Actions advised for Vietnam to lure investors amid energy crunch

Legal or regulatory obstacles with a low level of certainty and issues concerning grid access for private projects, are the most pressing to private investment.

Experts have recommended the Vietnamese government to remove regulatory obstacles for domestic and foreign investors in the energy sector to avoid energy insecurity caused by inadequate infrastructure due to low private investment.

 Legal obstacles should be resolved to attract private investors in energy projects.

In a working paper released recently, the experts said that given the new position of public finance, though official development assistance and preferential loans were previously the major sources of energy investment, they have been reduced significantly.

“The country will see a threat to energy security if sufficient capital for infrastructure and new energy, such as renewable energy (RE), cannot be raised,” remarked the experts.

Injecting capital into the energy sector will enhance electricity security by reducing the increasing reliance on imports and a lack of energy generation diversification, while simultaneously unlocking the potential for RE deployment in the country.

“Energy insecurity is an apparent threat to the Vietnamese economy without the timely involvement of the private sector, as forecasts indicate that this type of capital will account for 75% of the capital required in the power sector until 2030,” stressed the experts.

Comprehensive measures

Among the barriers that are hindering the participation of the private sector, the experts said that legal or regulatory obstacles with a low level of certainty and issues concerning grid access for private projects, are the most pressing.

“Rather than just focusing on the financial incentives, such as the feed-in-tariff, which has become the agenda in the country with a debate related to the rate and how to distribute it, addressing such concerns is more important,” the experts noted.

They explained that an energy sector policy that encourages the involvement of the private sector should shift incentives to enabling countries to take advantage of the carbon finance.

Moreover, the country should create a competitive energy market more quickly by speeding up the reform and restructuring of the energy market.

 

“The functionality of the wholesale and retail electricity market, to which the government is committed, is fundamental for the long-term investment consideration of the private sector, particularly the foreign one,” the experts noted.

Besides the regulatory barrier, the government should consider employing an innovative contract, such as a direct power purchase agreement. This type of contract allows private electricity buyers and sellers to sign an agreement directly for electricity transactions.

In addition, it is also necessary to improve the functionality of the domestic financial market, the experts recommended. 

To attract more private sector involvement in energy development, particularly renewable energy, the government should use key facets to enhance the function of the domestic financial market.

“These include developing the domestic bond market as a basis for long-term lending and a stepping stone to green bond issuance and strengthening the capacity of financial and banking institutions in funding renewable energy energy projects that require long-term loan access and expertise in power sector credit appraisal,” they said.

Other solutions include utilizing the spillover effect of the energy supply in the form of a tax return to the private sector.

According to the experts, the government often regulates electricity tariffs, which makes it difficult for private financial institutions, such as pension funds or insurance companies, to finance energy projects. Hence, it is necessary to utilize the spillover effects originally created by energy supplies and refund the tax revenues to the investors in energy projects. Hanoitimes

Anh Hong

Foreign direct investment and mature M&A boost investor confidence

Foreign direct investment and mature M&A boost investor confidence

The past two years have seen capital flows into Vietnam continue to steadily increase, as well as some of the country’s biggest mergers and acquisitions deals to date. 

Foreign investment increases in wood processing industry

Foreign investment increases in wood processing industry

Foreign direct investment in the wood processing industry has increased rapidly, especially since 2018, the Viet Nam Timber and Forest Product Association has said.  

 
 

Other News

.
Jan-Aug period sees 24 wind power plants commissioned
Jan-Aug period sees 24 wind power plants commissioned
BUSINESSicon  08/09/2021 

Twenty-four wind power plants with a combined capacity of 963 MW began commercial operations in the year to August, according to the Vietnam Electricity Group (EVN).

Local auto industry needs support amid pandemic
Local auto industry needs support amid pandemic
BUSINESSicon  08/09/2021 

Domestic automobile manufacturers have urged the Ministry of Finance to revise criteria for production capacity so as to enjoy a preferential tax incentive policy for imported automobile parts.

Export outlook depends on virus control
Export outlook depends on virus control
BUSINESSicon  08/09/2021 

Vietnam's exports may reach as high as US$313 billion by the end of 2021, a 10.7 per cent increase year-on-year, only if the country manages to stop the spread of the novel coronavirus, according to a report by the Ministry of Industry and Trade. 

Authority warns about consumer lending amid pandemic
Authority warns about consumer lending amid pandemic
BUSINESSicon  08/09/2021 

The Ministry of Industry and Trade’s Department of Competition and Consumer Protection has recently warned consumers about signing consumer loan contracts.

