Viet Nam has seen a rapid increase in renewable energy investment, driven largely by foreign direct investment (FDI). At the same time, FDI in pollution- and GHG-intensive sectors, including fossil fuels and manufacturing, remains significant, representing over 60% of total FDI. This chapter examines the policy mix needed to enhance the contribution of FDI to green growth in Viet Nam. It analyses trends in FDI in renewable energy and other green activities, alongside continued investment in pollution- and GHG-intensive sectors. It also examines the role of foreign firms in promoting green business practices, as well as Viet Nam’s strategic and institutional frameworks for green investment. The chapter identifies key barriers to green FDI and assesses the effectiveness of current policies. It offers policy recommendations to strengthen green investment promotion, improve regulatory implementation, and develop green skills and infrastructure.
FDI Qualities Review of Viet Nam
Abstract
While FDI in renewable energy in Viet Nam has increased strongly and foreign firms perform better on green business practices, FDI in polluting sectors remains significant. Private investment driven by generous feed-in tariffs (FiTs) expanded solar and wind power from less than 1% of installed power-generation capacity in 2017 to 28% in 2023. FDI contributed to this expansion, with renewable-energy projects’ share of total greenfield FDI doubling between 2014-2018 and 2019-2023, reaching 14.7%. This remains below the OECD average of 24.1% in 2019-2023 and below comparator countries. It also remains lower than greenfield FDI in fossil fuels, which rose to 23% of the total in 2019-2023, well above benchmarks. FDI in pollution- and GHG-intensive manufacturing also remains large, accounting for 33% of greenfield FDI and 60% of total FDI. On green business practices, such as energy monitoring, firms in Viet Nam perform poorly overall, partly because of low electricity prices. Foreign firms, however, significantly outperform domestic ones, suggesting scope for technology and knowledge spillovers, particularly through stronger linkages between foreign and domestic firms.
Viet Nam’s ambitious green growth targets require substantial high-quality private investment. Viet Nam’s 2022 Climate Change Strategy aims for net zero GHG emissions by 2050. These objectives have been recently reaffirmed and operationalised through legislative regulatory reforms, including amendments to the Law on Investment and the establishment of a domestic carbon market under Article 139 of the Environmental Protection Law, with a pilot phase through 2028 and full operation from 2029, and the adoption of new mechanisms and policies for energy development for the 2026-2030 period (VietnamPlus, 2025[1]). For the 2025-2026 pilot phase, emission quotas have been approved for selected facilities in the power, steel and cement sectors under Decision No. 263/QD-TTg and Decision No. 699/QD-BNNMT. The revised National Power Development Plan for 2021-2030, with a vision to 2050, sets the share of renewable energy at 74-75% by 2050, pursuant to Decision No. 768/QD-TTg dated 15 April 2025. The Socio-Economic Development Plan (SEDS) and Green Growth Strategy set targets for waste and wastewater management, access to clean water and energy efficiency. Meeting these goals requires substantial financing: USD 135 billion for largely renewable power generation and grid updates by 2030 (31.4% of Viet Nam’s GDP) and up to USD 658 billion by 2050 (1.5 times Viet Nam’s GDP) according to PDP VIII. Mobilising these resources requires more and better-quality private investment, especially foreign capital, as foreign companies have greater experience in large-scale renewable energy projects plus better access to capital and modern technology.
Attracting more investment that supports green growth requires greater coherence in Viet Nam’s strategic plans, clearer strategies for private investment mobilisation and better inter-institutional and public-private co-ordination. Strong government commitment to green growth, underpinned by a coherent strategic framework, is essential for attracting green and low-carbon investment. Viet Nam has many strategies and plans relating to green investment, but they are often misaligned and divided among different ministries and agencies, creating co-ordination challenges. The effectiveness of policy co‑ordination remains uncertain, and public-private dialogue needs strengthening. While strategic documents cite private investment as an important source of funding for green growth objectives, they offer limited information on how to mobilise it.
Regulations and standards, which support a positive contribution of FDI to green growth, are not always well designed and enforced. Challenges in environmental impact assessments (EIAs) and public consultations limit their ability to prevent pollution and environmental degradation from private investment. Energy efficiency measures face barriers from firms’ low awareness, difficult access to financing, and uneven policy implementation. Despite a well-developed legal framework for responsible business conduct (RBC) and foreign firms’ strong performance, gaps remain in implementation and awareness. Standardised power purchase agreements (PPAs) for renewable energies expose investors to many risks, including curtailment, termination compensation and dispute settlement, creating uncertainty over returns.
Stronger green investment promotion and facilitation, skills and innovation policies could support investment for green growth. Viet Nam is still in the early stages of integrating climate and environmental objectives into investment promotion and facilitation. Investment facilitation has not yet been fully leveraged to support investment in activities that contribute to green growth, and Viet Nam lacks designated green priority sectors. Administrative procedures for permitting and licensing, including access to land, can still create delays for investors in some areas, including renewable-energy projects. Recent reforms have helped streamline procedures, reduce processing times and compliance costs, while strengthening monitoring and enforcement. Infrastructure gaps also deter green investors: grid constraints and limited power-system flexibility cause renewable-electricity curtailment, reducing project revenues and debt-servicing capacity. Green investors in sectors such as renewable energy and green agriculture face significant technical and soft skills shortages, including at the TVET and technician level (GIZ, 2025[2]).
Incentives and prices do not always support green investment. Below cost-recovery-level electricity prices compromise the financial viability of the state-owned electricity company, limit funding for grid updates, and reduce the bankability of private renewable and energy-efficiency projects. Some profit-based corporate income tax (CIT) incentives may be less effective where they support investments that would have proceeded without additional public support, particularly for large multinational investors affected by the Global Minimum Tax. Some incentives for renewable energy projects may be better aligned with actual generation, system needs and grid capacity, rather than installed capacity alone. Frequent changes in FiTs for renewable energies create uncertainty for investors, while generous tariffs combined with regulatory gaps have enabled inefficiencies.
Enhance the strategic and institutional framework for green investment.
Improve the coherence of the strategic framework for green investment and strategies for private investment. This requires better aligning strategies and plans on green investment and ensuring effective co-ordination among public institutions responsible for their implementation. Develop clear strategies with concrete policy measures to mobilise private investment supporting green growth.
Strengthen public-private dialogue in green sectors. This requires consulting private sector stakeholders on new regulations and legislation.
Strengthen green investment promotion and facilitation.
Adopt a more systematic approach to green investment promotion. This includes adopting a national investment promotion strategy where climate and environmental considerations are clearly addressed and embedded. Viet Nam should identify specific economic activities where it has the greatest potential to develop low-carbon activities or growth poles to target investment promotion.
Simplify administrative procedures affecting investment projects, including those supporting green growth. A “one-stop-shop” for renewable energy projects could help reduce the length and complexity of procedures and the number of public institutions involved in the renewable energy investment process. Viet Nam’s IPA could also help identify investors’ key administrative challenges and advocate for further simplification, while recognising recent reforms to streamline procedures, reduce processing times and compliance costs, and strengthen monitoring and enforcement.
Strengthen the legal and regulatory framework for green investment.
Improve the implementation of EIAs and public consultations. This involves carrying out EIAs earlier on in the investment decision-making process, improving human and technical resources for EIA reviews, ensuring the impartiality of EIA appraisal committees, enhancing the quality of public consultations, giving more weight to environmental concerns over economic benefits when approving investment projects and improving monitoring and auditing of EIA implementation post-appraisal.
Improve the implementation of energy efficiency policies and regulations. This could be achieved through awareness raising, targeted financial support, access to financing at concessional terms and better human and technical resources for monitoring and implementation. Moreover, better aligning electricity prices with the cost of supply is crucial to render private investment in energy efficiency measures bankable.
Improve the risk allocation in PPAs for renewable energy investors to ensure project bankability. This involves reducing the risk of curtailment, for example through long-term minimum electricity purchase obligations, improving access to international arbitration and providing protection against change of law, clarity on termination compensation and take-over rights for creditors.
Accelerate power market liberalisation and enhance competition in Viet Nam’s power markets. This involves creating a competitive retail electricity market and strengthening competition in the wholesale electricity market by expanding market participation to renewable energy independent power producers (IPPs) and by opening electricity purchases and retail selling to private retail companies. Reforms should prioritise effective unbundling, transparent market rules, and a strong, independent regulatory framework to promote competition and a level playing field among electricity market participants. Changes to EVN’s ownership and governance arrangements, where pursued, should be carefully sequenced and embedded within broader power-sector reforms.
Improve price signals and incentives for green investment.
Align electricity tariffs with the cost of supply. This could improve EVN’s financial viability, grid investment, and spur renewables and energy-efficiency projects. Plans to introduce a new two-component tariff (capacity + consumption) are a step forward. Tariff reform should go hand in hand with targeted support for poor households and stronger social protection.
Shift from profit-based and indirect tax incentives to expenditure-based tax incentives. Such incentives lower the cost of specific inputs or expenses, attracting investors who might not otherwise invest.
Improve the stability and predictability of renewable support policies and introduce competitive renewable auctions. Avoid frequent policy changes without sufficient notice for investors.
Improve public infrastructure supporting green investment: upgrade and expand the electricity grid and enhance power system flexibility. Electricity storage, flexible generation capacity, regional interconnections, demand-response-management and smart grid development could render Viet Nam’s electricity system more flexible. Private investment could play an important role in upgrading and expanding grid infrastructure and in developing storage and flexible generation capacity if it is supported by an appropriate regulatory framework.
Support the development of green skills and green innovation. This requires a dedicated green skills development strategy, more collaborations between higher education institutions in Viet Nam and foreign investors and more in-house training in private companies. An effective skills assessment and anticipation (SAA) system should track available and missing green skills in the labour market. Targeted start-up accelerators or innovation centres for green technologies, measures to strengthen MSMEs’ absorptive capacities and links with MNEs, and stronger enforcement of intellectual property protection would foster more green innovation. Given the continued importance of manufacturing FDI in pollution- and GHG-intensive sectors, these efforts should also strengthen green innovation capabilities among domestic suppliers and promote the diffusion of responsible business conduct practices through linkages with foreign firms.
Improve the implementation and awareness of the role businesses play in delivering an effective and progressive response to global, regional and local environmental challenges. This involves implementing the recently adopted National Action Plan (NAP) for Law and Policy Improvement to Promote Responsible Business Practices and enforcing environmental disclosure mechanisms for public and private companies. The adoption of a green taxonomy would set clear standards to guide environmental disclosure and reporting. Other areas for improvement include raising fines and strengthening litigation for environmental offences, improving the legal and regulatory framework and incentives for green public procurement, and building awareness of and aligning with international eco-labelling standards.
6.2.1. Viet Nam faces significant pollution and other environmental challenges
Air pollution is high in big cities and industrial zones. Average levels of dust or fine particulate matter smaller than 2.5 microns (PM2.5) air pollution in Viet Nam have remained similar since 2010, and match ASEAN levels and those of Indonesia, Malaysia, and Jordon, but are more than double the OECD average (Figure 6.1). Air pollution is, however, significantly higher in big cities and industrial zones: although it has fell nearly 40% from 2015 to 2019, PM2.5 in Hanoi exceeds most comparators and is about 50% above the WHO’s recommended limit of 35 ug/m3 (WHO, 2021[3]). High use of private vehicles, especially motorcycles, and limited access to public transport drive up air pollution in big cities. In 2024, Viet Nam was had the world’s fourth-largest number of motorcycles and the second highest rate of motorcycle ownership per inhabitant (World Population Review, 2024[4]; World Bank, 2024[5]). Coal-based electricity generation, fuel combustion by the rapidly expanding industrial sector, construction and burning of waste are further sources of air pollution (OECD, 2020[6]).
Waste management, water pollution and land subsidence pose additional challenges despite recent improvements in environmental infrastructure. Approximately 96.6% of solid waste is collected in urban areas and 77.7% in rural areas (Nhan Dan, 2024[7]). Treatment capacity remains limited, and landfill disposal continues to dominate, with persistent gaps in waste treatment and management. Untreated wastewater, especially from heavy industry, and poorly disposed solid waste cause significant water pollution and GHG emissions and pose health risks (OECD, 2020[6]). Even though Viet Nam is a relatively water-rich country, the expansion of water-intensive agriculture and industry and rising pollution drive unsustainable use of groundwater. This has led to land subsidence in the highly fertile Mekong River Delta, crucial for Viet Nam’s agriculture. If the Mekong River Delta continues to sink at the current rate, it could be submerged by 2200 - or earlier with sea-level rise from climate change (OECD, 2020[6]). Ensuring compliance with environmental regulations among firms, including foreign-invested enterprises, remains important, particularly in relation to wastewater treatment, industrial emissions and environmental management in industrial zones. Firms in Viet Nam are increasingly required to conduct greenhouse gas inventories and implement emission reduction measures in line with the 2020 Law on Environmental Protection. However, available evidence does not allow for a comprehensive assessment of compliance levels among foreign-invested enterprises across sectors.
Note: The comparison uses 2010 and 2023 because they represent the first and latest available years in the PM2.5 data series.
Source: OECD based on WHO (2026[8]), The Global Health Observatory, https://www.who.int/.
6.2.2. Viet Nam has not succeeded in decoupling CO2 emissions from GDP growth
Unlike many comparators, Viet Nam has not yet decoupled carbon emissions from economic growth. Total CO2 emissions more than doubled between 2012 and 2022 (IEA, 2024[9]). CO2 emissions per capita almost doubled, increasing faster than GDP per capita (Figure 6.2, Panels B and C). This raised CO2 emissions per unit of GDP by more than 25% over the same period. CO2 emissions per unit of GDP in Viet Nam are 35% above ASEAN and 50% above OECD levels (Figure 6.2, Panel A). This increase is driven by the rapid expansion of coal for electricity generation and the economy’s high energy intensity linked fast industrial growth. Electricity generation accounts for the largest share of Viet Nam’s CO2 emissions (49% in 2022), followed by industry (31%) and transport (15%) (IEA, 2024[9]). CO2 emissions from electricity generation have almost quadrupled since 2012, when they accounted for just 34% of the country’s total carbon emissions (IEA, 2024[9]), while real GDP grew to nearly double over the same time period (World Bank, 2024[5]).
Source: OECD based on IEA (2024[9]), The IEA Energy Data Centre, https://www.iea.org/; and World Bank (2024[10]), World Bank Development Indicators, https://databank.worldbank.org/.
6.2.3. Viet Nam is vulnerable to climate change due to exposure to natural disasters
Viet Nam is strongly exposed to water-related extreme weather events, especially floods and storms. The country ranked 8th among 191 countries for natural disaster vulnerability on the European Union’s INFORM Risk Index 2025 and scored 9.6-9.9/10 for vulnerability to coastal and river flooding (European Commission, 2024[11]). Viet Nam has experienced the second-largest number of natural disasters – especially floods and storms - and the second-largest number of people affected by natural disasters among comparators, following only Indonesia (Figure 6.3). Currently, flooding affects about 930 000 people (around 1% of the population) annually and causes damage of USD 2.3-2.6 billion (0.5-0.6% of GDP) each year. Viet Nam’s two large river deltas - the Mekong and Red River Deltas - and nearby urban areas, including Hanoi and Ho Chi Minh City, are most exposed to flooding (World Bank/ADB, 2021[12]). Viet Nam’s high vulnerability to extreme weather events reflects not only its geographic location and topography but also the concentration of a large share of its population, settlements and economic assets - including irrigated agriculture - in disaster-prone coastal lowlands (OECD, 2020[6]).
Source: OECD based on CRED (2026[13]), EM‑DAT: The International Disaster Database, https://www.emdat.be/.
Climate change will affect Viet Nam through more frequent and severe flooding and storms as well as rising sea levels. The country ranked 117th among 187 countries on the University of Notre Dame’s ND-GAIN Index, which ranks countries by climate-change vulnerability (University of Notre Dame, 2024[14]). It is estimated that the already high share of Viet Nam’s population vulnerable to flooding from a 1-in-25-year event could rise from 33% to between 38% and 46% by 2100 due to climate change. Climate change will also impact Viet Nam through an increased frequency and intensity of tropical cyclones: without adaptation, a 1-in-100-year storm could cause losses equal to 9% of GDP by 2100. Viet Nam is also among the world’s most vulnerable countries to sea-level rise. Without adaptation, permanent inundation of the country’s low-lying river deltas could affect an estimated 6 to 13 million people and reduce GDP by 2.4% (World Bank/ADB, 2021[12]).
Climate change is also predicted to reduce agricultural yields and increase variability in hydrogeneration. Changes in rainfall patterns, salt intrusion and shifts in viable crops could all reduce agricultural yields. Estimates for rice range from a 5-10% reduction to a 50% reduction by 2040 (World Bank/ADB, 2021[12]). Water scarcity in the dry season could be exacerbated by climate change and by limited storage capacity, water pollution, and the unsustainable exploitation of groundwater (OECD, 2020[6]). Water scarcity could then cut hydropower output, threatening energy security.
6.2.4. While private investment has driven a rapid expansion in solar and wind power, coal-based power generation has increased strongly as well
A rapid increase in electricity demand in Viet Nam over the last decades has been met predominantly by fossil fuels, especially coal. Electricity consumption increased by an average of 9.2% between 2012 and 2022, driven by growing industrial and residential demand (IEA, 2024[9]) linked to economic growth, rising incomes, population growth, and private investment-driven industrialisation (OECD, 2021[15]). It is expected to continue increasing by 10-12% annually until 2030 (ITA, 2024[16]). To meet this rising demand, coal-based electricity generation more than tripled between 2012 and 2022 and rose by a factor of 20 since 2002 (Figure 6.4, Panel B). Coal accounted for 42% of both energy production and electricity generation in Viet Nam in 2022 compared to only 21% of electricity generation and 35% of energy production in 2012 (Figure 6.4, Panels A and B). The country has the world’s 13th largest coal reserves, with mining activities accounting for 7.3% of GDP in 2017. However, Viet Nam has been a net coal importer since 2015 (OECD, 2020[6]) and imports approximately two-thirds of its coal consumption (2022) (IEA, 2024[9]).
Source: OECD based on IEA (2024[9]), The IEA Energy Data Centre, https://www.iea.org/.
Viet Nam has a strong potential for solar and wind power. Viet Nam’s technical offshore wind potential is one of the best in Asia and is estimated to be two to six times the country’s total installed power-generation capacity in 2023. The bulk of this offshore potential aligns with major urban and industrial centres in southern Viet Nam. The country’s total solar potential is estimated at five to 12 times its 2023 installed power-generation capacity, and the onshore wind potential at more than twice that capacity (VBF/The Asia Foundation/GEAPP, Forthcoming[17]; VBF/The Asia Foundation/GEAPP, Forthcoming[18]; IRENA, 2024[19]).
