Foreign Direct Investment in the Renewable Energy Industry to Meet New Requirements in Vietnam
Abstract:
This article provides a comprehensive, multi-dimensional analysis of foreign direct investment (FDI) flows into Vietnam's renewable energy industry during the historic transition period from 2016 to 2025. Based on primary data from legal documents, statistical reports from state management agencies, and secondary data from international organizations, the study reconstructs the comprehensive picture of the national energy structure transformation process. According to data from the Ministry of Planning and Investment, by the end of 2024, the total registered FDI in this sector had reached approximately US$41.9 billion, accounting for 8.3% of the total FDI nationwide. The study identifies and analyzes the key development stages, while also highlighting the role of trade agreements (EVFTA, CPTPP) and JETP commitments in driving these capital flows. However, the report also clearly identifies serious bottlenecks regarding transmission infrastructure (causing 15-20% capacity reduction), legal dispute risks, and the low rate of technology transfer (only about 20%). From that, the report proposes a system of strategic solutions, including the enactment of a Renewable Energy Law and a set of green FDI criteria to unblock resources.
KeyWords:
DPPA Mechanism, Foreign Direct Investment (FDI), Renewable Energy Law, Power Development Plan VIII, Carbon Credits
References:
- Ministry of Industry and Trade. (2024). Policy consultation proceedings: Development of competitive electricity market and direct power purchase agreement (DPPA) mechanism. Vietnam Energy Partnership Group.
- Government of the Socialist Republic of Vietnam. (2024). Decree regulating the direct power purchase agreement mechanism between renewable energy generation units and large electricity customers (Decree No. 58/2024/ND-CP). Government Portal. https://vanban.chinhphu.vn/?pageid=27160&docid=208550
- Government of the Socialist Republic of Vietnam. (2025). Decree regulating the direct power purchase agreement mechanism between renewable energy generation units and large electricity customers (Decree No. 57/2025/ND-CP). National Database on Legal Documents. https://vbpl.vn/TW/Pages/vbpq-van-ban-goc.aspx?ItemID=176043
- Cohen, W. M., & Levinthal, D. A. (1989). Innovation and learning: The two faces of R&D. The Economic Journal, *99*(397), 569-596.
- Dunning, J. H. (1979). Toward an eclectic theory of international production: Some empirical tests. Journal of International Business Studies, *11*(1), 9-31.
- Eden, L., & Dai, L. (2010). Rethinking the O in Dunning's OLI/Eclectic Paradigm. Multinational Business Review, *18*(2), 13-34.
- Institute for Energy Economics and Financial Analysis. (2024, February). Vietnam's renewable energy landscape: A foreign investor's perspective. https://ieefa.org/resources/vietnams-renewable-energy-landscape-foreign-investors-perspective
- Institute for Energy Economics and Financial Analysis. (2024, April). Vietnam's solar and wind power boom: Who owns the assets?. https://ieefa.org/resources/vietnams-solar-and-wind-power-boom-who-owns-assets
- Institute for Energy Economics and Financial Analysis. (2022, May). Vietnam's renewable energy strategy can make or break economy's manufacturing future. https://ieefa.org/sites/default/files/2023-09/Vietnams%20Renewable%20Energy%20Strategy%20Can%20Make%20or%20Break%20Economys%20Manufacturing%20Future_May%202022.pdf
- McKinsey & Company. (2024). Putting renewable energy within reach: Vietnam's high-stakes pivot. https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/putting-renewable-energy-within-reach-vietnams-high-stakes-pivot
- Ngov, P., et al. (2025). Rise of Vietnam's solar panel industry. VoxDev.
- Nguyen, T. A., & Pham, T. H. (2024). Overview report on Vietnam renewable energy market in the first half of 2024. Vietnam Energy Magazine.
- National Assembly of the Socialist Republic of Vietnam. (2024). Electricity Law (amended) (Law No. 61/2024/QH15).
- Singapore Green Finance Centre. (2023, December). Vietnam renewables: Investment priorities. https://www.singaporegreenfinance.com/wp-content/uploads/2023/12/Vietnam-Renewables-Investment-Priorities.pdf
- Prime Minister of the Socialist Republic of Vietnam. (2017). Decision on promulgating support mechanism for development of solar power projects in Vietnam (Decision No. 11/2017/QD-TTg). Government Portal. https://vanban.chinhphu.vn/?pageid=27160&docid=189518
- Prime Minister of the Socialist Republic of Vietnam. (2018). *Decision on amending and supplementing a number of articles of Decision No. 37/2011/QD-TTg dated June 29, 2011 on support mechanism for development of wind power projects in Vietnam* (Decision No. 39/2018/QD-TTg). Government Portal. https://vanban.chinhphu.vn/?pageid=27160&docid=194533
- Prime Minister of the Socialist Republic of Vietnam. (2023). *Decision approving the National Power Development Plan for the 2021-2030 period, with a vision to 2050* (Decision No. 500/QD-TTg). Government Portal. https://vanban.chinhphu.vn/?pageid=27160&docid=208014
- Prime Minister of the Socialist Republic of Vietnam. (2025). *Decision approving the adjustment of the National Power Development Plan for the 2021-2030 period, with a vision to 2050* (Decision No. 768/QD-TTg).
- General Statistics Office of Vietnam. (2025). Statistical Yearbook 2024. Statistical Publishing House.
- U.S. Department of State. (2024). 2024 investment climate statements: Vietnam. https://www.state.gov/reports/2024-investment-climate-statements/vietnam
- U.S. Department of State. (2025, September). 2025 Vietnam investment climate statement. https://www.state.gov/wp-content/uploads/2025/09/638719_2025-Vietnam-Investment-Climate-Statement.pdf