This could result in a severe scaling down
Page 111
of infrastructure investment as the country rebalances to a consumer-driven economy. Lastly, the structural
deficiencies within the Chinese economy (shaky financial system, overvalued property market, expensive
infrastructure build-up, and huge industrial overcapacity) still remain. This creates the potential for a deep
slowdown in China's economic activity, which could cap infrastructure demand over the near-term.
India is also experiencing significant threats to its rewards. Some of these threats are: the relatively high
cost of capital in India; a weak rupee, resulting in costlier imports of equipment and raw materials for Indian
infrastructure companies; and the numerous business environment issues that continue to delay
infrastructure development (e.g. environmental clearances, land acquisition, convoluted bureaucracy).
Political risk is also on the rise in India, prompting us to revise the country's risks scores from 54.9 to 54.7
(a lower risk score represents greater levels of downside risks to returns for investors). The country is
scheduled to hold general elections between April and May 2014, with recent results at the state elections
indicating a strong potential for a change in government. The country's ruling Indian National Congress
Party suffered major defeats to the main opposition Bharatiya Janata Party (BJP) in all four state elections
held in December 2013, signalling its weakening popularity. The four states - namely Delhi, Rajasthan,
Madhya Pradesh and Chhattisgarh - comprise some 15% of the India's population, and the BJP victories
will mean that the party will head into the 2014 campaign very much on the front foot.
While we believe that a BJP victory would improve the country's political risk profile and increase the
potential for economic reform, we note that such a transition in power would likely have negative effects on
short-term political stability and policy continuity. As seen in many countries, a change in government
could lead to a review of infrastructure projects approved by the predecessor. This typically results in new
feasibility studies and schemes being conducted and crafted respectively, which could lead to project
delays, revisions, or worse, cancellations.
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Varied Performance
Asia Pacific - Q313 & Q413 Infrastructure Rewards Ratings, Scores out of 100
Higher Score = Higher Rewards. Source: BMI
As for Indonesia, the country continues to present vast opportunities across the entire infrastructure
spectrum - in November 2013, the central government released the fifth edition of its Public Private
Partnership (PPP) Book during Indonesia's annual infrastructure conference, with the book listing 48
infrastructure projects on offer to investors.
However, risks to infrastructure development are on the rise in Indonesia, which is reflected in our
downward revision of the country's risks scores from 47.4 to 46.6. President Susilo Bambang Yudhoyono is
constitutionally prohibited from standing for the presidential elections in 2014, while popular support for his
party, the Democratic Party, has collapsed. This scenario creates a growing likelihood for a more
protectionist and potentially nationalist candidate to accede to the office. The government and the private
sector also continue to experience considerable difficulties in filtering infrastructure investment into the
ground, while Indonesia's macro environment is becoming increasingly non-conducive for infrastructure
development.
Page 113
South East Asia: Fluctuations In Risks
South East Asian (SEA) countries continue to offer sizeable rewards for their level of risk as they push
forward with their multi-billion dollar infrastructure-building programmes. However, recent events have
seen a change in the level of risks for the individual SEA markets, with some markets (such as Thailand and
Cambodia) presenting greater risks and others (such as Vietnam and the Philippines) presenting fewer risks
than before.
In Thailand, we have revised down the country's risks scores from 56.9 to 56.1. This is because we are
witnessing a complete breakdown in political stability, with the dissolution of parliament and the escalation
of anti-government protests since November 2013. At present, this political crisis looks unlikely to end
anytime soon as the ruling Puea Thai Party (PTP), led by Prime Minister Yingluck Shinawatra, have refused
demands for the immediate resignation of Yingluck Shinawatra as caretaker prime minister and a
suspension of the electoral process, which would lead to the formation of a 'people's council' to oversee
political and electoral reforms in Thailand. This lack of political stability will most likely lead to fresh
delays for the PTP's infrastructure plans and disruptions to on-going project infrastructure tenders. This is
because political unrest typically increases security threats to project sites and requires the government to
devote considerable resources and attention to resolve the crisis.
Similarly in Cambodia, we have revised down the country's risks scores from 37.2 to 36.6 as the country
continues to be gripped by political unrest since the end of general elections in July 2013. The ruling
Cambodian People's Party (CPP), led by long-time Prime Minister Hun Sen, and the opposition Cambodia
National Rescue Party (CNRP) are still at loggerheads over the results of the elections and a resolution does
not appear forthcoming over the near term. Even if a resolution is reached, the end of CPP's political
dominance and the formation of a more evenly-balanced parliament are likely to set the stage for an
increase in uncertainty and paralysis regarding government policy. This is because the CPP would need
support from the opposition to make amendments to the constitution and the CNRP could hold up certain
parliamentary proceedings by walking out of the National Assembly.
In Vietnam however, we have revised up the country's risks scores from 51.8 to 53.0. This is because we
expect monetary conditions to remain conducive for construction in 2014. We have also seen the
government take an aggressive stance in restructuring its state-owned enterprises (SOEs) and improve the
business environment for infrastructure development. The restructuring process could not only allow the
Vietnamese government to raise funds for investment through the privatisation of these SOEs, but also
attract greater FDI due to a less protectionist investment climate. In addition, the Vietnamese government
Page 114
has strengthened its regulatory framework for public-private partnerships (PPPs) - it had launched the
tender for its first road PPP project in the second half of 2013 - and passed a revised legislation that could
speed up the land acquisition process.
Table: Asia Pacific Infrastructure Risk Reward Ratings
Rewards
Risks
Industry
Rewards
Country
Rewards
Rewards
Industry
Risks
Country
Risk
Risks
Infrastructure
RR Rating
Regional
Ranking
Australia
62.5
86.1
70.8
90.0
77.0
82.2
74.2
South
Korea
47.5
88.9
62.0
70.0
77.5
74.5
65.7
Singapore
37.5
86.2
54.6
90.0
88.6
89.2
64.9
Japan
45.0
87.0
59.7
75.0
73.7
74.2
64.1
China
70.0
60.9
66.8
40.0
66.8
56.1
63.6
India
75.0
45.4
64.6
55.0
54.5
54.7
61.7
Hong Kong
35.0
90.1
54.3
85.0
72.3
77.4
61.2
Malaysia
55.0
64.3
58.2
55.0
62.3
59.4
58.6
Thailand
47.5
72.3
56.2
50.0
60.1
56.1
56.2
Indonesia
65.0
48.2
59.1
35.0
54.4
46.6
55.4
10
Vietnam
52.5
60.4
55.3
40.0
61.7
53.0
54.6
11
Taiwan
30.0
74.0
45.4
75.0
69.9
71.9
53.4
12
Philippines
47.5
55.1
50.2
35.0
60.1
50.1
50.1
13
Myanmar
40.0
24.7
34.6
25.0
43.4
36.0
35.0
14
Pakistan
25.0
43.6
31.5
35.0
48.1
42.9
34.9
15
Cambodia
32.5
25.9
30.2
25.0
44.3
36.6
32.1
16
Regional
Average
48.0
63.3
53.3
55.0
63.4
60.0
55.4
Scores out of 100, with 100 highest. Source: BMI
Page 115
Market Overview
Competitive Landscape
Construction companies in Vietnam are fairly small and are confined to urban and roads infrastructure
projects. The inland waterway transport sub-sector is managed by two state corporations affiliated with the
Ministry of Transport, a state-owned enterprise (SOE) affiliated with the Vietnam Inland Waterway
Authority and some enterprises managed by other ministries, which are operating in support of the power
generation, cement and paper industries.
Table: Vietnam EQS Data
Name
Latest FY
Earnings
Revenue
Operating
Market Cap Growth (% y- Profit Growth Total Debt/
(US$mn)
o-y)
(% y-o-y)
EBITDA
Interest
Coverage
Ratio
PE
Ratio
Vietnam
Construction &
IMPO
12/2012
239.3
-13.7
-43.5
7.3
0.9
28.8
Songda Urban &

Industrial Zo
12/2012
66.7
-64.5
-472.1
na
-131.1
na
HCM City
Infrastructure INV
12/2012
101.5
19.3
na
43.4
0.0
5.6
Becamex
Infrastructure Devel
12/2012
105.9
-53.6
-38.9
2.0
6.9
14.9
PetroVietnam
Construction Co
12/2012
96.1
-51.8
na
na
-2.7
na
Development Invest
Construct
12/2012
69.4
-0.2
-66.8
19.6
0.5
na
Kinh Bac City