The share of renewables in Viet Nam’s electricity mix is higher than in most comparators. Renewables account for 52% of electricity generation in Viet Nam compared to about 30% on average in ASEAN and the OECD (Figure 6.5). The bulk of electricity renewable generation come from hydropower (73%), followed by solar (21%), and wind (6%). Viet Nam has the second-largest share of solar power in electricity generation among comparators, only behind Jordan.
Private investment supported by generous feed-in-tariffs (FiTs) has driven a rapid expansion of solar and wind power since 2017. Electricity generation from solar and wind took off in 2018, increasing from near zero to 10.7% and 3.3% of electricity generation, respectively, in 2022 (IEA, 2024[9]; IRENA, 2024[19]). Installed solar PV capacity increased from just 0.02% of total power-generation capacity 2017 to 23% in 2020, and installed wind capacity from just 0.5% in 2017 to close to 4% in 2021. In 2023, solar and wind made up nearly 28% of installed power-generation capacity (IRENA, 2024[19]). This increase was driven by private investment incentivised by generous feed-in-tariffs (FiTs) (VBF/The Asia Foundation/GEAPP, Forthcoming[17]). Since the phase-out of FiTs in 2021, however, solar power capacity additions have stalled and wind capacity has grown much more slowly (IRENA, 2024[19]).
Electricity generation from renewables by source (% of total electricity generation), 2022
Source: OECD based on IRENA (2024[19]), IRENASTAT, https://www.irena.org.
Power outages and electricity shortages are an important challenge for investors in strategic sectors such as semiconductors. Due to low water levels in hydropower dams and coal shortages, Viet Nam experienced power outages in 2023, a problem that climate change could worsen. High international energy prices in 2022 reduced Viet Nam’s coal output, causing shortages and greater reliance on hydropower. This overreliance combined with drought and adverse weather lowered water levels in hydropower dams during the dry season. Together with fast growth in electricity demand, these developments caused power shortages and outages. Power outages occurred predominantly in Northern Viet Nam as electricity from solar and wind plants – concentrated mainly in the South – could not offset shortages in the North. The grid infrastructure connecting Northern and Southern Viet Nam is not yet sufficiently developed to transport solar and wind power from the South, where most capacity is located, to the North, where electricity demand is growing rapidly. More frequent droughts and water shortages due to climate change could further worsen power outages in the future (ITA, 2024[16]; Ketelsen et al., 2023[20]; Giang, 2023[21]). Power outages and electricity shortages remain a major constraint for investors, particularly in energy-intensive sectors such as semi-conductors.
6.3.1. FDI in carbon-intensive sectors is significant in Viet Nam
Whereas FDI in Viet Nam’s heavy industrial sector has strongly decreased over the last two decades, FDI in manufacturing and fossil fuels, two notable contributors to GHG emissions, remains significant. Greenfield FDI in energy-intensive heavy industries – most importantly, metals, but also paper and chemicals – has fallen by 30% over the last two decades (Figure 6.6, Panel A). However, between 2019 and 2025, more than 45% of greenfield FDI was directed toward electronic components and other manufacturing sectors, which accounted for 12% of the country’s total greenhouse gas emissions and 17% of its carbon emissions in 2016 (MONRE, 2020[22]). National FDI statistics show a similar pattern: more than 60% of FDI went to manufacturing in 2024, and this share has remained high since the early 2000s (Figure 6.6, Panel B). Furthermore, while greenfield investment in coal, oil and gas declined from 2003-08, it rose again in the last decade and still made up around 25% of total greenfield FDI in 2019-2025. Fossil-fuel based energy production for electricity generation, transport and industrial uses accounted for 65% of GHG emissions and more than 80% of CO2 emissions in 2016 (MONRE, 2020[22]).
Note: Sectors are based on fDi Markets sector classifications and grouped by the OECD using a correspondence table. Coal, oil & gas covers fossil-fuel energy activities; Electronic components includes electronic components, semiconductors and consumer electronics; Heavy industry includes metals, minerals, chemicals, building materials, industrial equipment, engines and turbines, automotive, aerospace and non-automotive transport manufacturing; Communications & IT includes communications and software and IT services; Tourism & entertainment includes hotels, tourism, leisure and entertainment. Other manufacturing and Other services group the remaining manufacturing and service activities not captured elsewhere. Panel B data for 2024 covers only the first ten months of the year (January-October). No data was available for the period 2018-2023.
Source: OECD based on Financial Times (2024[23]), fDi Markets Database, https://www.fdimarkets.com/ (Panel A); and data received from FIA (Panel B).
6.3.2. Renewables FDI doubled in the last decade but is still lower than FDI in fossil fuels
While the share of greenfield FDI targeting renewable energies has doubled in Viet Nam over the last decade, it remains lower than in most comparators. Between 2020 and 2025, 14.8% of greenfield FDI in Viet Nam targeted renewables. This compares to 9.7% on average in ASEAN but 20.8% in the OECD, and is significantly less than top performers like Jorodn, Egypt or Uzbekistan, where more than 50% of greenfield FDI target renewables (Figure 6.7). Greenfield FDI in renewables in Viet Nam is directed mainly to wind power (84% of total greenfield FDI in renewables between 2020 and 2025) and solar (10.7%) (Financial Times, 2024[23]). In 2024, a Chinese investor announced plans to invest in one of the first green hydrogen projects in the country (Yep, 2024[24]). More than 70% of renewable-energy greenfield FDI between 2019 and 2025 came from the United States, driven by a USD 13 billion announcement in an offshore wind park by an American company. Western European countries, especially Germany, and South-East and East Asian countries, especially Thailand and South Korea, accounted for the remainder of investment in renewables. Between 2019 and 2025, 96% of greenfield FDI in renewable energies in Viet Nam went to electricity generation and only 2.5% to manufacturing (Financial Times, 2024[23]).
Greenfield FDI in fossil fuels continues to exceed greenfield FDI in renewables in Viet Nam. Viet Nam’s share of FDI in coal, oil and gas in total greenfield FDI is above average compared to comparators, though it has significantly decreased between 2014-2019 and 2020-2025, representing 21.5% and 7.3%, respectively. Greenfield FDI in fossil fuels in Viet Nam is largely directed towards oil and gas exploration, fossil fuel-based electricity generation and natural gas infrastructure (Financial Times, 2024[23]) driven by government targets to expand these sectors in the National Energy Development Strategy and Power Development Plan (Prime Minister, 2023[25]; Prime Minister, 2016[26]; Prime Minister, 2024[27]).
Greenfield FDI in renewables and fossil fuels (% of total greenfield FDI)
Source: OECD based on Financial Times (2024[23]), fDi Markets Database, https://www.fdimarkets.com/.
6.3.3. Foreign firms significantly outperform Vietnamese firms in clean business practices
If foreign firms outperform Vietnamese firms in green business practices, there is scope for green technology and knowledge spillovers. Multinational firms often bring advanced technologies and processes, excelling in climate-friendly business practices. Technology and knowledge spillovers can reach domestic firms through local suppliers and buyers, from improved regulatory compliance to innovations in energy use and industrial processes. Such spillovers are more likely to occur in manufacturing and services, which offer more local linkages than energy, building, and transport. Local partnerships, strategic alliances, joint ventures, worker mobility, and spin-offs from foreign MNEs also transmit green practices. However, spillovers can also be negative if, for example, foreign investors are attracted by weaker environmental regulation (the so-called “pollution haven hypothesis”) (OECD, 2022[28]).
Significant potential for technology and knowledge spillovers from foreign to domestic firms is reported in Viet Nam’s renewable energy sector. Domestic firms still lack access to the advanced technical solutions and specialised staff as well experience in large renewable project management required for the implementation of large renewable energy projects, especially offshore wind and solar power. They also lack access to capital to finance investments and R&D costs and independent research capacity. Foreign investors bring capital, modern technologies and advanced management models to Viet Nam, which can help improve domestic technology and human resources, raise production standards and domestic firms’ competitiveness and build supply chains through technology and knowledge spillovers (VBF/The Asia Foundation/GEAPP, Forthcoming[17]).
Source: OECD based on World Bank (2026[29]), World Bank Enterprise Survey, https://www.enterprisesurveys.org/.
Foreign firms significantly outperform domestic firms in energy efficiency, management, and emissions monitoring, indicating scope for technology and knowledge spillovers. Foreign firms in Viet Nam are about twice as energy-efficient as domestic firms, although they remain 16% less efficient than foreign firms in ASEAN and 32% less than those in the OECD (Figure 6.8). They are also more than twice as likely as domestic firms to adopt energy management measures (Figure 6.9, Panel A). Their performance in energy management is, however, mixed in international comparison, reflecting the very low uptake of such measures among domestic firms in Viet Nam. Foreign firms are more than three times as likely as Vietnamese firms to monitor their CO2 emissions, and their monitoring rates match or exceed those observed in comparator countries (Figure 6.9, Panel B). These differences suggest potential spillovers from foreign to domestic firms, although their realisation depends on enabling conditions such as price signals, skills availability, and supportive policy frameworks. Weak incentives for energy efficiency – notably low energy tariffs – may currently limit firms’ performance in energy efficiency and emission monitoring. Looking ahead, planned reforms to the intellectual property framework could further support technology transfer and licencing for low-carbon innovations, provided they are effectively implemented. Strengthening operational linkages between foreign-invested enterprises and domestic firms can further facilitate the diffusion of energy-efficient technologies and practices, subject to appropriate policy and market conditions.
This performance gap between foreign and domestic firms has policy implications. Strengthening technology and knowledge spillovers from foreign-invested firms can help domestic companies meet rising carbon-reporting and efficiency standards. Such upgrading is urgent as the European Union’s Carbon Border Adjustment Mechanism (CBAM) will increasingly require Vietnamese exporters in energy-intensive sectors to demonstrate robust emissions monitoring and compliance.
Source: OECD based on World Bank (2026[29]), World Bank Enterprise Survey, https://www.enterprisesurveys.org/.
6.4.1. Institutional framework for green FDI
Several channels for co-ordination between institutions responsible for investment policy and implementation and those overseeing green growth exist, but their effectiveness is unclear. Such mechanisms help align investment and green-growth policies and maximise FDI’s contribution (OECD, 2022[28]). Co-ordination mechanisms include the National Steering Committee on Green Growth, the newly established National Steering Committee for COP Commitments (which replaced the former National Committee for Climate Change), and the Viet Nam Energy Efficiency Programme (VNEEP) Steering committee. These committees include high-level representatives from the key investment and trade institutions – mainly MOF and MOIT – and from green-growth, climate and clean-energy bodies, especially MAE (formerly MONRE and MARD) and MOIT. The MOF also sits on all three committees for financing co-ordination. However, little is known about how often these committees meet or how effective they are at aligning policies. Overlaps also exist between their responsibilities and policy areas – notably between the National Steering Committee on Green Growth and the National Steering Committee for COP Commitments, which have similar membership. Private investors report that inter-institutional policy co‑ordination and coherence remain challenging in Viet Nam.
Green investment institutions in Viet Nam
Note: Compared to the pre-reform structure, the Ministry of Agriculture and Environment (MAE) now lead on climate and green growth, and the former National Committee for Climate Change has been replaced by the National Steering Committee for COP Commitments.
Source: OECD elaboration.
The following public institutions are most involved in policies at the intersection of investment and green growth in Viet Nam:
Ministry of Industry and Trade (MOIT): The MOIT has the overall responsibility for energy sector strategy, regulation and policymaking. It also leads the implementation and planning of energy sector mitigation activities to meet Viet Nam’s NDC targets. Renewable energy projects between 30 and 50 MW are approved and granted generation licenses by MOIT, projects under 30MW are approved by the MOIT’s regional offices and projects over 50 MW by the Prime Minister (OECD, 2021[15]).
Electricity and Renewable Energy Authority (EREA): EREA is attached to and funded by the MOIT. It is the main regulator for renewable energies and designs and regulates renewable energy support mechanisms, including FiTs (OECD, 2021[15]; EREA, 2022[30]).
Energy Efficiency and Sustainable Development Department (EESD): EESD is attached to and funded by the MOIT and designs energy efficiency and conservation policies (OECD, 2021[15]).
Electricity Regulatory Authority of Viet Nam (ERAV): ERAV is attached to the MOIT and regulates Viet Nam’s power sector. It monitors and enforces power-market rules and arbitrates PPA disputes. It sets retail electricity tariffs but must obtain MoF for large increases. ERAV lacks full independence being tied to the MOIT for budget and resources (OECD, 2021[15]; ERAV, 2024[31]). To reduce investor uncertainty and ensure fair, objective, politically independent decisions, ERAV’s technical capacity, independence, and oversight role should be strengthened – especially as competitive power markets develop.
Institute of Energy: The institute conducts research for power market planning and renewable energy development and comprises four laboratories (Institute of Energy, 2022[32]; OECD, 2021[15]).
Ministry of Finance (MOF): The MOF formulates the state budget and Viet Nam’s fiscal policy, including tax incentives, and oversees financial markets (MOF, 2024[33]; OECD, 2021[15]).The MOF’s role in supporting climate action and green growth is limited because it does not lead these policy areas or their strategies. The Ministry also prepares and co-ordinates Viet Nam’s development and Green Growth Strategies, manages investment policy and legislation, co‑ordinates ODA and climate finance, and oversees public-private partnerships (PPPs), investment and company registration, and investment promotion (Government of Viet Nam, 2022[34]; OECD, 2021[15]). The MOF’s role in implementing both the Green Growth Strategy and Viet Nam’s investment strategy positions it to align the two strategies’ objectives.
Foreign Investment Agency (FIA): The FIA is Viet Nam’s investment promotion agency and attached to MoF. It is responsible for developing and implementing Viet Nam’s investment policy, monitoring inward and outward investment projects and registering investment projects (FIA, 2020[35]; OECD, 2021[15]).
Ministry of Agriculture and Environment (MAE): MAE (formerly MONRE and MARD) leads the preparation and implementation of Viet Nam’s Climate Change Strategy and NDC. It also oversees land use, water, minerals, environment, and marine/island protection. MAE is leading the green taxonomy and carbon-market agenda (MONRE, 2024[36]; OECD, 2021[15]). MAE leads the development of a green taxonomy and carbon markets.
Ministry of Construction (MOC): MOC is responsible for energy efficiency policies in the building and construction sector, including building standards. It is also in charge of urban and rural construction planning and investment, housing and urban development and infrastructure (MOC, 2013[37]; OECD, 2021[15]).
National Steering Committee on Green Growth: The committee is chaired by the Deputy Prime Minister and members include representatives of ministries and government agencies.1 The Committee is in charge of assisting the Government in co-ordinating the implementation of the National Green Growth Strategy for 2021-2030 with a vision to 2050, handling issues and proposing orientations and measures relevant to green growth (Socialist Republic of VIet Nam, 2022[38]; MOIT, 2022[39]; MIC, 2022[40]).
National Steering Committee for COP Commitment: An inter-ministerial committee chaired by the Prime Minister, responsible for co-ordinating delivery of Viet Nam’s COP commitments and climate policy.
Viet Nam Energy Efficiency Programme (VNEEP) steering committee: The committee is tasked with co-ordinating, supervising and monitoring the implementation of Viet Nam’s energy efficiency programmes (VNEEPs) and reporting to the Prime Minister on the results of the implementation of these programmes. The committee is chaired by the Deputy Prime Minister. Its deputy chairs are the Minister of Industry and Trade and the Vice Minister of Industry and Trade. Members include line ministries and government agencies.2 The committee can mobilise the support of domestic and foreign experts to provide inputs for the design of clean energy policies and regulations (VNEEP, 2021[41]; OECD, 2021[15]).
Viet Nam Electricity (EVN): EVN is Viet Nam’s state-owned electricity company. It has been partially unbundled into twelve generation companies (GENCOS), the National Power Transmission Corporation (EVN NPTC), five EVN regional Power Corporations for distribution and retail and the EVN Electric Power Trading Company (EPTC). These companies remain EVN subsidiaries, so EVN still effectively monopolises operation, transmission, distribution, and retail. EVN appoints the management of its subsidiaries and sets service and output targets for its Power Corporations. The government directs EVN’s investments and appoints its board and senior management, retaining strong control (OECD, 2021[15]; EVN, 2024[42]). All IPPs - except off-grid solar PV rooftop projects and rooftop projects of less than 1MW – must sign grid-connection agreements and PPAs with EVN (Freshfields Bruckhaus Dehringer, 2020[43]).
National Load Dispatch Centre: In 2024, the National Load Dispatch Centre was separated from EVN and became the National Power System and Market Operation Company (NSMO) under the Commission for the Management of State Capital at Enterprises (CMSC) (Prime Minister of Viet Nam, 2024[44]; Thao, 2024[45]).
Provincial People’s Committees (PPC): PPCs implement national strategies, regulations and laws at the provincial level with the support of regional offices of key ministries. They are strongly dependent on central planning. They develop provincial renewable energy development and energy efficiency action plans subject to central government approval, approve renewable energy projects below 3MW, grant land use rights to renewable energy projects and issue other regulatory permits (OECD, 2021[15]).
While several fora for public-private dialogue on green growth and clean energy exist in Viet Nam, they could be further strengthened (VBF/The Asia Foundation/GEAPP, Forthcoming[17]). The existing fora for dialogue are private sector led initiatives, including the Viet Nam Business Forum’s Power and Energy Working Group, created in 2011 to enable policy dialogue with government on power and energy (VBF, 2024[46]). The EuroCham Green Growth Sector Committee, set up in 2014, works to remove barriers and promote green business through dialogue with government and other stakeholders (EuroCham, 2024[47]). Government co-ordination and consultation with the private sector – for example, in designing new direct power purchase agreement (DPPAs) – have improved, but consultations in other areas, such as the JETP, need strengthening. The JETP aims to mobilise half its funding (USD 7.75 billion) from private sources, yet local private sector involvement in its design has reportedly been limited.
Several high-level international initiatives aim to support green growth and investment in Viet Nam. This includes the JETP and the Asian Zero Emission Community (AZEC). The JETP was launched in 2022 by the International Donors Group.3 Viet Nam and this group issued a joint declaration to mobilise USD 15.5 billion for the clean-energy transition over the next three to five years – half public, half private – supported by the “Glasgow Financial Alliance for Net Zero” (GFANZ) of major private financiers (European Commission, 2022[48]; Wischermann, 2024[49]). AZEC, launched in Japan at the 2022 World Economic Forum, builds Asian partnerships to cut GHG emissions and advance the clean-energy transition, providing Viet Nam with financial and technical support. The Asia Zero Emission Community (AZEC), proposed by Japan in 2022 and formally launched in 2023, is a regional initiative led by the Government of Japan to promote decarbonisation, energy transition and sustainable investment co-operation across Asia, with a particular focus on renewable energy, hydrogen, energy efficiency and clean technologies (VBF/The Asia Foundation/GEAPP, Forthcoming[17]; Ministry of Education, Trade and Industry (METI), 2025[50]; IEA, 2025[51])
Viet Nam’s JETP could contribute to raise the financial resources required for the country’s clean energy transition but is underfunded and lacks engagement with the private sector. At the UN Climate Conference 2023 in Dubai (COP28), Viet Nam launched a Resource Mobilisation Plan for the JETP with priority investment areas, transmission, energy storage, offshore wind, energy efficiency, solar PV, and Coal-plant transition. It pledges USD 8.1 billion of funding, but only USD 321 million in grants, USD 2.7 billion in loans on preferential terms and USD 4.8 billion in loans at market conditions (European Commission, 2023[52]; Socialist Republic of Viet Nam, 2023[53]; Wischermann, 2024[49]). Overall, JETP pledges cover only 11.5% of Viet Nam’s energy-sector financing needs to 2030 and 3.0-4.2% to 2050. Limited private-sector involvement in its design may hinder mobilising enough private capital. Criticism also targets its weak focus on the “just” transition aspect (International Rivers, 2024[54]).
