See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/341708350

Investment Incentives for Renewable Energy in Southeast Asia: Case study of

Viet Nam

Book · December 2012

CITATIONS READS

0 194

3 authors, including:

Nam Khanh Pham Quan Minh Quoc Binh

University of Economics Ho Chi Minh City Ho Chi Minh City Open University
26 PUBLICATIONS   351 CITATIONS    11 PUBLICATIONS   11 CITATIONS   

SEE PROFILE SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Analysis of the Ecosystem Services of Mangrove to Aquaculture and Fisheries in Vietnam View project

Measurement of Career Success: The Case of Rural to Urban Migrant Labourers in Ho Chi Minh City, Vietnam View project

All content following this page was uploaded by Quan Minh Quoc Binh on 28 May 2020.

The user has requested enhancement of the downloaded file.

 Investment Incentives for
Renewable Energy in Southeast
Asia: Case study of Viet Nam
Nam, Pham Khanh; Quan, Nguyen Anh; and Binh, Quan Minh Quoc

December 2012

www.iisd.org/tkn © 2013 The International Institute for Sustainable Development

© 2013 The International Institute for Sustainable Development
Published by the International Institute for Sustainable Development.

About IISD
The International Institute for Sustainable Development (IISD) contributes to sustainable development by advancing
policy recommendations on international trade and investment, economic policy, climate change and energy, and
management of natural and social capital, as well as the enabling role of communication technologies in these areas.
We report on international negotiations and disseminate knowledge gained through collaborative projects, resulting
in more rigorous research, capacity building in developing countries, better networks spanning the North and the
South, and better global connections among researchers, practitioners, citizens and policy-makers.

IISD’s vision is better living for all—sustainably; its mission is to champion innovation, enabling societies to live
sustainably. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. IISD
receives core operating support from the Government of Canada, provided through the International Development
Research Centre (IDRC), from the Danish Ministry of Foreign Affairs and from the Province of Manitoba. The
Institute receives project funding from numerous governments inside and outside Canada, United Nations agencies,
foundations and the private sector.

Head Office
161 Portage Avenue East, 6th Floor, Winnipeg, Manitoba, Canada R3B 0Y4
Tel: +1 (204) 958-7700 | Fax: +1 (204) 958-7710 | Web site: www.iisd.org

About TKN
The Trade Knowledge Network (TKN) is a global collaboration of research institutions across Africa, Asia, Europe and
the Americas working on issues of trade, investment and sustainable development. Coordinated by the International
Institute for Sustainable Development (IISD), the TKN links network members, strengthens capacity in areas of
research, training and policy analysis, and also generates new research to assess and address the impact of trade and
investment policies on sustainable development.

The TKN brings together institutions and individuals working on common concerns, strengthening each others’
research and communication capacity and knowledge bases, and developing solutions to share with others outside
the network. It thereby provides a platform for partner-based research and specific policy engagement.

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam

December 2012

Nam, Pham Khanh; Quan, Nguyen Anh; & Binh, Quan Minh Quoc

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam ii
Table of Contents
1.0 Introduction .................................................................................................................................................................................................1
2.0 Definitions and Methodology............................................................................................................................................................... 2
2.1 Evaluation Tasks................................................................................................................................................................................. 2
2.2 Evaluation Approach....................................................................................................................................................................... 2
3.0 Overview of the National Energy Sector...........................................................................................................................................4
3.1 Energy Consumption .......................................................................................................................................................................4
3.2 Energy Production ........................................................................................................................................................................... 5
3.3 Electricity Generation ....................................................................................................................................................................6
3.4 Role of the Private Sector in Renewable Energy Development ....................................................................................... 7
4.0 Investment Incentives for Renewable Energy.................................................................................................................................9
4.1 Policy-Makers and Implementers ..............................................................................................................................................9
4.2 Subjects of Policy...........................................................................................................................................................................10
4.3 General Renewable Energy Policy Framework ....................................................................................................................10
4.4 Overview of the Investment Incentive Framework............................................................................................................ 13
4.5 Regional Incentives and Special Economic Zones (SEZs)............................................................................................... 14
4.6 Investment Incentive Programs for the Energy and Renewable Energy sectors ..................................................... 17
4.6.1 Financial Incentives ........................................................................................................................................................... 17
4.6.2 Fiscal Incentives................................................................................................................................................................. 17
4.6.3 Market Price Support and Regulation........................................................................................................................ 18
4.6.4 Other Subsidies................................................................................................................................................................. 20
5.0 Discussion and Analysis....................................................................................................................................................................... 21
5.1 Stakeholder Assessment of Investment Incentives for Renewable Energy Projects................................................ 21
5.2 The Impact of Investment Incentives .....................................................................................................................................22
5.3 The Costs and Benefits of Investment Incentives...............................................................................................................23
6.0 Conclusions and Recommendations...............................................................................................................................................25
6.1 Conclusions.......................................................................................................................................................................................25
6.2 Recommendations.........................................................................................................................................................................25
7.0 References................................................................................................................................................................................................. 26

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam iii
1.0 Introduction
Energy markets around the world face many challenges. Conventional supplies of fossil fuel reserves are becoming
increasingly scarce, leading to rising prices. At the same time, concerns over climate change are growing, increasing
the urgency for countries to decouple greenhouse gas emissions from economic growth.

All of these pressures have greatly raised the profile of renewable energy technologies (RETs), with governments now
commonly providing a range of support frameworks and incentives to attract investment.

In developing countries, government support for renewable energy is complicated by the need to simultaneously
expand access to energy more generally, as a cornerstone of poverty eradication and improvement of living standards.
Frameworks and incentives must attract finance and maximize benefits from natural resources, while expanding
energy access and keeping energy affordable for consumers and industry.

In order to achieve this difficult balancing act, policy-makers must know what kinds of incentives are most effective
at attracting investment for renewable energy projects, and what size of support is affordable and reasonable.

This report assesses investment incentives for renewable energy in Viet Nam. It focuses on small hydro, wind, solar,
biogas, and biomass resources. Through an analysis of the incentives available for these technologies, and drawing
on insights from representatives from governments and industry, it suggests some initial findings on the extent to
which Viet Nam’s investment incentives for renewable energy are effective and affordable, and identifies further
research that could usefully be conducted in this area.

The analysis is part of a series of reports that aim to conduct an initial, exploratory assessment of such incentives in
developing countries around the world.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 1
2.0 Definitions and Methodology
2.1 Evaluation Tasks
There is no one agreed definition of “investment incentives.” Thomas (2007) defines them narrowly as “a subsidy
given to affect the location of investment,” while UNCTAD (2004) defines them more broadly as incentives intended
to attract foreign or domestic investment using: financial incentives (such as grants and loans at concessionary rates);
fiscal incentives (such as tax holidays and reduced tax rates); subsidized infrastructure or services; and concessions
or exemptions from regulations and standards.

This study follows the broader definition of “investment incentives,” recognizing that the vast majority of renewable
energy subsidies cannot just focus on attracting investment to a particular location, but must also provide the financial
support that makes such investments viable in the first instance. In this sense, the words “investment incentive” and
“subsidy” can be considered interchangeable throughout the report, to the extent that the subsidy in question can be
argued to affect investment decisions.

It should be noted, however, that “investment incentives” and “subsidies” do not include measures that are intended
to remove existing market distortions that are a barrier to renewable energy. For example, none of the following
measures would be considered to qualify as investment incentives: the removal of fossil energy subsidies; regulation
intended to remove barriers to renewable energy entering the energy market; or the use of taxation and payments
to internalize positive and negative externalities. While such measures are not the focus of this report, they are
identified and factored into assessments where relevant.

The evaluation of the impacts from investment incentives is based on two specific goals:

• C
hoice of location of the renewable energy project. This goal is understood as the effect of the incentive on
the firm’s decision to choose a location and invest in a renewable energy project. The key objective of the
incentive is to increase the likelihood of choosing a targeted location.
• C
ontinuation of the existing investment. Besides possible impacts on the choice of investment location,
a subsidy could help to retain and expand existing facilities. Investment incentives often have short-run
impacts on investment decisions. A price subsidy should not be seen as a source of long-term profit. Typical
questions are whether and how the incentives affect the decision of the investor on retaining the investment.

2.2 Evaluation Approach

Two main research methods were used to collect data for this study: desk research and structured interviews.

The desk research focused on reviewing three issues: i) the current state of Viet Nam’s energy supply and demand
and the structure of its energy industry; ii) the laws and regulations that govern the Vietnamese energy industry,
including those that, although not targeted at energy, are nonetheless relevant to energy development, such as
laws and regulations concerning tax and investment in general; and iii) general issues that affect renewable energy
markets, such as ease of doing business. Sources reviewed included government documentation, research papers
and news media.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 2
The interviews were held with a range of stakeholders in government and the energy industry, including
representatives from: government ministries, intergovernmental organizations such as the Asian Development Bank
(ADB), international development agencies (such as the Deutsche Gesellschaft für Internationale Zusammenarbeit
[German Society for International Cooperation, or GIZ]), and private sector companies operating in the energy sector.

Interview questions were tailored to suit each respondent’s background or institution, but all focused on how best to
develop renewable energy in Viet Nam. Respondents were asked to identify the main impediments to developing the
renewable energy industry, to critique current investment incentives, and to suggest alternative incentive schemes
the government could pursue to attract investment.

The study focused on gathering data from the Ministry of Industry and Trade and other relevant government
agencies that influence policy-making processes together with international donors. At the industry level, the impact
of investment incentives on wind power, solar photovoltaic (PV), biogas, small hydro and biomass energy sectors
was conducted.

