Tax breaks to spur power savings

23/11/2011

Experts are urging the Government to provide industry with tax breaks and access to credit to encourage the use of energy-efficient technologies.

Experts are urging the Government to provide industry with tax breaks and access to credit to encourage the use of energy-efficient technologies.

A recent report by the Ministry of Industry and Trade (MoIT) said Vietnamese firms had large potential in energy saving since it found them saving 10-20 per cent of energy within two years of applying energy management systems.
In other countries they managed to save only 2-3 per cent, it said to explain its conclusion.

Vietnamese manufacturers consume much more energy that their counterparts in other countries, even within the region. They use 1.5 times more energy than Thai firms and 1.7 times more than Malaysian firms.

The potential for energy saving in the heavy, light and food industries could be as high as 20 per cent, while in civil construction and transportation, it was a whopping 30 per cent, the ministry said.

The household industry and service sectors could also save a lot of the energy since wastage was a common occurrence.

Energy experts blamed the energy inefficiency on the use of backward technologies and obsolete equipment. Many Vietnamese firms used machinery that was 15-20 years behind the times and did not manage their energy use properly, they said.

International experts said there were many hurdles to energy efficiency in Viet Nam. Businesses only focused on production management and not energy efficiency, they said, pointing out that because of their shallow pockets and ignorance of the significance of energy efficiency, they tended to attach importance to capital rather than revenue expenditure.

Since 2006 the Government has been strengthening its policy framework on energy efficiency among end users. A clutch of legal documents on the planning and implementation of energy efficiency policies and programmes has been issued while the Law on Energy Efficiency and Effective Use took effect at the beginning of this year.

Banks said lending for this purpose faced challenges since it was usually medium – to long-term and involved major changes in interest and exchange rates.

The experts said to practice energy efficiency, it was necessary to have tax breaks and credit on easy terms for buying energy-efficient equipment.

Phuong Hoang Kim, deputy head of the Department of Science and Technology - MOIT, said successful energy-efficiency programmes required a clear and transparent legal framework with regard to tax breaks and financial support for businesses.

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