6.4.2. Strategic framework for green FDI
Strong government commitment to green growth, underpinned by a coherent strategic framework, is the basis for attracting green and low-carbon investment. A coherent strategic framework and clear decarbonisation targets signal the government’s green growth and climate ambition to investors. Setting a clear, long-term transition trajectory tied to national growth and development goals is critical for investors to gauge transition risks. The European Green Deal provides an example of such commit and a clear framework for green, low-carbon development. It aims to make Europe the first climate-neutral continent by 2050, safeguard biodiversity, promote circular economy, cut pollution, boost industry competitiveness, and ensure a just transition for regions and workers (OECD, 2022[28]).
Viet Nam has many strategies and plans on green investment. These include the Socio-Economic Development Plan (SEDS) 2021-2025, which sets overall social and economic targets and includes environmental protection and climate-adaptation goals (National Assembly, 2021[55]). Viet Nam’s National Green Growth Strategy 2021-2030 with a vision to 2050, serves as the national framework document for green growth (Prime Minister, 2021[56]). In 2022, the strategy was complemented by a National Action Plan on Green Growth 2021-2030 (Prime Minister, 2022[57]) and in 2023 by statistical indicators to track its implementation and impact (Dezan Shira & Associates, 2023[58]). Viet Nam’s National Strategy on Climate Change to 2050 sets the climate-adaptation policy framework and a net-zero 2050 target (Prime Minister, 2022[59]). The National Power Development Plan (PDP) VIII 2021-2030, vision 2050, is the power-sector strategy, covering 10 years, revised every five, renewed every ten (OECD, 2021[15]; Prime Minister, 2023[25]). In 2024, Viet Nam adopted a detailed implementation roadmap for PDP VIII with power generation and grid infrastructure project pipelines (Prime Minister of Viet Nam, 2024[60]). Viet Nam’s National Energy Development Strategy 2030, vision 2045, sets the overall energy framework (Prime Minister, 2024[27]). Other sectoral green investment strategies include the Renewable Energy Development Strategy 2016-2030, vision 2050 (Prime Minister, 2015[61]); the Hydrogen Energy Development Strategy 2030, vision 2050 (Prime Minister of Viet Nam, 2024[62]); and the Industrial Development Strategy 2025, vision 2035 (Prime Minister of Viet Nam, 2014[63]).
Strategic documents for green investment
Source: OECD based on National Assembly (2021[55]); Prime Minister (2021[56]); Socialist Republic of Viet Nam (2022[64]); Prime Minister (2022[59]); Prime Minister (2023[25]); Prime Minister (2016[26]); Prime Minister (2021[56]); Prime Minister (2023[25]); Prime Minister (2016[26]); Prime Minister (2023[25]); Prime Minister of Viet Nam (2024[60]); EuroCham (2024[65]); Prime Minister (2023[25]); Prime Minister (2015[61]); Prime Minister (2024[27]); Prime Minister (2024[62]); and Prime Minister of Viet Nam (2014[63]).
Viet Nam significantly strengthened its emission reduction ambitions in its 2022 updated Nationally Determined Contribution and Climate Change Strategy but largely conditional on international support. Viet Nam’s 2022 updated NDC targets a 15.8% unconditional and a 43.5% conditional reduction in GHG emissions by 2030, compared with a business as usual (BAU) scenario based on the 2014 inventory. This compares to 9% unconditional and 27% conditional targets in the 2020 NDC. The conditional targets depend on international support via bilaterial, multilateral, and Paris Agreement mechanisms. The energy sector accounts for 44.3% of reductions under the 2022 unconditional target and 56% under the conditional target (Socialist Republic of Viet Nam, 2022[64]). The 2030 target in National Strategy on Climate Change until 2050 corresponds to the conditional NDC target. The strategy also sets a net-zero 2050 goal (Prime Minister, 2022[59]).
In its PDP VIII and National Energy Development Strategy, Viet Nam significantly scaled up its ambitions in terms of renewable energies and scaled down previous plans to expand electricity generation from coal. The PDP VIII seeks to ensure power security and a clean-energy transition by expanding renewables, natural gas and coal to 2030, and renewables and hydrogen to 2050 (Figure 6.11). The PDP VIII’s target for renewables in electricity generation is three times higher than PDP VII’s target and five times higher with international support (Prime Minister, 2023[25]) (Prime Minister, 2016[26]). The coal share in Viet Nam’s power mix is targeted to fall from 42% to 20% by 2030 and to zero by 2050 (Prime Minister, 2023[25]) whereas the revised PDP VII had aimed for 53.2% (Prime Minister, 2016[26]). The National Energy Development Strategy promotes renewables while ensuring system safety and reasonable prices, and synchronised transmission development to meet demand across regions. To support renewables, it targets smart grids for balancing, competitive energy markets, better SOE management, direct power purchase agreements (DPPAs), and auctions for renewable projects (Prime Minister, 2024[27]). Viet Nam is now revising PDP VIII upwards to meet fast-growing demand as investment in new coal- and gas-fired plants has lagged behind plans.
Electricity generation by source (% of total), 2023 and 2030 and 2050 targets in the PDP VIII
Notes: Data are based on IRENA, while the targets are derived from Viet Nam’s 2023, 2030 and 2050 objectives set out in the Power Development Plan VIII (PDP VIII).
Source: OECD based on IRENA (2024[19]), IRENASTAT, https://www.irena.org; and Prime Minister (2021[56]).
The PDP VIII and National Energy Development Strategy still envision, however, significant fossil fuel development. The PDP VIII’s new target for coal-based electricity generation still means absolute coal capacity will rise (Prime Minister, 2023[25]). To compensate for reduced coal generation, it plans to more than double natural gas’s share from 11% to 24.8% of total capacity by 2030 (Prime Minister, 2023[25]). In line with the PDP VIII, the Energy Development Strategy aims to replace coal with natural gas, backed by expanded gas-transport infrastructure such as LNG terminals (Prime Minister, 2024[27]). Although natural gas pollutes less than coal, it still causes significant GHG emissions. The strategy also seeks to intensify exploration and extraction of coal, petroleum, shale gas, and methane hydrate, while maintaining current output (Prime Minister, 2024[27]).
The PDP VIII’s target to double installed capacity for electricity generation by 2030 will require significant investment. The PDP VIII targets a capacity for electricity generation of 150 489 MW by 2030 and 490 529 – 573 129 MW by 2050 up from an installed capacity of 82 804 MW in 2023. Meeting these targets will require significant investment equivalent to an estimated USD 534-658 billion in total until 2050 for new and retrofitted generation capacity and grid infrastructure, of which USD 135 billion until 2030 and USD 399-523 billion between 2031 and 2050 (Prime Minister, 2023[25]).
Viet Nam’s strategies and plans provide limited guidance on how to mobilise private investment for green growth. Most cite private capital but give little detail on attracting it. Some, such as the Green Growth Strategy and the PDP VII, mention public-private partnerships (PPPs) (Prime Minister, 2023[25]; Prime Minister, 2021[56]). The PDP VIII stresses creating a transparent, attractive enabling environment and easing credit for electricity investment (Prime Minister, 2023[25]). The Green Growth Strategy promotes financial incentives and the development of green capital, credit and insurance markets, carbon markets and an emissions trading system (Prime Minister, 2021[56]). The Climate Change Strategy calls for simpler procedures and joint public-private financing for adaptation mitigation (Prime Minister, 2022[59]). The Hydrogen Development Strategy encourages green and climate credit and green bonds (Prime Minister of Viet Nam, 2024[62]). In addition, MAE has drafted a national green taxonomy to guide sustainable lending, aiming to standardise green credit and enable concessional rates about two percentage points below market levels.
While Viet Nam has significantly strengthened its climate and energy framework in recent years, further alignment across strategies and implementation instruments would enhance coherence and investor certainty. Targets for GHG emission reductions, renewable energies and energy efficiency improvements differ between the different strategic documents. Furthermore, they do not always rely on the same target indicators (e.g. total GHG emissions vs. GHG emissions per capita; % of renewables in electricity generation vs. in installed capacity vs. in total energy supply). Some strategic documents predate recent reforms and would benefit from updating to reflect the strengthened ambition under the revised NDC and PDP VIII. An example of this is Renewable Energy Development Strategy 2016-2030 and the Industrial Development Strategy 2025. While Viet Nam recently strengthened its GHG emission reduction ambitions in its updated NDC and Climate Change Strategy, the Industrial Development Strategy allows for a 4.5-5% annual increase in GHG emissions (Prime Minister of Viet Nam, 2014[63]). The Renewable Energy Development Strategy’s targets are less ambitious than those set in PDP VIII, which was adopted in 2023, and were already exceeded in 2021 (Prime Minister, 2015[61]; IRENA, 2024[19]).
The implementation of strategies and plans relating to green investment falls under the responsibility of different ministries and agencies, creating potential co-ordination challenges. While the MOIT is responsible for the implementation of strategic documents relating to the energy sector including the PDP VIII, the Energy Development Strategy 2030, the Renewable Energy Development Strategy 2016-2030, the Hydrogen Energy Development Strategy 2030 and the Industrial Development Strategy 2025, MAE co-ordinates the Implementation of the Climate Change Strategy 2030 and MoF the implementation of the Green Growth Strategy. This creates potential challenges for co-ordinating the implementation of these different strategic documents. As these different strategic documents share many common objectives, co-ordination in strategy implementation is crucial.
While renewable energies feature prominently in Viet Nam’s strategic documents for green investment, energy efficiency could be better prioritised. Most strategies and plans prioritise the renewable energy sector and include targets and policies for renewable energy development. Some strategic documents such as the Green Growth Strategy and the Energy Development Strategy include targets for energy efficiency but details on specific policies and implementation remain scarce. While the PDP VIII aims at improving energy efficiency in general, information on specific policies and measures remains rather vague and energy efficiency does not feature amongst the plan’s priorities (Prime Minister, 2021[56]).
To support the implementation of the PDP VIII targets for gradual coal phase out, it would be important to develop a detailed roadmap for the coal transition. Such a roadmap should also link this transition to the development of carbon markets and ensure energy security. The fact that many of Viet Nam’s coal power plants have been constructed very recently and are still very young could pose a challenge to meeting coal phase out targets (EuroCham Viet Nam, 2024[65]).
6.4.3. Legal and regulatory framework for green FDI
A fair, transparent, clear and predictable regulatory framework for investment is a critical determinant of investment decisions and their contribution to decarbonisation. Transparency and predictability matter even more when considering returns on investments with long time horizons, to ensure planning certainty and clear expectations on investment and climate policies and actions. Strong government commitments are necessary to catalyse low-carbon green investment. With clear, long-term and ambitious signals and emission goals, nationally and internationally, investors and markets will have a better view on where to invest. While these signals are important for all business, they are crucial for giving the confidence to multinational investors with the requisite capacity and skills to invest in risky new technologies that are highly capital- and R&D-intensive (OECD, 2022[28]). They are also particularly important for renewable energy investors given the capital-intensity and long delays for projects to become profitable and pay off. International guidance also stresses that a predicable, pro-investment regulatory setting is a precondition for clean-tech FDI (OECD; UNCTAD;, Forthcoming[66])
Legal framework for green investment
Viet Nam’s legal framework for green investment consists in a set of laws related to investment and to green growth and the clean energy transition. This includes most importantly the 2023 Law on Investment and the 2024 Electricity Law (National Assembly, 2023[67]) and the 2024 Electricity Law (National Assembly, 2024[68]). Viet Nam has further strengthened its environmental policy framework under the 2020 Law on Environmental Protection, including measures to promote a circular economy, extended producer responsibility, green credit mechanisms and improved waste and plastic management. Other laws related to green investment include the Energy Efficiency Law (National Assembly of Viet Nam, 2022[69]; National Assembly, 2010[70]).
Viet Nam’s 2023 Law on Investment contains several environmental provisions. Investment projects exerting great or potentially serious effects on the environment, including nuclear power plants and projects requiring repurposing of large areas of forest land, require approval from the National Assembly (article 30). Investment projects requiring preliminary environmental impact assessments (PEIAs) in line with the Law on Environmental Protection, have to include the PEIA in their application for approval for investment guidelines and PEIAs have to be taken into account in the appraisal process (article 33). If the request for investment guideline approval is validated, the validation must include solutions for environmental protection (article 33). The Law on Investment also states that investors shall comply with the Law on Environment (article 42). It interdicts the extension of the duration of investment projects using obsolete and environment threatening technologies (article 44) and allows for the suspension of investment projects in response to violations of the Law on Environmental Protection (article 47) (National Assembly, 2023[67]). Encouraging foreign-invested enterprises to adopt best available techniques (BAT) and best environmental practices (BEP) can further strengthen environmental compliance and support the transition to low-emission production.
In November 2024, Viet Nam approved a new Electricity Law, which reforms electricity pricing, provides the basis for the creation of competitive energy markets and promotes investment in renewables, natural gas and nuclear power. It provides a legal framework for renewable energies, including directions on structuring tariffs in PPAs and special regulations and incentives for offshore wind development. It also provides specific regulations for LNG power development, including LNG imports and PPAs. It provides a high-level development policy for nuclear power, in particular small-scale nuclear reactors, which are acknowledged as a low-carbon energy source and incorporates nuclear power into national power development planning. The law also introduces overarching rules on bidding for energy projects, which could facilitate the move to renewable auctions. It includes new electricity trading mechanisms such as contracts, futures and options, which could facilitate the move towards fully competitive electricity markets. The law opens the way for reforming electricity tariffs to move towards a more competitive pricing system and ending cross-subsidies across consumer groups and regions to create a more equitable pricing structure. It also provides a broad framework for direct power purchase agreements (DPPAs) (National Assembly, 2024[68]; Hanh, 2024[71]; Ohya et al., 2024[72]).
Environmental Impact Assessments and Strategic Environmental Assessments
EIA and strategic environmental assessment (SEA) systems are fundamental to ensure that international investments contribute to climate and environmental goals. EIAs and SEAs are structured analytical and participatory approaches for developing and evaluating assessments of how the environment will be affected by certain activities and advise on how best to manage their environmental implications. While SEAs assess strategic and policy actions such as new or amended laws, policies, programmes and plans, EIAs are used to examine proposed investment projects such as highways, power stations, water resource projects and large-scale industrial facilities. EIAs support investors in minimising environmental risks associated with their investment projects. SEAs in turn ensure that the policies, regulations and standards that influence the attraction and environmental performance of investment are aligned with national climate and environmental objectives. Strengthening the implementation of EIA and SEA systems is essential for their effectiveness in greening FDI, reducing its carbon impacts and promoting responsible business conduct (OECD, 2022[28]; OECD, 2023[73]).
Investment projects, which are likely to have a significant adverse environmental impact, must undergo EIAs in Viet Nam. Viet Nam’s 2020 Law on Environmental Protection provides the legal basis for EIAs in Viet Nam. Investment projects are classified into four groups according to their degree of risk for the environment and size. Group I projects are those with the highest level of risk and group IV projects those that do not pose a risk of adverse environmental impacts. Group I investment projects are subject to preliminary environmental impact assessments (PEIA) prepared by investors during the pre-feasibility phase. Group I investment projects and certain Group II investment projects (using environmentally sensitive land or marine areas, involving the environmentally sensitive extraction of minerals or water, repurposing environmentally sensitive land or requiring migration and relocation) are furthermore required to conduct EIAs. Urgent public investment projects are exempted from the EIA requirement. EIAs have to be prepared during the feasibility stage by the investor or a qualified consultancy firm. The 2020 Law on Environmental protection provides a list of detailed content requirements for EIA reports, including the results of public consultations (National Assembly, 2020[74]).
EIAs are evaluated by MAE, PPCs and the Ministry of National Defence and Public Security in the case of projects in the field of defence and national security. MAE is responsible for the appraisal of Group I investment projects and Group II investment projects subject to approval by the National Assembly and Prime Minister, involving several provinces, located within territorial waters, or subject to issuance of mineral licenses, licenses to extract and use water resources, ocean dumping permits or marine area transfers. The Ministry of National Defense and Ministry of Public Security is responsible for the appraisal of EIAs of investment projects classified as state secrets in the field of national defense and security. PPCs are in charge of the appraisal of EAIs of all remaining Group II investment projects within their provinces. EIA appraisals are conducted of councils of at least seven members, of which at least one third are experts subject to specific criteria. Time limits for EIA appraisals are 45 days for Group I projects and 30 days for Group II projects (National Assembly, 2020[74]). Between 2011 and 2019-2020, approximately 7 000 EIAs were appraised by competent authorities, of which approximately 200-250 annually by MONRE and the reminder by provinces (Pham, Bui and Puzirevsky, 2020[75]).
Timely and well-planned public consultation processes can contribute to the effectiveness and success of EIAs and SEAs. They contribute to the successful design, implementation, operation and management of the proposed actions. Stakeholders, including foreign multinationals, provide a valuable source of information on key impacts, potential mitigation measures and the identification and selection of alternatives. Their consultation further ensures the EIA/SEA process is open, transparent, and robust, and also that individual EIAs/SEAs are founded on justifiable and defensible analyses (OECD, 2022[28]). (OECD, 2023[73])
Public consultations are a mandatory element of Viet Nam’s EIA process. Investment project owners are responsible for holding public consultations either through a meeting to collect comments or in written form and to include the results in the EIA report that is submitted to the appraisal authority. Residential communities and individuals under direct impact of the investment project and agencies and organisation directly related to the investment project need to be included in these consultations. Consultation results have to be published online (National Assembly, 2020[74]).
National and certain regional strategies and plans must undergo strategic environmental assessments (SEAs) in Viet Nam. This includes national strategies for the extraction and use of natural resources; national, regional, provincial and special administrative-economic unit development plans; national marine-spatial and land use plans; national and regional sectoral strategies and other types of national plans in areas with a significant impact on the environment. SEAs are carried out by the organisations responsible for preparing these different types of strategies and plans and are taken into account in the appraisal and approval process (National Assembly, 2020[74]).