The study first provides a summary of the energy sector in Viet Nam in Section 3. It then gives an overview of
the country’s investment framework, focusing on investment incentives available to the renewable energy sector in
Section 4. Section 5 analyzes the extent to which existing incentives have adequately addressed investment barriers
for Viet Nam’s key renewable energy technologies. Finally, Section 6 summarizes the report’s key conclusions and
provides a number of recommendations to help improve investment policies.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 3
3.0 Overview of the National Energy Sector
Viet Nam’s energy sector plays an important role in the economy, as it provides necessary inputs for economic
production and other related activities. The sector has been dynamic over the past 10 years, with considerable change
in energy supply and demand, especially in power generation, transmission and distribution.

3.1 Energy Consumption

The key sources of energy in Viet Nam are: (i) coal, (ii) petroleum, (iii) hydro power, (iv) renewable energies and (v)
nuclear. Viet Nam’s main renewable energy sources are small hydro, wind, solar, biogas, and biomass. Key energy
commodities are diesel oil, gasoline and heavy oil, electricity, coal and liquefied petroleum gas (LPG). Non-commercial
energy in Viet Nam is mainly sourced from biomass, such as cattle dung, residues or by-products of agricultural
production, forest wood, rubber wood, saw mills, sugar cane, rice husks and coconut husks (traditionally gathered
and locally used). With 70 per cent of the country’s population living in rural areas, about one third of Viet Nam’s
energy consumption is sourced from traditional biomass and waste sources, with most households consuming 60
per cent of the biomass consumed nationally (Energy Information Administration [EIA], 2012). The use of biomass
for producing energy in a commercial sense has yet to be fully developed, while other renewable energy resources,
such as solar power, hydro power, wind energy, are beginning to be developed commercially.

Table 1 shows the different sources of energy used in Viet Nam from 2000 to 2009, while Figure 1 illustrates final
energy consumption by sector.

TABLE 1: ENERGY CONSUMPTION IN 2000, 2005 & 2009 (IN KILOTONNE OF OIL EQUIVALENT [KTOE])
AVERAGE ANNUAL GROWTH RATE (%)
ENERGY CONSUMPTION* 2000 2005 2009
2000–2009
a. Solid** 4,372 8,342 12,645 12.5
b. Liquid*** 7,917 12,336 16,607 8.6
c. Gas 1,441 4,908 7,290 19.7
d. Hydro electricity 4,314 3,835 6,785 5.2
e. Renewable energy 14,191 14,794 17,732 0.4
Total 32,235 44,215 61,059 6.8
Source: Viet Nam Energy Statistics, 2009.
* Primary energy consumption + net import (import–export) secondary consumption
** Solid fuels including coal and lignite
*** Liquid—includes crude oil

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 4
 Commerce &
Services Agriculture
3.5% 1.2%
Transportation
22%

Industry Agriculture
39.9%
Transportation

Residential Residential
33.4% Industry
Commerce & Services

FIGURE 1: FINAL ENERGY CONSUMPTION BY SECTOR (2010)

Source: Ha, 2012.

The industrial sector consumes the bulk of energy (39.9 per cent) for processing and industrial manufacturing of
steel and construction materials. An increase in approved projects in this sector has led to growing demand for
electricity. Residential energy consumption (33.4 per cent) and transport (22 per cent) have also experienced
significant demand increases (Ha, 2012). Shares for energy consumption in agriculture and commerce and services
sectors remain low, accounting for 1.2 per cent and 3.5 per cent of total energy consumed in 2010 (Ha, 2012).

3.2 Energy Production

In 2012 coal and oil were the dominant forms of fossil energy produced domestically. Coal production jumped from
15 per cent of energy produced domestically in 2001 to 35 per cent in 2010, while oil production decreased from 39
per cent in 2001 to 23 per cent in 2010 (Ha, 2012).

TABLE 2: ENERGY PRODUCTION FOR YEARS 2000, 2005, AND 2009, IN KTOE
ANNUAL GROWTH RATE (%)
ENERGY PRODUCTION 2000 2005 2009
2000 – 2009
a. Solid* 13,137 19,092 24,480 7.2
b. Liquid 9,076 19,051 16,970 7.2
c. Gas 1,194 6,204 7,290 22.7
d. Hydro electricity 3,583 3,835 6,785 7.3
e. Renewable energy 14,794 14,722
Sub-total 26,990 62,976 70,247 11.2
Net import (import–export) n/a 17,150 13,787
Total 26,990 80,126 84,034
Source: Viet Nam Energy Statistics, 2009.
* Solid fuels including coal and lignite

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 5
 Non-commercial energy
Oil
Natural gas
Hydro electricity
Coal
2010
0% 2000
10%
20%
30%
40%
Non-commercial
Coal Hydro electricity Natural gas Oil
energy
2010 35% 9% 12% 23% 21%
2000 15% 10% 3% 39% 33%

FIGURE 2: ENERGY PRODUCTION BY FUEL SOURCE (%) FOR THE YEARS 2000 TO 2010
Source: Ha, 2012.

3.3 Electricity Generation

In Viet Nam, electricity is supplied from the following sources: (i) hydro power, (ii) coal-fired power, (iii) oil-fired
power, (iv) gas-fired and turbine gas, (v) diesel and others and (vi) imported electricity (Ha, 2012). As of 2012, 39
per cent of electricity consumed was provided by non-coal-based thermal power generation (including oil-fired, gas-
fired, and diesel sources), 36 per cent from hydropower sources, 10.5 per cent from coal-fired power stations, and the
rest from renewable energy and imported energy.

In Viet Nam, Vietnam Electricity (EVN) takes the leading role in power generation, transmission and distribution, as
per the Power Development Master Plan VII (Decision 1208/QD-TTg, 2011). Viet Nam’s electricity generation has
increased from 26,562 gigawatt hours (GWh) in 2000 to approximately 100,000 GWh1 in 2010, representing an
average annual growth rate of approximately 13 per cent (as illustrated in Figure 3). Additional generation capacity of
4,100 megawatts (MW) will be required per year on average during the 2011 to 2015 period to meet rising demand.
Presently, there are 29 power plants under construction with a total capacity of 10,029 MW, including 20 hydropower
plants and nine thermal power plants. Nuclear power plants with a generation capacity of 2,000 MW are also being
developed (Decision 1208/QD-TTg, 2011).

EVN power plants contribute roughly 68 per cent of electricity generated and non-EVN power plants (includes independent power
1

producers [IPPs] and other government generators) provide 32 per cent (Viet Nam Regulatory Authority of Viet Nam, 2010).

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 6
 Power Generation (Gwh)

2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000

0 20000 40000 60000 80000 100000 120000

FIGURE 3: POWER GENERATION (GWH) FROM 2000–2010.
Source: Tuan, 2012.

Others with EVN

share
National 17%
Developer
EVN
6%
EVN Petro Vietnam
Foreign Developer 51%
9% Vinacomin
Foreign Developer
Vinacomin National Developer
5%
Others with EVN share

Petro Vietnam
12%

FIGURE 4: POWER GENERATION BY MARKET STAKEHOLDERS

Source: Vietnam Electricity, 2011.

3.4 Role of the Private Sector in Renewable Energy Development

The Vietnamese government has promoted the use of public-private partnerships to mobilize private capital and
attract the investment needed for both renewable and non-renewable energy. Based on legislation managed by the
Ministry of Industry and Trade (MoIT) (Decision 30/2006/QD-BCN) under agreed power purchasing agreements
(PPAs), power generation companies owned by private investors are permitted to sell power to EVN where EVN is
unable to mobilize financial resources to meet the full investment capital required for a power generation project.
Due to the rapid increase in energy demand, the participation of domestic and foreign investors in the form of
independent power producers (IPPs) will play a significant role in supplying power in the future. The following
roadmap for developing the power market in Viet Nam has been set out by the government.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 7
TABLE 3: POWER MARKET DEVELOPMENT ROADMAP
ROADMAP ACTIONS
2005–2009 Prepare for single buyer market (internal market)
2009–2014 Prepare for wholesale market
2014–2016 Pilot wholesale market
2016–2022 Develop wholesale competitive market
2022–2024 Pilot retail market (preparation for the retail market took place in 2014 – 2022)
Beyond 2024 Develop competitive retail market
Sources:, MoIT (2010, May 10); Circular 18/2010/TT-BCT on regulating the operation of the competitive electricity generation market; MoIT (2011,
December 30); Circular 45/2011/TT-BTC on the amendment and supplementation of a number of articles of the Circular No.18/2010/TT-BCT of May
10, 2010 of the Ministry of Industry and Trade defining the operation of a competitive electricity generation market.

The presence of IPPs in the Vietnamese power market is still limited by rigid regulatory policies such as those associated
with agreeing on an acceptable “financeable” tariff or per unit electricity price for power purchase agreements (PPAs).
The low off-take price for electricity is a key factor hindering the participation of IPPs in the power market (Laykin,
2009). According to EVN, the number of power-generating projects under the Power Development Master Plan VI
(17 IPP projects and two build–operate–transfer [BOT] projects) has yet to meet the targets of developing 47 power
projects under both IPP and BOT investment schemes by 2015.

Constraints around investment capital are a key barrier to private sector investment in the energy market. A private
company is required to have equity capital equivalent to at least 20 per cent of the total investment for an IPP project
(EVN, 2012). This means the remaining 80 per cent of the required capital will need to be financed by bank loans
from the Viet Nam Development Bank (VDB), or a foreign commercial bank backed by the Government’s credit
guarantee scheme. The following table sets out a selection of renewable power projects being developed by IPPs for
the period 2011–2015 (principally hydropower projects).