Development SH
12/2012
107.8
-55.6
na
na
-0.3
na
Cotec Construction
JSC
12/2012
71.5
-0.7
-12.5
0.0
451.3
7.0
na = not available/applicable. Source: Bloomberg
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Company Profile
Cavico Corporation
SWOT Analysis
Strengths
It is diversified across a number of interrelated sectors.
A portfolio of completed projects sets a precedent for the company in Vietnam's

construction and infrastructure sectors.
Weaknesses
According to the company, 'Cavico's business growth is correlated to Vietnam's

economic and infrastructural development' - this endangers the company's
operations and revenue streams in the current downturn.
The small size of the company means that competition from domestic state-owned
companies and foreign majors could erode its market share.
The value of contracts is very small for a construction and infrastructure company,
typically below US$10mn.
Opportunities
Vietnam is one of the best-placed Asian economies to weather the global financial
crisis.
Threats
The government's willingness to improve infrastructure seems undiminished.
The procedures for project start-ups are bureaucratic in Vietnam (administrative

burdens and inefficiency).
Regional contraction in the Asian markets poses threats to Cavico's planned

expansion in the region.
Company Overview
Cavico Corp. is the largest private infrastructure and mining company based in Vietnam
(while mining activities are at the heart of the company's operations, for the purpose of
this report we will only focus on Cavico's infrastructure operations). Through its various
subsidiaries, Cavico operates in the power, transport and urban development sectors.
In the power generation sector, Cavico mainly focuses on hydropower and dam
construction, although recently it has also made its first venture into wind power
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generation. Transport is the largest, or most active, segment of the company, with
operations in tunnels, bridges and highways. The company also has a presence in
commercial and residential construction in Hanoi, and other regional centres with largescale mixed-use projects under way.
Strategy
According to the company's declared business strategy, the key points that will guide
investment decisions are: prioritising the key businesses of industrial engineering,
infrastructure construction and mining; investing in strategic industries for the economy
of Vietnam (infrastructure, energy, mining, tourism); diversifying further; widening the
company's portfolio abroad; and increasing joint ventures and partnerships with
international majors.
Cavico has kept to its strategic guidance and has managed to expand into new sectors
(such as wind power generation) and abroad, most recently in neighbouring Laos.
The company's aim is to increase its current backlog of projects within Vietnam and to
cement its presence in the country's infrastructure sector. BMI believes that Cavico is
well placed in its operations in Vietnam. Its presence in the country has set a precedent
and it has a history of partnerships with local state-owned contractors. Vietnam's
planned infrastructure investments in the power and transport sectors present
significant opportunities that could allow Cavico to achieve its aim of increasing its
order backlog. This rose by 33.8% year-on-year (y-o-y) to reach US$304.6mn as of
June 30 2010. The firm also saw a loss of US$1.8mn in the second quarter of 2010.
According to the company, this was due to the fact many of its hydropower
construction projects were in the early stages, and not generating sufficient revenue to
offset their initial construction costs. Once these projects progress further into
completion, net income will increase as more revenues are generated.
Recent
Developments
In April 2011, Cavico Corporation announced that its subsidiary Cavico Mining had
received an investment licence for the Tan My Hydropower Plant. The licence grants
Cavico the right to build-own-operate (BOO) a hydropower plant downstream from
the Tan My Irrigation Reservoir. The plant will be built in the Phuoc Tan Village, Ninh
Thuan Province. The plant has a designed capacity of 6 megawatts (MW) and is
estimated to cost US$6.7mn.
In March 2011, Cavico Corporation announced that its subsidiary Cavico
Construction Manpower & Services signed a contract to construct the tunnel roof and
grout the arch consolidation of a 1.4-mile-long rock transport tunnel at the Nghi Son
cement plant, Thanh Hoa Province. The contract was valued at approximately US
$1.3mn. Cavico expected to complete the project within seven months from the start
of construction.
In January 2011, Cavico Corporation announced that its subsidiary Cavico
Hydropower Construction signed a US$7.75mn tunnel construction contract with
Song Giang Hydropower Joint Stock Company for the Song Giang 1 hydropower
plant in Khanh Vinh District, in central Vietnam's Khanh Hoa Province. The twin-unit
plant, which is located 31 miles from Nha Trang city, will have a 24MW annual
capacity once it becomes operational. Song Giang Hydropower Joint Stock Company
expects to invest a total of US$23.2mn in the plant.
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Financial Data
In December 2010, Cavico Corporation announced that its subsidiary Cavico Bridge
and Tunnel had signed a US$6mn construction contract with Vietnam's state-owned
electricity company, EVN, for the100MW Song Bung 2 hydropower plant project.
Under the contract, Cavico will be responsible for the construction of three tunnels, a
surge tank and a power house. Cavico expects to complete construction by 2014.
In Q210, revenues rose by 7.9% y-o-y to reach US$14.7mn. Net profit for Q210 was a
loss of US$1.8mn, compared with net income of US$37,445 in the same period of 2009.
Order backlog as of June 30 2010 was US$304.6mn, an increase of 33.8% y-o-y.
For 2010, the company expected revenues of between US$65mn and US$70mn, while
overall the company expected to see a net loss in the range of US$4-5mn.
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Electricity Vietnam Group

SWOT Analysis
Strengths
EVN's power companies account for 55% of Vietnam's total electricity generation.
EVN has outlined ambitious plans to build 74 new power stations by 2020, in line with
the country's power sector development.
EVN has a diversified portfolio and is involved in all types of power plant projects.
Weaknesses
Tightening credit conditions in the domestic banking sector are a key source of funds
for the company. These, together with rising construction costs, have severely
hindered EVN's ability to implement its investment mandate.
Opportunities
High debt levels are inhibiting plans for expansion.
The Vietnamese government is committed to energy sector development visible in its

