The Vietnamese energy sector is expected to be the next driver for foreign direct investment (FDI) growth in the country.
According to government estimates, foreign direct investment commitment in this sector will touch a record high of $4.5 billion in 2016.
Last year, this sector attracted investments worth $2.8 billion, surpassing real estate and just short of the FDI raised by manufacturing sector, in the country.
Current year’s projection partially stems from a planned thermal power project with an estimated investment requirement of over $2.2 billion by Marubeni Corp (Japan) and KEPCO (South Korea). They are scheduled to file for investment license for a 1,200 MW plant in Thanh Hoa, north central Vietnam, in the first quarter this year.
Japan and South Korea have been Vietnam’s largest investors for years and own primary projects across major sectors in this Southeast Asian country.
In addition, another 1,200 MW thermal power plant is likely to be set up in the northern Nam Dinh province, as per a recent agreement between Arab Saudi’s ACWA Power and Taekwang Power Holdings, another South Korean firm.
The investment license for this project is anticipated to be granted this year, the government report said.
Overall, the local government has 86 power plants under plan from 2011 until 2020, and 18 of them have been assigned to foreign investors. One third of such projects have been licensed.
A few projects are still pending and have yet to acquire licenses, although their investors, including Japan’s Sumitomo, South Korea’s Samsung C&T, Malaysia’s Toyo-Ink and India’s Tata Power, have reached agreements with the government.
Prior to these FDI pledges, a $2.1 billion thermal power plant within a $4 billion energy complex in coastal province of Quang Ninh came into commercial operation in April last year.
AES Corporation (US), Posco Power (South Korean) and China Investment Corp have invested in it under the BOT contract, and it will be handed over to the Vietnamese government after 25 years.
Malaysian companies are also mulling more investment into Vietnam’s power generation business, with the presence of Janakuasa Sdn Bhd in addition to Toyo-Ink, making Malaysia the largest Asean investor in Vietnam.
Vietnam has seen fast economic growth of nearly 7 per cent in last few years. The government estimates that if growth continues at 7 – 8 per cent until 2030, the country will see power consumption jump at least at 12.1 per cent per year. Thus, Vietnam will need an annual investment of $8 billion into the energy sector by 2020.
Source: Intellasia
Key words: Energy sector, investments, seen to top, Vietnam’s FDI list, at $4.5b in 2016