Challenges may remain in the implementation of EIAs in Viet Nam, despite the strengthened legal framework introduced under the 2020 Law on Environmental Protection. The law clarifies EIA appraisal responsibilities, sets time limits for appraisal, and requires public consultation during the preparation of EIA reports (National Assembly, 2020[74]). Effective implementation nevertheless depends on the technical capacity of project owners, EIA consultants and appraisal authorities, particularly at the provincial level and for projects involving new technologies or complex environmental risks. Earlier studies highlighted capacity constraints among professionals carrying out EIAs and government staff reviewing them, as well as variation in the quality of EIA preparation across projects (Pham, Bui and Puzirevsky, 2020[75]).
The timing and quality of EIAs remain important for their effectiveness. Under the 2020 Law on Environmental Protection, the approval of EIA appraisal results is one of the bases for competent authorities to undertake relevant investment approval steps (National Assembly, 2020[74]). The legal framework does not allow projects subject to EIA requirements to begin construction before EIA approval. For special investment projects in industrial zones, the Law on Investment provides for exemptions from EIA requirements in specific cases, but such projects remain subject to environmental permits or environmental registration before construction where required. The key implementation challenge is therefore to make sure that environmental risks are assessed early enough to inform project design, location and mitigation measures. Earlier OECD work also highlighted the importance of carrying out EIAs early enough in the project cycle to influence key project decisions (OECD, 2018[76]).
Public consultation and disclosure are legally required elements of the EIA process. The 2020 Law on Environmental Protection requires project owners to conduct public consultation during the preparation of EIA reports, and consultation results are used to complete the EIA report before submission to the competent appraisal authority. Consultation results must also be published online (National Assembly, 2020[74]). The law further requires disclosure of approved EIA appraisal decisions and approved EIA reports within specified timeframes. Implementation challenges may nevertheless remain where affected communities have limited technical capacity, limited awareness of environmental rights and procedures, or limited ability to engage effectively with complex project documentation (OECD, 2018[76]).
Post-appraisal monitoring and compliance remain important for translating EIA requirements into environmental outcomes. Once an EIA is approved, effective implementation depends on monitoring, inspection, reporting and enforcement by competent authorities, as well as compliance by project owners. Earlier studies pointed to challenges in post-appraisal monitoring, coordination between national and provincial authorities and the deterrent effect of penalties for non-compliance (Pham, Bui and Puzirevsky, 2020[75]). Strengthening technical resources for monitoring, improving coordination between national and provincial authorities, and applying effective penalties for non-compliance can help make sure that mitigation measures identified in EIA reports are implemented in practice.
Energy efficiency and environmental standards and regulations
Adopting regulations and standards that reinforce climate and environmental goals can help create the right framework conditions for foreign investments in low-carbon technologies, services and infrastructure. Environmental performance standards, such as emissions standards, restrict the emissions or energy use of vehicles, power plants, buildings, appliances and industrial processes and require the uptake of more efficient and less polluting technologies. For instance, fuel economy standards apply to the fuel efficiency of new road vehicles, and blending mandates apply to the use of biofuels in transport. Building standards apply to the thermal insulation of new buildings or to the retrofitting of old ones. Emissions standards of power plants regulate the carbon intensity of their electricity mix. Efficiency standards for consumer appliances remove certain products from the markets. Counter to the pollution haven hypothesis, there is little evidence that investors locational decisions are driven by differences in stringency of environmental standards and regulations. On the contrary, these standards can promote less polluting and more energy efficient investment projects (OECD, 2022[28]).
Viet Nam has adopted a strategic, legal and regulatory framework for energy efficiency in different sectors and areas (Table 6.2). The Decree on Energy Efficiency and Conservation, adopted in 2003, and the Energy Efficiency Law, adopted in 2010, constitute Viet Nam’s legal framework for energy efficiency (National Assembly, 2010[70]; OECD, 2021[15]). The Viet Nam Energy Efficiency Programme (VNEEP) is Viet Nam’s national energy efficiency action plan and provides a strategic framework for energy efficiency and a co-ordination mechanism among different stakeholders (Prime Minister of VIet Nam, 2019[77]; OECD, 2021[15]). Key energy efficiency regulations and standards include mandatory energy audits for large energy users every three years, energy efficiency targets for energy-intensive industries (Government of Viet Nam, 2011[78]), mandatory energy labelling for different types of equipment (MOIT, 2006[79]) (Prime Minister of Viet Nam, 2011[80]; Prime Minister of Viet Nam, 2017[81]) and mandatory energy efficiency standards for buildings (OECD, 2021[15]).
Challenges remain, however, in the implementation of energy efficiency standards and regulations. Energy audits and reporting are not always enforced and it remains uncertain whether energy efficiency targets for industries will be met. The implementation of energy audits for large energy consumers at the building level is a particular challenge as it is rendered complex by multiple owners and occupants (OECD, 2021[15]). Likewise, available evidence indicates that the enforcement of energy efficiency standards in the building sector remains challenging and that awareness on the Energy Efficiency Building Code remains low (OECD, 2021[15]; EuroCham Viet Nam, 2024[65]).
Source: OECD based on National Assembly (2010[70]), Prime Minister of Viet Nam (2019[77]), OECD (2021[15]), Prime Minister of Viet Nam (2023[82]), Government of Viet Nam (2011[78]), EVN (2024[42]), Anh (2024[83]), MOIT (2006[79]), Prime Minister of Viet Nam (2017[81]), Prime Minister of Viet Nam (2011[80]).
Electricity pricing reforms and the promotion of international energy efficiency standards could improve the enforcement of energy audits and energy efficiency targets. Better alignment of Viet Nam’s electricity tariffs with the cost of operation could increase the bankability of energy efficiency improvements. The dissemination of international energy efficiency standards such as ISO 50001 for Energy Management could also support energy efficiency improvements among industrial companies. It could furthermore allow foreign investors to more easily find suppliers, which meet international energy efficiency standards and send a positive signal to MNEs who scrutinise environmental impacts and green RBC along their supply chains. In 2019, 84 companies in Viet Nam had received ISO 50001 certification. Exemptions or relaxation of energy auditing requirements could incentivise further uptake of ISO 50001 (OECD, 2021[15]).
Policies supporting energy efficiency in buildings are particularly important as Viet Nam’s construction sector is expanding quickly. The construction industry is predicted to receive more investment in the coming years as demand for housing is increasing rapidly: by 70 million square meters annually, the equivalent of 17 500 buildings with 30 floors by 2030 (EuroCham Viet Nam, 2024[65]). At the same time, the residential sector accounts for the second largest share in electricity consumption (28%) following the industrial sector (2022) (IEA, 2024[9]).
The number of buildings certified with green building certifications in Viet Nam has increased rapidly but remains overall low. In 2024, Viet Nam largely exceeded its target of 80 green buildings by in the VNEEP 2019-2030 by 2025 with more than 400 green buildings having obtained certifications such as LOTUS or Leadership Energy and Environmental Design (LEED) (MOC, 2024[84]). This remains, however, low in international comparison and compared to Viet Nam’s total building stock (EuroCham Viet Nam, 2024[65]). Financial incentives for green buildings and public energy retrofitting programmes could support the wider adoption of energy efficiency in the construction and building sector. Public programmes could unlock a large project pipeline, raise awareness and demonstrate new financing models (OECD, 2021[15]). The government could also set an example by committing to a target for green building certifications for existing government buildings (EuroCham Viet Nam, 2024[65]).
Better awareness of the potential for and benefits of energy efficiency and the availability of the right skills and technical expertise could further disseminate such measures. Many businesses in Viet Nam are unaware of the benefits of energy efficiency. At the same time, technical expertise and skilled workers such as energy auditors are lacking (Haverman, 2024[85]).
Access to financing is an important challenge to energy efficiency improvements in private companies in Viet Nam. The high cost of capital, reflected in high interest rates and collateral requirements, frequently exceeds benefits in terms of savings from energy efficiency improvements in the light of low electricity tariffs. Public financing for energy efficiency is constrained by high degree of fiscal decentralisation. More than half of government revenues are managed by provincial governments. This renders the standardisation and aggregation of energy efficiency projects, which can create economies of scale and reduce costs, difficult (OECD, 2021[15]).
The success of donor-driven initiatives aiming at improving access to financing for energy efficiency improvements in private companies has been limited. The World Bank’s Viet Nam Scaling Up Energy Efficiency project with funding from the Green Climate Fund and implemented with MOIT set up a risk sharing facility to support access to commercial financing for energy efficiency projects. This facility is endowed with a USD 11.3 million grant and a USD 75 million guarantee to provide partial credit guarantees to participating financial institutions to cover potential defaults on loans to industrial enterprises and energy service companies (ESCOs) (Pham, 2022[86]; OECD, 2021[15]). While a USD 250 million target was set for 2025, however, the facility has not yet succeeded in mobilising any commercial financing for energy efficiency projects (World Bank, 2024[87]; World Bank, 2024[88]).
Power purchase agreements and direct power purchase agreements
The risk allocation in Viet Nam’s standardised PPAs creates uncertainty over investors’ revenues and returns to investment and constrains access to financing. Private renewable energy generators in Viet Nam, which do not participate in the competitive wholesale electricity market, sell the electricity they produce to EVN through standardised PPAs. These PPAs do not require EVN to pay for the electricity generated by renewable power plants unless it is delivered to the grid and do not contain minimum electricity purchase obligations, thus allowing for disruptions in payments in the case of curtailment due to oversupply of electricity and grid congestion. These provisions create significant risks and uncertainty over revenues for investors as power system flexibility and grid infrastructure are important challenges in Viet Nam, which have led to substantial curtailment of renewable energy electricity generators in recent years (see Section 1.3.6. in Chapter 1). Uncertain revenues and returns to investment create uncertainty over their ability to repay debt and can constrain access to financing (OECD, 2021[15]; Freshfields Bruckhaus Dehringer, 2020[43]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]).
Lack of access to international arbitration, protection against change of law and take-over rights for creditors and low and uncertain termination compensation constitute additional risks. PPAs do not allow for international arbitration unless agreed by both PPA signatories. Under the model PPA, MOIT’s EREA is responsible for dispute resolution and if unresolved, disputes are escalated to ERAV. This can cause conflicts of interest as EVN, EREA and ERAV are all dependent on MOIT. Furthermore, PPAs do not protect investors from changes in law and tax policies after signature of the PPA. PPAs do not include any mechanisms for calculating termination compensation in the event that the PPA is terminated by the buyer either and there is thus uncertainty over whether such compensations would be sufficient to cover debt and investment costs incurred. Finally, sample PPAs do not explicitly grant lenders the right to take over the project and PPA in the event of default of the renewable energy developer or to transfer rights to a third-party buyer as it is the case in other countries such as Malaysia or the Philippines. Taking over projects and PPAs is subject to complex administrative and legal procedures in Viet Nam. This can be an obstacle to access to finance (OECD, 2021[15]; Freshfields Bruckhaus Dehringer, 2020[43]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]).
Recent changes to currency indexation and the duration of PPAs could turn out either beneficial or create additional uncertainty for investors. In 2023, Viet Nam abolished the indexation of electricity prices to the VND/USD exchange rate in solar and wind power PPAs and a 20-year fixed term for PPAs (MOIT, 2023[90]). The abolition of currency indexation renders PPAs less attractive and bankable for investors with foreign currency loans. On the other hand, in the context of decreasing renewable prices worldwide, a more mature renewable market in Viet Nam and larger-scale renewable projects, the currency indexation might, however, no longer be necessary to render renewable energy project bankable, especially in the case of large developments (KPMG, 2024[91]). A longer term for PPAs would allow for covering the whole operational lifespan of solar PV panels of 25 to 35 years and wind turbines of 20 to 30 years. A shorter duration of PPAs, however, would result in more uncertainty for investors (KPMG, 2024[91]; Allen & Gledhill, 2023[92]).
The concept of long-term minimum contracted quantity introduced in Viet Nam’s newly adopted electricity law could reduce the risk of curtailment for investors. Including long-term minimum contracted quantities in PPAs could allow for providing renewable developers with more certainty on renewable dispatch levels, a more stable stream of payments from EVN and revenues for the duration of PPAs and more certain returns on their investments. This requires further details on the implementation of minimum contracted quantities in PPAs in the decrees on the implementation of the new electricity law (Moncrieff, Tran and Ho, 2024[93]).
In 2024, Viet Nam introduced more flexible standardised PPAs for solar and wind IPPs, which participate in the competitive wholesale market. These PPAs also apply to fossil fuel IPPs, all large hydropower plants (> 30MW) and small hydropower plants participating in Viet Nam’s competitive wholesale electricity market. They allow parties flexibility in determining and agreeing on the duration of the PPA, the method of dispute settlement, which can include international arbitration, and other elements. They also allow for bilingual PPAs in Vietnamese and English. PPAs do not, however, include minimum electricity offtake guarantees from EVN or protection against curtailment (MOIT, 2024[94]; Nguyen, Nguyen and Le, 2024[95]; Allens Linklaters, 2024[96]).
In July 2024, Viet Nam introduced direct power purchase agreements (DPPAs), allowing renewable developers to sell electricity directly to large consumers (Government of Viet Nam, 2024[97]). The mechanism applies to solar, including rooftop solar, wind, small hydropower, geothermal and other renewable sources. Two models exist. (1) On-site DPPAs enable renewable generators located close to large consumers, such as in industrial zones, to supply electricity through private connection lines. Generators may sell excess electricity to EVN or its subsidiaries after delivery to the corporate consumer. (2) Off-site DPPAs allow eligible solar and wind plants (minimum 10 MW and participating in the wholesale market) to enter into contract-for-difference arrangements with large consumers (minimum 200 MWh monthly consumption for production purposes, connected at ≥22 kV). Generators sell electricity into the wholesale market at spot prices, with the corporate consumer settling the difference between the spot price and a pre-agreed strike price to manage price volatility (Moncrieff, Tran and Ho, 2024[98]; Cryll, 2024[99]; Government of Viet Nam, 2024[97]). The framework was further refined in 2025 through Decree No. 57/2025/ND-CP, which clarifies implementation arrangements and eligibility conditions.
DPPAs can generate more certain revenues for renewable generators, facilitate access to financing and improve energy security for large corporate consumers. DPPAs can guarantee renewable generators a predictable and stable stream of revenues, especially if the strike price is inflation-indexed and large corporate consumers are financially strong. In several developed countries’ DPPA markets like the United States, large corporate consumers are willing to pay more than utility board rates as a result of the economic benefits of DPPAs over the long term and advantages beyond the electricity supply in terms of green responsible business conduct (RBC). In Viet Nam, in the context of electricity outages and energy security concerns, large corporate consumers might be willing to pay more for DPPAs as they could contribute to a more stable electricity supply. Financially strong and creditworthy corporate consumers could also improve access to financing for renewable developers, who could diversify offtaker risk and would no longer depend only on EVN for electricity payments (Moncrieff, Tran and Ho, 2024[98]). On-grid DPPAs could further allow for a better risk allocation between renewable developers and electricity off-takers by allowing them to freely negotiate the terms of the PPA. This could allow on-grid DPPAs to address issues for renewable developers such as curtailment risk, lack of a stable and predictable stream of revenues or dispute resolution concerns and ultimately facilitate access to financing (VBF/The Asia Foundation/GEAPP, Forthcoming[89]).
DPPAs could accelerate electricity market liberalisation, foster competition and attract more green investors to Viet Nam. DPPAs could render Viet Nam’s wholesale and retail electricity markets more competitive, thereby reducing costs and incentivising new investments in renewables. DPPAs are also expected to create new opportunities for green responsible business conduct, by allowing businesses to source clean energy and enabling them to obtain renewable energy certificates and carbon credits. This might allow Viet Nam to attract more investors committed to green energy and environmental criteria (VBF/The Asia Foundation/GEAPP, Forthcoming[89]; Moncrieff, Tran and Ho, 2024[98]). Demand from large international companies, which are established or seek to establish a base in Viet Nam, for clean energy is increasing as these companies frequently have corporate commitments to 100% clean energy (EuroCham Viet Nam, 2024[65]). Ultimately, DPPAs could encourage more investment in renewable energies in Viet Nam and accelerate the clean energy transition (VBF/The Asia Foundation/GEAPP, Forthcoming[89]; Moncrieff, Tran and Ho, 2024[98]).
Risks related to DPPAs include deficiencies in Viet Nam’s transmission infrastructure and regulatory uncertainties. Deficiencies in Viet Nam’s transmission infrastructure pose a risk to the supply of electricity through off-site DPPAs, which rely on national grid infrastructure. Viet Nam’s electricity grid might not always be able to accommodate the additional electricity sold through off-site DPPAs. While on-site DPPAs do not face this challenge, uncertainty remains, however, on whether foreign-owned renewable developers or generators are allowed to develop, operate and charge fees for private transmission lines. In practice, private electricity transmission lines from renewable generators to large corporate consumers might furthermore render switching to the public electricity supply – for example, when insufficient electricity is produced from renewable generators – difficult as this would require switching to a different transmission line and could cause disruptions in electricity supply (Moncrieff, Tran and Ho, 2024[98]). Uncertainties remain also on the terms and cases of termination of DPPAs and on what happens when large customers’ electricity consumption falls below 200 000 kWh a month. Finally, while financially strong large customers could facilitate access to financing for renewable developers, the opposite is true for financially weak large customers. Other challenges might surface as DPPA implementation starts given that this mechanism is still novel in Viet Nam (VBF/The Asia Foundation/GEAPP, Forthcoming[89]).
Power market liberalisation
Introducing competition in the power sector is crucial for supporting private investment in renewables. Unbundling monopolies in the power sector by separating power generation, transmission and distribution can help create more space for foreign investment in power generation. New entrants can in turn exert competitive pressures towards conventional power generators and spur the wider diffusion of renewable power investments across domestic actors. The decentralised nature and the smaller generation capacity of clean energy projects compared to their fossil fuel counterparts makes independent power production well-suited for mainstreaming clean energy technologies. Competition can be supported through effective regulators as dominant incumbent enterprises may deter independent renewable power producers from entering a market through tender procedures even where structural separation has been implemented. Therefore, countries in which regulators adequately address anticompetitive practices by incumbent utilities, including state-owned enterprises (SOEs), are likely to be more attractive destinations for multinationals seeking investment opportunities in renewable power (OECD, 2022[28]).
Electricity market liberalisation in Viet Nam has progressed at a slower pace than planned initially. Viet Nam’s 2004 Electricity Law set out three distinct phases of electricity liberalisation: (1) the establishment of a competitive generation market in 2012-2018, (2) the establishment of a competitive wholesale electricity market in 2019 and (3) the establishment of a competitive retail electricity market in 2023 (with a pilot phase in 2021-2023). While Viet Nam’s wholesale electricity market was launched in 2019, only 108 power plants equivalent to 38% of total installed electricity generation capacity were participating in the wholesale market as of March 2023. Non-renewable and hydropower plants with an installed capacity of 30MW or more are required to participate in the market. Renewable electricity generators other than hydropower, however, do not participate in the wholesale electricity market yet but benefit from annually adjusted fixed electricity prices. Furthermore, electricity buying and retail selling continues to be monopolised by EVN as the only buyers in the market are EVN and its five power corporations. Viet Nam’s retail market is not operational yet (ERAV, 2024[100]; EVN, 2023[101]).