ambitious plans to increase Vietnam's total installed generating capacity from 20GW
in 2011 to 75GW by 2020.
Threats
Vietnam's Electricity Law (2005) might make operating in the electricity sector more
complex, especially in relation to transitional procedures.
Company Overview
Electricity Vietnam (EVN) was founded in 1995 as a state-owned utility engaged in the
generation, transmission, trading and distribution of electricity. EVN owns five limited
liability power companies: Electricity North Vietnam (EVN NPC); Southern Electricity
Corporation (EVN SPC); Central Electricity Corporation (EVN CPC); TP Power
Corporation Hanoi (EVN HANOI); and the Electricity Corporation TP Ho Chi Minh City
(EVN HCMC). In addition, the subsidiary in charge of EVN's transmission grids is the
National Power Transmission Corporation (NPT).
As of 2010, EVN's power companies accounted for 60% of total electricity generation in
the country and had around 98,000 employees. EVN is managing almost all plant
groups, except for some independent power plants (IPP) and some other build-operatetransfer (BOT) power plants. Despite further privatisation plans, power transmission
companies and hydropower plants - including Hoa Binh, Tri An and Yaly - as well as the
nuclear power programme, are expected to remain under the management of EVN.
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EVN has also played a role in Vietnam's successful rural electrification programme by
implementing power projects financed by the World Bank.
Strategy
EVN is expected to face many major changes over the coming years due to the launch
of the Electricity Law in 2005. The law sets out a phased introduction of a competitive
generation market, followed by a competitive wholesale market and finally a competitive
retail market. While there are target dates for the realisation of each phase, important
detail is lacking, especially in relation to transitional procedures. EVN, which is currently
the monopoly off-taker and controller of the electricity transmission and distribution
network, is expected to face increasing competition in the future. As the largest utility
and electricity wholesaler in Vietnam, EVN is the main force driving the development of
Vietnam's power sector. It has taken up this mantle by launching and financing
numerous power projects throughout Vietnam, and has plans to continue to do so. In
July 2011, EVN announced that it will invest US$39bn in building an additional 95 power
plants with a total capacity of around 49,000 megawatts (MW) over the next 10 years,
38 of which will be built between 2011 and 2015. To meet this target by 2015, EVN
would need to invest US$3bn a year in new power plants and transmission
infrastructure between 2011 and 2015.
However, this target appears to be difficult to achieve. EVN is suffering from crippling
debts and is unable to raise sufficient capital to meet its investment needs. In late June
2012, EVN said that it faced a funding gap of around VND185trn (US$8.9bn) for power
plant projects between 2011 and 2015, while its overdue payments reached
VND10.15trn (US$488mn) at the end of 2011.
One reason for EVN's high debt levels is artificially low electricity prices in the past, and
a lack of sophistication in setting electricity prices. Electricity prices in Vietnam were at
levels below the cost of electricity production, making it unprofitable for power utilities
to sell electricity. Meanwhile, these electricity prices are not allowed to fluctuate, thus a
rise in the cost of basic inputs such as energy commodities cannot be passed on to the
consumer. Consequently, EVN is forced to incur additional losses to absorb these
costs.
In addition to electricity prices, diversification into non-core businesses such as the
Vietnamese telecoms sector is another contributing factor which has damaged EVN's
profit-generating ability. EVN had invested significant capital in setting up a Vietnamese
telecoms subsidiary, EVN Telecom, despite the presence of several established
players - VinaPhone, MobiFone and Viettel Telecom. EVN has found it difficult to
compete in such a challenging market and was reported to have generated revenues of
just VND2.8trn (US$135.9mn) in 2010, equivalent to 61% of its target. We believe that
this is because EVN Telecom lacks the financial capacity to invest in networks; it also
incurs substantial rental costs due to infrastructure leasing. EVN was looking to divest
EVN Telecom, but its plans to sell the subsidiary to the Corporation for Financing and
Promoting Technologies fell through in April 2011. Vietnam Multimedia Corporation is
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now the most likely candidate to acquire the telecoms subsidiary, according to local
media reports.
Weather conditions have also played a part in damaging EVN's profit-generating ability.
A sizeable portion of its portfolio is hydropower and severe droughts across the country
have reduced water levels for hydropower reservoirs, hampering their ability to generate
electricity. As a result, EVN has to rely on expensive oil-based generation sources and
electricity imports from China to meet the shortfall.
In a bid to ease EVN's current financial difficulties and meet its investment targets, the
Vietnamese prime minister has directed commercial banks to extend credit to carry out
projects under the six power planning scheme. EVN will also be granted guarantees by
the Ministry of Finance for domestic credit loans to pay for electricity purchases from
thermo power plants under the direction of the prime minister. This has taken place in
January 2013, where EVN secured a US$120mn loan from Vietnam Development Bank
for two new thermal power plants (Vinh 2 and Duyen Hai 1). The utility was also seeking
a government guarantee for its loan to build Duyen Hai 3 thermal power plant in midDecember 2012.
EVN would also be allowed to issue domestic bonds in 2013 to meet its funding gap,
but it remains to be seen if investors would be interested given the bond scandals with
several state-owned companies such as Vinashin.
Lastly, the government had allowed EVN to hike electricity prices twice (5% in July, 5%
in December) in 2012, increasing electricity prices by a total of 10%. Electricity prices
averaged VND1.437 (US$0.07) at the end of December 2012 and the hike in December
could potentially allow EVN to earn an additional VND7trn (US$330mn) in 2013. There
are also plans (as of March 2013) to adjust electricity prices if input costs increase by
2-5% over the current average power price, according to a draft decision about the
mechanism for retail power price management and adjustment.
Recent
Developments
In December 2013, state utility and monopoly distributor EVN and Japanbased Marubeni Corporation signed an engineering, procurement and construction
contract for the main thermal power plant of the Thai Binh Power Station in Vietnam.
The project will entail an investment of VND26.5trn (US$1.3bn), with 85% of the
investment coming from the Japan International Cooperation Agency and the remaining
15% from EVN. The construction of the 600MW plant is expected to commence in
Q114, with the first turbine scheduled to operate in Q417 and the second in Q218. The
two-turbine plant will generate about 3.3bn kWh every year.
In October 2013, EVN reported that its total outstanding bank debts were VND118.84trn
at the end of July 2013.
In September 2013, EVN and the National Power Transmission Corp (EVN NPT)
announced that the Lai Chau-Son La-expanded power line of 500 kV and Son La power
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station of 500 kV was to start in late 2013. In the same month, EVN Finance sold more
than 16mn shares (23% stake) of Thac Mo Hydropower Company (TMP).
In August 2013, EVN announced that electricity prices in Vietnam will increase by 5%
starting from August 1 2013. The average electricity price will be increase to
VND1508.85 per KWh.
During July 2013, EVN was expected to auction its 25.2mn shares in An Binh
Commercial Joint Stock Bank (ABBank) in August 2013. EVN is required to finish
divestment from non-core operations by the end of 2015. Besides ABBank, EVN has
invested in companies such as Global Insurance Company, EVN Finance Company,
Saigon Vina Property Company and Central Power Corporation.
In June 2013, EVN reported that it aims to have six new generators with a combined
capacity of 1420MW operational in 2013. They are two generators in Nghi Son 1 thermo
power plant, a generator in Quang Ninh power plant, a generator in Hai Phong power
plant and two generators in Ban Chat hydropower plant. According to EVN's seventh
power plan, the utility will put 20 generators with a combined capacity of 6,366MW into
operation between 2013 and 2015.
In March 2013, the Vietnam Ministry of Industry and Trade issued a decree stating that
EVN's CEO will be dismissed if the utility fails to maintain the expected return on equity
or suffer losses for two consecutive years. In return, EVN will be given permission to
adjust the electricity prices within the regulated price limits.
EVN announced in January 2013 that it plans to issue VND10trn (US$483mn) worth of
bonds in the domestic market, while converting its debt to PetroVietnam into bond debt
via a VND14trn (US$673mn) issuance.
In December 2012, EVN pulled out from the US$800mn Lower Se San 2 hydropower
plant project in Cambodia. China's Hydrolancang International Energy is expected to
purchase EVN's stake in the project, with the electricity produced from the dam to be
used in Cambodia.
During November 2012, EVN signed an agreement with the World Bank to finance a US
$800mn project aimed at ensuring stable power supply in Vietnam. The World Bank will
provide a loan worth US$449mn with an annual interest rate of 1.25% over a 25-year
period, with a five-year grace period. Meanwhile, a US$30mn loan will be provided by
the Clean Technology Fund, carrying an annual interest rate of 0.75% over a 20-year
period, with a 10-year grace period. Technical assistance estimated to be worth US
$8mn will be provided by the Australian Agency for International Development.
In June 2012, Vietnam granted approval to establish three power generation
companies: Genco 1, Genco 2 and Genco 3. These companies are to take over power
generating plants directly under EVN. Genco 1 will manage hydropower plants, such as
Dai Ninh, Ban Ve and Song Tranh. Genco 2, which is the upgrade of Can Tho Thermal
Power, will manage the Quang Tri and An Khe KaNak hydropower plants and the Thu
Duc, Hai Phong and Pha Lai thermal power plants. The establishment of Genco 3 is
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based on Phu My Thermal Power and 11 affiliates, including the Vinh Tan thermal power
plant and the Buon Kuop hydropower plant. These three companies will remain under
EVN, which will also appoint their personnel.
Financial Data
In January 2013, EVN announced a profit of VND6trn in FY2012, a reversal from the loss
of VND3.5trn in FY2011. This return to profitability was attributed to the company's
hydropower business and electricity price hikes. However, the company still had debts
amounting to an estimated VND34trn at the end of 2012.
Page 124
Global Infrastructure Overview

Africa In 2014: PPPs Cement Global Appeal
Sub-Saharan Africa (SSA) looks set to continue to offer the highest growth rates for construction globally
over the coming years - with real growth averaging 8.3% annually to the end of our forecast period in 2023.
That said, endemic risks across the region remain prevalent and will continue to offset the potential gains
for those wishing to take advantage of the multitude of opportunities on offer. As part of this growth story
we have indentified three key trends which will support our forecasts over 2014 and emerge as driving
factors for infrastructure development. These trends are the continued development of the public-private
partnership (PPP) model across the continent, massive investment into the cement industry to satisfy
demand and the increasing presence of other emerging market players in the development of African
infrastructure.
Africa's Potential Clear

Regional Construction Industry Real Growth (% Change year-on-year)
Source: BMI
Page 125
PPP Proliferation Proceeds
The further proliferation of the PPP model in Africa remains one of our trends to watch over the coming
year, as an increasing number of African nations pursue project development through private players.
Whilst PPPs are already used across the continent, insufficient bureaucratic capacity within African
governments' PPP units has often resulted in projects falling victim to technical delays, allegations of
corruption and cost overruns. However, we have seen an increasing amount of PPP legislation being passed
and frameworks developed to better implement projects - and increase their attractiveness to players
with private capital. Notably Kenya adopted its Public Private Partnerships Act in 2013, which bodes well
for two subsequent PPP projects in the pipeline. The most successful countries thus far have been Cte
d'Ivoire, Cameroon, Ghana and Namibia. Cte d'Ivoire in particular is seeking out alternative and
creative financing methods in order to open up financing to enable private sector players to take up projects.
The proliferation of the PPP model goes hand-in-hand with our view that African governments will
increasingly be able to fund their own infrastructure projects, as opposed to relying on international aid and
Chinese financing. To finance these PPPs and other public works projects, robust economic growth and low
global bond yields have allowed a number of African countries to go to the debt markets to raise funds; an
option unavailable to most even five years ago. Eurobond issuances have taken off over the past 12 months
in SSA, and more are planned for 2014. Most include at least a partial allocation for infrastructure, with
many fully earmarked for the sector.
While these opportunities remain attractive, and rewards could be substantial, risks remain the highest
globally (with SSA posting the lowest average in our Project Finance Ratings). Given the long-term nature
of PPPs, this is a major deterrent for investors. Risks, both regulatory and political, subdue international
investor interest. In an attempt to mitigate these risks, we have seen a number of initiatives to increase
access to private sector capital in Africa. One of the most promising has been the World Bank's Africa50
vehicle. One of the main aims of the initiative is to make infrastructure projects more attractive to financiers
by making skilled legal, technical and financial experts available to projects from an early stage of
development. It is hoped that better planned and executed projects will incur fewer delays, legal costs and
limit the potential for corruption, thus lowering the risks for investors.
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Risks Remain Elevated, But PPPs Spread

