In rural clean water supply alone, although there remain numerous shortcomings, our initial achievements indicate a common trend that the Government will step by step not directly act as a clean water supplier but will be a controller enabling private sector to undertake this assigment by themselves.

First of all, it is necessary to clarify who are in the private sector. In the broad sense, the private sector refers to enterprises which are non- state owned and able to self-mobilize investment capital to supply clean water to rural areas. They are groups of people in family relationships or friends who jointly take part in planning, compling with all the necessary procedures, calling for capital, and taking responsibilities for business establishment.Generally, the investment plan results from urgent concerns on clean water demand at their local areas and their experience in or knowledge about the situation of production and business of this service in other localities. Some investors, who have worked and experienced in the field of clean water, now seek opportunities in new markets to expand their business.

Through investigating rural clean water business and investment situation within the rural clean water project for Red River Delta, we had chance to meet and share ideas in this new and challenging service with entrepreneurs from the private sector.

So what are difficulties? How can the private sector overcome such difficulties and what do they expect to be supported from the Government? Among various matters, we will study three difficulties that private enterprises consider the biggest and can exert the most direct impact.

The first difficulty is market.

Rural area is thinly populated with poor people who have been only aquainted to using natural water sources for living for decades. Raw water is taken from ponds and lakes, man-made water is from drilled or excavated wells, cleaner water is rain water which is caught and stored rain water, and all the water sources are freely provided from the nature. Therefore, it is difficult to convince them to pay a great amount of money for installing clean water pipeline in their houses and pay a monthly amount calculated in accordance with their water usage volume.This is new to rural households.

In order to overcome this difficulty, entrepreneurs have found out some measures such as beginning from accessing market surrounding urban area where there are more concentrated services such as restaurants, garage, and rest houses and then targeting at centralized facilities such as offices, schools, clinics, processing bases, other services establishments and finally focusing on households who have demand for clean water usage, especially those with good economic conditions and newly built houses installed with tapped water equipment or people have been aquainted to using tapped water.

In regard of the State assistance, entrepreneurs expect that the State will implement a national project on investigation of demands for clean water at specific areas to obtain potential water consumption amounts, helping them to make more feasible investment and business plans. In addition, thanks to the State’s community development projects, rural people are aware of the beneficial use of clean water from the piped water supply system and gradually give up the habit of using non-purified and indisinfected water. Accordingly, with people’s awareness of positive impacts of clean water use on living standards improvement, clean water market will develop remarkably.

The second difficulty is management work.

Rural areas are typically wide-spread over the country. Therefore, per-capita investment is higher than that in urban areas resulting in high investment expenditure and making investors face various difficulties in determination of quality level of the system in order to rationalize initial investment expenditures. Some enterprises learnt a lesson that minor savings in investment in water meters may cause unacceptable losses. Besides, some pipe systems run across so many areas that they are difficult to manage and lead to high risk of breaking. All such matters result in high percent of leaking of product water while all people working in water supply know that a decrease in leaking directly leads to an increase in business profits. So the management tip mentioned here is “No leaking”.

In order to restrict leaking, rural water supply and sanitation enterprises (RWSSEs) have taken measures such as actively using high-quality equipment which is more expensive but more reliable, especially equipment with high risks of leaking such as joints, vavles, water-meters or mechanic breaks for pipelines running across roads, over the ground or private land, etc. In return, enterprises have many solutions to reduce total initial investment expenditure, including actively looking for suppliers and installing high-quality and costly water meters for households instead of allowing them to install bad and cheap water meters by themselves (normally, households have to cover the cost of water meter), then enterprises will gradually return the cost to households by clean water during the using process. Diversified and different measures have been taken based on enterprises’ management experience and insight into local practices.

The third difficulty is capital.

Generally, RWSSEs are small-scaled, newly-founded and short of capital. Clean water can be sold to households only after piped clean water system has been fully constructed and is used only for clean water suppy purpose whatever happens. Furthermore, operation and maintenance expenses (O&M) are fluctuant and tentative to increase, etc. while banks only lends with condition of high value mortgage assets.

What have RWSSEs done to deal with this difficuty? They have taken various measures. Investment groups take advantage of relationships to obtain a funded project and then they can grow up with their own capital. Some enterprises make use of favourable locations provided by the commune for building a water supply scheme to carry out other services with a view to geting additional profits to support clean water supply. Other enterprises have taken flexible measures.

However, how flexible and dynamic they are, RWSSEs all expect to get supports from the State by creating favourable conditions for enterprises to operate rather than providing financial assistance. Particularly, RWSSEs should be regarded as enterprises typically operating for public purposes in order to utilize permissible support within the policy framework at the maximum level. Alternatively, local authority may issue a decision on water tarrif that ensures business activities and adopt policies on assisting poor households in served areas in order to increase clean water consumption, and other measures under the local authority.

Apart from three main difficulties mentioned above, RWSSEs are also in the face of a range of other difficulties such as enterprises’ capacity, organization model, legal environment, etc. Although, these difficulties are inevitable when RWSSEs want to operate in the market, they may be overcomed step by step.

However, besides outstanding difficulties, the participation of the private sector in various business fields is a matter of concerns in most internationally-funded national strategic programs and the Governament and donors take certain actions to establish a more favouable business environment for private sector, facilitating the participation of private enterprises in services which is previously dominated by State-owned enterprises, fostering and improving capacity for enterprises in all aspects, skills for officers and technicians in private enterprises so that they can perform effectively, and other constant and particular measures.

In addition, naturally, the private sector itself has many advantageous features such as effectivenss, non-cumbersome, activeness, riskiness and a more important and decisive feature that is entrepreneurship spririt together with expectation to contribute to the community that urges such individuals, groups and enterprises to “join in rural water supply activities”, as sayings by rural water supply officers, at their own money and willingness to accept potential risks and a large number of enterprises have achieved encouraging results.

Phan Manh Tuan