In Focus
May 2013

IndoChina: Running on two-wheelers

Despite serving a diverse array of people and places, Indochina's transportation sector has some shared characteristics. For one thing, the most common passenger vehicle in Vietnam, Cambodia, Laos and Myanmar runs on two-wheels, not four. A second commonality is that air pollution could grow much worse, unless steps are taken to rein in emissions. A final area-wide issue has to do with the cost to consumers of getting from A to B.

"The region, with regard to fuel, struggles with continuing fuel subsidies in a number of countries," said Florian Kitt, program manager for Southeast Asia for the Paris-based International Energy Agency (IEA).

Vietnam

Of course, there are differences between countries of the region as well. Take Vietnam, which has an economy that dwarfs the others (see Table 1). At US$3,435, it also has the highest annual gross domestic product (GDP) per capita. The country has started to phase out fuel subsidies, according to Kitt.

Table 1 – Key Economic Indicators

Country

GDP
(US$ billion)

GDP per capita
(US$)

Real GDP growth 2013 forecast

Cambodia

33.9

2,372

6.7

Lao PDR

17.7

2,809

7.5

Myanmar

--

--

6.5

Vietnam

301.7

3,435

5.5

Source: World Bank, December 2012, East Asia and Pacific Economic Update

It also has put into place a plan to tackle its growing air pollution problem. In September 2011, the government approved a new motor vehicle emission standard (See Table 2). Vietnam is currently at Euro 2 with regard to vehicle fuels and emissions.

Table 2 – Vietnam Emission Standards and Fuel Quality Mandates

Standard

Vehicle

Motorcycle

Fuel

Euro 4

1 Jan 2017

 

1 Jan 2016

Euro 5

1 Jan 2022

 

1 Jan 2021

Euro 3

 

1 Jan 2017

 

Source: Environmental Division of the Ministry of Transport's Vietnam Register

In a two-tier approach, the law calls for Euro 4 to be adopted in January 2017 and Euro 5 in 2022 for four-wheel vehicles. Motorcycles, on the other hand, will only move up to Euro 3 in January 2017, with no plans currently for further improvements beyond that. Fuels are to be available at the required quality level a year before the emission standard goes into effect. Thus, Euro 4 quality fuel is slated to appear in January 2016 and Euro 5 in January 2021.

One of the most important effects will be a drastic reduction in the allowable fuel sulphur levels. Over the decade, sulphur levels in both petrol and diesel fuel will fall from 500 to 10 parts per million (ppm).

The split between four- and two-wheeler specifications is important. The country will have 38 million motorcycles by the end of 2013, said Le Anh Tu, manager of the Environmental Division of the Ministry of Transport's Vietnam Register. In contrast, there will only be 1.5 million cars. Even when trucks are added in, this means that about 95% of vehicles on Vietnam's roads today are motorcycles. Many of these are less than 250 cubic centimeters in engine size.

For now that heavy tilt toward motorcycles is not expected to change. Affordability is the major reason for strong growth in this vehicle segment. Three million new motorcycles will be registered in 2013, while only about 100,000 new four-wheelers will join the existing fleet. In addition to moving toward higher quality fuel and tighter emission standards, Vietnam is also trying to increase its use of biofuels, Tu said. E5, or 5% ethanol-blended gasoline, is sold at 35 stations across Vietnam, but there are plans to change that.

"The government has a roadmap to popularize E5 petrol in 2014," Tu said. However, that industry is struggling, with the largest ethanol producer in Vietnam recently filing for bankruptcy. The government has stepped in to try to bail out the company.

These moves aimed at curbing emissions while improving fuel quality and availability are important, as Vietnam, along with the other countries in the region, is currently undergoing relatively rapid economic growth. According to a report from the World Bank, the country's economy expanded at 5.2% in 2012 with a projected growth of 5.5% in 2013, compared to a relatively flat, if not negative growth, in many parts of the world. That growth is ultimately expected to translate into more vehicles and greater urbanization, trends that historically have made pollution problems worse.

Phan Quynh Nhu is secretary-general of the Vietnam Clean Air Partnership and country network coordinator of Vietnam for Clean Air Asia, the Manila-based air quality advocacy organization. At the time that the new emission control roadmap was announced, she said, "The leading cause of air pollution in Vietnam is from transport, particularly engine-run vehicles, which led to the need for strict limits on emissions."

Cambodia, Laos and Myanmar

Cambodia, the Lao People's Democratic Republic (Laos), and Myanmar have economies a tenth or smaller than that of Vietnam. Their GDP per capita is also lower but their recent growth rates are higher (see Table 1).

In Cambodia and Laos, the minimum octane rating for petrol is RON 87, compared to Vietnam's RON 90. Sulphur levels in Cambodia were in the 1,000-ppm range in 2010, while in Laos the maximum sulphur content in petrol was 500 ppm. Overall, fuel quality is somewhat worse in both Cambodia and Laos as compared to Vietnam.

The car fleet for both is small and sales are, for now, meager. For instance, Cambodia's exclusive Toyota dealer is targeting sales of 1,000 units in 2013 and sales for Volkswagen, which has just entered the market, are expected to be 100 cars only. The total market, including unauthorized import and second-hand sales, is estimated at 20,000 vehicles a year.

Roughly 1.8 million strong, motorcycles are the largest single category in Cambodia's vehicle fleet. Clean Air Asia estimates that four out of five are found in Phnom Penh, the country's capital.

A similar situation exists in Laos. Two-wheelers comprise four out of 10 vehicles on the road, according to Clean Air Asia estimates. Roughly 50 percent of the country's million motorcycles and cars are either found or are based in Vientiane, the country's capital.

Myanmar is in a class by itself when it comes to fuel. It was one of only six countries in the world still selling leaded petrol when the United Nations announced in 2011 that the fuel would be phased out worldwide by 2013.

Myanmar has one of the lowest motorization indices in the world. It had only about 18 vehicles per 1,000 people in 2010. In contrast, Vietnam had about 20 times that ratio.

Definitive information on air pollution for Cambodia, Laos and Myanmar is lacking, as there is no regular monitoring scheme with published results for any of these countries. The little research that has been done indicates that problems may be looming.

For instance, a study by Clean Air Asia in 2006 showed worrisome particulate matter and sulfur dioxide levels in Vientiane. Particles 10 microns or smaller, or PM10, averaged 87 micrograms per cubic meter, above the World Health Organization (WHO) guideline of 50. Sulfur dioxide exceeded the WHO 24-hour guideline of 20 micrograms per cubic meter for almost three quarters of the days sampled. Residents of the capital report that air pollution is most noticeable during the dry season, which runs from March to May.

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