Vietnam Environmental Technologies Export Market Plan

Chapter 14
Market Entry Strategies
14.1—Getting Started
It is highly recommended that companies build a local
presence in Vietnam by establishing a representative
office to understand the dynamics of the market.
Successful business in Vietnam means establishing
relationships with key industry leaders and government
officials and this can be accomplished locally. A foreign
company with a representative office is allowed to
negotiate and sign contracts with local firms or apply for
an investment license from the government. However, a
representative office cannot conduct commercial
activities and earn revenue. Its sole purpose is to allow a
company to research and prepare for a more formal
investment project. The Ministry of Trade issues
representative office licenses that are usually valid for
five years. The current fee is just 1 million dong
(approximately $71).
14.2—ODA-Funded Projects
In the foreseeable future, the best opportunities for
environmental equipment and services will be projects
financed with overseas development assistance (ODA).
Therefore, it is essential to maintain contact with ODA
sources to remain abreast of project opportunities and
status.
Tracking ODA projects includes establishing relationships
with implementing ministries, agencies, and offices
that will be responsible for project management on a local
level. Successful bidding on ODA projects depends upon
meeting the detailed qualifications set out in bidding
documents and establishing relationships with key local
decision makers.
ODA projects funded by the World Bank and the Asian
Development Bank usually require that foreign contractors
partner with local companies to promote transfer of
technology/expertise. For example, in the case of large
water supply, sewerage, and drainage projects, foreign
companies often try to partner with the Vietnam
Consultancy for Water Supply, Sanitation and Environ-
ment (VIWASE). VIWASE is owned by the Ministry of
Construction.
14.3—Imports
All imported equipment must be through a company
with an import/export license. Every shipment of goods
must have an import permit from the Ministry of Trade.
In general, government authorities frown upon imports
of used or outdated equipment, even when such
equipment may be more appropriate for Vietnam’s low
level of infrastructure development.
Industrial water pumps, water filters, liquid filters, and
air or gas purifying machinery is exempt from import
duties. Equipment imported for use at a foreign-invested
company and in ODA projects may also be imported duty
free. However, local customs officials are occasionally
unaware of national import policies. In the past, imports
of equipment for ODA projects have been delayed until
these policies could be clarified for local officials.
Household pumps and filters are subject to a 20 percent
import tax. Import duties change often, especially since
the introduction of the value added tax in Vietnam in
January 1999, so rates should be checked before contracts
are signed.
Vietnam tends to grant import licenses only to large,
state-owned firms. If one is distributing product via a
smaller local agent that does not have import rights, this
company then signs an import contract with the firm that
owns an import license. The larger trader then earns a
commission, ranging from 1 to 2 percent of the contract
value.
14.4—Distribution
Vietnam does not grant distribution rights to foreign
companies. They are only allowed to manage distribution
legally if they enter into a joint manufacturing venture
with a local firm.
Vietnam Export Market Plan
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