Vietnam needs a healthy competitive energy market

Energy is regarded as the "infrastructure of infrastructure" because it must not only be one step ahead to pave the way but also play a crucial role in maintaining the operation of the entire economy and social life, according to VCCI Vice President Hoang Quang Phong, who spoke at the Forum: "Building a Competitive and Transparent Energy Market: Challenges and Opportunities for Businesses" organized by the Business Forum Magazine in collaboration with relevant agencies under the direction of the Vietnam Chamber of Commerce and Industry (VCCI).

In particular, energy demand is expected to continue rising sharply, with average electricity growth rates possibly reaching double digits in the upcoming years, given Vietnam's goals of high economic growth—above 8% in 2025, double-digit growth starting in 2026, and becoming a high-income nation by 2045.

VCCI Vice President Hoang Quang Phong stated, "Recently, the Politburo's Resolution 70-NQ/TW on ensuring national energy security until 2030, with a vision to 2045, has also set out many specific goals, tasks, and solutions aimed at meeting energy needs for growth in the coming period."

Simultaneously, he said that Vietnam's energy industry has advanced significantly in recent years, essentially fulfilling the objectives outlined in the national energy development strategy with a vision for 2050. However, the energy industry must meet a common standard of market processes in order to grow sustainably and address existing issues.

Statistics show that the Vietnamese energy industry has continuously grown at a rapid pace, with average output rising by about 10% annually. A number of energy-related industries, most notably oil and gas, are crucial to the nation's economic growth. Vietnam has adjusted the price of coal and energy using market methods.

According to the vice president of VCCI, some experts believe that Vietnam's energy sector is still beset by issues like inadequate distribution of the energy system by region and territory, imbalances between energy sub-sectors, supply and demand, and investment needs and capital. Energy investment has lagged behind socioeconomic advancement. Many projects are still moving slowly, and the legislative framework governing the energy market is still inadequate and uneven. The input elements used in the production and delivery of energy are not fairly reflected in energy pricing.

In order to progressively create a robust, competitive energy market based on guaranteeing political and social stability, it is crucial to expedite the reform of the energy industry. This entails encouraging state-owned energy companies to take the lead, keeping business and production apart from political and public service duties, and enhancing laws and procedures to promote more private sector involvement in energy development.

According to VCCI Vice President Hoang Quang Phong, the Revised National Energy Master Plan for the years 2021–2030, with a vision for 2050, was created to thoroughly evaluate energy supply and demand, link energy development with environmental and socioeconomic objectives, and take into account global energy transition trends.

The worldwide energy market, maintaining energy security, energy pricing and energy technology costs, energy transition trends, and environmental protection against climate change are the five primary ways that Vietnam's energy industry is adapting to global energy trends in this new phase.

As a result, the Government required that the Revised National Energy Master Plan must offer the best options for building energy infrastructure and guaranteeing the country's energy security in the future. Therefore, growth rates for coal and renewable energy are anticipated to be 5.9% and 7.8% annually, respectively, during the same time frame.

Although there are positive signs of the energy transition, there is still room for the diversity of main energy sources. According to Mr. Hoang Quang Phong, the primary energy supply is still largely reliant on a small number of energy sources and fuel imports.

Strongly advancing the energy transition, putting strong policies in place to fight climate change, and improving energy security will be the main focuses of global energy development trends in the upcoming years.

With the coordinated efforts of several sectors and local governments, numerous methods to eliminate barriers and comprehensive solutions must be put in place to guarantee energy security and supply enough energy to achieve high GDP growth. In light of this, it is advised that the Ministry of Industry and Trade submit the Revised National Energy Plan, which will serve as the foundation for its organization and execution, to the Prime Minister for approval.

"From the perspective of the business community, VCCI recognizes that a competitive and transparent energy market is not only a requirement of the institutional reform process but also a prerequisite for enhancing the competitiveness of Vietnamese businesses," said Mr. Hoang Quang Phong.

A transparent and competitive market will reduce policy risks and compliance expenses while fostering a stable and predictable investment climate for companies in the energy industry. Investors will have a stronger basis for decision-making with a defined institutional framework, transparent pricing systems, and fully revealed market information. This will help to effectively mobilize societal resources for energy development.

"Today's Forum is organized with the desire to create an open and frank dialogue between State authorities, experts, scientists, and the business community," the VCCI Vice President said.

Simultaneously, this Forum is expected to concentrate on elucidating the fundamental issues for creating a competitive energy market in Vietnam. These issues include policy improvement, information transparency, the development of electricity pricing mechanisms based on market signals, the development of power grid infrastructure and the electricity market, and the application of science and technology, innovation, and digital transformation in the energy sector.