Viet Nam introduced several new regulations in preparation of the further liberalisation of power markets and the introduction of a competitive electricity retail market. In 2020, Viet Nam adopted a new roadmap for energy market development with two phases: (1) the consolidation and improvement of the competitive wholesale electricity market and operationalisation of the competitive retail electricity market from 2021 to 2025 and (2) the finalisation and expansion of the competitive retail electricity market starting from 2026 (Prime Minister of Viet Nam, 2020[102]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]). Furthermore, in preparation of the launch of the competitive retail market, in 2020, MOIT adopted new regulations on the design of the electricity retail market, which allow electricity consumers to choose their electricity suppliers (MOIT, 2020[103]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]).
In 2024, Viet Nam issued new regulations for the wholesale electricity market, which expand mandatory participation and could enhance competition. New regulations require hydropower plants with a capacity of 10 MW or more to participate in the wholesale electricity market upon expiration of their avoided-cost tariff PPAs, other renewable energy power plants with a capacity of 10 MW or more upon expiration of their FiT PPAs and BOT power plants, which have been transferred to the government, upon expiration of their BOT contracts. Renewable energy power plants with on-grid DPPAs are also required to participate in the market. In addition, power plants in industrial zones selling part of their electricity output to the national grid, power plants with an installed capacity of up to 30 MW connected to the grid at voltage levels of 110 kV or higher and renewable energy power plants other than hydropower with an installed capacity of 10 MW or more can participate in the market on a voluntary basis. Furthermore, a number of plants are required to participate indirectly in the wholesale electricity market, which means that they sell the electricity they produce to EVN-EPTC, which then sells it on the market. This includes BOT power plants with effective contracts and renewable energy power plants other than hydropower except for those with off-grid DPPAs (MOIT, 2024[104]; VILAF, 2024[105]). The mandatory and voluntary expansion of participation in the wholesale electricity market to a larger number of participants is an important step to increase competition.
Viet Nam has not yet fully separated electricity generation, transmission, distribution and power trading and its energy regulator lacks full independence. Viet Nam’s state-owned electricity company, Electricity of Viet Nam, has been partially unbundled into separate companies for electricity generation, transmission, distribution and power trading (OECD, 2021[15]). However, these companies remain subsidiaries of EVN. This results in potential conflicts of interest and could favour non-competitive practices: the transmission grid operator’s role in negotiating and facilitating grid connections may create advantages for SOEs in accessing the transmission grid compared with IPPs. Viet Nam’s energy regulator ERAV is not fully independent as it is attached to MOIT (OECD, 2021[15]).
The full unbundling of Viet Nam’s system operator from EVN in 2024 represents an important step in supporting competition and boosting investor confidence. In 2024, the National Load Dispatch Centre was fully separated from EVN and became the National Power System and Market Operation Company (NSMO) under the Commission for the Management of State Capital at Enterprises (CMSC) (Prime Minister of Viet Nam, 2024[44]; Thao, 2024[45]). NSMO determines short-term operations of electricity generation plants and acts as the interface with the transmission system. The full independence of the system operator is an important step to support objective dispatch prioritisation and effective competition. This can strengthen investor confidence given frequent oversupply and congestion in Viet Nam’s transmission networks combined with a lack of commitment to take or pay all electricity generated by renewable developers (OECD, 2021[15]).
SOEs’ share in electricity generation has decreased by 40% since 2016 as a result of privatisation of EVN’s generation assets and private investment in renewables. EVN’s share in total installed capacity for electricity generation has decreased from 61.4% in 2016 to 58% in 2018 and 37.1% in 2023. The share of installed capacity owned by the state-owned petroleum and coal companies (Petrovietnam and Vinacomin) has decreased as well from 14.7% in 2017 to 10% in 2023. This is driven by increased private investment in renewable energies: the share of independent power producers (IPPs) and BOTs in Viet Nam’s installed capacity for electricity generation has increased from 23.9% in 2016 to 51.9% in 2023, largely due to investment in solar and onshore wind power plants (EVN, 2023[101]; EVN, 2017[106]; EVN, 2018[107]). At the same time, Viet Nam is partially privatising EVN’s electricity generation assets by selling part of GENCOs’ shares but this process has been very slow and interest limited due to a too high value of shares in generation companies, concerns over indebted generation plants and corporate governance and as better performing power plants are bundled together with poorly performing ones. Furthermore, as EVN keeps majority shares in generation companies, partial privatisation has so far had a limited impact on competition, reflecting both ownership structures and broader constraints related to market design, regulation and corporate governance (OECD, 2021[15]).
Going forward, Viet Nam should continue progressing towards more competitive wholesale and retail electricity markets, with reforms carefully sequenced and adapted to institutional capacities. Experience across emerging and developing economies suggests that ownership reform alone does not guarantee efficiency or competition outcomes, and that liberalisation tends to be most effective when accompanied by strong regulation, transparent market rules and adequate system operation and planning capacity. In this context, further diversification of ownership in electricity generation and greater private participation can contribute to market contestability, provided that regulatory oversight, grid access rules and market governance are sufficiently robust to ensure a level playing field among all participants (World Bank, 2019[108]). SOEs can benefit from direct or indirect state aid and other advantages, thereby undermining competition. Integrating renewable electricity generators, who currently benefit from fixed prices, into Viet Nam’s power market could also enhance competition in the wholesale electricity market. Viet Nam’s newly established DPPAs are another mechanism to foster more competition. An effective wholesale market is key for increasing efficiency and driving electricity cost reductions and can play an important role in balancing intermittent renewables and enhancing power system flexibility. Market prices, which reflect electricity supply and demand, can incentivise electricity generators to increase or decrease electricity generation as necessary (OECD, 2021[15]; Giang, 2023[21]).
6.4.4. Green investment promotion and facilitation
Investment promotion bodies can create awareness of existing green investment opportunities, attract green investors, and facilitate their establishment and expansion in the economy. Investment promotion bodies – whether as IPAs or departments in ministries – are key players in bridging information gaps that may otherwise hinder the realisation of foreign investments, and their potential sustainable development impacts. Many prioritise green investments, by selecting green priority sectors such as renewable energies or other low carbon technologies or green priority investment projects, and by allocating resources accordingly (OECD, 2022[28]; OECD, Forthcoming[109]). Investment facilitation services can help reduce administrative barriers to low-carbon investments. Investment aftercare services are an important channel for the propagation of FDI low-carbon spillovers through the interactions of foreign MNEs with domestic firms and workers. Investment promotion bodies also tend to have the role to raise policymakers’ awareness of regulatory needs to promote low-carbon investment (OECD, 2022[28]).
Investment promotion
Viet Nam is still in the early stages of integrating green considerations into investment promotion policies. Although Viet Nam does not have official priority investment sectors, renewable energies are one of the sectors, which is in practice promoted the most by Viet Nam’s investment promotion agency (IPA). Electricity, gas and steam and water supply, sewage and waste management are furthermore among those industries, on which information is provided on the FIA’s website, although updates of these sector descriptions date back to 2020 (FIA, 2020[110]; FIA, 2020[111]). Viet Nam’s IPA also attributes supporting the low-carbon transition a moderate level of importance in its investment promotion goals and reports contributing to combating climate change and sustainable production and consumption in its role as an IPA (OECD, 2024[112]).
Viet Nam’s strategic documents on investment promotion include references to green growth and environmental protection. In August 2019, Viet Nam adopted a Politburo’s Resolution on orientations to enhance the quality and efficiency of foreign investment by 2030. This resolution aims at improving the quality of foreign investment in Viet Nam, including with respect to environmental protection criteria. It targets an increase in the share of foreign firms adhering to environmental criteria by 50% by 2025 as compared to 2018 and by 100% by 2030. To achieve these objectives, the strategy seeks to improve environmental protection and energy saving regulations and standards, holding foreign investors better accountable for their environmental impact and enhancing the management, inspection and supervision of the environmental impact and adherence to environmental standards of foreign investment projects (Central Committee, 2019[113]). In June 2022, Viet Nam approved the Strategy for Foreign Investment Cooperation for 2021-2030. This strategy aims at holding foreign investors better accountable for environmental protection. To improve the effectiveness and sustainable development impact of foreign investment, it seeks to enhance standards and regulations on environmental protection and energy efficiency and to improve the government’s management of foreign investment with respect to the environment, including the adherence to environmental standards, and response to foreign investment projects causing significant environmental pollution (Prime Minister of Viet Nam, 2022[114]). Although the strategy contains several provisions on environmental protection, however, green growth and decarbonisation in foreign investment are much less prominent in the strategy than in the 2019 Politburo Resolution.
Viet Nam is also promoting the transition of traditional industrial parks into eco-industrial parks to attract sustainable FDI and align with emerging green supply chain requirements in key export markets such as the EU and the United States. The Ministry of Finance, through the Department of Economic Zones Management, is supporting cleaner production, resource and energy efficiency, energy conservation measures, circular-economy practices, e-waste recycling and environmentally friendly materials production in industrial parks. Pilot programmes in several provinces (e.g. Ninh Bình, Cần Thơ, Dà Nẵng) aim to convert existing parks into eco-parks by encouraging waste and energy symbiosis, improved water management and low-carbon technologies. These initiatives are intended to enhance Viet Nam’s appeal to multinational enterprises seeking compliant, low-impact supply chains and to strengthen the country’s positioning as a destination for sustainable manufacturing investment.
Going forward, it would be beneficial to adopt a more systematic approach to promoting green investment. This includes adopting a national investment promotion strategy, in which climate and environmental considerations are embedded, in consultation with relevant ministries and agencies such as MOIT and MAE. This also involves reviewing and identifying specific economic activities where Viet Nam has the greatest potential to develop low-carbon activities or growth poles. Once such activities have been identified, relevant bodies should design investment promotion packages for these low carbon activities combining tools that range from intelligence gathering (e.g. market studies) and sector-specific events to pro-active investor engagement (one-to-one meetings, email/phone campaigns, enquiry handling). Aftercare services should be designed to help investors overcome information barriers associated with identifying low-carbon business partners, suppliers and distributors, for example, through match-making services, and help them reduce emissions along their supply chains. (OECD, 2022[28]).
Green investment facilitation
Viet Nam’s IPA could facilitate investment in renewable energy through policy advocacy on the simplification of investment procedures and the creation and hosting of a dedicated one-stop-shop. Investment promotion bodies play a crucial role in understanding investors’ challenges and advocating for reforms required to promote low-carbon investments by serving as the primary interface between investors and other government institutions (OECD, 2022[28]). Viet Nam’s IPA could more systematically engage in this role by raising awareness of the administrative and implementation challenges facing investors in low-carbon activities, including renewable energy projects, and advocating for reforms to simplify relevant procedures. Investment promotion bodies also play an important role in supporting investors in low-carbon activities to acquire the necessary permits and clearances for their investment projects (OECD, 2022[28]). Viet Nam’s FIA could play a more active role in this process through the creation and hosting of a “one-stop-shop” for renewable energy projects. Such a one-stop-shop could help reduce the length and complexity of procedures, limit the number of public institutions with which investors have to interact, and improve coordination across responsible agencies (VBF/The Asia Foundation/GEAPP, Forthcoming[17]; EuroCham Viet Nam, 2024[65]).
The permitting and licensing process for renewable energy projects can involve multiple sequential procedures from project development and construction to commercial operation. Investors may need to complete procedures involving different ministries and public agencies at the central and provincial levels before project implementation can begin. These procedures can relate to investment and enterprise registration, inclusion in national and provincial planning, grid connection agreements with EVN, land clearance, EIAs, electricity project implementation, construction-related approvals, commissioning and electricity operating licences. Varying administrative procedures across provinces, together with coordination challenges and overlapping responsibilities between regulatory agencies, can add further complexity (OECD, 2021[15]; Freshfields Bruckhaus Dehringer, 2020[43]; VBF/The Asia Foundation/GEAPP, Forthcoming[17]). Some administrative procedures remain cumbersome and can increase investor costs, create uncertainty over project implementation and returns, and complicate access to finance. In some cases, project-development rights, infrastructure assets or land-use rights may be transferred between investors as projects move towards implementation (VBF/The Asia Foundation/GEAPP, Forthcoming[89]; Nguyen, 2023[115]; OECD, 2021[15]).
The administrative process is particularly difficult to manage for investors in offshore wind. They require sea area allocations, but a legal and regulatory framework has recently been established. Recent regulations have clarified institutional responsibilities for allocating sea areas and granting approval for using marine areas for activities such as measuring, monitoring, investigating, exploring, and surveying for the purpose of developing offshore wind power projects (Hutt, 2024[116]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]). Sea allocations are furthermore facilitated by the development of marine spatial planning in Viet Nam, which identifies areas suitable for offshore wind development and provides clearer guidance on where projects can be located. The absence of transmission lines to transport electricity from wind farms to the grid adds a further challenge for investors. Furthermore, Viet Nam’s seaports currently still lack the capacity to serve the various functions of offshore wind power construction activities, including manufacturing, assembly, storage, transportation and maintenance of equipment for the offshore wind power industry (VBF/The Asia Foundation/GEAPP, Forthcoming[17]).
Viet Nam has taken steps to make the permitting and licensing process more efficient. A 2023 circular simplifies certain administrative procedures for the development of wind power projects. This includes the requirement to submit a report when the project does not comply with the planning scheme in terms of operations, scale and capacity, as well as certain requirements for the commencement of construction, such as adding new wind power plants to the national electricity development master plan and completing several administrative procedures (MOIT, 2023[90]; KPMG, 2024[91]; Allen & Gledhill, 2023[92]). Viet Nam’s new Electricity Law introduces new regulations for offshore wind projects, including exemptions from or reductions in land- and sea-use fees, the possibility of transferring shares in offshore wind projects, and provisions for electricity output negotiations under PPAs with electricity market participants (National Assembly, 2024[68]; Hanh, 2024[71]; Ohya et al., 2024[72]; Moncrieff, Tran and Ho, 2024[93]). Such efforts should be accompanied by strengthened monitoring, enforcement and accountability mechanisms.
The administrative procedures to access land can be particularly complex for foreign investors. Investors in Viet Nam cannot buy land but only Land Use Rights Certificates (LURCs), Vietnamese nationals indefinitely and foreigners for up to 50 years. The process for acquiring LURCs is complex, involving multiple administrative procedures and public institutions and other stakeholders. This includes the appraisal of land and clearance plans by provincial authorities such as the regional office of MAE (formerly MONRE), land-use change in special areas designated for agriculture or forest, negotiations with the parties owning the LURCs, agreements of land lease fees, clearance and compensation of current owners and an agreement with the PPCs. Prior to the agreement with PPCs, investors must complete an EIA and obtain an investment registration certificate and an enterprise registration certificate. Investors in Viet Nam are not only responsible for securing land for the renewable power plants themselves but also for securing land for and installing power lines and transformers from the plant to the nearest connection point to the grid. This further complicates the process to obtain LURCs as it may require negotiations with multiple LURC owners (OECD, 2021[15]). Access to land for transmission infrastructure is moreover not only a challenge for private investors but also for EVN-NTPC (EuroCham Viet Nam, 2024[65]). An additional difficulty is that land for renewable projects is limited due to Viet Nam’s geography with many hills and densely forested areas and must compete with other uses such as agriculture (OECD, 2021[15]).
Problems with compensation and clearance are common challenges for investors and can delay project implementation and raise costs. Investors are responsible for securing cleared land for project development and bearing all compensation costs, creating risks and uncertainty stemming from potentially high land prices and lengthy clearance processes (VBF/The Asia Foundation/GEAPP, Forthcoming[18]). Land prices and compensation are often high and uncertain due to overlapping regulations, which complicate price determination (Nguyen, 2024[117]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]). In addition, the Land Law accords Provincial People’s Committees up to three years to complete compensation, support and resettlement processes, which can result in delays, increased costs and financial losses for investors (VBF/The Asia Foundation/GEAPP, Forthcoming[18]). Recent reforms seek to address these challenges. A new Land Law adopted in 2024 has improved regulations on land management, land types, land price determination and land-use fees. It is supported by implementing regulations, including recent decrees on land administration such as Decree 49/2026/NĐ-CP (Government of Viet Nam, 2026[118]), aimed at improving administrative procedures and land access, which may help address several of the challenges investors face (VBF/The Asia Foundation/GEAPP, Forthcoming[89]).
Viet Nam’s strict regulations on using LURCs as securities to access credit prevent foreign renewable developers from using LURCs as collateral for loans, thereby impacting their access to financing. Land rights are an important tool for allowing renewable investors to secure financing for their projects (OECD, 2021[15]). According to Viet Nam’s Land Law, however, project companies can only use LURCs as collateral for loans if they pay the land rent to the state in a one-time lump-sum payment. Projects that are exempted from land rent payments, as it is often the case for renewable energies, or projects that pay rent annually cannot use their LURCs as collateral. The 2024 Land Law further limits projects eligible for one-time land rental payments primarily to industrial zones (VBF/The Asia Foundation/GEAPP, Forthcoming[17]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]; National Assembly of Viet Nam, 2024[119]). Moreover, LURCs and property attached to the land can be used as security for loans from onshore licensed credit institutions only but not for loans from foreign lenders. Using a local bank as security agent can allow for bypassing this restriction but uncertainty exists on whether such an arrangement would be enforceable by Vietnamese courts in case of default by the borrower (VBF/The Asia Foundation/GEAPP, Forthcoming[17]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]; National Assembly of Viet Nam, 2024[119]; OECD, 2021[15]). In the case of offshore wind projects, it is still unclear whether maritime area allocations can be used as collateral for loans similarly to LURCs (VBF/The Asia Foundation/GEAPP, Forthcoming[89]).
Government acquisition of LURCs could facilitate access to land for investors while floating solar offers an option to bypass the land acquisition challenge. Government identification and acquisition of LURCs of land for renewable projects could be an option in combination with the introduction of an auction system. While this would significantly cut red tape and lower costs for investors, it would, however, require that responsible government authorities have sufficient institutional capacity and human and financial resources to identify land for renewable projects and acquire LURCs. In light of Viet Nam’s significant hydropower capacity, floating solar power plants constitute another opportunity to bypass challenges linked to land acquisition (OECD, 2021[15]).
6.4.5. Pricing, incentives and financial support for green investment
Fossil fuel subsidies and electricity pricing
Fossil fuel subsidies in Viet Nam - made up to more than 90% of electricity subsidies – have decreased from an all-time high of USD 32.4 billion (9% of GDP) in 2022 to USD 3.6 billion (1% of GDP) in 2023 (IEA, 2024[120]). High fossil fuel subsidies for electricity generation reflect indirect subsidies as end-user electricity prices in Viet Nam are estimated to be below the cost of operation and maintenance and debt service expenses (OECD, 2021[15]). The spike in electricity subsidies in 2022 reflects high international energy prices, leading to a sharp increase in the cost of electricity generation as Viet Nam relies on imported coal, oil and electricity. This increase was not proportionally passed on to end-user electricity prices.