TABLE 4: LIST OF IPP PROJECTS IN VIET NAM

INDEPENDENT POWER PRODUCER OWNERSHIP TYPE / OPERATIONAL
NO. NAME OF PROJECT
(IPP) INVESTMENT CAPITAL DATE
1. Northern Electricity development and a. Joint stock company, Ngoi Phat hydropower plant
2011
investment JSC. No.2 b. VND1,457 billion (72 MW)
2. Hoang Anh Hydropower Joint Stock a. Joint stock company Ba Thuoc 2 hydropower plant,
2012
Company b. VND1,497 billion turbine 1, 2 (80 MW)
3. Trung Nam Group a. Joint stock company, Dong Nai 2 hydropower plant
2012
b. VND2,500 billion (70 MW)
4. Southern Hydropower Joint Stock a. Joint stock company, Dam Bri hydropower plant
2012
Company b. VND1,798 billion (75 MW)
5. Hung Hai Group a. Joint stock Company Nam Na 2 hydropower plant
2013
b. VND2,000 billion (66 MW)
6. Hung Hai Group a. Joint stock company Nam Na 3 hydropower plant
2014
b. Bank loan: US$100 million (84 MW)
7. Viet–Laos Electricity Joint Stock a. Joint Venture Nam Mo hydropower plant
2014
Company b. US$166 million (95 MW) constructed in Lao PDR
8. Energy and Industry Development Joint a. Joint Stock company Luc Nam coal-fired thermo power
2015
Stock Company (EIC) b. US$66 million plant (turbine 1)

Source: Vietnam Investment Review, n.d.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 8
4.0 Investment Incentives for Renewable Energy
This section describes the policies introduced by the Vietnamese government to promote the development of
renewable energy. The discussion is restricted to policies and regulations that affect the key types of renewable
energy focused on in this study: small hydro, wind, solar, biogas and biomass.

4.1 Policy-Makers and Implementers2

Viet Nam has a complex institutional structure in the energy sector. At least three government agencies are directly
involved in formulating or implementing renewable energy policy at a national level, with local governments and a
number of other government agencies also having influence over either policy or its implementation, as described
below.
• T
he Vietnamese Government and Prime Minister are responsible for policies and regulations, strategies and
plans for the development of renewable energy sector.
• T
he Ministry of Industry and Trade (MoIT) manages all energy sectors, such as coal, oil, gas, electricity,
nuclear energy and renewable energies. The ministry is responsible for policy design and national plans
subject to Prime Minister’s approval.
• T
he Ministry of Planning and Investment (MPI) takes the lead role in coordinating and allocating funds
for energy projects submitted by line ministries and agencies, for consideration and approval by the Prime
Minister.
• T
he Ministry of Finance (MoF) is responsible for taxation and energy tariff policies applied to the energy
sector.

Prime Minister

Ministry of Ministry of Finance Ministry of

Industry and Trade (MoF) Planning and
(MoIT) Investment (MPI)

Electricity Provincial General

Regulatory Department of Directorate of
Authority of Industry and Trade Energy
Vietnam (ERAV) (DoIT)

New and
Electricity of Renewable Energy
Institute of Energy
Vietnam Group Department
(EVN)

FIGURE 5: GOVERNMENT MANAGEMENT STRUCTURE FOR RENEWABLE ENERGY

Sources: MoIT, 2010; U.S. Commercial Services, 2012.
2
This part is mainly based on GIZ/MoIT, 2011.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 9
4.2 Subjects of Policy
The actors who are the subjects of energy policy—and who, in turn, often seek to influence policies to meet their
needs and interests—are several state-owned enterprises and, in certain segments of the industry, private companies.
This includes:

• V
ietnam Electricity (EVN) is the most important institution in implementing policies and regulations for
renewable energy.
• G
eneral Energy Department under control of the Ministry of Industry and Trade (MoIT). The Department
helps MoIT to implement management functions relating to the energy sector.
• Renewable Energy Department is in charge of designing plans for renewable energy development.
• T
he Electricity Regulatory Authority of Viet Nam (ERAV) is a department under the Ministry of Industry and
Trade. This department manages and regulates electricity market-related activities (also including electricity
from renewable sources).
• A
t the provincial level, the provincial Departments of Industry and Trade (DOIT) are responsible for
implementing state management directives for the energy sector, including renewable energy.
• T
he Institute of Energy plays an important role in conducting research into renewable energy issues. In 2007,
it established the “Center for Renewable Energy and Clean Development Mechanisms.”
• I ndependent power producers (IPPs) generate electricity from renewable technologies in Viet Nam. In
most cases, they must sell their electricity to EVN. The electricity is sold at rates set by power-purchase
agreements or in line with the national feed-in tariffs.
• R
enewable energy companies, such as biofuel producers, solar PV, wind and other renewable energy
companies.

4.3 General Renewable Energy Policy Framework

The Vietnamese Government has recognized the role of renewable energy in delivering a number of positive
outcomes, including improving energy security, reducing reliance on more expensive primary fossil sources, and
promoting energy access and rural electrification. The Government has recently developed a legislative framework
for renewable energy and related institutions.

The general policy targets for renewable energy are reflected in the Decision 1855/QD-TTg, which approves
Vietnam’s national energy development strategy up to 2020. The national energy development strategy sets targets
for the shares of renewable energies in the total primary energy production at 5 per cent and 11 per cent in 2020 and
2050, respectively.

The following table sets out Vietnamese renewable energy targets.

TABLE 5: POWER GENERATION TARGETS BY SOURCES

TARGETED CAPACITY BY 2020 (MW) TARGETED CAPACITY BY 2030 (MW)
Wind Power 1,000 6,200
Biomass Power 500 2,000
Hydropower 17,400
Source: Government of Vietnam, 2011, July 21.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 10
 The Power Master Plan VII sets priorities in relation to the development of power from renewable sources including
hydropower, wind, solar and biomass over the next decade. Hydropower projects will perform multiple functions,
such as flood control and water supply in addition to power generation. Financial incentives will also support energy-
related enterprises in developing renewable energy from agricultural waste and city garbage. Table 6 below provides
an overview of key policies.

TABLE 6: KEY POLICIES OR DECISIONS

LEGAL DOCUMENTS CONTENT
Circular 32/2012/TT- Guidance on the implementation of (i) wind power projects, and (ii) standardized power purchase agreements (contract) for
BTC dated November electricity generated from wind power projects, uniformly applied to:
12, 2012 • Owners of wind farms
• Purchase of electricity
• Entities managing wind farms
• Power purchasers
Decision 1208/2011/QD- National Power Development Plan for the period 2011–2020 and looking forward to 2030:
TTg dated July 21, 2011 • Increasing electricity generation from renewable energy: specifically wind and biomass energy sources from 3.5 per
cent of total electricity generation in 2010 to 4.5 per cent in 2020 and 6 per cent in 2030, respectively.
• Electrification: 600,000 households will be supplied with electricity from renewable energy by 2020.
Decree 04/2009/ND- Preferential treatment and support for selected activities relating to environmental protection. Renewable energy projects are
CP dated January 14, entitled to the following incentives:
2009
• Preferential corporate tax rates
• Exemption from import tax on equipment, facilities and materials imported for activities related to production
• Exemption from environmental protection fees.
• Ability to depreciate fixed assets 1.5 times faster than normal depreciation rates.
Joint Circular 58/2008/ The Ministry of Finance (MoF) and the Ministry of Natural Resource and Environment (MoNRE) guidance on implementing
TTLT-BTC-BTN&MT Prime Ministerial Decision 130/2007/QD-TTg (02/8/2007) on financial mechanisms and policies for investment projects
dated July 4, 2008 complying with the clean development mechanism (CDM). Renewable energy power plants will be entitled to support
measures relating to electricity tariffs and taxes, e.g., import tax and land fee exemptions during a designated period.

Regulations on consumption subsidy for products from CDM projects:

• Electricity produced from wind, solar, geothermal and tidal projects.

• Electricity produced from recovered methane gas (landfill, coal mining).
• Grant amount/kWh = Production cost/kWh + reasonable profit/kWh - the selling price/kWh – selling price of
CDM Carbon Emission Reduction Credits (CERs).
Decision 1855/2007/ Approving biofuel development through to 2015, with a long-term vision towards 2025. The government’s objective is for an
QD-TTg on Dec 27, 2007 annual output of 100,000 tons of E5 (a blend of 5 per cent ethanol with 95 per cent gasoline) and 50,000 tons of B5 (a blend
of 5 per cent biodiesel with 95 per cent diesel) by 2010 equivalent to 0.4 per cent of the country’s projected oil and gasoline
demand.
Electricity Law 28/2004/ Approved by National Assembly focusing on:
QH11 dated December 3, • Encouraging the exploitation of renewable energies for electricity generation. Renewable energy power plants will
2004 receive incentives relating to investment, electricity tariffs and taxation.
• Encouraging organizations and individuals to invest in the construction of power networks or power generation
plants using local energy, renewable energy resources to supply electricity to rural, mountainous areas or islands.
• Support will be provided through:
°° Investment capital
°° Favourable interest rates on investment loans
°° Tax incentives
• The Ministry of Finance (MoF) is responsible in conjunction with the MoIT in the implementation of support
policies

Source: MoIT, 2012; Government of Vietnam, 2011a; Government of Vietnam, 2009, January 14; Government of Vietnam, 2008, July 14; Government of Vietnam,
2007, December 27; Government of Vietnam, 2007, November; Government of Vietnam, 2005.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 11
The following table sets out the main renewable energy projects in Viet Nam.

