Vietnam’s ability to attract FDI is not based on low energy prices, the research revealed, adding that foreign firms do not typically invest in Vietnam as a result of the fact that energy prices have been historically low, and they are also not seriously concerned about the prospect of gradually increasing power prices.
It noted that firms ranked the state of power prices to be the least important of ten factors in their decision to invest in Vietnam.
The majority of firms indicated that they would be willing to bear sustained nominal annual power prices increases of 15 percent or more before reconsidering future investment, and more than 65 percent of firms were willing to manage sustained price rises of more than 10 percent per annum.
According to the study, interviewed enterprises are, however, concerned about the inadequate power supply with 65 percent of them indicating that they were either slightly unsatisfied or not satisfied at all with power infrastructure and supply.
Further, a large majority (73 percent) of firms said that the unreliability of power supply was more damaging to Vietnamese investment competitiveness than the prospect of higher power prices over time.
Through the findings, experts stressed the necessity of Vietnam to find more practical and effective measures to meet power supply needs and solve issues related to private investment attraction and shortcomings in the energy market.
Carried out through in-depth interviews with foreign business communities in Vietnam, the research provides significant new data with a number of clear and important implications for the Vietnamese energy policy.
It assesses also the impact of the current energy policy on Vietnam’s competitiveness, providing policymakers with data to inform the development of an energy policy that reflects the needs and concerns of this important constituency.
It noted that firms ranked the state of power prices to be the least important of ten factors in their decision to invest in Vietnam.
The majority of firms indicated that they would be willing to bear sustained nominal annual power prices increases of 15 percent or more before reconsidering future investment, and more than 65 percent of firms were willing to manage sustained price rises of more than 10 percent per annum.
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Further, a large majority (73 percent) of firms said that the unreliability of power supply was more damaging to Vietnamese investment competitiveness than the prospect of higher power prices over time.
Through the findings, experts stressed the necessity of Vietnam to find more practical and effective measures to meet power supply needs and solve issues related to private investment attraction and shortcomings in the energy market.
Carried out through in-depth interviews with foreign business communities in Vietnam, the research provides significant new data with a number of clear and important implications for the Vietnamese energy policy.
It assesses also the impact of the current energy policy on Vietnam’s competitiveness, providing policymakers with data to inform the development of an energy policy that reflects the needs and concerns of this important constituency.
