Vietnam needs $150 bln for energy development
Vietnam needs to invest $150 billion, or half of its GDP, to increase power production in the next decade, but mobilizing the money would be difficult, analysts said.
A worker fixes electric cables in District 7, Ho Chi Minh City. Photo by VnExpress/Thanh Nguyen.
Dang Huy Dong, head of the Planning and Development Institute in Hanoi, said at a forum on Tuesday that at least in the next five years capital flows would be inadequate to meet this demand.
While international capital flows are abundant, there is high competition for it, he said, adding that foreign lenders also have high standards.
Echoing him, Nguyen Duc Hien, deputy head of the Central Economic Committee, said borrowing domestically is difficult while there are obstacles to FDI in the power sector.
Other analysts have warned that since energy is a sensitive industry which has a direct impact on the economy, the government needs to be selective and ensure foreign investors do not bring low technologies or seek to control the country’s resources.
But there are funding sources available. Fabrice Henry, CEO of U.S. advisory firm Astris Finance Llc, said in the Asia Pacific region around $80 billion is invested annually in the energy sector.
There are several sources of finance, including development agencies, export credit agencies, banks, and the bond market, all ready to invest in Vietnam, he added.
The keys to accessing these funds are a transparent legal framework and a thorough risk allocation process, he added.