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Prioritize Investments into Clean Energy

26/06/2015

Vietnam may increase the attractiveness of foreign investment by developing green energy sources. It is just so confirmed by many participants at the meeting on Europe - Vietnam Free Trade Agreement organized by the European Business Association in Vietnam.

Vietnam may increase the attractiveness of foreign investment by developing green energy sources. It is just so confirmed by many participants at the meeting on Europe - Vietnam Free Trade Agreement organized by the European Business Association in Vietnam.

Mr. Christoph Schill, Vice President of Green Growth Committee, European Business Association in Vietnam, said power supply in Vietnam is doubling every 6 years. And to meet this energy demand, from now to 2020, Vietnam needs nearly USD8 billion/year for investment into supply sources. It is notable that Vietnam is still giving a priority for the development of low cost energy sources, which is hydroelectric, coal-fueled power, whereas no effective investment policy is available for developing clean energy supply sources. Meanwhile, Vietnam is a country with great potential for development of clean energy to meet the increasing demands of energy. Investment into developing clean energy not only helps Vietnam to take advantage of its natural conditions, but also ensures its energy security in the future.

Even in case of the fuel price increase, it will not affect the investment attractiveness. It is the latest research finding from Green Growth Sector Committee (EuroCham GGSC) and the International Institute for Sustainable Development after their survey, interviewing 150 enterprises with foreign investment capital in Vietnam.

The interviewed enterprises confirm that the ability to attract foreign direct investment in Vietnam is not based on cheap energy. Energy price is the least important factor in the 10 factors affecting their investment decisions in Vietnam. The more important factors for investors are the cost, the availability and readiness of skilled labor, local market conditions and development policies of the Government. When asked to assess the importance of energy costs in investment decisions (with the ascending scale from 1 to 10), 72% of respondents ranked 5 and lower. Foreign investors do not worry much about the increasing tendency of energy prices.

Partially, it may be due to relatively low energy costs in foreign companies. 90% of foreign companies in most sectors have less than 10% of total operating expenses for electricity. 60% of companies could even achieve the rate of electricity costs below 5%. The majority of surveyed companies said they were willing to afford the annual electricity price increase of 15% or more, before reconsidering the intention to invest for the future, and over 65% of companies accepted the electricity price increase of 10% per year.

Trong Tan

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