Taste of US investors

Renewable energy, high technology industries, supporting industries… are areas that are interested by US investors when they come to set up company in Vietnam.

One of the “hot” issues that US businesses and investors interested in is the issue of cooperation and investment in the field of renewable energy. According to Mr Freb Burke from Baker & McKenzie, renewable energy is currently the most attractive investment area. Vietnam will avoid the construction of thermal power plants when moving to invest in wind and solar power plants.

In addition, many multinational corporations have strict environmental standards and they want these standards to be applied globally. Manufacturers also want to produce consumer goods using clean energy. For example, Apple is making a commitment to achieve 100% clean energy in their global supply chain. Hence, if Vietnam wants to attract investors like Apple, Vietnam should produce enough renewable energy to meet their needs.

According to Mr Burke’s explanation, renewable energy secures energy and environment security for Vietnam, helping Vietnam tap its potential and export energy. Renewable power plants attract the interest of US businesses like First Solar and GE. Furthermore, Vietnam has just raised its electricity purchase price to 9.35 UScent per kWh. This is a relatively attractive price for foreign investors due to the reduction in the price of wind and solar power along with the development of technology. However, Vietnam needs long-term guarantees for investors to borrow from banks and invest.

Moreover, the American Chamber of Commerce in Vietnam (AmCham) stated that the Association and its partners are proposing a Production Energy Plan in Vietnam to provide a needed road map for reforms, in order to attract investors, equipment suppliers, manufacturers and operators from the United States.

In addition, many US investors have also expressed their interest in intelligent cities, waste treatment projects, high-tech industries… Many businesses say that despite the United States withdrawal from the TPP agreement, trade relations between Vietnam and United States will continue to develop strongly in the future.

In fact, in recent times, high technology and supporting industries have attracted more projects of US investors. According to the owner of Saigon Silicon Project, after the construction of the project in Saigon Hi-Tech Park in the second half of 2016, up to now, many US investors have expressed their plan to implement projects here. It is planned that after completion of the infrastructure, the project can attract about 20 projects operating in the field of high tech and supporting industries, with investment capital of about 1.5 billion USD.

Meanwhile, a group of US scientists and businesses have recently reached an initial agreement on implementing a smart glass production project in Long An province with a billion dollar investment capital. This is a high-tech manufacturing project and about 90% of the output will be exported.

According to businesses, the results of investment attraction is not worth the potential of the two countries. Currently, the United States ranks 9th among foreign investors in Vietnam, with an investment of about 10 billion USD according to registered statistics from the United States. However, if we count the investment from the United States through third countries, the investment capital must be greater, for example, the Intel project has investment of more than 1 billion USD, but the investment capital is registered from the enterprise based in Netherlands.

Another good news is that, during the US visit of Vietnam Prime Minister Nguyen Xuan Phuc at the end of May 2017, US and Vietnamese businesses have signed contracts worth tens of billions of dollars in many fields. Therefore, according to businesses, if the bottlenecks, especially the regulatory and framework issues on investment are improved, the flow of investment from the United States is likely to increase in the coming time.

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Vietnam Welcomes Trillion Renewable Energy Projects

The number of renewable energy projects with total investment capital of about 1,200 – 1,400 billion VND is constantly increasing, confirming that investment in Vietnam renewable energy is an attractive trend.

Recently, the People’s Committee of Binh Thuan Province has handed the decision and received commitment to invest in renewable energy of 20 enterprises in order to diversify the form of energy production, step by step achieving the goal of becoming a large national energy center of the country in the next few years.

Currently, Binh Thuan and Ninh Thuan are the two leading provinces in attracting investment in renewable energy because most of the area has an average radiation intensity of about 5 kWh per square meter, less rainfall and hours of sunshine always maintained at an ideal level.

Although the natural conditions are not as favorable as Binh Thuan and Ninh Thuan, some neighboring provinces such as Khanh Hoa, Quang Tri, Binh Dinh… also attract many domestic and foreign enterprises committed to pour capital.