TABLE 7: KEY PROJECTS IN ENERGY EFFICIENCY AND RENEWABLE ENERGY IN VIET NAM
REF. PROJECT DONOR/ PROJECT VALUE
PROJECT TITLE PROJECT DESCRIPTION
NO. IMPLEMENTATION AGENCY & DURATION
1. Renewable Energy a. Asian Development Bank a. SDR Primary objective is to promote rural electrification
Development (ADB), Viet Nam 102,161,000** and renewable energy in Viet Nam to benefit ethnic
and Network b. Power Companies (PC) PC1, and a technical minority communities in remote and poorer parts
Expansion and PC2, and PC3 under EVN assistance of the country. Location: Lai Chau and Dien Bien,
Rehabilitation grant of Quang Nam and Hue, TraVinh and Soc Trang, and
for Remote US$2,500,000 Quang Tri province.
Communes Sector
Project b. 2009–2015

2. Viet Nam a. The World Bank, Viet Nam; a. US$318 million Aims to provide (i) a refinancing facility for
Renewable Energy b. Swiss Secretariat for Economic participating commercial banks (PBs) in lending to
Development b. 2009–2014 eligible renewable-based projects whose capacity
Affairs (SECO)
Project to increase does not exceed 30 MW developed by private
the supply of a. MoIT sponsors; and (ii) technical assistance to MoIT for
electricity to the reviewing applications, monitoring the eligibility
national grid from b. Investors in small hydropower of PBs and developers, project management, as
renewable energy plants well as capacity building for PBs and developers in
sources c. Financial institutions preparation, appraisal, financing, and implementing
renewable-based projects according to international
best practices.
3. Viet Nam a. The Global Environment Facility 2008–2009 Technical Assistance Project assisting MoIT in
National Energy (GEF) administered by the establishing technical standards for Solar Water
Efficiency Program World Bank; Heaters (SWH). Demonstrating the benefits of
(VNEEP)— Pilot SWHs for demand-side management and energy
Program on Solar b. MoIT efficiency (DSM/EE) through pilot installation in
Water Heaters three major cities: Ha Noi, Ho Chi Minh City and Da
Nang.
4. Biogas Program on The Netherlands’ Directorate Phase 1: 2003– Provides a flat-rate subsidy of VND1 million in phase
building domestic General for International 2006 1, and VND1.2 million in phase 2, respectively, to
biogas plants and Cooperation (DGIS) and the Phase 2: eligible household to build biogas plants. Equivalent
the development government of Viet Nam 2007–2012 to around 25 to 30 per cent of the investment
of domestic biogas represented by Ministry costs for the complete installation (digester volume
sector of Agriculture and Rural EUR 7.5 million of 6 to 8 cubic metres). The goal is to promote
Development (MARD) environmental protection in rural areas, improve the
health of the rural population, create rural jobs, and
reduce greenhouse gas emissions.
5. Quality and Safety Asian Development Bank (ADB), US$110 million Biogas development with a budget of US$22.25
Enhancement Viet Nam million to support the installation of 20,000
of Agricultural 2009–2014 domestic biogas plants. Disbursed through
Ministry of Agriculture & Rural
Products Development Ministry (MARD) the Vietnam Bank for Agriculture and Rural
and Biogas Development (VBARD) and Central Credit Fund
Development Central Credit Fund (CCF) to 40,000 households, installing an additional
Project (QSEAP) 100,000 units over a five-year period (2009–2014).
6. Wind power Vietnam Renewable Energy Joint US$70 million Wind power project with capacity of 27 MW
project in Binh stock company (RENV) and invested and implemented in Binh Thuan province.
Thuan province, German Fuhrlaender AG 2008–2011 Phase 1 completed with five wind turbines in place
Viet Nam connected to the national power grid as of August
2009.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 12
 7. Wind power Cong Ly Construction, Trade and US$228 million Wind farm with capacity of 99.2 MW (62 wind
project in Bac Lieu Tourism Company turbines of 1.6 MW each), with total electricity
province (Mekong 2010–2013 production capacity of is approximately 320 million
delta), Viet Nam kWh annually. Construction completed and ready for
grid connection.
8. Solar PV cells Red Sun Energy Joint Venture US$10,000,000 In phase 1, the production plant will supply solar
manufacturing Company in cooperation with panels with a capacity of 80–165 MW per module
plant in Duc Hoa its partners: the Center for Commencement: with 16 per cent efficiency levels. In phase 2, the
District, Long An Energy Efficiency of Ho Chi Minh 2009 plant is scheduled to produce electronic components
province, Viet Nam city (under the Department of using domestic materials (as well as solar hot water
Science and Technology) and Tan systems, light bulbs and other electronic devices).
Ky Nguyen Company Limited
*Projects listed in the table represent wind power projects in operation.
** SDR: Special Drawing Rights, equivalent to US$151 million.
Sources: (1) http://www.adb.org/projects/42182-013/documents; (2) http://www.worldbank.org/projects/P103238/vietnam-renewable-energy-
development-project?lang=en; (3) http://www.ieej.or.jp/aperc/CEEP/Viet%20Nam.pdf; (4) (i) http://www.biogas.org.vn/English/Home.aspx; (ii)
http://www.snvworld.org/en/countries/vietnam/our-work/projects/vietnam-national-biogas-programme; (5)
(i) http://www.adb.org/Projects/project.asp?id=39421; (ii) http://www.snvworld.org/sites/www.snvworld.org/files/publications/brief_
report_2010_and_plan_2011_of_the_working_group_on_domestic_biogas_under_the_e4all.pdf; (6) http://enerexpo.com.vn/images//6V-Bai-hoc-
kinh-nghiem-tu-DA-Phong-dien-Binh-thuan.pdf; (7) BMI’s Industry Report & Forecasts Series, Business Monitoring International, Q4 2011 www.
businessmonitor.com; vfpress.vn/attachments/vn-power-q4-2011-pdf.6662/ [in Vietnamese]; (8) http://redsun-solar.com

4.4 Overview of the Investment Incentive Framework

This section outlines the investment incentive framework and policies based around the key laws and decisions
relating to the development of the renewable energy sector.

The Government has established a coordinated strategy in line with region-based planning and investment
mechanisms supporting renewable energy development. This is in response to a number of barriers facing renewable
energy, including a lack of resource assessments looking at the potential of renewable energy, and poor integration
of energy and renewable energy projects into national energy efficiency programs. The development of a strategy
to promote renewable energy has allowed for better alignment with government programs supporting rural
electrification, forestry development, poverty alleviation and drinking water resource management. The key laws
include:

a. Investment law No. 59/2005/QH11, which provides a legal framework for both domestic and international
businesses/investors, covering provisions on specific types of incentives to attract investment in various areas
and sectors/industries, respectively, categorized as “conditional,” “encouraged” and “special encouraged” as
follows:

“Encouraged” or “special encouraged” sectors

• P
roduction of renewable energies; high-value technological products, bio- and information technologies;
mechanical manufacturing activities.
• H
igh-tech, modern technologies, ecological and environmental protection, research and development
(R&D).
• Labour-intensive industries.
• Forestry, agriculture, fishery industries and animal husbandry.

These sectors include areas related to renewable energy development and deployment.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 13
“Encouraged” areas

• Geographic areas entitled to investment incentives located in regions with poor socioeconomic development,
industrial parks, export-processing zones, zones producing high-tech equipment and economic zones.

Investment incentives are provided through taxation, including favourable income tax rates, low import duties and
fees; loss transfer; accelerated depreciation of assets; preferential land rights; and special cases entitled to extended
investment incentives.

Investment incentives offered by the Government prioritize the following areas: (i) technology transfer (with a focus
on development of advanced technologies and those used to manufacture new and innovative products), activities
that can increase production capacity, while enhancing competitiveness, product quality, and the efficient use of
production inputs and natural resources in general; (ii) deliver human resources development; (iii) investments in
infrastructure systems in industrial parks, export-processing zones, high-tech zones and economic zones.

The following table outlines Viet Nam’s tax policy and the exemptions provided to specific industries.

TABLE 8: TAX INCENTIVES

CORPORATE NUMBER OF YEARS CIT EXEMPTION 50% REDUCTION OF CIT
INCOME TAX FOR WHICH CIT HOLIDAY (NUMBER (CONSECUTIVE YEARS
DESCRIPTION
(CIT) RATE INCENTIVES WILL BE OF YEARS EXEMPTED FOLLOWING THE TAX
(%) AVAILABLE FROM TAX) EXEMPTION PERIOD)
New projects in industries designated as
20 10 2 3
“Encouraged Sectors”
New projects “Encouraged Areas” 20 10 2 6
New projects in “Encouraged sectors”
15 12 3 7
located inside “Encouraged Areas”
New projects in special encouraged
10 15 4 9
industries and/or special encouraged areas

b. In 2012, the Government issued Decision 1231/QD-TTg in relation to the Small and Medium-Sized (SME)
Development Plan II for the period 2011–2015, setting up eight key measures: (i) improving the legal
framework for market entry and exit; (ii) improving SMEs’ access to finance; (iii) support of technological
innovation and application of new technologies for SMEs; (iv) human resource development with a focus on
capacity building for business management for SMEs; (v) promoting the development of industrial clusters
and improved access to land; (vi) provision of information and market expansion; (xii) setting up institutional
systems supporting SME development; and (xiii) the implementation of an SME development plan (SME
Development Plan II), in particular the establishment of an SME Development Fund.

