Green Buildings in Vietnam: Nascent, Potential Market to Tap on

Vietnam building

Rapid urban development and the current environmental condition are the baseline of what commonly drive the green buildings adoption in anywhere around the globe. Responding to such situation, Vietnamese  government aims to mitigate annual energy consumption by 2.5-3% (per unit GDP) until 2020 and reduce annual greenhouse gas (GHG) emission by 2-3% from 2020 – 2030 through its Green Growth Strategy.

On the other hand, to catalyze sustainability implementation in the country, Vietnam Green Building Council (VGBC) released a local certification named LOTUS back in 2010, in which relevant training programmes are initiated and financed by multilaterals through Vietnam’s NGO network. LOTUS was specifically developed by VGBC under relevantly particular considerations i.e. climate, legal framework, market saturation and economic development in Vietnam, serving as an ideal green building rating tools to comply with.

As for an endeavor to assess the current market condition as well as explore possible opportunities in the sector, partnered with VGBC to host an Exclusive Breakfast Meeting in Ho Chi Minh, Vietnam. The assemblage of senior executives from VGBC, Solidiance, prominent architectural firms, constructors, as well as the world’s leading construction materials and equipments manufacturers – Schneider Electric, Saint Gobain, Bluescope Steel, Schindler, Akzo Nobel, Holcim, etc – resulted a lively exchange of ideas with the following key takeaways :


Vietnam, the nascent market to tap on

According to Yannick Millet, the Executive Director of VGBC, Vietnam’s green buildings is currently still a nascent market. However, the urban population in the country is only 30% – far less than its neighbouring countries, and this will serve as a potential for the sector to grow as there will be a huge amount of buildings construction need to be built especially in this decade.

Regardless of the country’s increasing energy consumption, Vietnam’s green building market is still responding quite slowly towards its necessitated sustainability efforts if compared to its other countries in the region. The green buildings adoption rate in Vietnam is still low due to several main reasons – underdeveloped regulatory framework, low electricity price and speculative or misinformed market due to lack of proper knowledge.

Vietnamese government is still not yet implementing robust enforcement as many assume they still don’t have enough capacity and source yet to spur the green buildings adoption rate. Despite the continuous push that has been observed through different subsidy programs, the adoption rate is still relatively low with green construction materials allotted reaching up to only 5% of total building materials.

Xavier Denoly, the Country President for Vietnam and Cambodia at Schneider Electric asserts that the low electricity price is one of the main issues that hinders the market to push themselves towards green initiatives. “As long as the price of electricity will remain low, it will even make it more difficult for green  building concept to catch up”, Xavier said.

Another issue that rounds up a set of hindrances holding back the growth of Vietnam’s green buildings industry is that there is evidently a misinformed market because of the lack of proper knowledge being provided as well as available in the field.

The price of misinterpretation

Mainly due to inadequacy of proper knowledge and awareness, the residential segment in Vietnam is very speculative. There has been a misinformation about the high cost of green building adoption, while the actual accrued price to acquire green certification is ranging only around 2-8%, with the possible period of ROI of approximately 5 years. There has also been a sound misconception where mere additional parks and numbers of trees are reckoned as enough characteristics to label a building ‘green’.

The dismissal or unwillingness to comply with green standards may therefore cost more than one could imagine. According to a report done by McGraw Hill Construction, slightly higher premiums incurred by building green are more than offset by energy savings and other benefits. Green construction can also result significant economic savings through occupants’ productivity, increasing benefits from improvements in health and safety, as well as through energy (green buildings on average are 25-30% more energy efficient than conventional buildings), water (29% usage savings on average), maintenance and operational costs reduction.

Steering towards greener direction

Several ideas were spurred in the discussion as for possible solutions in response to existing issues hindering green buildings growth in Vietnam. Firms who are reluctant to acquire green certification due to financial incapability may pursue a joint venture for a possible green funding. Proper training programs should also be more enforced or promoted as for an advocacy towards necessary endeavor to overcome lack of sustainability education in different levels of value chain.

Government may also have a more strategic position to play a bigger role through mandates of green building codes and financial sanction for case of infringement. An alternate way of providing easier and quicker process to grant legal permissions for green buildings shall be taken into consideration as well to leverage the benefit of green buildings adoption.

In a long term, however, there needs to be a heavier focus to put not only on the construction, but also on the sustainability efforts, as to what it would take to maintain the state of ‘green’ of a building i.e. in terms of design, construction, operationalization and building management system. ( – SA)

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