Actual electricity subsidies are likely to be significantly higher than these estimates. The estimates are based on the comparison of end-user prices with international reference prices, which may not fully reflect substantial debt servicing expenses by EVN. Although average electricity retail tariffs in Viet Nam increased by 50% between 2010 and 2022 and international energy prices decreased in 2023 from their all-time high in 2022, in 2023, EVN incurred losses of more than USD 1.2 billion (EVN, 2024[42]) and EVN’s combined losses in the 2022-2023 period amounted to up to USD 2 billion. These losses have to be covered by the government through subsidies for EVN or government-guaranteed loans (VBF/The Asia Foundation/GEAPP, Forthcoming[17]). At approximately 8.3 US cents/kWh, electricity prices are estimated to remain below the cost of operation, maintenance and debt service combined with a reasonable return on capital for future investment estimated at approximately 12 US cents/kWh (OECD, 2021[15]). The transmission tariff component of electricity prices is particularly low, thereby reducing the profitability of EVN-NDTC and its financial resources for investment in transmission infrastructure. Transmission tariffs amounted to 0.32 cents/kWh in 2022 while tariffs of at least 0.72 cents/kWh would be required to cover investment needs (EuroCham Viet Nam, 2024[65]).
Notes: Subsidies are calculated by comparing average end-user prices paid by consumers with reference prices that correspond to the full cost of supply. The price gap multiplied by the amount of energy consumption corresponds to the subsidy.
Source: OECD based on IRENA (2024[19]), IRENASTAT, https://www.irena.org/; and World Bank (2024[10]), World Bank Development Indicators, https://databank.worldbank.org/.
The better alignment of end-user electricity tariffs with market prices could further support and accelerate the clean energy transition in Viet Nam. Below-cost recovery tariffs compromise EVN’s financial viability, thereby impairing the company’s ability to make investments required to modernise and expand Viet Nam’s outdated electricity grid infrastructure to allow for the smooth integration of intermittent renewables in the country’s power mix. Below-cost recovery tariffs also limit the government’s fiscal space for investments in renewables and other ancillary services and infrastructure as EVN’s losses need to be covered by the government. Moreover, the current pricing structure encourages overconsumption of electricity and reduces the bankability of private investment in renewable energies and energy efficiency improvements. The gradual liberalisation of electricity prices could spur significant investment in renewable energies and energy efficiency. Electricity price increases should be accompanied by targeted support for poor households and improved social protection. At present, energy subsidies for vulnerable household are modest in Viet Nam (OECD, 2021[15]). Viet Nam’s new electricity law adopted in 2024 provides the framework for reforming electricity prices in Viet Nam and removing cross-subsidies across consumer groups and regions to achieve a more competitive and equitable pricing structure (National Assembly, 2024[68]; Hanh, 2024[71]; SIPET, 2024[121]).
Viet Nam’s planned introduction of two-component electricity pricing could better align electricity prices with the cost of supply and allow for greater efficiency in investment in and usage of power generation capacity. The current pricing structure takes into account only the monthly amount of electricity consumed and does not accurately reflect the cost of supply. The new electricity price structure would consist in a price paid for registered capacity and a price paid for consumed electricity. Consumers with a higher registered capacity would need to pay more even if they have a low maximum registered capacity usage time. The new structure would more accurately reflect the full cost of electricity supply and encourage consumers to use electricity more effectively and spread electricity consumption more evenly over time. This could reduce peak demand and support system load balancing, thereby reducing the need for investment in additional power generation capacity and grid infrastructure to meet electricity demand during peak hours and ultimately improving efficiency in investment in power generation capacity and grid infrastructure. EVN is also proposing to classify electricity consumers into three groups (non-residential consumers, residential consumers with electricity consumption up to 2 000 kWh/month, residential consumers with output over 2 000 kWh/month) and four voltage levels. The new pricing structure would initially apply to industrial, non-residential consumers and residential consumers with consumption levels above 2 000 kWh/month (EVN, 2024[122]; EVN, 2024[123]; TTC, 2024[124]; Kiet and Hue, 2024[125]).
Carbon pricing
Carbon pricing provides a technology-neutral case for low-carbon investment and consumption and incentivises businesses to reduce their carbon emissions. Carbon pricing raises the cost of carbon-intensive assets and behaviours and effectively encourages the required shift of production and consumption decisions towards low- and zero-carbon options. Carbon pricing can internalise the climate costs of carbon emissions. Not reflecting the full costs that carbon emissions impose on society results in extensive consumption of carbon-intensive goods, such as fuels or final products, as well as investment in production processes. Carbon pricing raises the returns on low-carbon relative to high-carbon investments and reduces the competitiveness of carbon-intensive industries, ultimately downsizing these industries while incentivising investments in low-carbon activities. Carbon emissions can be priced through taxes or emissions trading systems, where authorised bodies set a cap on GHG emissions and allocate or auction a limited number of tradable permits that allow a discharge of a specific quantity of a specific pollutant (e.g. CO2) over a set time period. Emitters are required to hold permits in amount equal to their emissions but can increase their emissions by buying permits from others willing to sell them. Carbon pricing through taxes or emissions trading provides incentives for emissions abatement where it can be done at least cost (OECD, 2022[28]).
Viet Nam levies an Environmental Protection Tax (EPT) on products with significant negative environmental impacts. Taxable goods under Article 3 of the Law on Environmental Protection Tax (2010, amended 2012) include gasoline, diesel, fuel oil, kerosene and other fuels, coal, hydrochlorofluorocarbons, plastic bags, pesticides with restricted use, and several other listed chemicals. Rates are set within minimum-maximum bands defined in the law. EPT revenues flow into the general State Budget and are not earmarked for the Viet Nam Environmental Protection Fund, although budget resources can still be allocated to environmental projects through normal budgetary processes (OECD, 2021[15]).
Viet Nam is preparing to fully operationalise a domestic carbon market by 2029 following a pilot phase through 2028 (National Assembly, 2020[74]). The carbon market is grounded in Article 139 of the 2020 Law on Environmental Protection, which establishes the legal basis for allocating and trading greenhouse gas (GHG) emission quotas and carbon credits generated through domestic and international offset mechanisms to support national emission‑reduction targets and low‑emission technologies (National Assembly, 2020[74]). The Ministry of Finance is responsible for establishing the market, while the Ministry of Agriculture and Environment is responsible for its operation international co-ordination. In 2022, Viet Nam adopted regulations creating a national monitoring, reporting and verification system, a GHG inventory, and the architecture and roadmap for the domestic carbon market (Government of Viet Nam, 2022[126]). In 2024, the government approved a list of sectors and criteria for facilities required to conduct GHG inventories and participate, covering energy, transport, construction, industrial processes and agriculture (Prime Minister of Viet Nam, 2024[127]; STAMEQ, 2024[128]). During the 2025-2027 trial phase, the market will operate only domestically and will not be linked to international markets, with foreign purchases of carbon credits prohibited (Government of Viet Nam, 2022[126]; Viet Nam News, 2024[129]). The pilot will include 150 large companies in the thermal power, iron and steel, and cement sectors, for which emission quotas have been allocated as part of the initial implementation phase, including approved allocations for 2025 and 2026 (MONRE, 2024[130]; Viet Nam News, 2024[131]). The iron and steel sector was prioritised to support its adjustment to the EU’s Carbon Border Adjustment Mechanism (CBAM), given that the European Union is Viet Nam’s largest export market for iron and steel products (Yin, 2024[132]).
Developing and operationalising Viet Nam’s carbon market requires further improving and filling gaps in existing regulation and awareness raising. This includes the definition of clear and harmonised reporting requirements for carbon emissions and principles for calculating and certifying carbon credits, improving and simplifying third-party verification mechanisms and a reliable platform for trading. A clearer and complete legal and regulatory framework will also improve the availability of financing for emission-reducing projects, which is currently a constraint (Anh and Foster, 2024[133]; PWC, 2023[134]). In addition to filling gaps in existing legislation and regulations, there is also a need for training, information sharing and awareness raising of new regulations among businesses (VNEEC, 2024[135]).
Investment Incentives
Renewable energies, energy efficiency equipment and other environmental protection technologies benefit from generous corporate-income tax (CIT) incentives (Table 6.3). They enjoy a three-year exemption from land rent everywhere and a longer exemption up to the entire project period in socio-economic priority areas. Raw materials, supplies and components for renewable energy infrastructure and other environmental protection projects are exempt from import duties under Law No. 107/2016/QH13 for five years from the start of production, provided they are not produced domestically and statutory conditions are met. Renewable energy, energy efficiency and other environmental technology projects can further access preferential loans for up to 70% of investment from Viet Nam Development Bank although in practice, limited funding constrains this incentive. Renewables and other environmental technologies such as pollution monitoring systems, energy storage systems and hydrogen are part of the sectors, which are prioritised for research and development.
In addition, Viet Nam provides registration-fee relief to encourage the uptake of clean vehicles and environmental service equipment. Decree No. 10/2022/ND-CP and Decree No 51/2025/ND-CP grant a 0% first-time registration fee for electric cars and electric buses during 2025-2027, followed by a 50% reduction thereafter, and extend exemptions or reduction to certain environmental protection vehicles, equipment, and facilities.
Renewable energies, energy efficiency equipment and other environmental protection technologies also benefit from generous indirect tax incentives. They enjoy a three-year exemption from land rent everywhere and a longer exemption up to the entire project period in socio-economic priority areas. Raw materials, supplies and companies for renewable energy infrastructure and other environmental protection projects, which are not produced domestically, are also exempt from import taxes for five years. Renewable energy, energy efficiency and other environmental technology projects can further access preferential loans for up to 70% of investment from Viet Nam Development Bank although in practice, limited funding constrains this incentive. Renewables and other environmental technologies such as pollution monitoring systems, energy storage systems and hydrogen are part of the sectors, which are prioritised for research and development.
Planned reforms could align incentives with environmental outcomes. MOST has proposed introducing a set of green standards for FDI projects and requiring periodic reporting on energy efficiency and emission reduction as a condition to access investment incentives. Linking preferential tax and other benefits to measurable green performance could help ensure that public support effectively rewards low-carbon investment and improves transparency.
Rebalancing profit-based and indirect tax incentives towards more targeted expenditure-based incentives could improve the contribution of FDI to green growth in Viet Nam. Exemptions from indirect taxes for renewable developers, such as import taxes on machinery and equipment, land-use fees and land rent, as well as the general input VAT refund available to all investment projects, can support investment in renewable energy capacity. However, some incentives may be better aligned with actual generation, system needs and grid capacity, rather than installed capacity alone. CIT reductions or exemptions for eligible green activities, such as renewables, energy-efficient technologies, water and waste, can support investment in priority sectors. Where tax incentives are used, they could be better targeted towards projects that introduce green technologies, cleaner production methods and technological innovation, while remaining consistent with Viet Nam’s tax legislation and the responsibilities of the Ministry of Finance. However, as profit-based incentives, they may be less effective where they support investments that would have materialised without additional public support, and they can involve significant forgone public revenues (OECD, 2022[28]). Their effectiveness may also be affected by the implementation of the new Global Minimum Corporate Income Tax, to which Viet Nam has adhered.
Forthcoming change to Viet Nam’s CIT framework could further affect green and high-tech investment. A new Corporate Income Tax Law, adopted in 2025 and expected to take effect in 2026, will expand eligible incentives by introducing additional deductibility for R&D and innovation expenditures, alongside exemptions and preferential rates for selected high-technology, renewable energy and environmental protection activities. These reforms aim to encourage investment in advanced technologies and green growth but will also interact with Viet Nam’s commitment to the Global Minimum Tax, which may limit the effectiveness of profit-based incentives for large multinational investors.
Green investment incentives in Viet Nam
Notes: A new Corporate Income Tax Law (Law No. 67/2025/QH15) introduces enhanced R&D and innovation deductibility and expanded exemptions for high-tech and green sectors, expected to take effect from 2026. Also, under Law No. 107/2016/QH13 on Import and Export Duties, import duty exemptions apply to renewable energy and other environmental protection projects if their raw materials, supplies and components are not produced domestically and statutory conditions are met. Non-agricultural land-use tax exemptions apply to eligible renewable and green projects under Law No. 48/2010/QH12.
Source: OECD based on National Assembly (2023[67]); MOF (2014[136]); MOF (2015[137]); Government of Viet Nam (2013[138]); National Assembly (2023[139]); Government of Viet Nam (2015[140]); Government of Viet Nam (2014[141]); Prime Minister (2020[142]); MOT (2007[143]); National Assembly (2005[144]); Government (Government, 2023[145]); Government of Viet Nam (2017[146]); Government of Viet Nam (2022[147]); Government of Viet Nam (2013[138]); National Assembly (2016[148]); Le (Le, 2024[149]); Freshfields Bruckhaus Dehringer (2020[43]); Source of Asia (2023[150]); Western Pacific (2024[151]); LNT (2023[152]); and VDB (2023[153]).
Expenditure-based incentives that target low-carbon investments are linked to specific expenses and lower the cost of related inputs. For instance, Mauritius and South Africa offer accelerated depreciation allowances on machinery used to generate renewable energy. In Malaysia, investors can benefit from a special tax allowance for expenditure for integrated waste management solutions, electric vehicle charging stations and renewable energy projects (biomass, biogas, small hydropower, geothermal, solar and wind energy). Colombia has introduced accelerated depreciation for machinery, equipment and civil works related to energy generation from non-conventional energy sources and energy efficiency management (OECD, 2024[154]). By lowering the cost of capital, these incentives are expected to facilitate investment that would otherwise not be made and have the potential to mobilise more investment per dollar of forgone tax revenue. A downside of targeted expenditure-based incentives is that they require greater tax administration capacities and are associated with higher compliance costs in terms of qualifying and reporting requirements (OECD, 2022[28]).
Renewable support mechanisms
Viet Nam is in the process of reforming its renewable energy support mechanisms. The country started gradually introducing FiTs for renewable energies in 2008, which were subsequently phased out for solar and wind power in 2021 (Figure 6.13). As a result of the COVID-19 pandemic, however, 62 solar and wind projects, which had signed PPAs with EVN prior to the expiry of FiTs, could not be completed on time and were therefore not able to benefit from FiTs. In October 2022, Viet Nam introduced a transitional pricing mechanism for these solar and wind projects (MOIT, 2022[155]). In November 2023, the country adopted a new permanent pricing mechanism for new wind and solar projects (MOIT, 2023[156]). As part of power market liberalisation, in June 2024, the country introduced a different pricing mechanism for solar, wind and small hydropower plants participating in the competitive wholesale electricity market and large hydropower plants (> 30 MW) (MOIT, 2024[94]; Nguyen, Nguyen and Le, 2024[95]; Allens Linklaters, 2024[96]). In October 2024, Viet Nam adopted a new pricing mechanism for waste-to-energy and biomass power plants (MOIT, 2024[157]). The new transitional and permanent pricing mechanisms are based on tariff ranges defined by EVN (MOIT, 2022[155]; MOIT, 2023[156]; MOIT, 2024[157]). Only small hydropower plants continue to benefit from the in 2008 introduced avoided-cost tariffs (OECD, 2021[15]).
Viet Nam’s FiTs have been an important tool to kick off the solar and wind markets but have been less successful in supporting investment in other renewable technologies. Fuelled by a relatively high FiT, between 2017, when the solar FiT was introduced until 2020, when it expired, 16.7 GW of solar PV capacity (the equivalent of 20.2% of installed capacity for electricity generation) were connected to the grid in Viet Nam. 4 GW (4.8% of installed capacity for electricity generation) of onshore wind capacity was installed between 2011 and 2021 (IRENA, 2024[19]). FiTs supported rapid investment in solar power and to a lesser extent onshore wind power, by providing investors with stable profits and guarantees. Viet Nam does, however, not have any offshore wind parks yet. Similarly, since the introduction of a biomass FiT in 2014, no investments in biomass power plants have been realised despite opportunities for biomass development, especially in the sugar industry (OECD, 2021[15]; Nguyen, 2024[158]; Van, 2022[159]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]). This reflects too low wind and biomass FiTs to cover the cost of investment and operation of these technologies and to offer investors sufficient risk-adjusted returns. Even though the in 2011 introduced wind FiTs were raised in 2018, the short timeline until their expiry date in November 2021 rendered the implementation of new projects difficult (OECD, 2021[15]; Nguyen, 2024[158]; Van, 2022[159]).
Frequently changing renewable support policies have caused uncertainty for investors and reduced investor confidence. Solar and wind FiTs were frequently adjusted and eventually fully phased out with often limited advance notice for investors. The implementation of a new competitive auction mechanism, which has been announced for several years, has been substantially delayed and has lacked clarity (VBF/The Asia Foundation/GEAPP, Forthcoming[17]; VBF/The Asia Foundation/GEAPP, Forthcoming[18]; Vu, 2024[160]; Nguyen, 2023[115]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]). These frequent changes have reduced investor confidence as policy stability is particularly important for investors in the renewable energy sector due to the long payback periods for renewable energy investments and large amount of capital resources required. As projects often take many years to become profitable, long-term policy stability and commitment that the project can be implemented and operated effectively is essential for renewable energy investors (VBF/The Asia Foundation/GEAPP, Forthcoming[17]). Frequent changes have furthermore resulted in numerous different legal documents regulating the licensing and support mechanisms for different types of renewable energies separately. This complex legal framework has created additional uncertainty and costs for investors (VBF/The Asia Foundation/GEAPP, Forthcoming[17]).
Evolution of FiTs for renewable energies in Viet Nam
Source: OECD elaboration based on MOIT (2023[156]; 2022[155]; 2024[157]; 2023[161]; 2023[90]); ; OECD (2021[15]); and MOIT (2024[94]).
Generous combined with gaps in the regulatory framework did not always incentivise the prioritisation of the most suitable projects from a cost-benefit perspective. Solar and, to a lesser extent, onshore wind FiTs in Viet Nam prior to their 2021 expiry were significantly higher than developers’ investment and operating costs, providing a substantial public subsidy. This created risks that some projects could benefit from support mechanisms without fully meeting legal and regulatory requirements, including projects developed on agricultural and forestry land (Hiep, 2024[162]; VBF/The Asia Foundation/GEAPP, Forthcoming[89]). Reports also indicate that some investors without a strong track record in the energy sector were able to benefit from FiTs. These implementation challenges may have contributed to a sub-optimal distribution of investment, with projects offering the strongest returns and cost-benefit ratios not always being prioritised.