4.5 Regional Incentives and Special Economic Zones (SEZs)

The government has set up a range of incentives designed to attract investment in specific areas.

a. In February 2008, the Government approved Decree 29/2008/QD-TTg establishing special industrial,
processing, economic and border economic zones. This decree applies to state management agencies,
organizations and individuals involved in investment and business activities in these special zones.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 14
 b. In September 2009, the Government approved Decision 105/2009/QD-TTg establishing and expanding
industrial clusters; and setting out regulations on investment in (i) construction of infrastructure, (ii) business
activities within industry clusters, (iii) manufacturing activities and (iv) state management of industrial
clusters.

c. Viet Nam has 256 industrial zones and 20 economic zones located nationwide as of February 2011 (UNIDO,
2011). Table 9 illustrates a selection of economic zones.

TABLE 9: SELECTION OF ECONOMIC ZONES IN COASTAL PROVINCES

ECONOMIC ZONES LOCATIONS / PROVINCES ESTABLISHMENT DATE AREAS (HA)
Chu Lai Quang Nam June 5, 2003 27,040
Dung Quoc Quang Ngai March 21, 2005 45,332
Nhon Hoi Binh Dinh June 14, 2005 12,000
Chan May – Lang Co Thua Thien Hue Jan. 5, 2006 27,108
Phu Quoc Kien Giang Feb. 14, 2006 56,100
Vung Ang Ha Tinh April 3, 2006 22,781
Van Phong Khanh Hoa April 25, 2006 150,000
Nghi Son Thanh Hoa May 15, 2006 18,619
Van Don Quang Ninh May 31, 2006 55,133
Dong Nam Nghe An Nghe An June 11, 2007 18,826
Dinh Vu–Cat Hai Haiphong Jan. 10, 2008 21,600
Nam Phu Yen Phu Yen April 29, 2008 20,730
Hon La Quang Binh June 10, 2008 10,000
Dinh An Tra Vinh April 27, 2009 39,020
Nam Can Ca Mau Nov. 23, 2010 11,000
Dong Nam Quang Tri February 27, 2010 23,460
Thai Binh Thai Binh February 9, 2011 30,583
Ninh Co Nam Dinh February 25, 2011 13,950

The Ministry of Industry and Trade has been reviewing the implementation of Decision 105/2009/QD-TTg in
coordination with line ministries, local authorities and relevant stakeholders. During the two-year policy review
period, the Government sought to suspend new plans to establish or expand existing industrial clusters nationwide.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 15
FIGURE 6: ADMINISTRATIVE MAP OF VIET NAM

TABLE 10: TAX INCENTIVES APPLIED TO INDUSTRIAL AND ECONOMIC ZONES

DESCRIPTION CORPORATE NUMBER OF YEARS FOR CIT EXEMPTION HOLIDAY 50% REDUCTION OF CIT
INCOME TAX WHICH CIT INCENTIVES (NUMBER OF YEARS (CONSECUTIVE YEARS FOLLOWING
(CIT) RATE (%) WILL BE AVAILABLE (YEARS) EXEMPTED FROM TAX) THE TAX EXEMPTION PERIOD)
Service projects 20 10 2 3
Manufacturing projects 15 12 3 7
Special encouraged
10 15 4 9
manufacturing projects

In Table 10, special encouraged manufacturing projects are entitled to a CIT rate of 10 per cent for 15 years from the
commencement of operations. These projects may be granted a tax holiday for four years beginning from the first
year of profitable operations or a 50 per cent CIT reduction for nine years (starting from the fourth year revenue is
generated), whichever comes first.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 16
4.6 Investment Incentive Programs for the Energy and Renewable Energy
sectors
Investment incentives for renewable energy development in Viet Nam can be classified into a number of groups: first,
financial incentives, which provide loans and loan guarantees at below-market rates; second, fiscal incentives such
as tax exemptions and other tax-related subsidies; third, market price support and regulation, which provide above-
market prices or demand when renewable energy is produced and sold; and fourth, other subsidies, which could
involve preferential access to government land.

4.6.1 Financial Incentives

Financial incentives focus on the provision and cost of project finance. This can be a major issue for renewable energy
projects, which require large amounts of capital and can therefore involve substantial risk for the investors. They
often take the form of mechanisms such as investment grants, subsidized loans, loan guarantees and insurance at
preferential rates.

Decree 151/2006/ND-CP (December 20, 2006) introduced investment and export credits covering construction
costs for small hydropower projects (with a maximum capacity of 100 MW) and wind farms. The loan size for each
eligible project is up to 70 per cent of the total investment capital of the project (excluding working capital). In special
cases where projects are in need of funds exceeding 70 per cent of the total investment capital, and a bank loan is
required, it must be endorsed by the Ministry of Finance and approved by the Prime Minister. The investment loan
should not exceed 12 years with an interest rate equivalent to government bond interest rates with a term of five
years plus 1 per cent for loans in VND. The government can provide loan guarantees in cases where investors have to
obtain loans from other financial institutions. This Decree was amended by Decree 106/2008/ND-CP (September
19, 2008) making all renewable energy projects eligible.

The biogas program (with technical assistance from the Dutch government represented by SNV) focused on the
development of biogas technology that can provide a sustainable energy source and improve the livelihood and quality
of life of rural farmers at the household level. This program promotes a public–private partnership model aimed at
enhancing the participation of the private sector in the commercialization of the technology and the development of
credit structures provided by financial institutions to facilitate access to finance. There is also an investment incentive
scheme for biomass and biogas technically assisted by GIZ with funding from Kreditanstalt für Wiederaufbau (KfW)
Development Bank which is awaiting Government approval.

4.6.2 Fiscal Incentives

Fiscal incentives are provided through tax provisions. They are typically intended to reduce costs related to investment
and plant operation. Some of these have been introduced for renewable energy in Viet Nam but only to a limited
extent. Fiscal incentives for renewable energy are outlined in the following table.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 17
TABLE 11: FISCAL INCENTIVES
STANDARD GOVERNMENT RATES PREFERENTIAL TREATMENT FOR RENEWABLE ENERGY
FOR ENTERPRISES ENTERPRISES
Importation There are three import duty rates in Exemption from import tax on machines, equipment, tools and
duties Viet Nam: ordinary rates, preferential materials imported for production activities. Available for the
rates and special preferential rates first four years of operation.
(PricewaterhouseCoopers [PwC], 2012)
In calculating import duties, Viet Nam
follows the WTO Valuation Agreement.
Value of dutiable imported goods is based
on the transaction value (PwC, 2012).
Value Added Viet Nam has three VAT rates: 0%, 5%, a) Purchase of investment equipment is exempted from VAT.
Tax (VAT) and 10%
b) 0%VAT for renewable energy projects.
a) 0% for exported goods such as those
sold to firms without a permanent legal
base in Viet Nam and goods at duty free
shops.
b) 5% is applied to enterprises that
provide essential goods and services such
as books, teaching aids, clean water, etc.
c) 10% is applied to all other activities
that are subject to VAT.
Corporate Standard corporate income tax for a) Tax rate: 10% for a period of 15 years for newly established
Income Tax enterprises is 25%. However, enterprises renewable energy enterprises. If the project employs advanced
(CIT) in oil and gas industry have to pay tax technology or is a large-scale project, corporate income tax
ranging from 32% to 50% depending on rates can be extended up to 30 years with a tax rate of 10%.
the geographic location.
b) Tax exemption and tax reduction: for the first four years,
enterprises receive a tax exemption. For the next nine years,
enterprises may also receive a tax reduction of up to 50%
(Decree No. 124/2008/ND-CP, 2008).
Soft loans Companies borrow from commercial Investors are supplied with preferential loans of up to 80%
sources based on market rates. of the investment cost of projects. In addition, Government
Decree 75/2011/ND-CP (August 8, 2011) stressed wind power
projects were eligible for government credit incentives.

4.6.3 Market Price Support and Regulation

There is currently no standardized comprehensive legal framework for feed-in tariffs for renewable energy projects in
general in Viet Nam. There are however other forms of subsidies supporting prices for renewable energy.

Avoided Cost Tariff

“Avoided Cost Tariff” is defined as “the electricity tariff calculated by avoided costs of the national power grid when
1 kWh is generated to the distribution power grid from a small renewable energy power plant” (“Energy Profile
Vietnam,” n.d.). The “avoided cost” is defined as “the production cost per 1 kWh of the most expensive power
generating unit in the national power grid, which would be avoided if the buyer purchases 1 kWh of electricity from
a small renewable energy power plant instead” (“Energy Profile Vietnam,” n.d.). Avoided cost tariffs are applied in

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 18
formulating the purchasing price of electricity generated by small renewable energy power projects with an installed
production capacity of 30 MW or less, such as small hydropower plants. Avoided cost tariffs reflect the cost of
producing electricity from thermal power plants, investment costs to extend transmission lines out to areas with
hydropower plants, the cost of power generation from thermal power plants, and the environmental costs incurred
by fossil fuel-based electricity production. Avoided cost tariffs help small renewable energy power projects sell
electricity at a price that is equivalent to other generation sources. The current price per kWh for renewable energy
is around the equivalent of US$.05.3

Wind Power

Announced in a Circular (96/2012/T-BTC) by the Ministry of Finance (MoF, 2012 June 8), a price subsidy of
US$0.078 per kWh will be provided to wind farms (with a fixed purchasing price at US$0.068/kWh plus a US$0.01
subsidy financed from the state budget through the Environment Protection Fund). The unit subsidy for purchasing
the electrical output of grid-connected wind farms is VND207/kWh, with the level of subsidy estimated as the
subsidy per unit multiplied by the level of purchased electrical output. The level of per-unit support will be adjusted
based on decisions by the Prime Minister. ENV, which purchases the power using a standardized power purchase
contract from wind developers, is entitled to a price subsidy from the central government.4

The price subsidy is formulated on the following basis. The investment costs for wind power farms equipped with
new technology that meets the International Electrotechnical Commission (IEC) standards are paid at US$2,250
per kW. The average electricity price is calculated at US$0.1068 per kWh equivalent. Alternatively, if the investment
costs are US$1,700 per kW, then the average electricity price is estimated at US$0.086 per kWh. This lower cost
may be applicable to wind power developers investing in cheaper technologies as estimated by the MoIT.

