Vietnam Moves Forward towards Greener Built Environment | Solidiance | Michael Sieburg

018e A recently released white paper produced by Solidiance – a B2B marketing consultancy firm focused on Asia Pacific – in partnership with the Vietnam Green Building Council outlines about the current overview of Vietnam’s green building sector and the market strategies for both local and multinational players in the industry to develop and attain a strong market presence in the market.

Solidiance’s Michael Sieburg who heads up their Vietnam operation as well as the main author of this white paper titled “Is There a Future for Green Buildings in Vietnam?” further shares with us the possible reasons behind the low usage of green building materials, the local players’ preference towards the Building Automation System, and more about this topic on the exclusive interview below.

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There is still relatively low usage of green construction materials in Vietnam, accounting approximately only 5% of the total building materials used. What is the possible reason behind this?

Low awareness among many residential property owners is a driving factor, though local contractors are increasingly knowledgeable and interested in green materials. Furthermore, even minor cost differences can drive buying decisions, especially where developers are not building users, where resources are severely constrained, or where short-term thinking predominates long-term planning – all can lead to buying on upfront costs rather than long-term financial considerations. Green building codes for public buildings and / or incentives for developers to build green would help boost the market but these are not yet in place. However, the government has taken steps to transition the country away from its traditional reliance on baked clay bricks towards greener solutions, with local and international companies like Xella rising to meet this coming demand.

In terms of the overall market, it’s not a matter of supply of green building materials and technologies but rather demand, which will only increase as electricity prices rise, awareness spreads, and an encouraging regulatory environment is in place. However, thus far, the industrial and hospitality sectors have seen the greatest adoption in Vietnam. With regards to the industrial market, multinational corporations are typically following global corporate guidelines that require them to adhere to a specific set of environmental criteria. They of course are also looking to reduce operating costs, especially at energy intensive manufacturers. In the hospitality sector, there is also the need to maximize resources and reduce operating cost but there is also a clear PR benefit to boosting a property as eco-friendly, which can at a minimum boost occupancy rates but also, in some cases, increase room rates as well.

 

Multinational manufacturers are flocking to build their factories in Vietnam, arguably with the general preference or knowledge about LEED over LOTUS. What needs to be done to drive the local green building certification?

LOTUS was an important development for the promotion of green buildings in Vietnam as it gave the market green standards that are applicable to local conditions, enabling easier adoption as well as lower implementation costs. While LEED might be immediately more recognizable to a global audience, LOTUS was developed based on LEED standards but then localized for Vietnam’s conditions. Key to accelerating the adoption rate will be the ability to demonstrate a clear return on investment for building green. As the certification was only introduced in 2010, analysis of return on investment on LOTUS-certified buildings remains ongoing. Once specific figures are available, they will demonstrate the clear financial benefits of adhering to LOTUS standards, especially in terms of ongoing operational costs.

 

With regards to the regional trend of the building automation system (BAS), are the local enterprises in Vietnam currently already in favor of advanced building metering technology for sustainable solutions?

Any reference to boosting energy efficiency and the resulting cost savings in Vietnam needs to be understood in the larger context that electricity prices here are low relative to many of the country’s ASEAN neighbors. The government is making moves towards market-based pricing but is wary of the impact this will have on inflation, as well as low-income consumers and production costs. Energy prices will need to rise before there is more widespread adoption of energy efficient technologies, especially for more expensive technologies which require a longer return on investment period. However, as building users do increasingly demand more energy efficient operations, local companies will seek to become more active in the building automation market but they will face significant challenges from international companies like Schneider Electric, Siemens, Bosch, Johnson Controls, Honeywell, etc who have the product technology, experience, and reputation in the market. But there will still be a role to play as partners, service providers, systems integrators, and so forth to these leading multinationals.

 

What are the possible strategies for corporations that are reluctant to acquire green building certification due to financial constraints?

I would first question the premise that building green requires significant additional financial resources. While implementation costs for LOTUS are still being developed, experience elsewhere in the region shows that building green might entail anywhere from 1-10% in additional costs. However, making the decision to go green from the beginning can help lower costs through architectural design considerations, especially factoring solar exposure in the building’s positioning. This costs essentially nothing. Though implementing advanced technologies might well entail additional investment in the short-term, the financial benefit can be seen over time through lower energy costs. It is true that longer return on investment periods is more attractive to the property developer where that company is also the building user but in such cases where the two are different, the property developer might still build green in order to obtain premium rental fees or for PR purposes.For companies looking to utilize green technologies, it might be possible to obtain financing from equipment suppliers themselves, though such instances would usually be limited to significant investments made by large industrial customers or developers of major office buildings. For example, Siemens Financial Services could play such a role in equipment financing for its industrial automation equipment. Vietnam’s government has also begun to implement incentives for companies to implement green technologies, providing support to those companies who might be otherwise reluctant to build green. Such government incentives would typically be available to a broader customer base, enabling companies with limited financial resources the opportunity invest in green technologies in order to gain long-term savings.

 

Currently in Asia, sustainability efforts are not only put forward by the government or private sectors – but also by the tertiary institutes. How far do Vietnamese universities go towards greener built environment and skilled green workforce?

Universities are only beginning to introduce green building concepts into their curriculum but increasing student interest is driving demand and universities are looking to adapt and expand their program offerings accordingly. For example, the University of Architecture in Ho Chi Minh City offers coursework in environmental and sustainable design, and its professors have also partnered with the Energy Conservation Center to offer a multi-day certification workshop in green architecture. Civil society and the private sector have also been active in supporting universities in capacity building, with Saint-Gobain recently sponsoring a workshop on the topic of “Sustainable Development in Vietnam Construction” between the Ho Chi Minh City University of Technology and the Vietnam Green Building Council. These types of initiatives will be key to building networks and increasing visibility on the importance of green building ideas, and they are taking off.

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About Solidiance :

Solidiance is a dedicated growth strategy and B2B marketing consultancy firm focused on Asia. The company works exclusively with Fortune 500s to perform market opportunity analysis in order to support their Asia market growth expansion strategies and provide them with the required insights and the necessary roadmap to capture profitable market share in the region. Solidiance’s industry focus lays on their extensive experience in green technology, industrial applications, construction, clean tech and healthcare.

Website : www.solidiance.com

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