BMI African Project Finance Ratings
Source: BMI. Scores 0-100, 100 being
Cement Investment A Sign Of Things To Come
From cement majors to local players, there is huge investment planned for the cement industry over 2014,
which will significantly boost capacity. We expect that frontier markets will garner particularly strong
interest due to their growing economies but minimal existing capacities. We highlight Angola, Cameroon,
Ghana and Zambia as key locations in which cement producers are ramping up investment into the cement
industry.
That said, investment is going into the sector across the continent. Nigerian conglomerate Dangote plans to
boot its cement production capacity to 55mn tonnes per annum by 2016, with new plants planned in Niger,
Zambia, Cameroon, Kenya, Ethiopia and South Africa - all expected to be under construction in 2014.
South Africa's PPC plans to expand in Ethiopia, Rwanda, Zimbabwe and the Democratic Republic of the
Congo (DRC). Indicating that the growth potential of African cement is attractive, Africa features heavily in
major producer Heidelberg's capacity expansion plans for 2014, with new plants planned in Ghana,
Burkina Faso, Togo and Tanzania, whilst other locations are still under consideration.
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The increase in cement capacity across the continent bodes well for our construction industry forecasts, as
producers feel confident in the growth potential in Africa. We expect that increasing numbers of cement
plants will be built, owing to poor transport infrastructure and the fact that accessing remote locations raises
the cost of importing cement or shipping it from a small number of large plants.
Following The Chinese Into Africa
Our final trend to highlight for 2014 is that, following a number of pledges of investment in 2013,
international players, particularly from other emerging markets, will increase their exposure to Africa as
risk premiums fall.
Brazilian companies have held dominant market positions in lusophone African countries (namely Angola
and Mozambique) for some time. Now, in line with a broader global expansion strategy, we are seeing these
companies expanding their focus outside of their traditional remit, with West Africa at the forefront of this
trend. Ghana in particular is benefitting from an influx of Brazilian construction players and capital.
Currently, Ghana follows only Angola and Mozambique in terms of construction market share of Brazilian
companies, with US$600mn-worth of projects being developed in Ghana by Brazilian companies. Ghana is,
therefore, likely to be the first step under a broader strategy by Brazil's biggest construction players to
expand their geographical presence in Africa.
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Others Look To Where China Has Gone

Percentage Market Shares
Source: BMI/ENR
In East Africa, it is the BRIC nations which are increasing their presence by targeting the efforts to better
integrate the region's transport network. Both Russia and Brazil have shown interest in funding and
developing the LAPSEET corridor project. Ethiopia looks set to benefit from Indian investment in
developing its road and rail capacity and connections with Djibouti, whereas Mozambique has seen Indian
capital pledged for power and transport projects.
Other Asian nations, particularly Japan and South Korea, look to repeat the Chinese model in the search to
secure resources. South Korea has increased its foreign aid to Liberia with a view to improving the
infrastructure of the country - notably one of the few in which China's presence is not too heavily felt.
Similarly South Korean companies are increasingly active on the continent, looking to tap the growing
opportunities not automatically accorded to Chinese firms.
However, it is Japan which has set about asserting itself more in Africa and looks set to carry on doing so.
In June, Japan's Prime Minister Shinzo Abe announced US$32bn in funding for Africa over a five-year
period (including an undefined portion for infrastructure). This follows an announcement in May in which
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Japan pledged US$2bn to develop infrastructure around Africa's natural resources, capitalising on rising
anti-Chinese sentiment in light of its African investment strategy.
Asia-Pacific In 2014: Shaping Up To Be A Benign Year

BMI View: Our outlook for the Asia Pacific construction market in 2014 is relatively benign against the
historical average, where lingering uncertainties towards the outlook for the global economy could prevent
the region from maximising its construction potential. We have identified five trends that we believe will
play out in the Asia Pacific construction market in 2014. They are the growing relevance of the more
developed markets in Asia towards regional construction growth, lower capital costs, considerable project
opportunities, pertinent business environment risks and greater financing invention due to weaker
government fiscal positions.
Our outlook for the Asia Pacific construction market in 2014 is benign relative to the historical average,
with our forecasts for construction growth in 2014 similar to the historical ten-year average (4.9% versus
5.0%). Although several countries have seen political risks subside following the conclusion of elections
and remain focused on addressing their infrastructure and building deficits, there are still considerable
difficulties in translating pledged investment into actual construction activity. Coupled with the numerous
uncertainties that cloud the outlook for the global economy, these conditions have the potential to stifle
financing for new construction projects and hamper project implementation in 2014. That said, despite these
concerns the Asia-Pacific region is still expected to outperform the global construction market, which is
forecast to grow by just 3.5% in 2014.
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Indifferent Outlook
Asia Pacific - Construction Industry Value Forecasts
e/f = BMI estimate/forecast. Source: BMI, Various State Agencies
In this analysis, we will review the current prospects for the construction market in the Asia Pacific region,
highlighting some of the key themes that we expect to unfold over the course of 2014.
Developed States Increasingly Relevant: While we are projecting Asia's construction growth in 2014 to
be relatively similar to the historical ten-year average, the drivers of this activity continue to change. Hong
Kong, Singapore, South Korea, Taiwan, Australia, Japan, and New Zealand are becoming increasingly
relevant to the region's growth performance. These markets are expected to contribute to 27.9% of Asia's
overall construction growth in 2014, compared to an average contribution of -0.7% per annum between
2004 and 2013.
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Changing Composition
Asia Pacific - Contribution To Construction Industry Value Real Growth, By Key Sub-Groups,
Percentage Points
Developing Asia: Hong Kong, South Korea, Singapore, Taiwan. Developed Asia: Australia, New Zealand, Japan. e/f = BMI
estimate/forecast. Source: BMI, Various State Agencies
We believe that this trend has arisen due to two factors: a sharp cutback in capital expenditure in China, the
biggest contributor to construction activity among Asian emerging markets, but more importantly, increased
opportunities among these developed markets. An unusually high number of natural disasters among the
developed countries in 2011 have heavily damaged existing infrastructure and a large portion of the
reconstruction effort, particularly in Japan and New Zealand, has yet to be completed. Meanwhile, Taiwan,
Singapore, Hong Kong are implementing major plans to improve inter- and intra-transport links after years
of perennial underinvestment.
We also highlight that the recent electoral victories by the Liberal Democratic Party in Japan and the
Liberal-National coalition in Australia have increased the potential for a broad-based improvement in policy
formation and construction-project execution in two of the largest developed markets in Asia.
More Conducive Monetary Backdrop: We expect the cost of capital across Asia in 2014 to be lower than
over the past ten years. Most Asian countries have adopted a looser monetary policy to spur economic
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activity - India and Vietnam are expected to register the greatest decline in domestic lending rates among
Asian economics - and this could reignite private sector interest in construction in 2014.
Lower Capital Costs

Asia Pacific - Lending Rates, 2014 And 10-Year Historical Average (2004-2013), %
Considerable Project Opportunities: We expect project opportunities in Asia's infrastructure and

construction sectors to remain considerable in 2014. Although government fixed capital expenditure in the
region is not expected to clock the highs seen during the stimulus-driven 2008-09 recovery (due to China's
spending reductions on infrastructure), Asia's infrastructure and building needs are still massive and many
Asian governments remain keen to address this deficit.
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Still Lacking
Asia Pacific - Quality Of Infrastructure, By Country, 2012 And 2013
*Out of 144 Countries. **Out of 148 Countries. Note: Lower Rank = Higher Quality. Source: World Economic Forum Global
Competitiveness Report 2012/13, 2013/14
Most of the infrastructure-building programmes introduced by emerging economies in Asia (particularly in

South East Asia) to attract private investors are gaining momentum - for example, Indonesia's Master Plan
for the Acceleration and Expansion of Indonesian Economic Development, Malaysia's Economic
Transformation Programme, and Philippines' Public Private Partnership (PPP) Programme. These emerging
economies have also ramped up capital spending for all types of infrastructure to record highs, while
developing and developed countries in Asia are ramping up spending to address transport bottlenecks and
rebuild disaster-hit infrastructure, respectively.
China's capital expenditure plans will also still be significant and will mostly likely dwarf allocations in all
other emerging markets. Even though the Chinese central government is increasingly targeting economic
growth driven by private consumption and not by fixed asset investment, the latter - particularly into
infrastructure sector - continues to be viewed by the central government as the easiest way to generate a
satisfactory economic growth rate in the near term. For example, the Chinese government increased its
railway investment target for the 12th Five-Year Plan (2011-2015) by CNY500bn (US$14bn) to
CNY3.3trn.
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Lastly, many Asian governments (we highlight China, Singapore, Hong Kong and Malaysia) are
channelling funds into public housing as record-high housing prices create social problems for these
countries.
Business Environment Risks Remains Pertinent: We believe that business environment issues (such as
red tape, land acquisition, environmental clearances and deficits in institutional capacity and regulatory
framework) are still a major problem in several emerging markets in Asia. This is despite some countries
taking significant steps to resolve these regulatory bottlenecks (such as the breakup of the Ministry of
Railways to reduce red tape and increase operational transparency for investors) or making attempts to do
so (such as the parliamentary approval of a new land acquisition bill in India). Many of these flaws are
deeply ingrained in their bureaucratic system and require years for reforms to mature and fully resolve
them. These countries also need years to train the necessary human resources to boost instructional capacity.
As such, these issues could take many years to be resolved.
Investment Challenges Abound