The following table explains how these two technology cost structures and price subsidies for wind power are
calculated.

TABLE 12: EXPLANATION OF WIND POWER COST STRUCTURES AND PRICE SUBSIDIES
FORMULATION SCENARIO 1 SCENARIO 2
Target capacity by 2020 of 1,000 MW With the price subsidy of US$0.01 per With the price subsidy of US$0.04
of wind power x 1,000 kW x 365 days x kWh (VND 207/kWh) x 2 billion kWh, (VND828)/kWh or the purchase price
24 hours x 90% (estimated loss at 10%) the total amount planned for subsidy is by EVN of US$0.108/kWh to secure
x 25% (the efficiency of wind turbines VND414 billion, divided by 20 million adequate return on investment and
based on wind velocity conditions in Viet customers who pay for electricity directly reasonable profit for investors who invest
Nam) = 1.971 billion kWh, equivalent to (by 2020): the average amount each in high tech equipment, the total amount
2 billion kWh outlined in Power Master household will pay is about VND20,700 to be spent on the subsidy is VND1,656
Plan VII. annually or VND1,725 monthly. billion, divided by 20 million customers:
the average extra amount each customer
will pay by 2020 is VND81,800 annually
or VND6,810 monthly.

Table 13 summarizes the status of electricity prices and price subsidies for renewable energy projects.
Subject to changes in the exchange rate between US$ and VND.
3

ENV is responsible for reporting the following data annually to the ERAV on May 31: (i) general information on wind farms with signed
4

power purchase agreements for the next year (including the name of the wind farm, investor, installed capacity, output, location; and the
contract’s value, date and number); (ii) amount of electricity purchased from the wind farm in the previous year; (iii) expected output to
be contracted with the wind farm operator in the current year and subsequent years set for each wind farm, and (iv) the expected total
amount subsidized.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 19
TABLE 13: MARKET PRICE SUPPORT AND REGULATION-BASED INCENTIVES
a. Subsidy Price subsidy for Clean Development Mechanism (CDM) projects:
a. A CDM project whose production cost is greater than the contracting electricity selling price
may file an application to the Environmental Protection Fund of Vietnam for a price subsidy.
b. For wind power: VND207/kWh (US$0.01/kWh)
b. Retail electricity price to Electricity pricing in Viet Nam:
increase a. VND1,242 / kWh (US$0.06/kWh) on average in 2011;
b. VND1,304/kWh (US$0.063/kWh) currently;
c. US$0.08 / kWh–US$0.09/kWh by 2020.

Based on a meeting with a representative of the Department of Renewable Energy under MoIT in December 2012,
it was confirmed that the legal framework for investment incentives is in place, and eligible wind farms are now
preparing applications for the price subsidy.

Small-Scale Hydropower Projects

The Ministry of Trade and Industry (MoIT) established investment incentive mechanisms based on an avoided cost
tariff for electricity generated by small-scale hydropower plants.5 As such, there are approximately 200 small-scale
hydropower projects registered for development with total capacity of 4,067 MW (Phuong & Huong, 2012). The
following table highlights avoided cost tariffs for small-scale hydropower.

TABLE 14: APPLIED AVOIDED COST TARIFF FOR THE PERIOD 2009–2012, IN VND/KWH
DESCRIPTION 2009 2010 2011 2012
Capacity cost accounting for three 1,674 1,633 1,772 1,805
regions (North, Centre, and South)
Avoided Cost Tariff 916 954.52
Sources: MoIT, 2008, 2009, 2010, 2012; Decisions on annual ACT.

4.6.4 Other Subsidies

Several other renewable energy subsidies may be available to investors. For example, renewable energy projects are
exempt from environment protection fees, land-use fees and land rent for the whole life span of the project.

TABLE 15: OTHER SUBSIDIES FOR RENEWABLE ENERGY

Environmental a) Solid waste: With the ordinary solid waste from business: Exemption from
protection fees not exceeding VND40,000/tonne (nearly US$2/tonne). With environmental protection
hazardous solid wastes: not exceeding VND6,000,000 /tonne fees.
(nearly US$300/tonne) (Decree No. 174/2007 ND-CP, 2007)
b) Liquid waste:
+ Chemical Oxygen demand from VND100/kg to VND300/kg
+Suspended solids from VND200/kg to VND400/kg
+ Mercury from VND10,000,000/kg to VND20,000,000/kg
+Cadmium from VND600,000/kg to VND1,000,000/kg (Decree
No. 04/2007/ND-CP, 2007)
Land-use fee/rental Dependent on location. Dependent on location of the
project; enterprises receive
exemption/reduction of land
use fees.

Hydropower plants with a capacity of less than 30 MW.

5

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 20
5.0 Discussion and Analysis
5.1 Stakeholder Assessment of Investment Incentives for Renewable Energy
Projects
The investors interviewed for this study indicated that the current investment incentives supporting renewable
energy deployment in Viet Nam have little effect on investment decisions. A foreign investor looking to invest in Viet
Nam’s renewable energy sector noted: “an investment incentive is not a critical variable in our investment decision.
The most important thing is to have a predictable power system regime where market competition is appreciated”
(Ann-Mari Lillejord, personal communication, 2012). Potential investors face a range of issues other than investment
incentives which are further elaborated on below. The study identified that:

• V
iet Nam still does not have a clear legal framework guiding policies on renewable energy projects. The
policies are separately stipulated in different laws leading to confusion in their application. In many cases,
these laws and regulations are contradictory. For example, a foreign investor interested in investing in a
hydropower project in Viet Nam noted that, although the project was exempt from import duties for imported
machinery and equipment, there was significant red tape relating to customs processes. In some cases,
costs associated with unofficial fees and red tape were higher than the benefits received from the import tax
exemption. Furthermore, as noted by a manager of a sugar company investing in a biomass project, although
this project can be exempted from certain taxes, these entitlements were still awaiting government approval.
• T
he low price of renewable electricity is a major hurdle for investors and affects returns on investment. The
price at which EVN purchases electricity from renewable energy projects is currently lower than electricity
production costs for wind or solar PV. Also, it appears investors in electricity production from biogas and
biomass power projects do not currently receive price support from the government. Due to the low price
for renewable electricity and returns from investing in renewable energy, the number of new projects is low
compared with other industries, and it takes longer for investors to recoup their investments.
• P
rocedures for establishing and operating renewable energy projects often require the involvement of a number
of authorities, resulting in high transaction costs as project developers must submit the same information
to several government authorities at different points of time. Effective coordination and clarification of
responsibilities among stakeholders is required to reduce the existing fiscal and technical barriers facing the
renewable energy sector. Government officials often lack adequate experience in establishing and operating
investment incentive policies supporting the renewable energy sector.
• T
rust in government guarantees is a critical issue when foreign investors evaluate investment opportunities.
Some investors suggested that government guarantees are unreliable.6 These investors have encountered
difficulties in seeking loans for their renewable power projects although legal documents confirm that
they are eligible to access available soft loans. Other investors pointed out the unreliability of government
macroeconomic policies. For example, Viet Nam’s foreign exchange reserves are low and could affect any
guarantees relating to the availability of foreign currencies. Similarly, high inflation rates and the devaluation
of Viet Nam’s currency as part of government policies are also a concern for investors.

6
Oliver Massmann, managing partner of Duane Morris Vietnam LLC, confirmed this point in a presentation titled “Investment in wind
energy in Vietnam: The right time has come?” (Massmann, 2012).

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 21
5.2 The Impact of Investment Incentives
a. Hydropower Projects

Current investment incentives provide modest benefits for small hydropower projects, according to the investors
interviewed. One investor in a small hydropower project noted the application of the Avoided Cost Tariff and
Standardized Power Purchase Agreement with the government allowed his hydropower plant to sell electricity at
a higher price compared with electricity prices in pre-2008 periods. From 2009, grid-connected renewable energy
projects with an installed capacity lower than 30 MW can apply for the Avoided Cost Tariff. The standardized power
purchase agreement provided more opportunities to negotiate with EVN on the purchase price of electricity. In 2012,
the Ministry of Industry and Trade approved an increase of 5 per cent in the purchase price of electricity compared
with 2011 prices for more than 10 small hydropower plants.