Most recently, Fujiwara (Japan) also received license to invest in solar and wind power plants in Binh Dinh with total capital of 1,446 billion VND. According to the investment registration progress, the project will be implemented right in 2017 and is expected to complete the first phase in the first quarter 2019.

Recently, more and more businesses outside the industry have not hidden their ambition to enter the renewable energy sector. According to Deputy General Director of Bamboo Capital, the company plans to raise 300 million USD through issuing bonds and certificates with rights to buy shares held in period from 2017 to 2020. In which, about 100 million USD will be poured into renewable energy projects.

According to this year’s plan, the company will promote the procedure to build a 140 MW solar power plant in Long An province. In addition, the company is seeking investment opportunity in solar power projects in Phu Ninh (Quang Nam) and Ninh Thuan, while taking advantage of international relations to attract capital and experiences from foreign investors.

Furthermore, Bamboo Capital expects to officially sell electricity and record revenue from the energy segment by 2018. By 2020, this segment will be able to deliver significant revenue streams to the company.

Explaining the fact that businesses are racing to plan, commit to invest and directly invest in renewable energy sector, the Renewable Energy Center (under The Energy Institute) thinks that it comes from many factors. First of all, the demand for energy is rising, while the supply of fossil fuels is becoming more expensive and exhausting.

In addition, the technology enters the ripe stage, making business easier to access, while reducing the difference in levelized cost of electricity (LCOE) compared to thermal power. A few years ago, the cost of producing wind electricity was about 3,500 VND per kWh and now it drops to 2,200 – 2,500 VND.

Moreover, the incentive mechanism for the development of solar power projects issued in April this year has also influenced the investment decisions of enterprises. Currently, the purchase price of electricity at the power point is 2,086 VND (equivalent to 9.35 cents/kWh).

In addition, investors are also entitled to many tax incentives such as import tax exemption for imported goods to create fixed assets, exempt from land use fees, land rent, water surface rent at the construction location, lines, substations connected to the grid. In the short term, it is likely that the Government of Vietnam will also consider increasing wind power prices to assist businesses, boosting investment to achieve a total capacity of 6,000 MW by 2030.

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Strengths in FDI Attraction of Vietnam

Vietnam has many strong points in FDI attraction that foreign investors are very interested in. This has made Vietnam an attractive destination for investors to set up company in Vietnam.

Firstly, the stable security and political situation is an important condition for deciding to set up long-term investment activities in Vietnam. Moreover, Vietnam has a favorable geographic position in trade with the world as well as a connection hub of the region and a gateway to penetrate economies in the western part of the Indochina Peninsula. Third, with a population of 92 million people, Viet Nam has the advantage of abundant and quality labor force with competitive labor costs. In addition, with 12 new generation free trade agreements and Vietnam’s entry into the ASEAN Economic Community (AEC), it is a good opportunity for Vietnam to connect with Asean market with over 600 million population and also the world market.

The institution, law and transparency of Vietnam are gradually being completed associated with integration, not only enabling investors to be reassured for long-term operation, but also help enterprises to participate in the supply chain, global value chain in a convenient way.

The field that foreign investors consider as strength of Vietnam is the manufacturing, processing industry. Up to now, this sector has attracted the most foreign investors with 11,833 investment projects with total registered capital reached over 175 billion USD (accounting for 51.6% of the total number of projects and 58.9% of total registered capital in Vietnam). Such investment structure is evaluated positively and place strong impact on the development of Vietnam’s industries in line with the country’s industrialization and modernization policy.

In the coming time, Vietnam will continue to prioritize attracting investment projects in the fields of supporting industries, projects with advanced technology, environmentally friendly and efficient use of the resources, minerals, land; facilitate and strengthen the connection with domestic enterprises.

Over the past years, Vietnam’s business and investment environment has been constantly improving in  the open and transparent way, in line with international standards. In the context of Vietnam’s increasingly deep integration into the world economy, it will increase the attractiveness and competitiveness of Vietnam in attracting foreign investment, especially multinational corporations.

In addition, FDI enterprises have contributed to the socio-economic development of Vietnam. In recent years, the proportion of foreign investment in total investment always accounting for about 25%; contributing over 20% to GDP; contributing to the state budget and creates millions of jobs for employees.