The new pricing mechanisms expose renewable developers to more risks, while less generous tariffs may better align support levels with project costs and system needs. Price ranges are provided in VND and are no longer indexed to the VND/USD exchange rate, as was the case for the previous solar and wind FiTs, which expired in 2021. Furthermore, the new permanent pricing mechanism for solar and wind power projects no longer guarantees FiTs for the full length of PPAs but adjusts FiT ranges on an annual basis (MOIT, 2023[156]; MOIT, 2024[157]). Transitional solar and wind FiT ranges are significantly lower than FiTs provided under the previous pricing mechanism (MOIT, 2023[161]; Barnes, 2023[163]). The length of PPAs is also no longer fixed to 20 years (MOIT, 2023[161]; MOIT, 2022[155]; MOIT, 2023[90]; MOIT, 2024[157]). These changes make project profitability less predictable for developers and leave them exposed to exchange rate fluctuation risks, especially those with foreign currency loans (Cooper and Nguyen, 2024[164]; Huld, 2023[165]). Yet, on the other hand, the adjustments also reduce the risk of excessive returns and can help better align support levels with project costs and system needs (MOIT, 2023[156]; Cooper and Nguyen, 2024[164]; Huld, 2023[165]; MOIT, 2024[157]).
Despite recent reforms, incentives for selling renewable electricity could be strengthened. Price ranges are administratively set and not fully cost-reflective, while low retail tariffs, curtailment risk and the absence of capacity or ancillary service payments reduce revenue certainty. Grid congestion and quotas – such as the 20% cap for rooftop systems – further constrain sales. These market features limit bankability for developers and slow private investment.
Given the limitations of the FiT mechanism, Viet Nam is currently in the process of replacing FiTs with competitive renewable auctions. Competitive bidding could result in lower electricity prices to be paid to IPPs, reduce costs, improve transparency and enhance efficiency in renewable investments. The new electricity law introduces competitive bidding for power projects within the scope of the PDP VIII with interest from two or more investors with a few exceptions, including DPPAs. The law provides basic rules and regulations for competitive bidding for power projects (National Assembly, 2024[68]). An in 2024 adopted government decree on the implementation of the Law on Bidding (Government of Viet Nam, 2024[166]) and a MOIT circular on bid evaluation criteria and documents for investor selection in competitive bidding processes in the energy sector (MOIT, 2024[167]) provide further details on the rules and regulations governing the bidding process. To avoid uncertainty for investors, it will be important to shift to competitive bidding for renewable energy projects gradually and to avoid abrupt changes to policy and support mechanisms as it has been the case in the past (OECD, 2021[15]). At present, there is still uncertainty among investors about the design of the future auction mechanism (EuroCham Viet Nam, 2024[65]). To create the right framework conditions for competitive tendering, it would also be beneficial to further increase competition in the wholesale electricity market and to improve the availability of data and information on renewable potential and grid infrastructure (VBF/The Asia Foundation/GEAPP, Forthcoming[18]).
Net metering
To reach the PDP VIII’s ambitious target for rooftop solar, Viet Nam introduced a new net metering scheme in 2024. This new scheme will replace the at the end of 2020 expired FiTs for rooftop solar and provides a legal and regulatory system for on- and off-grid rooftop solar systems for self-consumption. Viet Nam’s PDP VIII targets a total rooftop solar capacity of 2 600 MW by 2030, with 50% of all office buildings and residential houses to be equipped with rooftop solar systems (Prime Minister, 2023[25]). The in 2024 adopted implementation plan allocates this capacity between different provinces and municipalities (Prime Minister of Viet Nam, 2024[60]). This strategy targeting a large amount of rooftop rather than utility-scale grid-connected solar could allow for expanding solar power and meeting increases in demand for electricity without significant additional investment needs in balancing sources and grid infrastructure.
Viet Nam’s new net metering scheme for rooftop solar allows for two models of self-produced and self-consumed rooftop solar systems: systems that are connected to the national grid (on-grid) and systems that are not connected to the national grid (off-grid). Off-grid systems, which do not feed electricity into the national grid, do not face any capacity limits. On-grid systems, on the other hand, cannot exceed a generating capacity of 100 kW or equal to the total installed capacity of the existing load. They can sell the surplus power of up to 20% of their installed capacity to EVN at a price equalling the preceding year’s average market price (Government of Viet Nam, 2024[168]; Baker McKenzie, 2024[169]; Frasers Law Company, 2024[170]; Watson Farley & Williams, 2024[171]).
Large on-grid rooftop solar systems are subject to additional administrative procedures. They have to sign five-year PPAs with EVN when they start generating electricity. On-grid systems with a capacity above 100 kW are furthermore required to install special devices for controlling and monitoring electricity generation, which are connected to EVN’s system, and to be covered by a province’s and municipality’s quota for roof-top solar as defined in the PDP VIII’s implementation plan. On-grid systems with a capacity of 1 000 kW or more require an electricity operating license and a power development certificate and are subject to carry out procedures for power planning. Off-grid systems and on-grid systems with an installed capacity below 1 000 kW are subject to the notification of relevant authorities. Roof-top solar consumer-producers are entitled to tax incentives for renewable energies (Government of Viet Nam, 2024[168]; Baker McKenzie, 2024[169]; Frasers Law Company, 2024[170]; Watson Farley & Williams, 2024[171]).
Problems with the new net-metering scheme include unclear responsibilities between central and local authorities, inconsistencies with power planning, uncertainty related to leasing models and implementation challenges related to the 20% limit. Responsibilities between provincial and central authorities for ensuring that large on-grid systems respect provincial and municipal quotas defined in the PDP VIII’s implementation plan are unclear and this process is further complicated by the small size of rooftop systems, which are not accounted for in municipal and provincial power plans. Furthermore, the exclusion of off-grid systems and on-grid systems with a capacity of less than 100 kW from power planning could result in capacity additions significantly beyond the PDP VIII’s 2 600 MW target for 2030 and municipal and provincial plans’ targets if many households decide to install such systems. Such additions could contribute to electricity oversupply, grid overload and curtailment. The implementation and monitoring of the 20% cap on electricity, which can be fed into the national grid, is not clear either (Reccessary, 2024[172]; Investment Newspaper, 2024[173]). Finally, it is not entirely clear whether the new support scheme allows for leasing or financial leasing of rooftop solar systems (VBF/The Asia Foundation/GEAPP, Forthcoming[89]).
6.4.6. Public infrastructure supporting green investment
Integrating variable solar and wind capacity into Viet Nam’s electricity mix requires enhancing the flexibility of its power system and expanding and upgrading grid infrastructure. Storage capacity, flexible generation capacity, regional interconnections and demand-response management can balance fluctuations in the electricity supply from solar and wind power. A sufficiently developed electricity grid allows for transporting electricity to those locations, where demand is concentrated. In Viet Nam, in the absence of such balancing resources and an insufficiently developed electricity grid, the rapid expansion of intermittent renewables has caused an oversupply of electricity and congestion in the transmission system since the beginning of 2020. This oversupply has led to strategic curtailment of electricity generators, including solar and wind power plants, reducing developers’ revenues, impacting their ability to repay debt obligations and causing financial losses in some cases (OECD, 2021[15]; Ketelsen et al., 2023[20]; GIZ ESP, 2024[174]; Daiss, 2022[175]; ITA, 2024[16]; VBF/The Asia Foundation/GEAPP, Forthcoming[17]). This challenge is partly the result of a concentration of solar power plants in the South of Viet Nam while demand growth is occurring largely in the industrialised Northern region. In the absence of adequate grid infrastructure, excess electricity cannot be transferred from the Southern to the Northern part of Viet Nam (Ketelsen et al., 2023[20]). Curtailment can damage investor and lender confidence, thereby reducing access to finance and investment and increasing financing costs.
Viet Nam has taken initial steps to enhance system flexibility through flexible gas-fired power plants and demand-response management. As discussed above, in its PDP VIII, Viet Nam plans to significantly expand natural-gas fired electricity generation. Modern, quickly dispatchable natural gas-fired power plants could help balance intermittent renewables and are less polluting than coal-fired plants. The PDP VIII also aims to promote economical and efficient energy use and increase demand-response management through smart grid development. In 2012, Viet Nam adopted a Smart Grid Development Roadmap, which sets timelines for different measures to automate grid operation (Prime Minister of Viet Nam, 2012[176]) and an implementing decision by the MOIT in 2016 defined more specific measures and targets (MOIT, 2016[177]). In 2019, Viet Nam also adopted a demand response roadmap, which defines targets and measures to improve demand response management in Viet Nam (MOIT, 2019[178]).
Viet Nam has initiated the automation of its power grid and started upgrading grid infrastructure. The country has deployed Supervisory Control and Data Acquisition (SCADA) systems for remote and on-site control, monitoring and analysis in all power stations and high-voltage substations of 110 kV and above, and started automating the operation of high-voltage substations. Viet Nam has also started rolling out electronic meters and remote meter-reading and data collection systems. Going forward, it will be important to use all functionalities of SCADA systems, solve technical problems, roll out electronic meters more widely, start deploying smart meters and implement commercial demand-response programmes (IES/EWEC, 2023[179]). EVN-NPTC has already made progress in expanding and upgrading the country’s transmission grid, notably through the construction of a 500 kV transmission line to improve regional interconnectivity (VBF/The Asia Foundation/GEAPP, Forthcoming[17]).
Enhanced regional interconnection and electricity trade could render Viet Nam’s electricity system more flexible. Interconnection can allow Viet Nam to export excess electricity from renewable energies during periods of oversupply and to import electricity when it is experiencing electricity shortages. Currently, only a limited number of cross-border transmission lines connect Viet Nam’s electricity grid with Lao PDR, Cambodia and China. Some of them are dedicated to the import of electricity from specific plants in neighbouring countries such as several hydropower plants in Lao PDR (OECD, 2021[15]). Viet Nam is planning additional interconnectors with Lao PDR and Cambodia (EVN, 2021[180]). Viet Nam is also part of the regional initiatives for power market integration ASEAN Power Grid (APG), which aims to connect the energy markets of the ASEAN’s 10 members, and Greater Mekong Subregion (GMS) programme, a joint initiative with Cambodia, China, Lao PDR, Myanmar and China. These initiatives are, however, both still in the early stages. Further advancing them and improving regional interconnection requires harmonising technical and regulatory standards and operating procedures, developing national and subsequently regional power markets and agreeing on data and information sharing and on joint operation of interconnectors (OECD, 2021[15]).
Battery storage could enhance power system flexibility. Viet Nam’s PDP VIII targets 300 MW of battery storage by 2030 (Prime Minister, 2023[25]). Viet Nam’s legal basis for battery energy storage systems is developing, while implementation rules, market arrangements and revenue models may require further clarification to support private investment at scale (EuroCham Viet Nam, 2024[65]). Furthermore, Viet Nam’s 2030 target for battery storage remains low, amounting to only 0.4% of the installed capacity for electricity generation. Other countries such as Uzbekistan have made the integration of battery storage systems into newly built utility-scale solar and wind power plants mandatory (OECD, Forthcoming[181]).
Private investment in Viet Nam’s transmission grid infrastructure and balancing sources such as flexible natural-gas fired generation capacity and electricity storage could allow to finance significant investment needs. The PDP VIII forecasts investment needs in grid infrastructure of USD 14.9 billion by 2030 (USD 1.5 billion annually) and USD 34.8 – 28.6 billion between 2031 and 2050 (USD 1.7 – 1.9 billion annually) (Prime Minister, 2023[25]). This compares to current annual investment by EVN-NPTC of USD 0.5-0.8 billion (EuroCham Viet Nam, 2024[65]). Viet Nam is planning to overcome this financing gap through the facilitation of private investment in transmission grid infrastructure (Daiss, 2022[175]). Viet Nam’s amended PPP law encourages PPPs in transmission line and substation development (ITA, 2024[16]). The recently amended electricity law allows for private investment in transmission infrastructure (Ketelsen et al., 2023[20]; EuroCham Viet Nam, 2024[65]). Facilitating private investment in grid infrastructure, requires, however, further improving and completing the regulatory framework.
6.4.7. Green innovation and skills
Low-carbon innovation
Low-carbon and environment-related R&D remains moderate in Viet Nam in line with R&D in general. Inventions of environment-related technologies increased from about 0.03 per million inhabitants in 2010 to around 0.2 per million in 2021, but this remains low compared with the OECD average of about 24.5 per million on average (Figure 6.14). This is in line with Viet Nam’s overall moderate performance in R&D: in 2021, there were only 779 researchers in R&D per million people compared to 4 079 in the OECD (in 2020) and R&D expenditure amounted to only 0.43% of GDP compared to 3% in OECD members on average. Likewise, there were only 7.2 patent applications by residents and non-residents per billion USD of PPP GDP in Viet Nam n in 2021 compared to 20.2 in OECD countries on average (World Bank, 2024[10]).
Environment-related technologies patents per person (millions) and inventions (% of total inventions), 2021
Source: OECD based on OECD (2024[182]), OECD Patent Statistics (Patents - Indicators), https://data-explorer.oecd.org.
Environment-related innovation in Viet Nam is concentrated in the energy sector: in 2021, 37.4% of environment-related technology inventions were climate change mitigation technologies in energy generation, transmission and distribution followed by 29.% environmental management technologies and 18.2% climate mitigation technologies related to buildings (OECD, 2024[182]). In the energy sector, significant potential for clean energy innovation exists in offshore wind, given unique challenges in Viet Nam in terms of tropical storms, and in biomass, where potential exists to use agricultural feedstocks such as rice husk, rice straw, coconut pith, sugar cane bagasse and coffee waste from rural communities (OECD, 2021[15]).
Viet Nam’s moderate performance in innovation in general and in low-carbon innovation in particular can be attributed to the institutional and policy framework for innovation, a focus on technology generation and lower innovation capacity. Multiple public institutions are involved in innovation policymaking but implementation and co-ordination amongst these institutions and with the private sector is limited (World Bank, 2021[183]; VISTI/NESTA, 2020[184]). This holds also true in the renewable energy sector where collaboration between private companies and universities and other research institutions is not common (VBF/The Asia Foundation/GEAPP, Forthcoming[17]). Innovation policies are too narrowly focused on tax incentives and grants and too few programmes, which promote spillovers and linkages between local suppliers and MNEs, exist. Furthermore, existing programmes focus too much on large firms. Viet Nam’s policies are also biased towards support for the invention of new technologies at the expense of adoption and diffusion of existing technologies from abroad and among a wider pool of firms (World Bank, 2021[183]; VISTI/NESTA, 2020[184]). Green skills mismatches and shortages (see section in green skills) and shortcomings in education result furthermore in a lower innovation capacity.
Viet Nam could support green innovation through targeted start-up accelerators, incubators or innovation centres for green technologies, renewable energy and energy efficiency. Several initiatives already exist in Viet Nam, often supported or developed by international donors. This includes the Green Technology Incubator by the German-funded Digital Transformation Centre Project, implemented by GIZ and Viet Nam’s National Innovation Centre (Fourdozen, 2024[185]; Viet Nam News, 2023[186]), the Acceleration Program for Innovative Startups in the field of Energy Efficiency (AIS4EE) funded by the European Union and the Global Green Growth Institute (GGGI) and implemented in collaboration with MOIT (VNEEP, 2024[187]; AIS4EE, 2024[188]; EVSET Facility, 2024[189]; GGGI, 2024[190]) and the World Bank-funded Vietnam Climate Innovation Centre (World Bank, 2024[191]; Australian Government, 2019[192]). Driven by demand from international investors, an increasing number of local green startups specialising in products and services such as environmental-friendly packaging are also developing. Green accelerators and incubators can play an important role in supporting private enterprises in green innovation. Going forward, it could be beneficial strengthen the role of universities and research institutions in such initiatives to foster more collaboration between them and private companies.
Measures to strengthen MSMEs’ absorptive capacities could facilitate more green innovation. Absorptive capacity is defined as the ability of the firm to acquire, assimilate and exploit the available information, knowledge and technology that comes through interaction with other firms. Governments can strengthen MSMEs’ absorptive capacities by implementing targeted measures that support the development of strategic assets and resources at the firm level (e.g. access to skills, finance, innovation and digitalisation, etc.). Such measures often involve financial support and technical assistance but also training and guidance on the skills, managerial and organisational changes that are required to strengthen firm productivity and innovation. Measures that facilitate access to qualified human capital can strengthen firms’ capabilities in areas that require highly specialised expertise and skillsets such as those involving the use of innovative production processes, automation and digitalisation. Managerial skill development programmes in the form of seminars, workshops and individual consultations and improved access to finance can also enhance firms’ absorptive capacities (OECD, 2022[28]). Improved absorptive capacities can facilitate both, the adoption of new technologies among firms and the development of new processes and products.
Intellectual property protection is crucial for facilitating low-carbon innovation and investment. Intellectual property rights (IPRs) create strong incentives for innovation as they ensure that investors earn a fair return on their technological innovations. IPRs can be used to generate revenues from licences, encourage synergistic partnerships, or create a market advantage and be the basis for productive activities. They are especially important for the development of low-carbon technologies, which are both research- and capital-intensive (OECD, 2022[28]).
Viet Nam has a legal and regulatory framework for intellectual property rights in line with international standards and is a signatory to international agreements on intellectual property rights. Viet Nam’s 2005 Intellectual Property law, amended in 2009, provides the legal framework for intellectual property protection in Viet Nam (National Assembly, 2009[193]). In 2019, Viet Nam adopted a National Strategy on Intellectual Property with a Vision to 2030 (Prime Minister of Viet Nam, n.d.[194]). Viet Nam is a signatory of important intellectual property agreement such as the Paris Convention for the Protection of Industrial Property, the WTO Trade-Related Aspects of Intellectual Property Rights (WTO TRIPS) Agreement, the World Intellectual Property Organization, the Patent Cooperation Treaty, the Madrid Protocol and The Hague Agreement concerning the International Deposit of Industrial Designs (OECD, 2021[15]).
The enforcement of intellectual property protection could be further improved in Viet Nam. Challenges exist in the enforcement and implementation of intellectual property laws and regulations in Viet Nam (ITA, 2024[195]; OECD, 2021[15]). In 2024, Viet Nam ranked 85 out of 125 countries on the International Property Rights Index. It was performing worst in judicial independence and copyright protection (Property Rights Alliance, 2024[196]). Viet Nam has further been listed on the Watch List in the United States Trade Representative’s Special 301 Report for over a decade (Office of the United States Trade Representative, 2024[197]; ITA, 2024[195]).
Planned measures could also strengthen the domestic ecosystem for green technology adoption. MOST has proposed to establish Vietnamese organisations capable of providing internationally recognised green certification and to train specialised experts and intermediaries to facilitate green technology transfer. Building such certification capacity and a pool of technology-transfer specialists would help local firms meet global sustainability standards, adopt advanced low-carbon technologies, and better integrate into international green value chains.
Green skills
Skills shortages are an important challenge for green investors in sectors such as renewable energies or green agriculture in Viet Nam. In the case of renewable energies, the solar and wind sectors’ rapid expansion since 2017 has led to significant shortages in skilled workers. Wind and solar power plants have to rely largely on specialised technicians from abroad or Vietnamese nationals, who have been trained abroad in renewable energies. They face difficulties in recruiting engineers, renewable energy project managers and specialised technicians locally, especially, with a good level of English and solid project management and soft skills such as teamworking. Without adequate skills development policies, Viet Nam’s ambitious renewable energy targets can be expected to further exacerbate existing skills shortages (Hien, 2021[198]). Other green sectors such as green agriculture face difficulties in hiring skilled workers as well (Do, 2023[199]).