Some small hydropower projects have also received substantial benefits from the Clean Development Mechanism
(CDM). According to the GIZ Renewable Energy Project (2012), among the 143 projects operating within the CDM,
about 69 per cent (98 projects) were small hydropower projects.

b. Negative Example: Wind energy

The Electricity Regulatory Authority of Vietnam (EARV) sets consumer electricity price ceilings to which Vietnam
Electricity (EVN) (the state monopoly purchasing and distributing power) must adhere when selling to electricity to
consumers. EVN is unable to pay more for electricity purchased from generators because of price regulating policies.
According to Decision 130, EVN is allowed to pay a higher price for electricity bought from IPPs than the price sold
to consumers. However, the price for electricity bought from IPPs or other generators is still lower than the real cost
of electricity production incurred by the generator. Funding for these subsidies is limited to the amount set aside in
a capped government fund. For example, in 2010, the solar PV company Power RE Co. Ltd. invested US$17 million in
a wind farm in Phú Quý District, Binh Thuan Province. The project’s installed capacity of 6 MW (two turbines) can
supply electricity to the local area; however, as noted by Pham Cuong, Company Director, the company had to spend
US$480,000 of its own operating capital to cover the losses incurred by the project (“VN ‘wind power capital,’”
2012). He explained that “[t]he power produced by the wind farm is bought by the local power sector at 6.8 cent
[sic], plus 1 cent subsidized by the government . . . But we will only be able to break even at 10.36 cent [sic] a kWh,
although it will also take as long as 12 years” (“VN ‘wind power capital,’” 2012). The off-take or purchase price of
electricity received by a generator is lower than those in nearby countries such as Thailand (US$0.89/kWh), the
Philippines (US$0.18 cent/kWh) and Cambodia (US$0.18/kWh) (Cooper, 2012). Hence, it is hard to attract foreign
investment in renewable energy due to the uncompetitive electricity off-take prices provided by EVN.

c. Negative Example: Biogas

In Ho Chi Minh City, the Go Cat sanitary landfill in Binh Tan District, with an area of 25 hectares, is using landfill
gas to produce electricity. The project cost US$20.8 million, of which 60 per cent was funded by the government
of Netherlands and 40 per cent by the state budget of Ho Chi Minh City (Nguyen, 2004). The company signed a
contract to sell electricity to EVN at US$0.04/kWh without any price subsidy from the city authorities. According to
the operators of the plant, the electricity price agreed with EVN is too low to cover the cost of production. As explained

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 22
by Nguyen Trung Viet, Head of Solid Waste Management, Department of Natural Resources and Environment, Ho
Chi Minh City, the main reason the Go Cat Company was able to accept such a low electricity price was due to the
plant’s technology being 100 per cent funded by foreign capital The company also uses the revenue generated from
municipal waste treatment to offset the losses (SGGP, 2007).

Foreign investors interested in biogas projects ideally are seeking an electricity price of US$0.07/kWh, a price which
is not accepted by EVN. This case explains why many biogas projects in Ho Chi Minh City, such as those invested in
by Keppel Seghers Engineering Company (Singapore) (at Dong Thanh) and the International Environmental Energy
Corporation (U.S.) (at Phuoc Hiep), were cancelled during the last five years due to a lack of capital and low electricity
prices on offer (DuyNguyên, 2012).

One manager of a company investing in a biomass plant said: “Why [have] we invested in this biomass plant? We
expected a long-term profit. We knew the incentive policies but we haven’t got any support from the government
so far” (Manager of Ninh Hòa Sugar Joint Stock Company, personal communication, 2012). Investors in small-scale
biogas projects admitted that when making a decision to invest in renewable energy they do consider investment
incentives provided by the government. However, they usually do not have sufficient information on the incentives
when trying to identify investment opportunities. For investors in large-scale projects, investment incentives seem
not to have affected their location decision.

5.3 The Costs and Benefits of Investment Incentives

A Cost-Benefit Analysis (CBA) of investment incentives is often used to determine whether or not there is a net
social benefit of using these policies. A CBA requires the identification and evaluation of main social costs and
benefits related to the investment incentive policies. In practice, policies such as investment incentives are seldom
subject to a CBA before being implemented.

Many practical issues hinder the use of CBAs in assessing the implementation of investment incentives. For example,
information used to evaluate their costs and benefits in general is not transparent. The Ministry of Finance (MoF)
is responsible for estimating and recording related data; however, this data is generally not publicly available. The
amount and quality of information, especially financial data, may vary widely according to the level of secrecy or
commercial sensitivity. Identification of costs and benefits is not straightforward even when transparency and
accountability of information is adequate. The costs of incentives encompass many intangible components such as
opportunity costs, administrative costs and social costs relating to market inefficiencies generated by the incentive
policies. Currently, it is almost impossible to directly estimate administrative costs related to these policies, as the
administration system covers a variety of activities, of which investment incentives are but one component.

Evaluating the beneficial impact of investment incentives is also difficult because they stem from a number of
sources other than the use of incentives. When asking one investor to list determinants for selecting an investment
location, they identified a range of factors, including available infrastructure and labour costs, and not necessarily the
availability of investment incentives (Le An Khang, personal communication, 2012).

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 23
TABLE 16: COSTS AND BENEFITS FOR A TYPICAL WIND ENERGY PROJECT RECEIVING INCENTIVES
IMPACT ESTIMATE
TYPES OF COSTS AND BENEFITS
SMALL MEDIUM HIGH
Costs
Price subsidy X
Other types of subsidy X
Administrative costs X
Transaction cost X
Opportunity costs X
Distortion costs* X
Benefits
New investment in renewable energy X
Environmental benefits X
Indirect benefits (employment and tax revenue) X
Sources: Personal interviews conducted by authors, 2012. Qualitative estimates in this table are compiled from interviewees and practitioners, and
government reports.
* Distortion costs are social costs associated with the market distortion created by the incentives

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 24
6.0 Conclusions and Recommendations
6.1 Conclusions
Viet Nam is well placed to develop renewable energy due to its endowment of natural resources, geographic
position and favourable climatic conditions. With a growing demand for electricity, and faced with a reduction in
the availability of fossil fuel resources, the Vietnamese government has developed an overarching policy framework
for the renewable energy sector. The development of the Power Master Plan VII is a breakthrough in promoting
renewable energy development, providing a legal framework for introducing investment incentives, such as tax
incentives and a subsidized electricity price.

This study provides a preliminary assessment of incentives based on interviews with investors, and these suggest
that current investment incentives have had a limited effect on investment decisions. Most stakeholders interviewed
thought incentives were not the key determinant in selecting a specific site or geographic area. Investors in renewable
energy felt the current legal framework and incentive mechanism were not adequately developed. Procedures
for investors to apply for incentives were often considered opaque and not well understood by the investment
community. Some local investors commented that they decided not to submit an application for a price subsidy
due to the time required to complete the application. Foreign investors expressed concern over the reliability of
government guarantees backing fair prices for electricity or the ongoing terms of the soft loans.

Although the effects of investment incentives promoting renewable energy investment are still limited, their role in
future renewable energy development is likely to increase. Viet Nam’s huge potential for renewable energy combined
with overall increasing demand for renewable energy sources is considered attractive to investors.

6.2 Recommendations
The research suggests the following recommendations:

• E
nsure the application system for investment incentives is easy to understand and transparent. Presently,
many investors are unsure how to apply for incentives.
• T
he power system regime is not predictable, and there is limited market competition, which acts as a
disincentive for investors. The Vietnamese government should support the development of an energy market
that treats all investors equally and allows investment incentives to work.
• A
lthough investment incentives are not a critical factor in determining investment decisions in renewable
energy projects, they are still important in retaining existing investments and encouraging further investment
to develop an existing facility. Further research is required to understand the costs and benefits of the
incentives currently on offer, so that they can be improved over time.
• I nvestment in renewable energy depends a lot on the performance of one actor—the EVN. Investors view
electricity prices for renewable energy projects and fair competition in the electricity market as critical factors.
The current price subsidy should be revised in situations where the government is unable to subsidize EVN to
cover losses from purchasing electricity from renewable energy projects run by IPPs.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 25
7.0 References
Cooper, G. (2012, March 23). Vietnam’s renewable energy legal environment getting projects done today and tomorrow.
ENEREXPO Vietnam 2012, Hanoi.

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). (2012). Renewable energy project. Retrieved from
http://www.renewableenergy.org.vn/index.php?page=small-hydro-power

GIZ/MoIT. (2011). Information on wind energy in Viet Nam. Hanoi, Viet Nam.

DuyNguyên. (2012). Sảnxuấtđiệntừrác: Nhiềudựánđuốisức [in Vietnamese]. Retrieved from http://news.go.vn/kinh-

te/tin-909481/san-xuat-dien-tu-rac-nhie-u-du-an-duoi-suc.htm

Electricity Regulatory Authority of Viet Nam. (2010). Power market developments in Vietnam. Retrieved from http://
www.theapex.org/images/uploads/Dinh_The_Phuc-Power_Market_Developments_in_Vietnam.pdf

Energy Information Administration (EIA). (2012). Country analysis. Retrieved from http://www.eia.gov/cabs/
Vietnam/Full.html

“Energy Profile: Vietnam.” (n.d.). Retrieved from http://www.reegle.info/countries/vietnam-energy-profile/VN

Government of Vietnam. (2003). Prime Minister Decree 102/2003/ND-CP. Retrieved from http://thuvienphapluat.vn/
archive/Nghi-dinh/Nghi-dinh-102-2003-ND-CP-su-dung-nang-luong-tiet-kiem-hieu-qua-vb51315t11.aspx

Government of Vietnam. (2005). Electricity Law No. 28/2004/QH11 approved by the National Assembly on 3 December
2004 and effective 1 July 2005.

Government of Vietnam. (2005, November 29). Investment Law No. 59/2005/QH11 endorsed by the National Assembly
on 29 November 2005.

Government of Vietnam. (2006, April 14). Decision 79/2006/QD -TTg dated April 14, 2006 by Prime Minister on
approving the National Strategic Program on Energy Saving and Effective Use.

Government of Vietnam. (2006, August 30). Decision No. 30/2006/QD-BCN dated 30 August 2006 by Minister of
Industry on the management of investment–construction of independent power plant projects.

Government of Vietnam. (2006, September 22). Decree No. 108/2006/ND-CP on providing guidelines in implementation
of a number of articles of law on investment.

Government of Vietnam. (2006, December 20). Decree No. 151/2006/ND-CP dated 20 December 2006 on state
investment credit and export credit.

Government of Vietnam. (2007). Decree No. 04/2007/ND-CP on Environmental protection charge on waste water.

Government of Vietnam. (2007, August 2). Decision No. 130/2007/QD-TTg dated 02 August, 2007 on some financial
mechanisms, and policies for investment projects under the clean development mechanism.