Asia-Pacific - Ease of Doing Business Rankings, By Country, 2013 And 2014, Out Of 189 Countries.
Note: A Higher Ranking Denotes A Poorer Business Environment. Source: BMI, World Bank
Weaker Fiscal Position Prompts Financing Invention: We expect most Asian countries to run
historically high fiscal shortfalls as they could continue to find it difficult to decrease their welfare spending
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(such as in Thailand, Indonesia and India) or be obliged to pay for the excesses of their state-owned
enterprises (such as in China and Vietnam).
This weaker fiscal position not only undermines investor confidence, but also affects their ability to finance
their infrastructure plans in two ways. Firstly, these governments would have to continue to channel funds
into supporting non-development expenditure at the expense of infrastructure development. Secondly,
demand for their sovereign bonds could wane on the back of a weaker fiscal picture, making it more costly
for them to secure debt to support their subsidy schemes and capital expenditure plans.
Greater Debt
Asia Pacific - Budget Balance, 2014 And 10-Year Historical Average (2004-2013), % of GDP
It has prompted some of them to privatise public fixed assets to raise financing for their capital expenditure
plans and utilise non-traditional business mechanisms to garner private sector investment. These
mechanisms include the use of Islamic bonds, infrastructure funds, financial assistance schemes (such as
takeout financing and viability gap funding) and new PPP models that reduces project risks to private
investors (such as an equity investment from the private sector). We expect both trends to take greater
prominence in 2014.
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Latin America In 2014: A Prosperous Year For Infrastructure Development

BMI View: Latin America continues to be a highly attractive destination for investment in infrastructure.
The region is seeing high levels of activity in the transport and energy sectors and the Public-Private
Partnership (PPP) model looks set to continue to play a leading role. In addition, improvements to the
regulatory environment are being implemented in order to better mitigate a number of downside risks. As
such, our outlook for 2014 remains broadly positive, although we highlight that several risks remain
pertinent to investing in Latin America in the upcoming year.
Latin America presents a diverse array of markets, which offer opportunities but also challenges in the
infrastructure market. Although we like the region as whole, we draw attention to the fact that each country
offers a very unique set of conditions. However, we identify the following common themes which will be
prevalent over 2014:
PPP model continues to gain momentum
Regulations to adapt to meet industry challenges
We do not anticipate radical changes to overall business environments
Delays on environmental permits, land ownership issues and relations with local communities will
continue to be among the main risks to investment in the region
PPPs Role Continues To Strengthen In Hand With New Regulation
The strengthening of the PPP model in Latin America is a sign of growing confidence in the market. The
model's increasing popularity bodes well for future investment in the region as several governments open up
their infrastructure sector to private investment in order to share the financial burden, better manage the
risk, but most importantly to attract expertise where institutional capacity is weak. At the moment, Latin
America is undertaking some of the most challenging construction works that would have previously been
unthinkable without the involvement of the private sector. These include ports in Mexico, hospitals in Chile,
airports in Brazil, public transport in Peru, and an ambitious road network in Colombia. Indicative of the
success of the model, countries without a PPP framework in place have subsequently started to develop one
- Paraguay finally approved a PPP law in November after four years of negotiations.
As a general trend, higher levels of economic growth in the region have led central governments to
prioritise infrastructure development in order to increase competitiveness and improve living standards. The
strong momentum in the industry will be maintained through 2014 on the back of a robust project pipeline
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and strong government support. As such, PPPs will continue to play a major role in 2014 allowing the
construction of technically challenging, high-cost projects.
Sustained Growth
Latin America Construction Industry Value (US$bn) And Real Growth %
10
500
5
250
0
2015f
2014f
2013f
2012
2011
2010
2009
-5
2008
Latam construction industry value, US$bn (LHS)

Latam Const Industry Value, Real Growth % y-o-y (RHS)
F = BMI forecast. Source: Central Banks/National Statistics Agencies of Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa
Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru,
Trinidad&Tobago, Venezuela. BMI
Regulatory Improvements
In terms of changes in regulation, we highlight progress made by President Enrique Pea Nieto in Mexico
with a bill to liberalise the energy sector (to be approved by December 15). The new legislation is expected
to benefit construction industry companies such as Empresas ICA which is highly exposed to the energy
sector-related infrastructure operations. Also in Colombia, President Juan Manuel Santos recently signed a
bill to speed up land purchasing and environmental permits for infrastructure projects of national interest.
The new law - which is pending approval from the Constitutional Court - is expected to be implemented
soon.
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No Major Surprises But Familiar Risks
We do not anticipate radical changes for 2014 in terms of outperformers and underperformers in the region.
On top of our Risk Reward Ratings (RRRs), we expect Chile, Mexico, Colombia and Peru to continue to
lead as they offer the best compromise between risks and rewards. In terms of underperforming markets,
Venezuela, Honduras, El Salvador and Guatemala are likely to remain at the bottom of our rankings. The
political outlook in Venezuela is not particularly promising; President Maduro continues to strengthen his
hold on power while acting as a deterrent to private investment. In turn, structural weaknesses in some of
the Central American economies are unlikely to be solved in the short term. As for the Caribbean, we do not
anticipate high levels of construction industry growth as weak economic outlooks and high levels of
external leverage suggest that, in the absence of exchange rate flexibility, it is only a matter of time before
another small-island economy in the Caribbean defaults.
Regional Outperformers Stay On Top

Latin America Risk/Reward Ratings
Source: BMI
Although we anticipate the region will remain largely stable in 2014, we highlight the potential risk of
upcoming elections and potential instances of public unrest. Next year, presidential elections will be held in
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Costa Rica, El Salvador, Panama, Colombia, Brazil, Uruguay, and Bolivia. Although we do not expect the
elections to have a significant impact on infrastructure development, a change of leadership in countries like
Brazil is bound to have an impact on the business environment. In addition, we are keeping track on the
progress in the peace process in Colombia which is expected to be completed in 2014. If successful, we
expect to see an increase in foreign interest in the country's infrastructure development.
Unsurprisingly, the capacity of several Latin American states to deal with the calibre and pace of current
infrastructure projects continues to be limited. As such, we anticipate some of the familiar challenges of
investing in emerging markets to remain in 2014. Risks vary depending on the market, but delays in the
granting of environmental permits, land ownership issues, and opposition from local community groups to
continue to be present challenges to infrastructure projects.
MENA In 2014: Reaping Rewards Despite Risks

BMI View: 2014 is set to be an important year for infrastructure in the Middle East and North Africa. With
massive government expenditure plans, these markets are some of the fastest growing in the world, whilst
weaker markets have entered recovery after a tumultuous few years.
Key trends we identify for 2014 which will dictate this growth story include:
High risk, high reward markets will become increasingly attractive, especially for regional
construction companies;
The GCC will suffer capacity constraints in light of a boom in activity;
And a number of political risks will come to a head in 2014 which could either boost or undermine
market growth potential.
High Risks, High Rewards?
Having to pay a risk premium has always come with operating in the MENA region. However, after a
turbulent decade of war and revolution, the risk premiums have risen dramatically for a number of markets;
namely Iraq, Libya and Egypt. There have been upticks in violence in Iraq and Libya over recent months,
and political turmoil continues to threaten stability in Egypt. However, instead of descending into economic
ruin, these markets present some of the biggest construction growth markets in the region. Not only is the
repair and reconstruction of existing infrastructure a top government priority, but buoyed by hydrocarbon
revenues, international assistance and pressure from restive populations, infrastructure deficits are
beginning to be addressed.
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In 2013 Aecom returned to Libya to assist with the reactivation of billions of dollars worth of pre-revolution
contracts and implement the investment of Libya's oil wealth into new infrastructure projects. European
companies such as Salini Impregilo have already begun to take advantage of this and we expect that others
will follow suit in 2014 (see 'Salini Impregilo's Risky Markets Paying Off', 25 November).
Growth in Iraq will be among the strongest in the region over the 2014-2018 period, averaging 8.1% y-o-y,
as the government looks to address power and housing deficits. Additionally, the outperformance of the
Kurdish region of Iraq is one of our views we expect to continue to proliferate over the course of 2014 (see
'Kurdish Stability Attracts Tourists, Creates Opportunities', 21 June).
For Egypt, despite uncertainty, the market's appeal appears to still be in place as a number of public-private
partnership projects have moved forward and investors seem keen to enter the market. Saudi Arabia's
persistent interest in Egypt demonstrates that investors from neighbouring Arab countries are less sensitive
to the political risk generated by regime change in the country. As such, Gulf-based (and Turkish) firms are
investing in the region, and we believe that these firms will be well placed to capitalise on stability, when it
is achieved.
Overall we see that in light of government aims to placate populations with high infrastructure spending,
coupled with existing infrastructure deficits, we should see much in terms of construction industry growth enough to make the high risk markets appealing to those with enough appetite.
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Unexpected Opportunities
BMI's Short Term Political Risk Ratings, %
Source: BMI, Higher scores = lower risk
GCC - Victim Of Own Success
We retain a generally positive view of the GCC's prospects as we head into 2014, and expect the region to
be the outperformer in the Middle East and North Africa. However, the sheer size of GCC members'
ambitious infrastructure spending programmes, particularly in Saudi Arabia and Qatar, are leading to
shortages, delays and price inflation, which we expect to continue and even accelerate over 2014. With
Qatar's World Cup preparations, a recovery on the cards in the UAE's construction sector and Dubai
winning the World Expo, and huge investment being ploughed into rail projects, demand for construction
materials is set to soar. EC Harris reports that Qatar alone could experience price inflation of 18% in the
construction sector. Whilst over the medium term we expect regional cement production capacity will
increase to match demand, especially in Saudi Arabia, over 2014 and 2015 at least we expect to see
shortages of cement, tarmac and other materials.
Demand for highly skilled workers, project managers and engineers is also exceptionally high in the region,
with many projects held up in light of a lack of oversight. Also, demand has drawn in influx of expat labour
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into the GCC, which has exacerbated already severe housing shortages. Again over 2014, we expect these
issues to continue, although more housing projects are coming online as confidence in real estate increases
and domestic project management capabilities are increasing.
Rail and Power Investment Like Nowhere Else