Foreign investment capital continues to increase annually. From 2013 to now, the registered FDI capital is over 20 billion USD. Furthermore, the results of production, business, export, import and state budget contribution of FDI enterprises also achieved superior results.

In addition, the FDI sector has a spillover effect on other sectors of the economy; raising domestic investment resources, shifting economic structure, reforming state-owned enterprises and administrative procedures, improving market economy institutions and promoting international economic integration.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Advisory

• Market Entry

• Tax Advice

• Legal Advice

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +844 32232771 .  To learn more about us, please visit www.antconsult.vn

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New Solar Power Plant Project in Binh Dinh

Solar energy is encouraged to invest by Vietnam Government. Therefore, there were many foreign business delegations come to Vietnam to find out opportunities in this area.

On January 11th 2017, Chairman of Binh Dinh Province has met and worked with the President of Truong Thanh Investment and Development Co., Ltd (Vietnam) and Truong Thanh’s partners from Japan and Spain to find out opportunities to invest in solar energy plant project in Binh Dinh, Vietnam.

According to representatives of Truong Thanh, in recent time, the Company has made the solar power plant investment project proposal in Cat Hiep commune, Phu Cat district, Binh Dinh province. The project capacity is 95mW, using land area of about 150 hectares.

The expected investment capital for plant construction is 4,000 billion VND. Tuong Thanh Company wants to be supported by leaders in Binh Dinh Province and relevant local Government agencies with the investment procedures.

According to Chairman of Binh Dinh Province, they are always welcome and encourage enterprises to invest in power plant using renewable energy, which is very environmentally friendly.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Advisory
• Market Entry
• Tax Advice
• Legal Advice

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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Solar Energy Power Future in Vietnam

Although the initial investment cost for solar energy in Vietnam is high but it brings in opportunities for cheaper option than thermal power technology being used in Vietnam.

In other country, solar power plants are competing fiercely with the thermal power plants running on coal.

In Vietnam, Thien Tan solar energy plant has been started to construct on 24 ha land in Quang Ngai with capacity of 19.2 MW at investment of VND 800 bil.  The Ministry of Industry and Trade has also approved the investment project of Tuy Phong solar energy plant on 50 ha land in Binh Thuan with capacity of 30 MW at investment of VND 1,454 bil.  This will open opportunities for renewable energy to contribute to the effort of protecting the environment and curbing climate change.

The solar energy is new in Vietnam therefore the investment in this area is at very early stage.  However, the foreign investors have been increasingly interested in seeking opportunities in investment in solar energy projects.

Similar to investment in wind power energy in Vietnam, one of the concerns for investors is the expected increase in purchasing price from Electricity Vietnam Corporation, the party whom purchase the electricity on Power Purchase Agreement (PPA).   Further, legal frameworks for promoting solar energy investment are not yet finalized.  Accordingly, the contribution ratio of renewable energy in Vietnam is minimal.  The Vietnam government has been trying to put some effort to increase the renewable energy contribution to 5,6% (in 2020) and 9,4% (2030).

 To achieve this, Vietnam government shall need to be consulted on plan to support the solar energy investment project in Vietnam in tax, land, capital, power purchase agreement.  Investors would need to be consulted by local consulting firm on process, procedures on investment policy, appraisal process, power purchase agreement, and other steps to develop and execute an energy project in Vietnam to improve the effectiveness of the investment in renewable energy.

ANT Consulting is here to assist you from the outset; providing corporate intelligence, risk advisory, management consulting services that assist market entrance, and ensure efficient business start-up operation.  Our services are as following:

• Advisory

• Market Entry

• Tax Advice

• Legal Advice

We strive to save your cost by guiding you towards economical solutions that comply with local legislation and procedures. We support you through early logistic solutions and carry you through as your business grows.  We aim to bridge the gap between international best practices and local cultures and assist foreign companies and organizations entering Vietnam market to overcome commercial and regulatory issues.

We could be reached at email: ant@antconsult.vn or tel: +848 3520 2779 .  To learn more about us, please visit www.antconsult.vn

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