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Energy-saving foreign firms to be favoured
To ease the current power shortage and boost foreign currency supplies, the Foreign Investment Agency (FIA) has suggested the Government stimulate capital disbursement from FDI projects that have small energy needs, rather than electricity-hungry heavy industries.
The country's electricity shortage would worsen in the coming months as many sources of supply would be cut in March, FIA Director Do Nhat Hoang said, adding this could cause problems with capital disbursement.
Previous power shortages had impacted many companies' trade and production including in FDI companies, causing problems with capital disbursement, Hoang told Dau Tu (Viet Nam Investment Review).
Driving up FDI capital disbursements was a potential strategy to improve the country's foreign currency supply and reduce pressure on the current account, he said.
Hoang said, to achieve the right objectives, stimulating capital disbursement had to be done right, as it was a two edged sword.
He explained most FDI projects in Viet Nam were electricity intensive industries such as industrial production, processing and manufacturing (7,418 out of the total operating 12,448 projects). Hence capital disbursement there may help the current balance, it would put extra load on the already-stretched-to-the-limit power supplies.
He also pointed out that FDI enterprises often relied on material imports, so the benefit to the trade balance might not be as good as expected.
In the first two months of this year, FDI enterprises imported US$5.93 billion worth of goods, a year-on-year increase of 31.9 per cent. It accounted for 41.9 per cent of the country's total import value.
Some experts warned that certain FDI businesses were taking advantage of cheap energy prices in Viet Nam, to import materials for export manufacturing.
Hoang also suggested that power savings FDI projects should get priority when applying for investment licences.
He said energy-intensive FDI projects needed to be reviewed and made more energy efficient.
FDI projects, such as in real estate, that drained Viet Nam's foreign currency resources would not be stimulated to disburse, Hoang said.
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