In a recent visit to Vietnam, Mr Hiroshi Wantanabe, CEO of the Japan Bank for International Cooperation (JBIC), said Vietnam's electricity development plan to 2020 and orientation to 2030 have helped investors to envisage the long-term development of electricity industry. High economic growth and higher living standards will result in very high demand for electricity and this is the reason why Japanese investors are interested in power projects.

Low power price is not necessarily a barrier Mr Hiroshi Wantanabe revealed that JBIC may consider funding thermal power projects, especially those interested and negotiated by Japanese corporations, like Nghi Son 2, Vung Ang 2 and Van Phong 1. These are feasible projects as they meet Vietnam's energy development requirements and enterprises' investment demands. He analysed that although the United States announced to stop funding coal-fired power plants in other countries because this burning material emits much carbon, this is no reason to turn down investment in this field in Vietnam where coal reserves are abundant. In the coming decades, Vietnam still has to generate electricity from coal. In answer to the question why Japan is interested in power projects in Vietnam while many domestic and foreign investors are not keen on them because of low electricity prices, he explained that electricity price is not necessarily a big problem because Japanese investors always carefully weigh their investment decisions. However, JBIC also recommended, "In Vietnam, State agencies tend, and want, to keep the prices of essential commodities such as electricity and water lower [than costs] to ensure social security. An increase in input costs like coal and oil may push up electricity production costs. If power prices are unrealistically low, they will not reflect real costs. Consequently, investor interests will be affected. Vietnam needs to ensure profitability for investors although it is low." Transparency and exchange rate risk response Mr Hiroshi Wantanabe stressed that Vietnam must make investment attraction transparent and clear in every project. If processes have hitches, investors will shrink back. Besides, when investing in Vietnam, investors also hope to have a coordinating unit to handle administrative procedures to save time and resources. He also expressed his concerns over exchange rate risks and foreign exchange restrictions in Vietnam, especially in big investment projects like power, industry and infrastructure. "If investors bring exchange rate fluctuations into contracts, selling prices will be higher. Meanwhile, in PPP (public private partnership) investment, risks need to be allocated to the parties with the best competence to handle. Hence, Vietnam should consider an appropriate framework to ensure minimum foreign exchange risks," he added. Hiroshi Wantanabe noted, "Foreign investors also expect the State Bank of Vietnam to ensure stability and predictability of exchange rate. International financial institutions cannot perform foreign currency exchange on the market as well as Vietnamese authorities. Therefore, we urge the authorities to consider this to have reasonable regulations."

By Huong Ly - vccinews.com/

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