Ensuring power in industrial zones
On the morning of March 19, the annual meeting between the Prime Minister and the foreign direct investment (FDI) business community and the Vietnam Business Forum (VBF) is taking place in Hanoi.
This year, for the first time, the VBF is combined with the Prime Minister’s meeting with the FDI business community.
In his opening remarks at the forum, Minister of Planning and Investment Nguyen Chi Dung shared that the achievements of the Vietnamese economy in recent years cannot be mentioned without acknowledging the important role of the FDI sector. In 2023, Vietnam attracted 36.6 billion USD of registered FDI capital, a 32.1% increase compared to the previous year, with disbursed capital reaching 23.18 billion USD, the highest level in 5 years.
According to Minister Nguyen Chi Dung, the choice of the theme “Leading FDI businesses in implementing the green growth strategy” for this conference demonstrates the strong determination of the Government, as well as affirming the special and important role of the business community, especially FDI businesses, in implementing green growth. For Vietnam, green growth is not only a necessary choice, but also an opportunity to become a pioneer in the region, keeping up with the global development trend.
Minister of Planning and Investment Nguyen Chi Dung speaks at the opening ceremony of the forum.
At the forum, representatives of associations and foreign businesses discussed and made policy recommendations to the Government and relevant ministries. Ensuring continuous electricity supply was mentioned, and specific proposals were made to the Government by FDI businesses.
The Korean Business Association in Vietnam (Kocham) proposed that the Government have a plan to ensure uninterrupted electricity supply in industrial zones so that FDI businesses, including Korean businesses, can maintain stable production activities.
Mr. Hong Sun, Chairman of Kocham, said that from June to July 2023, many areas in northern Vietnam (Bac Ninh, Hai Duong, Ha Nam, Phu Tho, Vinh Phuc, etc.) experienced power cuts due to electricity shortages, and some industrial zones also conducted pre-announced power cuts at a frequency of about 1-2 times per week.
According to Chairman Hong Sun, Korean businesses are interested in investing in Vietnam, especially high-tech businesses such as semiconductor ones, which pointed out that Vietnam’s electricity shortage is one of the major factors causing them to hesitate in making investment decisions.
Chairman Hong Sun also revealed that Korean businesses are currently very interested in industries that use a lot of technology and are environmentally friendly, such as rooftop solar power. However, they are hesitant to invest due to the unstable electricity supply and unclear related regulations.
Associations and FDI businesses discuss at the conference.
Regarding power issues, the Japan Chamber of Commerce and Industry (JCCI) said that serious power shortages have occurred in the northern region, making it difficult for businesses to plan production and estimate delivery dates.
“This situation has seriously affected the just-in-time model – a core element of the supply chain. Some JCCI member companies said that they are considering reconsidering their global production systems,” said Mr. Muto Shiro, Vice Chairman of JCCI.
In this proposal, JCCI sent 3 recommendations to the Vietnamese Government, with the goal of facilitating smooth production activities for businesses. These include stabilizing the electricity supply for industrial zones, providing prior notice of power cuts and electricity-saving requirements to allow businesses to adjust and establish a direct power purchase agreement (DPPA) mechanism.
“We are very happy and encouraged by the signs that DPPA can be implemented from July 1, 2024. Our association members – along with other investors – are ready to support the earliest possible implementation of this long-awaited program,” emphasized Mr. Joseph Uddo.
Mr. Joseph Uddo, Chairman of the American Chamber of Commerce (Amcham) in Vietnam, also stated that one of the main needs of all businesses or any future investor is the stability of energy supply and immediate access to renewable energy.
Amcham supports the government’s focus on supply chain growth, attracting investment, and high-tech production. Without stable, affordable electricity supply and sustainable power sources, many discussed goals today will be difficult to achieve.
Amcham encourages continued dialogue between the Ministry of Industry and Trade, the Vietnam Electricity Group, and relevant private sector stakeholders to develop feasible short-term and long-term solutions for Vietnam to meet its energy security needs, including promoting the approval of major liquefied natural gas (LNG) projects to support energy security.
Over 600 members of VBF, associations, and foreign businesses participated in the conference today.
Amcham also believes that an energy infrastructure cannot be established overnight, and planning for Vietnam’s sustainable growth needs to be implemented right now. The association recommends that the government consider adjusting power purchase agreements (PPAs) to international standards.
Existing investors need more reasonable regulations to be able to supply renewable energy. Key issues include implementing the National Power Development Plan, establishing a Decree on rooftop solar power development, accessing renewable energy in industrial zones, and providing guidelines for Direct Power Purchase Agreements (DPPA).
“We are pleased and encouraged by indications that DPPA can be implemented from July 1, 2024. Our association members, along with other investors, are always ready to support the earliest implementation of this long-awaited program,” emphasized Mr. Joseph Uddo.
Mr. Denzel Eades, Vice Chairman of the British Chamber of Commerce (Britcham) in Vietnam, recommends rapid implementation of the 8th Power Development Plan, especially regarding LNG development, solar and wind energy, along with establishing legal regulations to allow implementation, such as regulations related to DPPA.
“We recommend the implementation of the Joint Energy Transition Partnership (JETP) in line with the 8th Power Development Plan and ensuring the readiness of specific pilot projects, especially offshore wind energy,” recommended Mr. Denzel Eades.