Government of Vietnam. (2007, November). Decision No. 177/ 2007/QD-TTg dated November 2007 on approving the
scheme on development of biofuel up to 2015, with a vision to 2025.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 26
Government of Vietnam. (2007, November 29). Decree No. 174/2007 ND-CP on November 29 2007 on environmental
protection charge on solid waste.

Government of Vietnam. (2007, December 27). Decision No. 1855/QD-TTg dated 27/12/2007 by Prime Minister
approving the “Viet Nam National Energy Development Strategy up to 2020, Vision to 2050.”

Government of Vietnam. (2008, July 14). Inter-ministerial Circular No. 58/2008/TTLT-BTC-BTN&MT dated 4 July 2008
by Ministry of Finance and Ministry of Natural Resources and Environment providing guidelines for executing some articles
of Decision No. 130/2007/QDTTg dated 2 August 2007, issued by the Prime Minister on a number of financial mechanisms
and policies for the implementation of CDM projects.

Government of Vietnam. (2008, July 18). Decision 18/QD-BCT dated July 18, 2008 by Prime Minister on promulgation
of regulation on avoided cost tariff and standardized power purchase agreement for small renewable energy power plants.

Government of Vietnam. (2008, September 19). Decree No. 106/2008/ND-CP dated 19 September 2008 on amending
and supplementing some articles of Governmental Decree No. 151/2006/ND-CP dated 20 December 2006 on state
investment credit and export credit.

Government of Vietnam (2008, December 11). Decree No. 124/2008/ND-CP on Implementing the Law of Corporate
Income Tax.

Government of Vietnam. (2009, January 14). Governmental Decree No. 04/2009/ND-CP dated 14 January 2009 on
incentives and support for environmental protection activities.

Government of Vietnam (2009, August 19). Decision No. 105/2009/QD-TTg on promulgating the Regulation on
Management of Industrial Complex.

Government of Vietnam. (2010, August 13). Governmental Decree No. 87/2010/ND-CP dated 13 August 2010 on detailed
stipulations on the implementation of some Articles of Law on export and import taxes.

Government of Vietnam. (2011a). Decision 1208/QD-TTg on the National Power Development Master Plan for the period
2011 to 2020, with a vision toward 2030. Retrieved from http://phapluattp.vn/20120909032127703p0c1065/tai-
quyet-dinh-1208qdttg-ngay-49.htm

Government of Vietnam. (2011b). Law on energy efficiency and conservation, 2011.

Government of Vietnam. (2011, July 21). Decision No. 1208/QD-TTg on 21 July 2011 (or Power Development Plan 7 for the
2011–2020 period with the vision to 2030).

Government of Vietnam. (2011, August 8). Decree 75/2011/NĐ-CP on state investment credit and export credit.

Government of Vietnam (2012, September 7). Decision No. 1231/QD-TTg on approving the plan for developing medium
and small enterprises 2011 – 2015.

Ha, N. K. (2012). Viet Nam energy overview. Institute of Energy. Retrieved from http://www.ievn.com.vn/en/index.
php/thong-tin-tu-lieu/bai-viet/224-vietnam-energy-overview

Laykin, J. (2009). Vietnam promises, promises. Independent Power Producers Forum. Retrieved from http://www.
ippfpowerasia.com/artitcles/pdf/nonpublished/Vietnam_Promises-Jan11-20090424-updated.pdf

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 27
Lovells. (2009). Vietnam’s independent power producers sector toward market liberalisation.
Retrieved from http://m.hoganlovells.com/files/Publication/2e8941d8-f8e9-4aeb-88dc-
6a80844338a6/Presentation/PublicationAttachment/fc70ab90-eaf1-4c1f-82b4-fb9c782dec90/
VietnamsIndependentPowerProducersSectorTowardsMarketLiberalisation.pdf

Massmann, O. (2012) Investment in wind energy in Vietnam: The right time has come? A presentation. DUANE
MORRIS VIETNAM LLC.

Ministry of Finance (MoF) (2012, June 8). Circular 96/2012/TT - BTC on Guiding the Financial Mechanism to Support
Electricity Price for Grid connected Wind Power Projects.

MoIT (2008, December 24). Decision 74/QD-DTDL on Avoided Cost Tariff for 2009.

MoIT (2009, December 30). Decision 73/QD-DTDL on Avoided Cost Tariff for 2010.

MoIT (2010, December 31). Decision 66/QD-DTDL on Annual Avoided Cost Tariff for 2011.

MoIT (2012, January 19). Decision 06/QD-DTDL on Annual Avoided Cost Tariff for 2012.

MoIT (2010, May 10). Circular 18/2010/TT-BCT on Regulating the Operation of the Competitive Electricity Generation
Market.

MoIT (2010, October 18). Power market developments in Vietnam. Retrieved from http://www.theapex.org/images/
uploads/Dinh_The_Phuc-Power_Market_Developments_in_Vietnam.pdf

MoIT (2011, December 30); Circular 45/2011/TT-BTC on the Amendment and Supplementation of a Number of
Articles of the Circular No.18/2010/TT-BCT of May 10, 2010 of the Ministry of Industry and Trade on Defining the
Operation of a Competitive Electricity Generation Market.

MoIT (2012, Nov. 12). Circular 32/2012/TT-BCT Providing the Development of Wind Power Projects and the Model
Electricity Trading Contract for Wind Power Projects.

Nguyen, Q. (2004). Go Cat Landfill quality improving project. Energy Conservation Research and Development Center.

Phuong, N., & Huong, H. (2012). Development of small hydropower in Viet Nam: Existing concerns from investors. Retrieved
from http://dddn.com.vn/20120711100550605cat7/phat-trien-thuy-dien-nho-nhieu-noi-lo.htm

PricewaterhouseCoopers (PwC). (2012) Vietnam pocket tax book, 2012. Retrieved from http://www.pwc.com/en_
VN/vn/publications/2012/assets/PwC_Vietnam_Vietnam_Pocket_Tax_Book_2012_English.pdf

“Renewable Energy” [in Vietnamese]. (2009). Retrieved from http://4tech.com.vn/forums/showthread.php/265-

Năng-lượng-tái-tạo

SGGP. (2007). Thị trường “điệnsạch” TPHCM đa dạng nhưng nhiều rào cản [In Vietnamese]. Retrieved from http://
www.sggp.org.vn/moitruongdothi/2007/5/97707/

The Office of Government (2005, October 19). Decision 258/2005/QD-TTg on the Role, Powers, Duties and Organizational
Structure of the Electricity Regulatory Authority of Vietnam under the Ministry of Industry and Trade.

Thomas, K. (2007). Investment incentives: Growing use, uncertain benefits, uneven controls. International Institute for
Sustainable Development.

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 28
Thuy, N. (2012). Investors need financial support [in Vietnamese]. Forum of Development of Small Hydropower
plants in Viet Nam. Retrieved from http://daibieunhandan.vn/ONA_BDT/NewsPrint.aspx?newsId=252255

Tuan, N. A. (2012). A case study on power sector restructuring in Vietnam. Pacific Energy Summit. Summit Papers.
Retrieved from http://www.nbr.orgww

Tung, P., Mai, V., & Wasielke, A. (2012, March). Status of wind power development and financing of these projects in Viet
Nam. GIZ Wind Energy Project.

United Nations Conference on Trade and Development (UNCTAD). (2004). Incentives (UNCTAD Series on Issues
in International Investment Agreements). United Nations. Retrieved from http://unctad.org/en/Docs/iteiit20035_
en.pdf

United Nations Industrial Development Organization. (2011). Viet Nam industrial development report 2011. United
Nations.

U.S. Commercial Service. (2012). Vietnam market for medical equipment. Retrieved from http://export.gov/vietnam/
build/groups/public/@eg_vn/documents/webcontent/eg_vn_051777.pdf

Vietnam Electricity (EVN). (2011). Home page. Retrieved from http://www.evn.com.vn/vi/home.aspx

Vietnam Electricity (EVN). (2012). Investment capital for power project: Solutions? Retrieved from http://www.evn.com.
vn/Home/Detail/ tabid/84/TopicId/1/ItemId/4362/View/2/CateId/49/language/vi-VN/Default.aspx

Vietnam Energy Statistics (2009). Country Energy Profile. Retrieved from http://www.pub.iaea.org/MTCD/
Publications/PDF/CNPP2011_CD/countryprofiles/Vietnam/Vietnam2011.htm

Vietnam Investment Review. (n.d.). List of power plants scheduled to come online until 2020. Retrieved from http://www.
vir.com.vn/data/files/electricity_list.pdf

“VN wind power capital unattractive to investors.” (2012). TuoitreNews. Retrieved from http://www.tuoitrenews.vn/
cmlink/tuoitrenews/business/vn-wind-power-capital-unattractive-to-investors-1.92750

World Bank. (2012). Trung Son hydropower project: Meeting growing energy demands. Retrieved from http://www.
worldbank.org/en/news/2012/11/20/trung-son-hydropower-project-meeting-growing-energy-demands

TKN POLICY BRIEF DECEMBER 2012

Investment Incentives for Renewable Energy in Southeast Asia: Case study of Viet Nam 29
 Further details and contact information
For further information contact Damon Vis-Dunbar at: dvis-dunbar@iisd.org or +41 22 917 8630.

International Institute for Sustainable Development

Trade Knowledge Network
International Environment House 2, 9 chemin de Balexert, 1219 Châtelaine, Geneva, Switzerland
Tel: +41 22 917-8373 | Fax: +41 22 917-8054

www.iisd.org/tkn © 2013 The International Institute for Sustainable Development

View publication stats