Sustainable International Development

I was recently invited to Vietnam to participate as an Investment Consultant on behalf of potential large scale North American investors to review a development project in Yen Tu, Vietnam, a place of pilgrimage for Vietnamese Buddhists. My consultancy work in the area of investment and development is based on a simple philosophy: If it isn’t good for the world, it isn’t good for the courtry either. Coupled with a recent course on sustainability the whole effort had me pondering the best ways to encourage and increase sustainable international development which aids a country in reducing poverty without taxing the planet’s resources.

Development has the potential to do harm but can also be used to do good if it addresses the local needs in a sustainable way. But even high standards such as LEEDs doesn’t guarantee that the results will be positive. On the other hand, using investment opportunities such as Yen Tu to encourage Sustainable Development and the use of LEEDs standards will certainly help to create skills for the future. It increases local expertise related to sustainable building practices, especially when the work is performed primarily by local developers. And it ensures that newly acquired expertise stays local and gets used on future building projects.

From an investment perspective, one way is to encourage sustainable development is to share methods and approaches through active program participation, collaboration and educational programs which allow for project participates to learn new sustainable techniques, always bearing in mind that we can also learn something from the local participants. Some investors are interested only in getting a good return on investment and less interested in how the development work actually gets done. Savvy investors recognize that sustainable building practices bring higher returns, especially when looking a long term value of the project. (If you happen to have access to a few hundred million you’d like to invest, feel free to call me and I’d be happy to direct you on how to invest in this or other projects in Vietnam. After all, there is a very satisfying feeling when you invest in a project that makes a difference in the world while earning you a reasonable rate of return.) Given a secure revenue stream, which the Yen Tu project certainly promises (see details below), long term profits will always be higher when operating expenses are reduced, a natural outcome of lower energy and resource costs. It’s simple math.

One of the natural consequences of Sustainable Development is lower energy and resource costs.  

Reduced expenses lead to higher long term profits. Short term profits are increased because the value of the development is based on long term profitability projections. Based on comments from LEEDs experts, short term costs on development are only increased in LEEDs projects as a result of inexperience. Once past the learning curve, the costs of LEEDs construction are not much different than standard approaches. In the case of such a large development, 700ha and spaning over many years, the overall costs of the development could actually be reduced through use of solar, wind and geothermal technologies which contribute energy to construction and operational efforts over the construction period.

If you create a sustainable infrastructure using solar and wind power, water recycling, geothermal cooling and other clean renewable technologies, the demand for consumable resources is removed or reduced, expenses are less, profits are naturally higher.

So is Yen Tu a good development? Absolutely, but with a little encouragement it could be even better. The Vietnamese Government has stated its goal of encouraging Sustainable Development in the region and is participating in the project by helping to develop better infrastructure around Yen Tu including highways, lakes, waterways and forest management. They are also bringing power to the area. This obviously has many positive implications. It also has some potential down sides.

The development company is introducing solar power for some aspects of the development such as water heating. Having said that, Vietnam gets a lot of sun and realistically could produce a 100% solar powered development with suitable designs. The developer has proposed that only electric vehicles will be used in the Yen Tu development area once completed. But this only helps if they also reduce demands on coal fired generators. The 700ha are will be a resort / tourist city with a convention centre, diplomatic area, several hundred villas, five star and other hotels, Buddhist Training centre, Buddhist cultural areas, theatres and museums, and commercial and retail buildings for development and sales of cultural memorabilia for visitors.

The Yen Tu area is being developed by a successful local company that has proven it’s cability through the development of many other office and hotel properties in Vietnam. Proposed designs recognize and incorporate the spiritual and cultural history of Buddism in Vietnam and incorporated important symbols such as the lotus flower in their architectural themes.

The development company has worked with the various Government Ministiries of Vietnam to ensure their support of the project and in acquiring the property. During our visit, we met with officials from the Ministry of Construction, Natural Resources and Religion. All of them described specifically how they were supporting the project. In the case of the Ministry of Construction, they are improving transportation corridors, water and sewage management and providing electrical connection to the grid.

Yen Tu itself offers a guaranteed stream of visitors that already ranges from 3,000-10,000 visitors daily in the low season and from January through March  has 30,000-60,000 visitors per day. Currently, there is nowhere for these visitors to stay once they arrive. The Yen Tu development promises increased employment in the area, increase revenues to the country, and, by encouraging a sustainable approach, it will lends itself well to a brighter future.

During our trip, we met with the Vietnam Buddhist Association’s top monks. The project not only received their blessings, but their encouragement and involvement. Besides serving a cultural and religious purpose, it provides a service to the many thousands of religious pilgrims and interested tourists.

The development company has also take care in consulting the local people and merchants who will ultimately be affected by the project to ensure that their needs have been addressed. They’ve also invited input from the local scientific and historical community who also support the project.

From a commercial perspective, there is both the long term employment related to the commercial and tourist elements of the town and medium term employment (about 5 years for the first phase of the project) related to construction. From a local and regional perspective, there are homes and local facilites for people who are being displaced from their current homes as a result of construction and for long term employees who will support the commercial and retail operations in the area.

It seems everyone’s happy with the plan. Now all that’s required is to get the investment capital fully in place. The project is already partially funded but there is more opportunity and interest investors are invited to participate. Please see http://hbi-investments.com  for contact information. 

The social view of Sustainable Development in Vietnam
Most governments of the world acknowledge, in some form, the need for Sustainable Development and the necessity to reduce carbon emissions. Vietnam as with other ASEAN nations, is certainly amongst those that recognize this need. Most also have an increasing understanding of the implications of development. However,  they often find the move to Sustainable Development difficult in the face of short term economic concerns of their countries. While having made significant economic progress in recent years, Vietnam continues to face the challenge of bringing 16% of their nation out of the grips of poverty and most of their population of 84 million continue to live at economic levels well below levels enjoyed by western nations. 

Vietnam’s developent from an Environmental Perspective
One of the shortfalls in Vietnam, as in many countries, is that, in the face of ever expanding need for power,  there is huge temptation to exploit readily available coal supplies which are relatively inexpensive to mine. Vietnam, along with other countries is making efforts to reduce it’s carbon emissions by expanding it’s use of nuclear power. Solar is also routinely used for water heating and further development is continuing.

Countries like Vietnam are directly impacted by climate change and are only too aware of the consequences of ignoring it. While it struggles to provide an economy more akin to the ones enjoyed by western nations, it faces increasing environmental challenges which might hamper it’s future prospects. Already they are experiencing some of the social implications of unsustainable development in the form of lost employment, crop failure and food shortage issues related to Climate Change (flooding, drought and severe typhoons) which is impacting inland fishing and farming in central Vietnam as well as the Mekong Delta and the Red River.

They are also facing international instability in the form of disputes with China with regards to conflicting land claims around the Paracell and Spratly Islands, spurred on to some degree by oil and other nearby resources, although talks have been proposed to address these concerns. 

There are also concerns related to mining in some regions. As participants in a global economy, one step we can take is to encourage, through our investment dollars, the participation of companies who make Corporate Social Responibility (CSR) a priority, who make the GRI (Global Reporting Initiative) part of their practice and who continuously seek input from local voices.

Please feel free to comment and share your ideas and share this with anyone you think might be interested.

Regards,

Garth Schmalenberg

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