Viet Nam has started introducing courses related to renewable energy at both tertiary education institutions and the TVET level. Approximately 20 universities offer courses related to renewable energy, including Hanoi University of Science and Technology, University of Electricity and Ho Chi Minh City University of Technology. Most researchers teaching these courses have been well-trained abroad (VBF/The Asia Foundation/GEAPP, Forthcoming[17]; Hien, 2021[198]; An, 2024[200]). In parallel, vocational training for wind and solar technologies is being developed through public–private partnerships, including industry-led TVET programmes supported by international partners (GIZ, 2025[2]). A notable example is the GIZ-supported development partnership establishing vocational training centres for wind and solar energy, which has trained instructors and technicians across multiple provinces (GIZ, 2025[2]). Despite these initiatives, most programmes remain recent and the number of trained technicians remains insufficient to meet rapidly growing demand (Hien, 2021[198]). Several development partners are working with Viet Nam to expand and improve education and training programmes in renewable energies and other green technologies, for example, the Agence Française de Développement (AFD), United Nations Industrial Development Organization (UNIDO), the Swiss State Secretariat for Economic Affairs (SECO), the United Nations Environment Programme (UNEP) and the Deutsche Gesellschaft für Technische Zusammenarbeit (GIZ) (OECD, 2021[15]).
The development of green skills figures amongst the objectives of Viet Nam’s Green Growth Strategy and action plan (Prime Minister, 2021[56]). The plan includes integrating green growth into curricula at all education levels, investing in training infrastructure in schools and vocational institutions, and strengthening co-operation with the private sector and internationally on green skills. It also calls for measuring green jobs, forecasting demand and supply, and building a national labour market information system (Prime Minister, 2022[57]). Going forward, preparing a dedicated green skills development strategy could provide clearer guidance for policy and investment (OECD, 2021[15]).
It will also be important to foster more collaborations between higher education institutions in Viet Nam and private investors, especially foreign companies, in renewable energies and other green industries (VBF/The Asia Foundation/GEAPP, Forthcoming[17]). Some collaborations exist already: for example, Hanoi University of Science and Technology is collaborating with EVN and foreign investors from Japan on training related to renewable energies (An, 2024[200]). The agricultural company Greenfeed Vietnam reports collaborating with more than 40 universities and colleges through the award of scholarships, scientific research activities and internship opportunities to meet its human resource needs (Do, 2023[199]). Going forward, Viet Nam could establish a dedicated council or committee to regularly engage business associations, employers and businesses, trade unions and non-governmental organisations, educational institutions and government institutions and to foster more collaboration between stakeholders in the development of green skills (OECD, 2019[201]).
More in-house training by private investors could support the development of sufficient green skills in Viet Nam. Dedicated tax incentives for training in green skills such tax allowances or credits for training and education expenses could incentivise more in-house training and skills development by green investors.
To better align its education system and in particular TVET education with the private sector’s needs, Viet Nam requires information on those green skills that are available or lacking in the labour market. Individuals and firms alike require this information to make decisions about which skills to develop. Governments need this information to design relevant education and training policies and programmes. An effective skills assessment and anticipation (SAA) system could identify the types of green occupations, qualifications and fields of study in demand in the labour market, or that may become so in the future. Such systems should use both quantitative and qualitative methods, as well as both short- to medium-term and longer-term evaluations to allow for robust analysis (OECD, 2019[201]). The objective of developing a national labour market information system in the action plan for Viet Nam’s Green Growth Strategy is a first step in the direction of the development of such a system.
6.4.8. Responsible business conduct
Responsible business conduct (RBC) and voluntary compliance promotion instruments can facilitate more environment- and climate friendly business practices. OECD’s Guidelines for Multinational Enterprises on Responsible Business Conduct recommend that businesses take due account of the need to protect the environment, including improving environmental performance and addressing any adverse environmental impacts in their own operations and supply chains, within the framework of laws, regulations and administrative practices in the countries, in which they operate. In particular, Chapter 6 of the Guidelines on “Environment” addresses aspects such as environmental management systems, continual improvement of corporate environmental performance, training of workers on environmental matters, and raising environmental awareness (OECD, 2023[73]).
Awareness of RBC is not yet widespread in Viet Nam but is increasing, driven in part by foreign investors’ higher RBC standards and spillovers to local firms. Evidence from business surveys, investor reporting and stakeholder consultations suggests that large foreign investors – particularly from European countries – tend to perform more strongly in green RBC practices. These practices include environmental and climate reporting, the use of renewable energy and electric vehicles, and the adoption of recycling and circular-economy initiatives, thereby creating opportunities for supply-chain spillovers to domestic companies. Foreign companies’ demand for green products and services, such as sustainable packaging from local suppliers, has supported the emergence of local industries in these areas and contributed to green innovation by domestic firms (PWC, 2022[202]; EuroCham Viet Nam, 2024[65]; OECD, 2018[76]).
Despite these firm-level improvements, particularly among foreign-invested enterprises, the implementation and enforcement of green RBC and environmental protection regulations remain a challenge at the system level in Viet Nam. Environmental damage and pollution by investors persist due to weaknesses in monitoring, enforcement and compliance with laws and regulations (OECD, 2018[67]). Reflecting these challenges, Viet Nam ranked last (180th of 180 countries) on Yale University’s 2024 Environmental Performance Index, which assesses countries’ performance and policies in the areas of climate change, environmental health and ecosystem vitality (Yale Centre for Environmental Law and Policy, 2024[195]). Environmental risks are likely to intensify as Viet Nam moves up the value-added chain towards more sophisticated high-tech and electronics manufacturing, where risks related to industrial and hazardous waste, including electronic and chemical waste, can be pronounced (OECD, 2018[76]).
The EU–Viet Nam Free Trade Agreement (EU-VFTA) provides an important contextual anchor for responsible business conduct in Viet Nam, as it explicitly references sustainable development and responsible business practices. By deepening trade and investment links, the agreement also increases exposure of foreign investors, exporters and local suppliers to EU disclosure and RBC-related expectations. In addition, the EU’s Corporate Sustainability Reporting Directive (CSRD), adopted in 2022, places reporting obligations on large companies with operations in the EU, which may indirectly influence corporate practices in Viet Nam through parent-company and supply-chain requirements (Nam et al., 2024[203]). Separately, the EU’s Carbon Border Adjustment Mechanism (CBAM) affects Vietnamese exporters in carbon-intensive sectors by introducing emissions reporting and, over time, carbon pricing requirements. While CBAM is not a responsible business conduct instrument, it may indirectly incentivise improved emissions measurement and carbon management among affected firms (Slaughter and May, 2025[204]).
Viet Nam published the National Action Plan (NAP) for Law and Policy Improvement to Promote Responsible Business Practices in Viet Nam, which contains provisions on green RBC, in July 2023. The NAP’s overall objectives aim at enhancing “the positive impacts and minimise the negative ones of economic and business development activities on society and the environment”. The NAP’s specific actions include reviewing and improving legislation on natural resources and environment to promote responsible business practices, including Viet Nam’s Law on handling of administrative violations in the fields of investment, labour, environmental protection, protection of vulnerable groups, and consumer protection. They also include the development of complaint mechanisms to report negative impacts of businesses on the environment at government institutions such as hotlines, mailboxes or fora for dialogue as well as the collection of data on complaints from these mechanisms (Prime Minister of Viet Nam, 2023[205]).
The development of Viet Nam’s National Action Plan (NAP) on Responsible Business Conduct included stakeholder consultations, involving representatives from the public and private sectors, state-owned enterprises, international partners, trade unions, civil society organisations and vulnerable groups. The process was supported by development partners, including the United Nations Development Programme (UNDP), and featured consultations and workshops, as well as a period for public comments via the Ministry of Justice’s website in February 2023 (DIHR, 2023[206]). From a policy design perspective, a longer and more transparent consultation period, with clearer communication on how stakeholder inputs are reflected in final policy documents, could have further strengthened the quality, inclusiveness and credibility of the NAP. International experience suggests that extended consultation timelines and systematic feedback mechanisms can enhance stakeholder ownership and support effective implementation of RBC frameworks. In addition, while earlier assessments of Viet Nam’s regulatory framework for responsible business conduct have been made publicly available, the publication of subsequent analytical updates could further support transparency and informed policy dialogue.
In 2022, Viet Nam adopted the 2022-2025 Programme to support private enterprises in sustainable business, which includes objectives for RBC. It aims at “sustainably developing private sector enterprises, ensuring close, reasonable and harmonious co-ordination between economic efficiency and social responsibility, protection of resources and environment, contributing to the attainment of 17 sustainable development goals of Viet Nam by 2030” and at developing an environment supporting businesses which contribute to “the creation of jobs, the improvement of living standards of low-income earners and disadvantaged people, the environmental protection and response to climate change in Vietnam”. The programme’s specific objectives and activities include awareness rising and the provision of information on sustainable business among private companies and public sector officials (Prime Minister of Viet Nam, 2022[207]).
Environment entities to make environment and climate-related financial disclosures can help mobilise green investment and provide companies with incentives to reduce their carbon footprint and environmental impact. Effective, clear, and consistent environment- and climate-related disclosures can reveal how companies are preparing for a lower-carbon economy and how they are dealing with pollution and other environmental risks and thus supports investors to better assess financial exposure to climate-related risks. Such disclosures can improve the accuracy of ESG investment ratings and ultimately facilitate investments into lower carbon assets. The Task Force on Climate-related Financial Disclosure (TCFD) provides recommendations to companies on TCFD, which include the disclosure of information on the governance, strategy, management and targets around climate-related risks. Environmental regulations on reporting requirements are also increasingly used to address the cross-border environmental footprint of multinationals (OECD, 2022[28]).
The disclosure of environmental information is mandatory for public and listed companies and SOEs in Viet Nam. Circular No. 96/2020/TT-BTC (2020) makes the annual disclosure of environmental and social impacts mandatory for public companies, listed organisations, security companies and companies with publicly offered or listed bonds. Companies must disclose total direct and indirect greenhouse gas (GHG) emissions, measures and initiatives to reduce GHG emissions, the total amount of raw materials used for the manufacture and packaging of the products and services during the year, the share of recycled materials used to produce products and services, direct and indirect energy consumption, energy savings initiatives, the amount of water used, share of reused water, the number of times being fined for failing to comply with laws and regulations on the environment and the total amount of such fines, green capital market activities (MOF, 2020[208]; EuroCham, 2024[209]; Keslio, 2024[210]). Viet Nam’s State Securities Commission (SSC) published in co-operation with the IFC the Sustainability Reporting Handbook for Vietnamese Companies (2013) (SSC/IFC, 2013[211]) and GHG Emissions Reporting Guidebook (2023) (SSC/IFC, 2023[212]; SSC, 2023[213]) to support companies in their ESG disclosure. Decree 47/2021/ND-CP makes the disclosure of information on environmental protection mandatory for state-owned enterprises (SOEs) in Viet Nam (Government of Viet Nam, 2021[214]; Slaughter and May, 2025[204]).
Survey evidence suggests that ESG adoption is progressing among firms in Viet Nam, though with differing areas of emphasis. Around 44% of companies report having made ESG commitments and a further 36% plan to do so within the next two to four years. ESG commitments are more prevalent among foreign-invested companies (57%) than among Vietnamese listed (35%) and non-listed firms (40%), reflecting the influence of parent-company policies, home-country reporting requirements and reputational considerations (PWC, 2022[202]). Across firms, governance is most frequently identified as the primary focus of ESG strategies, cited by 62% of companies, while environmental considerations are prioritised by 22%. This pattern is consistent with international experience, where governance reforms often represent an entry point for broader ESG integration, with environmental and social dimensions gaining prominence as reporting frameworks, regulatory requirements and investor expectations evolve (PWC, 2022[202]).
Challenges remain in the implementation of environmental reporting. A main issue with Circular No. 96/2020/TT-BTC is the absence of clear standards on how to report, leading to confusion and inconsistent disclosure quality. Many firms also struggle to collect and process the required data. Reporting could be strengthened by adopting a green taxonomy and aligning with international standards such as the European Sustainability Reporting Standards and the Task Force on Climate-Related Financial Disclosures standards, alongside mandatory validation or audits. Disclosure could also extend to biodiversity and waste generation, already covered in other regions such as Singapore and the European Union (EuroCham, 2024[209]). Looking ahead, public access to emissions and environmental data is expected to improve as the newly formed MAE assumes disclosure responsibilities and releases more comprehensive, regularly updated inventories and related datasets.
Special reporting requirements exist for companies in special economic zones, industrial clusters and other dedicated areas for production. Viet Nam’s Law on Environmental Protection includes a separate section on environmental protection during production, business operation and service provision. Investors in industrial clusters, special economic zones and other dedicated areas for production are required to comply with environmental inspection requirements, engage in environmental monitoring and prepare reports on environmental protection to be shared with competent authorities (National Assembly of Viet Nam, 2022[69]; MOJ/Government of Sweden/UNDP, 2020[215]). Large GHG emitting facilities in energy, transport, construction, industrial processes and agriculture, which are on the list of facilities to develop GHG inventories, have to monitor and report their GHG emissions to MAE on an annual basis and to develop GHG reduction plans (National Assembly of Viet Nam, 2022[69]; Slaughter and May, 2025[204]).
Higher fines for environmental offenses and more effective litigation by courts, better public participation and stronger support for communities affected by environmental offenses could strengthen the implementation of environmental regulations. Fines and other punishments for offenses in the area of environmental protection are not high and strong enough to deter environmentally harmful behaviour. Victims of environmental offenses frequently avoid litigation through the court system due to its perceived complexity, inefficiency and courts. Viet Nam furthermore lacks mechanisms to allow people and social organisations to raise concerns on the violation of environmental regulations and environmental pollution through their participation in the design and monitoring of investment projects. Communities affected by environmental pollution and damage lack support to monitor and report such violations (MOJ/Government of Sweden/UNDP, 2020[215]).
Viet Nam introduced the legal concept of social enterprises in 2014; however, uptake remains limited relative to the overall enterprise population. Social enterprises are defined as enterprises with the objective of addressing social and environmental challenges in the public interest, which reinvest at least 51% of their annual profits for these purposes. While the legal framework enables social enterprises to receive donations and financial support from domestic and foreign individuals and organisations, their number remains small compared to the total number of registered firms, and their economic footprint is modest (National Assembly, 2022[216]; MPI, 2024[217]; OECD, 2018[76]). This suggests that, despite a supportive legal basis, social enterprises have not yet become a widespread vehicle for delivering social and environmental objectives through private business activity.
Eco-labelling exists in Viet Nam since 2009 when the “Viet Nam Green Label” was introduced but awareness and use remain limited. MONRE (now MAE) is responsible for setting and promulgating criteria, granting certification and monitoring the use of Viet Nam Green Label. In 2014, MONRE issued detailed criteria for the eligibility of products for the Viet Nam Green Label. Eligible products include office paper, electronic devices, batteries, fluorescent lamps, biodegradable plastics and cosmetics. In 2018, 59 products had obtained the Viet Nam Green Label certification (MONRE, 2018[218]; MONRE, 2009[219]). In addition, in 2012, Viet Nam introduced criteria for environmentally friendly plastic bags such as biodegradability and limits on the presence of heavy metals. Plastic bags complying with these criteria are exempted from the country’s environmental protection tax, which applies to environmentally harmful products, including plastic bags. As of 2018, 46 products from 41 companies had received certification as environmentally friendly plastic bags (MONRE, 2018[218]; MONRE, 2012[220]). However, limited public awareness and market demand for ecolabelling products as well as interest by businesses have hindered the broader uptake of and demand for certification (MONRE, 2018[218]).
In 2022, the Viet Nam Green Label was replaced with the Viet Nam Ecolabel for environmentally friendly products and services. As the Viet Nam Green Label is, Viet Nam Ecolabel is managed by MAE. Once obtained, Viet Nam Ecolabel certifications are valid for three years (Government of VIet Nam, 2022[221]; TCHEM, 2025[222]). In 2023, MONRE issued criteria for environmentally friendly plastic packaging, including biodegradability, the use of recycled materials and maximum limits for pollutants, which are more stringent than the previously applied criteria in the context of the Viet Nam Green Label (MONRE, 2023[223]; TCHEM, 2025[222]). In 2024, Viet Nam introduced a green label and inspection certificate for vehicles using clean, green energy and environmentally friendly fuel in the context of vehicle inspections (MOT, 2024[224]; Huyen, 2024[225]).
Viet Nam has started developing a regulatory framework for green public procurement (GPP), which is now being strengthened. The 2022 amended Law on Environmental Protection first defines GPP as the purchase of environmentally friendly products and services awarded the Viet Nam Ecolabel, giving them priority in state-funded projects, and its implementing Decree No. 08/2022/ND-CP on the law’s implementation provides further details (National Assembly of Viet Nam, 2022[69]). More recently, the revised Law on Public Procurement and Decree No. 24/2024/ND-CP allow contracting authorities to prioritise environmentally friendly goods and services. Eco-labelled and energy-labelled products now qualify for incentives, and environmental criteria can be built into bid specifications, price evaluations, and early planning and cost estimation. These updates could help create more predictable domestic demand for low-carbon goods and services, though further expansion beyond the Viet Nam Ecolabel and stronger implementation could make GPP more effective.
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← 1. Members include the Minister of Natural Resources and Environment, the Minister-Chairman of the Office of Government, the Minister of Planning and Investment, the Minister of Finance, the Minister of Foreign Affairs, the Minister of Justice, the Minister of Industry and Trade, the Minister of Transport, the Minister of Agriculture and Rural Development, the Minister of Construction, the Minister of Information and Communications, Minister of Education and Training, Minister of Science and Technology, Minister of Labour, Invalids and Social Affairs, Minister of Health, the Governor of the State Bank of Viet Nam and the Chairman of the Commission for the Management of State Capital at Enterprises.
← 2. Members include the Deputy Minister of Construction, the Deputy Minister of Planning and Investment, the Deputy Minister of Science and Technology, the Deputy Minister of Education and Training, the Deputy Minister of Transport, the Deputy Minister of Agriculture and Rural Development, the Deputy Minister of Labor, Invalids and Social Affairs, the Deputy Minister of Natural Resources and Environment, the Deputy Minister of Information and Communications, the Deputy Minister of Finance, the Vice Chairman of Viet Nam Energy Conservation and Energy Effciency Association, the Deputy General Director of Électricité du Viet Nam and the Director General of the Energy Efficiency and Sustainable Development Department (Ministry of Industry and Trade).
← 3. European Union, the United Kingdom, the United States, Japan, Germany, France, Italy, Canada, Denmark and Norway