Sector Share Of Key Projects Value
Source: BMI Key Projects Database
Coupled with this problem is the issue of construction labour, which the GCC has long been under pressure
from due to accusations of poor worker conditions. 2013 in particular has seen labour come under the
international media spotlight, and we expect that 2014 will continue this trend. A jump in the number of
deaths on construction sites has attracted criticism towards on Qatar's World Cup preparations. Elsewhere,
programmes of promoting private sector employment to indigenous populations whilst cracking down on
illegal migrant workers has seen millions of construction workers leave the GCC. Felt most acutely in Saudi
Arabia, Kuwait and Oman, the increased costs of stricter labour rules will likely impact firms throughout
2014.
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Political Risk Key To Outlook
A number of political issues are likely to dictate the direction of the MENA region's construction industry,
as how they play out will dictate investor confidence in a number of markets. The revolutions which swept
North Africa are still preventing markets such as Tunisia from fully recovering following their revolutions.
Presidential and parliamentary elections, initially set to take place in 2013, are unlikely in our view to be
held before H214. Recent developments also highlight the fragility of the security situation. A suicide bomb
attack in the Tunisian tourist resort of Sousse on October 30, the first such assault in more than a decade, is
an episode which is likely to hit the all-important tourism sector. Additionally, after being pushed out of
Mali into the Sahel region, Algeria and Libya in particular have been targeted by Islamist terrorism. After
the January 2013 attack on the In Amenas facility, this has particularly affected investment and operations
from international oil companies, which is a key driver of construction industry growth in the region. A
situation in flux does not present an attractive investment climate, which is what the construction industry in
North Africa needs.
Elsewhere, the affect of improving relations between Iran and the West could yield better market conditions
in both Iran and the GCC in 2014. Although tentative at present, further rapprochement and warming of
relations could not only see an increase in trade between the GCC and Iran, as the GCC is a key exporter to
Iran, but also see construction activity pick up surrounding this trend. However, if the deal surrounding
Iran's nuclear ambitions fails, we could see the region enter a tense period which may damage investor
perceptions. In particular, due its vehement opposition to Iran's nuclear capabilities, Saudi Arabia may
escalate tensions in the region.
Finally, tensions between Baghdad and Erbil within Iraq remain high as the Kurdish regional government
pursues its own energy agenda. Despite protests from Baghdad, a number of international oil companies
have moved operations into the Kurdish region, which subsequently threatens the vitally important oil
revenues for Baghdad. Whilst the construction sector in Kurdistan is booming, supported by private
investment, the construction industry in the rest of Iraq is heavily dependent on government funding. As
such, should relations between Baghdad and Erbil continue to sour, we are less likely to see a deal which
would see oil revenues shared, which poses significant downside risk to Baghdad's ambitious infrastructure
and housing investment plans.
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North America And Europe In 2014: Turning A Corner

BMI View: Long considered the laggard in the global infrastructure space, the European and North
American construction sectors should experience a continuation of the turnaround which took hold in late
2013. Stable to positive outlooks are becoming increasingly frequent across the region as a whole, and
therefore we do not expect a triple dip recession in the European construction industry, with growth to
accelerate to 2.5% for the region in 2014, versus 1.8% estimated for 2013.
This turnaround will be facilitated by an expansion of capital for the sector, although not from pre-recession
sources. Instead, the EU, supported by the European Investment Bank (EIB), as well as institutional capital
both through direct investments and private equity funds, should support projects. Broadly speaking,
developed markets will drive growth in North America and Europe 2014; however, we remain uncertain
over the sustainability of this trend over the medium term.
Turning A Corner
Europe Construction Industry Real Growth, % y-o-y
10
-5
2018f
2016f
2017f
2015f
2013f
2014f
2012
2010
2011
2009
2007
2008
2006
2005
2004
2003
2002
-10
f=BMI forecast, Source: Central Banks, National Statistics, BMI
Our key themes for the North American and European construction markets for 2014 are:
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The EU and EIB will continue to play a crucial role in supporting infrastructure investment in
Europe, especially in the periphery;
Whilst substantial capital pledged through private equity funds will buoy investment into
infrastructure in Western Europe and North America.
Developed markets to play a crucial role in the region's construction sector growth performance.
Emerging European recoveries to remain fragile and construction growth will trend below pre-crisis
highs.
EU and EIB will continue to play a crucial role in supporting infrastructure investment in Europe
With the European banking sector unlikely to experience an expansion and infrastructure financing
constrained by new banking regulations, traditional sources of project finance - absent since the financial
crisis - will remain elusive in 2014.
Stepping in to fill this void has been the EU in conjunction with the EIB. We believe their role in European
infrastructure finance will only accelerate in 2014 in line with a number of new programmes.
Outlined in 2013, the Connecting Europe Facility (CEF) will support Projects of Common Interest under the
Trans European Transport and Energy Networks (TEN-T and TEN-E) scheme. The EUR29.3bn plan will
run between 2014 and 2020 and support European infrastructure projects through direct loans as well
as preferential access to EIB loans and capital guarantees, in the form of project bonds, risk capital or
enhanced loans.
One of the major areas of focus of the CEF is the energy sector. In October the EU outlined 248 energy
Projects of Common Interest, with a price tag of EUR9.1bn, these projects will benefit from EUR5.12bn in
CEF funding, with the remainder to be supported by EIB funding. Energy projects will be a key area of
priority for the EU over the near term, as the region struggles to balance its green energy agenda with rising
electricity prices and capacity concerns. As such, policy clarification along with improving the region's
security of supply and better integration of energy infrastructure will be a focus over 2014.
Complementing the CEF facility is the Europe 2020 Project Bond Initiative, which is a joint initiative of the
EC and the EIB. The venture, launched in November 2012, aims to provide credit enhancement for
infrastructure public-private partnerships (PPPs), in particular TEN-T and TEN-E projects and high speed
broadband. The initiative works by providing credit enhancement to improve the credit quality of project
bonds in order to attract institutional investors with high investment thresholds. It will do this by taking a
subordinated debt in the project company, in order to elevate the credit quality of the senior debt.
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Levelling The Playing Field

Competitiveness Of Infrastructure, Rank Out Of 148
Source: World Economic Forum, Global Competitiveness Report, 2013-14
The mandate of these programmes will necessitate that much of the financing support is directed outside of
the more developed markets. TEN-T and TEN-E projects are designed to better integrate periphery
countries into the region through improving inter-regional connectivity, reducing bottlenecks, filling in
missing links. Periphery countries remain considerably behind their developed European peers in terms of
infrastructure quality, and thus we expect 2014 this acceleration of EU and EIB financing support for
infrastructure weighted towards projects in emerging Europe.
Capital pledged through private equity funds will buoy investment into infrastructure in Western Europe
and North America
Whilst emerging European infrastructure development will be predominantly sponsored by the EU and EIB,
we expect an acceleration in the level of institutional investors and private equity investments into Western
European and North American infrastructure assets in 2014.
2013 saw a substantial expansion in the amount of capital raised by infrastructure funds, with impressive
closes reached by many (Brookfield Infrastructure Fund II closed the second largest fund ever with US$7bn
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raised). European-focused infrastructure fundraising has seen a considerable expansion in 2013, with
EUR9.1bn raised as of October 22 2013, versus EUR4.8bn over 2012 and just EUR2.6bn in 2011
(according to Preqin data). Infrastructure fundraising is benefiting from the number of institutional investors
that are either turning to the asset class for the first time, or are increasing their infrastructure mandate.
In addition to institutional investors increasing infrastructure allocations through private equity funds, many
are going direct into the sector, supported by government measures to entice greater capital into the market.
European and US institutional investors are increasingly looking to compete with their Canadian peers who
are leaders in direct investments into infrastructure. In the UK for example, the government has encouraged
investment from both pension funds and the insurance industry, the latter of which announced plans in
December 2013 to invest GBP25bn into infrastructure in the UK.
The net impact is considerably more capital available for infrastructure investment in 2014 and over the
medium term. Indeed, the majority of funds and direct investors are targeting North America and Western
Europe, and therefore we expect increased competition for high quality assets in the regions. Indeed, the key
risk seems not to be capital availability, rather the number and quality of opportunities on offer. We expect
therefore to see considerable competition for high quality, regulated assets in the region over 2014.
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Clear Regional Preference

