Decisive focus on renewable energy development

Vietnam is currently seen as one of the most dynamic emerging economies in Asia. From the perspective of an international financial institution, how do you assess its economic development in relation to the green development goals it’s pursuing?

The Vietnamese Government has set a target of reaching net-zero emissions by 2050, along with specific clean energy goals to 2030. In particular, with an annual growth target of 6.5-8.5 per cent, Vietnam’s energy demand is expected to increase by around 10 per cent to support momentum. This requires that the country rapidly expand its clean energy infrastructure to ensure economic growth while fulfilling its environmental commitments.

Vietnam also remains quite vulnerable to the impact of climate change. For years, its energy sector has relied heavily on fossil fuels, resulting in significant emissions - alongside those from agriculture, industry, and waste. Therefore, the government’s renewable energy development targets are expected to unlock strong FDI inflows into green and climate-related projects.

Notably, in pursuit of its green growth and economic development goals, Vietnam is receiving active support from the UK and many other countries through the Just Energy Transition Partnership (JETP), to achieve net-zero emissions by 2050. Aligned with this direction, British International Investment (BII)’s objectives are fully consistent with Vietnam’s sustainable development strategy.

In Southeast Asia, we focus on two key investment areas: climate and infrastructure. Our investment strategy prioritizes markets where capital can have a strong catalytic effect, attracting additional commercial capital. Therefore, Vietnam’s energy transition is one of our top investment priorities in the immediate future.

Vietnam is aiming to post double-digit annual growth during the 2026-2030 period. What should it do to achieve its goal?

This is an impressive target that requires strong confidence and determination from the government. Moreover, it inspires the younger generation and demonstrates the country’s ambitious vision for the future.

However, achieving double-digit growth demands a comprehensive development strategy. Economic growth must go hand-in-hand with energy growth to meet development needs. Without boosting energy capacity, sustainable growth will be impossible.

In addition, future energy growth cannot rely on traditional sources. Instead, it must transition decisively to renewables such as wind and solar power. This transition is key to enabling Vietnam to pursue economic development while ensuring environmental sustainability. It also lays the foundation for the country to progress towards becoming an upper-middle-income and eventually a high-income economy in the near future.

BII has committed to allocating at least 30 per cent of its new investments over the next five years to climate finance. Meanwhile, Vietnam is making strong efforts to achieve net-zero emissions by 2050. How will BII strengthen its cooperation with the Vietnamese Government and expand its support for renewable energy?

Vietnam is accelerating the development of renewable energy, which perfectly aligns with BII’s strategy. Renewable energy not only protects the environment but also offers high economic efficiency, with lower production costs and a stable electricity supply supported by storage systems. That is why promoting renewable energy development has become an inevitable global trend, aligning with the green growth strategy pursued by both Vietnam and BII.

Renewables are among the most affordable energy sources. While solar panel costs are declining, wind power is becoming increasingly competitive due to lower turbine prices and storage technologies such as batteries and pumped hydro are continually improving cost-wise. These factors will enable Vietnam to further develop its renewable energy sector in the future.

To accompany Vietnam, we are implementing multiple investment channels. Through investments in regional funds, where Vietnam is a key market, we indirectly finance green projects in the country. Additionally, we directly invest equity into companies leading Vietnam’s energy transition.

We also strive to attract like-minded investors to support Vietnam’s green transition. For example, BII recently provided a $50 million loan to VPBank as part of a $350 million loan package coordinated by the Sumitomo Mitsui Banking Corporation (SMBC), with participation from Export Finance Australia (EFA), FinDev Canada, and the Japan International Cooperation Agency (JICA). This funding will help Vietnam achieve its national goals in inclusive economic growth, green development, and critical infrastructure, particularly by supporting small and medium-sized enterprises (SMEs) in accessing capital.

I believe SMEs play an important role in an economy, creating the most jobs and driving growth in every country, including Vietnam. Therefore, supporting these enterprises in accessing finance is crucial, especially during the green transition. Countries that better support their SMEs on this journey gain a sustainable advantage. Everything we do, directly or indirectly, aims to support Vietnam in achieving its net-zero emissions by 2050 target.

Many foreign investors still face challenges when implementing renewable energy projects in Vietnam. What do you think Vietnam should do to create favorable conditions for investors and attract more capital into renewables?

In any emerging market, investors always prioritize four key factors. The first is a stable, transparent, and predictable policy environment. Second, project implementation should be smooth, with administrative barriers minimized. Third, the market must ensure a qualified workforce to meet development requirements. And lastly, projects must demonstrate sustainable profitability. When these conditions are met, international capital will flow more strongly into Vietnam’s renewable energy sector.

Like Indonesia, Vietnam is on the right track in its energy transition and green economic development, although further adjustments and improvements are needed. Currently, the macro-economy is still affected by global fluctuations, including tariff issues and other uncertainties. However, these challenges are short-term. I believe that as the environment stabilizes, with its inherent potential and strong commitment to reform, Vietnam will continue to strengthen its position and open promising long-term development opportunities for international investors.