Instant noodles recalled in Europe, manufacturers told to be cautious about use of ethylene oxide
Instant noodles recalled in Europe, manufacturers told to be cautious about use of ethylene oxide
BUSINESSicon  08/09/2021 

Vietnam does not have regulations about the use of ethylene oxide (EO) in agriculture production or limits on EO residue in food.

VN businesses need new measures for long-term fight against pandemic
VN businesses need new measures for long-term fight against pandemic
FEATUREicon  08/09/2021 

Businesses are bearing severe impacts from Covid-19 developments and social distancing campaigns.

Overseas Vietnamese firms are suppliers of Vietnamese goods to foreign markets
Overseas Vietnamese firms are suppliers of Vietnamese goods to foreign markets
BUSINESSicon  07/09/2021 

The overseas Vietnamese business community is an important distribution channel to bring Vietnamese goods to the world market, said Minister of Industry and Trade Nguyen Hong Dien.

Welcoming the 'upgraded' CAEXPO
Welcoming the 'upgraded' CAEXPO
BUSINESSicon  07/09/2021 

The 18th China-ASEAN Expo (CAEXPO) will kick off in Nanning, China as scheduled, and here comes the "CAEXPO Moment" again.

Bank stocks decline sharply during pandemic
Bank stocks decline sharply during pandemic
BUSINESSicon  07/09/2021 

Banking stocks have continuously corrected since the beginning of July, with market analysts forecasting the decline in bank asset quality as due to the COVID-19 pandemic.

VIETNAM BUSINESS NEWS SEPTEMBER 7
VIETNAM BUSINESS NEWS SEPTEMBER 7
BUSINESSicon  07/09/2021 

Market extends rally after long holiday on pillar stocks

Deposit interest rates fall, deposits drop to 10-year low
Deposit interest rates fall, deposits drop to 10-year low
BUSINESSicon  06/09/2021 

Commercial banks continued easing deposit interest rates in late August, causing deposits at banks to fall to a 10-year low.

45-day social distancing has hurt Hanoi's economy but public health has been protected
45-day social distancing has hurt Hanoi's economy but public health has been protected
FEATUREicon  07/09/2021 

Hanoi’s economy has suffered heavily from social distancing and travel restrictions over the last 45 days, but in exchange the Covid-19 outbreak has been under control.

All-round report on Vietnam’s startup ecosystem to be unveiled
All-round report on Vietnam’s startup ecosystem to be unveiled
BUSINESSicon  06/09/2021 

The Vietnam Open Innovation Landscape Report 2021, the most comprehensive and up-to-date overview of the local startup and innovation ecosystem so far, is set to be released in December.

Vietnam's steel sales increase due to exports
Vietnam's steel sales increase due to exports
BUSINESSicon  06/09/2021 

Steel enterprises have boosted exports while facing difficulties in domestic consumption due to the COVID-19 outbreak, according to the Vietnam Steel Association (VSA).

Pro-competitive policies in logistics sector can help Vietnam recover from the pandemic
Pro-competitive policies in logistics sector can help Vietnam recover from the pandemic
BUSINESSicon  06/09/2021 

Pro-competitive policies can help Vietnam continue its progress in logistics sector and help the country recover quickly from the impacts of the pandemic, the Organisation of Economic Co-operation and Development said in its two latest reports.

Foreign investors withdraw cash, but will return soon: experts
Foreign investors withdraw cash, but will return soon: experts
BUSINESSicon  07/09/2021 

Market experts forecast that foreign investors will undertake strong net buying in the fourth quarter of this year to prepare for next year’s economic recovery after large-scale immunisation campaigns.

VIETNAM BUSINESS NEWS SEPTEMBER 6
VIETNAM BUSINESS NEWS SEPTEMBER 6
BUSINESSicon  06/09/2021 

E-commerce sales in Vietnam expected to reach $56 billion in next five years

E-commerce platforms resume delivery in HCM City as ban is lifted in red zones
E-commerce platforms resume delivery in HCM City as ban is lifted in red zones
BUSINESSicon  06/09/2021 

E-commerce platforms have resumed deliveries in HCM City and some of the city’s extremely high risk areas (red zones) since August 30, a week after they were banned.

Mooncake makers face unprecedented difficulties
Mooncake makers face unprecedented difficulties
BUSINESSicon  06/09/2021 

Online sales are being implemented by mooncake businesses with a variety of products from the common to the high-end.

Vietnam manufacturing output declines on Covid-19 outbreak
Vietnam manufacturing output declines on Covid-19 outbreak
BUSINESSicon  05/09/2021 

Vietnam’s manufacturers are facing an uphill task to keep operation amid restriction measures.

 
 
 
Leave your comment on an article

OR QUICK LOGIN