Unlisted Infrastructure Fund Dry Powder, By Regional Focus, EURbn
Source: Preqin
Developed markets to play a crucial role in the region's construction sector growth
In line with a sustained focus by investors on the developed markets in Europe and North America, we also
expect these countries to be the major engines of construction sector growth. Indeed, the US and Canada
have been global developed market outperformers since 2012, and we expect Europe to follow suit in 2014.
Following deep recessions over recent years which saw Europe's largest construction markets act as a net
drag on overall industry performance, 2013 saw many of the major construction markets in the region return
to growth. As such, the developed markets in Europe are becoming increasingly important to the regional's
overall growth and we believe this will continue into 2014, supported by a broader improvement in the
Eurozone economic picture.
In 2014 we are anticipating a turnaround in Germany, a continued revival in the UK construction sector, and
sustained growth in France and Italy. However, Spain and Greece will continue to be the developed market
laggards, with growth to return only in 2015 and 2017 respectively.
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Whilst growth in the developed market region should return to pre-crisis levels in 2014, we highlight less
certainty over the medium term for sustained robust growth rates. Both Germany and the UK have seen
strong growth in the second half of 2013 and we expect growth rates to remain elevated in 2014, and
potentially through to 2015. However, sustaining growth beyond the near term will depend on the
governments' abilities to implement ambitious infrastructure investment plans.
Emerging Europe To Trend Lower

Emerging And Western Europe, Construction Industry Value Real Growth, % y-o-y
20
10
Western Europe
2018f
2016f
2017f
2015f
2013f
2014f
2012
2010
2011
2009
2007
2008
2006
2005
2004
2003
2002
-10
Emerging Europe
f=BMI forecast, Source: National Statistics, Central Banks, BMI
Emerging European recoveries to remain fragile
Conversely, growth will be far more volatile in emerging Europe. Although positive growth will return
more broadly across the region, with growth rates expected to outperform those in developed market peers,
it will trend substantially lower than pre-crisis levels.
In order to support more sustainable infrastructure investment over the medium term, outside of EUmandated projects, structural improvements are needed in the economies of emerging Europe. Economies
across the region are struggling to recover from the financial crisis, with private consumption rates
Page 150
remaining weak; this is weighing on domestic demand for infrastructure. At the same time, the region is
losing competitiveness, in part due to high electricity costs, and this is weighing on demand for
infrastructure from industrial users and foreign investors. Consequently, with low existing capacity
utilisation and weak demand across the region, infrastructure investment is unlikely to be a priority. Indeed,
whilst we see austerity measures easing, infrastructure investment is likely to remain constrained, as
governments focus on measures which will improve private consumption.
Rebound Unsustainable?
Emerging Europe Economic Data
40
10
20
2017f
2016f
2015f
2014f
2013f
2012
2011
2010
2009
2008
2007
-10
2006
-40
2005
-5
2004
-20
Fixed capital formation, real growth % y-o-y (LHS)

Real GDP growth, % (RHS)
f=BMI forecast, Source: National Statistics, Central Banks, BMI
Page 151
Methodology
Industry Forecast Methodology
BMI's ndustry forecasts are generated using the best-practice techniques of time-series modelling and
causal/econometric modelling. The precise form of model we use varies from industry to industry, in each
case being determined, as per standard practice, by the prevailing features of the industry data being
examined.
Common to our analysis of every industry, is the use of vector autoregressions. Vector autoregressions
allow us to forecast a variable using more than the variable's own history as explanatory information. For
example, when forecasting oil prices, we can include information about oil consumption, supply and
capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own
history is often the most desirable method of analysis. Such single-variable analysis is called univariate
modelling. We use the most common and versatile form of univariate models: the autoregressive moving
average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality
is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for
analysis and forecasting.
We mainly use OLS estimators and in order to avoid relying on subjective views and encourage the use of
objective views, we use a 'general-to-specific' method. BMI mainly uses a linear model, but simple nonlinear models, such as the log-linear model, are used when necessary. During periods of 'industry shock', for
example poor weather conditions impeding agricultural output, dummy variables are used to determine the
level of impact.
Effective forecasting depends on appropriately selected regression models. We select the best model
according to various different criteria and tests, including but not exclusive to:
R2 tests explanatory power; adjusted R2 takes degree of freedom into account
Testing the directional movement and magnitude of coefficients
Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value)
All results are assessed to alleviate issues related to auto-correlation and multi-collinearity
Page 152
BMI uses the selected best model to perform forecasting.
It must be remembered that human intervention plays a necessary and desirable role in all of our industry
forecasting. Experience, expertise and knowledge of industry data and trends ensure that analysts spot
structural breaks, anomalous data, turning points and seasonal features where a purely mechanical
forecasting process would not.
Sector-Specific Methodology
Construction Industry
Construction Industry Value
Our data is derived from GDP by output figures from each country's national statistics office (or
equivalent). Specifically, it measures the output of the construction industry over the reported 12-month
period in nominal values (ie domestic currency terms). As it is derived from GDP data, it is a measure of
value added within the industry (ie the additional contribution of the construction industry over other
industries, such as cement production). Consequently, it does not measure the nominal value of all inputs
used in the construction industry, which, for most states would increase the overall figure by 50-60%.
Furthermore, it is important to note that the data does not provide an indication of the total value of a
country's buildings, only the construction sector's output in a given year.
This data is used because it is reported by virtually all countries and can therefore be used for comparative
purposes.
Construction Industry Value Real Growth
Our data and forecasts for real construction measures the real increase in output (rather than nominal
growth, which would also incorporate inflationary increases). In short, it is an inflation-adjusted value of the
output of the construction industry year-on-year. Consequently, real growth will be lower than the nominal
growth of our 'construction value' indicator, except in instances where deflation is present in the industry.
Data for this is sourced from the constant values for construction value added, using the same sources noted
above. We use officially calculated data to accurately account for inflation specific to the construction
industry.
Page 153
Construction Industry, % Of GDP/Construction Value (US$)
These are derived indicators. We use BMI's Country Risk team's GDP and exchange rate forecasts to
calculate these indicators.
Capital Investment
Total Capital Investment
Our data is derived from GDP by expenditure data from each country's national statistics office (or
equivalent). It is a measure of total capital formation (excluding stock build) over the reported 12-month
period. Total capital formation is a measure of the net additions to a country's capital stock, so takes into
account depreciation as well as new capital. In this context, capital refers to structures, equipment, vehicles
etc. As such, it is a broader definition than construction or infrastructure, but is used by BMI as a proxy for
a country's commitment to development.
Capital Investment (US$), % Of GDP, Per Capita
These are derived indicators. We use our Country Risk team's population, GDP and exchange rate forecasts
to calculate them. As a rule of thumb, we believe an appropriate level of capital expenditure is 20% of GDP,
although in rapidly developing emerging markets it may, and arguably should, account for up to 30%.
Government Capital Expenditure
This is obtained from government budgetary data and covers all non-current spending (ie spending on
transfers, salaries to government employees, etc). Due to the absence of global standards for reporting
budgetary expenditure, this measure is not as comparable as construction/capital investment.
Government Capital Expenditure, US$bn, % Of Total Spending
These are derived indicators.
Page 154
Construction Sector Employment
Total Construction Employment
This data is sourced from either the national statistics office or the International Labor Organization (ILO).
It includes all those employed within the sector.
Construction Employment, % y-o-y; % Of Total Labour Force
These are derived indicators.
Average Wage In Construction Sector
This data is sourced from either the national statistics office or the ILO.
Infrastructure Data Sub-Sectors
BMI's Infrastructure data examines the industry from the top down and bottom up in order to calculate the
industry value of infrastructure and its sub-sectors. We use a combination of historic data as reported by the
central banks, national statistics agencies and other official data sources, and BMI's Infrastructure Key
Projects Database tool.
Where possible we source historic data for the relative portion of either infrastructure spend or value
generated by the various sub-sectors we classify as infrastructure. We seek to segment official infrastructure
data into pre-set categories classified by us, across all countries, in order to optimise the ability to compare
industry value across the sub-sectors of infrastructure. We then apply ratios to the infrastructure subsector
value in order to derive the value. Real growth is calculated using the official construction inflation rate.
In those instances where historic data is not available, we use a top down and bottom up approach
incorporating full use of BMI's Infrastructure Key Projects Database, in most cases dating back to 2005.
This allows us to calculate historical ratios between general infrastructure industry value and its sub-sectors,
which we then use for forecasting. Our Key Projects Database is not exhaustive, but it is comprehensive
enough to provide a solid starting point for our calculations.
Page 155
The top down approach uses data proxies. We have separated countries into three tiers. Each tier comprises
a group of countries on a similar economic development trajectory and with similar patterns in terms of
infrastructure spending, levels of infrastructure development and sector maturity. This enables us to confirm
and overcome any deficiencies of infrastructure-specific data by applying an average group ratio (calculated
from the countries for which official data exists) to the countries for which data is limited.
Tier I - Developed States. Common characteristics include:
Mature infrastructure markets;
Investments typically target maintenance of existing assets or highly advanced projects at the top of the
value chain;
Infrastructure as percent of total construction averages around 30%.
Tier I countries: Canada, Germany, Greece, UK, US, France, Hong Kong, Taiwan, Singapore, Israel,
Japan, Australia.
Tier II - Core Emerging Markets. Common characteristics include
The most rapidly growing emerging markets, where infrastructure investments are a government
priority;
Significant scope for new infrastructure facilities from very basic levels (eg highways, heavy rail) to
more high value projects (renewables, urban transport);
Infrastructure as percent of total construction averages around 45% and above.
Tier II countries: Colombia, Malaysia, Mexico, South Korea, Peru, Philippines, Turkey, Vietnam,
Poland, Hungary, South Africa, Nigeria, Russia, China, India, Brazil, Indonesia.
Tier III- Emerging Europe. Common characteristics include:
Regional socioeconomic trajectories;
Development defined by recent or pending accession to European structures such as the EU.
Infrastructure development to a large degree dictated by EU development goals and financed through
vehicles such as the PHARE and ISPA programmes, and institutions such as the EBRD and EIB;
Infrastructure as percent of total construction averages between 30% and 40%.
Tier III countries: Czech Republic, Romania, Bulgaria, Slovakia, Slovenia, Estonia, Latvia, Lithuania,
Croatia, Ukraine.
This methodology has enabled us to calculate infrastructure industry values for states where this was not
previously possibly. Furthermore, it has enabled us to create comparable indicators.
The top down hypothesis-led approach has been used solely to calculate the infrastructure industry value as
a percentage of total construction. For all sub-sector calculations we apply the bottom-up approach, ie
calculating the ratios from our Key Projects Database where data was not otherwise available.
Page 156
Risk/Reward Rating Methodology

BMI's Risk/Reward Ratings (RRR) provide a comparative regional ranking system evaluating the ease of
doing business and the industry-specific opportunities and limitations for potential investors in a given
market.
The RRR system divides into two distinct areas:
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state
characteristics that may inhibit its development. This is further broken down into two sub categories:
Industry Rewards (this is an industry-specific category taking into account current industry size and
growth forecasts, the openness of market to new entrants and foreign investors, to provide an overall
score for potential returns for investors).
Country Rewards (this is a country-specific category, and the score factors in favourable political and
economic conditions for the industry).
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic
profile that call into question the likelihood of anticipated returns being realised over the assessed time
period. This is further broken down into two sub categories:
Industry Risks (this is an industry-specific category whose score covers potential operational risks to
investors, regulatory issues inhibiting the industry, and the relative maturity of a market).
Country Risks (this is a country-specific category in which political and economic instability,
unfavourable legislation and a poor overall business environment are evaluated to provide an overall
score).
We take a weighted average, combining market and country risks, or market and country rewards. These
two results in turn provide an overall Risk/Reward Rating, which is used to create our regional ranking
system for the risks and rewards of involvement in a specific industry in a particular country.
For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall
Risk/Reward Rating a weighted average of the total score. Importantly, as most of the countries and
territories evaluated are considered by us to be 'emerging markets', our rating is revised on a quarterly basis.
This ensures that the rating draws on the latest information and data across our broad range of sources, and
the expertise of our analysts. Our approach in assessing the risk/reward balance for infrastructure industry
investors globally is fourfold:
First, we identify factors (in terms of current industry/country trends and forecast industry/country
growth) that represent opportunities to would-be investors.
Page 157
Second, we identify country and industry-specific traits that pose or could pose operational risks to
would-be investors.
Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/
trends to avoid subjectivity.
Finally, we use BMI's proprietary Country Risk Ratings (CRR) in a nuanced manner to ensure that only
the aspects most relevant to the infrastructure industry are incorporated. Overall, the system offers an
industry-leading, comparative insight into the opportunities/risks for companies across the globe.
Sector-Specific Methodology
In constructing these ratings, the following indicators have been used. Almost all indicators are objectively
based.
Table: Infrastructure Risk/Reward Rating Indicators
Indicator
Rationale
Rewards
Industry rewards
Construction
expenditure, US$bn
Objective measure of size of sector. The larger the sector, the greater the opportunities
available.
Sector growth,
% y-o-y
Objective measure of growth potential. Rapid growth results in increased opportunities.
Capital investment, % of Proxy for the extent the economy is already oriented towards the sector.
GDP
Government spending,
% of GDP
Proxy for extent to which structure of economy is favourable to infrastructure/
Country rewards
Labour market
infrastructure
From BMI's Country Risk Ratings (CRR). Denotes availability/cost of labour. High costs/low
quality will hinder company operations.
Financial infrastructure
From CRR. Denotes ease of obtaining investment finance. Poor availability of finance will
hinder company operations across the economy.
Access to electricity
From CRR. Low electricity coverage is proxy for pre-existing limits to infrastructure coverage.
Risks
Industry risks
No. of companies
Subjective evaluation against BMI-defined criteria. This indicator evaluates barriers to entry.
Transparency of
tendering process
Subjective evaluation against BMI-defined criteria. This indicator evaluates predictability of

operating environment.
Country risks
Structure of economy
From CRR. Denotes health of underlying economic structure, including seven indicators such
as volatility of growth; reliance on commodity imports, reliance on single sector for exports.
External risk
From CRR. Denotes vulnerability to external shock - principal cause of economic crises.
Policy continuity
Subjective rating from CRR. Denote predictability of policy over successive governments.
Page 158
Infrastructure Risk/Reward Rating Indicators - Continued
Indicator
Rationale
Legal framework
From CRR. Denotes strength of legal institutions in each state. Security of investment can be a
key risk in some emerging markets.
Corruption
From CRR. Denotes risk of additional illegal costs/possibility of opacity in tendering/business

operations affecting companies' ability to compete.
Source: BMI
Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal
weight. Consequently, the following weighting has been adopted:
Table: Weighting Of Indicators
Component
Rewards
Weighting, %
70, of which
- Industry rewards
65
- Country rewards
35
Risks
30, of which
- Industry risks
40
- Country risks
60
Source: BMI
Page 159

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Q2 2014

Vietnam Infrastructure Report Q2

Part of BMIs Industry Report & Forecasts Series

Business Monitor International

2014 Business Monitor International

Vietnam Infrastructure Report Q2 2014

Industry Forecast .............................................................................................................. 11

Transport Infrastructure - Outlook And Overview .......................................................................................... 23

Major Projects Table - Transport .............................................................................................................. 42

Energy And Utilities Infrastructure - Outlook And Overview ............................................................................ 58

Major Projects Table - Energy & Utilities ................................................................................................... 75

Residential/Non-Residential Building - Outlook And Overview ......................................................................... 93

Major Projects - Residential/Non-Residential Construction And Social Infrastructure ..................................... 101

Industry Risk Reward Ratings ........................................................................................ 105

Asia - Infrastructure Risk/Reward Ratings .................................................................................................. 107

Market Overview ............................................................................................................. 116

Company Profile .............................................................................................................. 117

Business Monitor International

Vietnam Infrastructure Report Q2 2014

Global Infrastructure Overview ...................................................................................... 125

Methodology .................................................................................................................... 152

Table: Infrastructure Risk/Reward Rating Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

Business Monitor International

Vietnam Infrastructure Report Q2 2014

BMI Industry View

The major developments in Vietnam's infrastructure sector are:

Business Monitor International

Vietnam Infrastructure Report Q2 2014

Business Monitor International

Vietnam Infrastructure Report Q2 2014

Vietnam Infrastructure SWOT Analysis

A hike in electricity prices should stimulate investment in the energy sector.

State-owned companies dominate the infrastructure market. This is especially the

Severe drought is driving demand in electricity generation sources besides

If the government's attempts to cool the overheating economy are successful,

Business Monitor International

Vietnam Infrastructure Report Q2 2014

Vietnam Infrastructure SWOT Analysis - Continued

A possible shift in the Vietnamese government's focus - from driving economic

Should any significant events occur to highlight Vietnam's structural difficulties,

Business Monitor International

Vietnam Infrastructure Report Q2 2014

Business Monitor International

Vietnam Infrastructure Report Q2 2014

Vietnam Construction And Infrastructure Industry Data, 2012-2017 - Continued

Business Monitor International

Vietnam Infrastructure Report Q2 2014

Vietnam Construction And Infrastructure Industry Data, 2012-2017 - Continued

e/f = BMI estimate/forecast. Source: Vietnam General Statistics Office, BMI

Table: Vietnam Construction And Infrastructure Long-Term Forecasts, 2018-2023

Business Monitor International

Vietnam Infrastructure Report Q2 2014

Vietnam Construction And Infrastructure Long-Term Forecasts, 2018-2023 - Continued

Business Monitor International

Vietnam Infrastructure Report Q2 2014

Vietnam Construction And Infrastructure Long-Term Forecasts, 2018-2023 - Continued

f = BMI forecast. Source: Vietnam General Statistics Office, BMI

Business Monitor International

Vietnam Infrastructure Report Q2 2014

On The Path To Recovery

Source: General Statistics Office, State Bank of Vietnam

Business Monitor International