Newsletter
Vietnam Infrastructure Spotlight - July 2024
Freshfields' Vietnam Infrastructure Spotlight keeps you up-to-date with the key business and legal developments in this sector. Please contact us if you would also like to receive our Vietnam M&A Spotlight, Vietnam Environment Spotlight or Vietnam Competition Law Spotlight.
MARKET UPDATES
Data centre
- Beyond the cloud. Vietnam’s strategic geographical location, flexible policies and young population can attract technology behemoths like Google, Amazon and Microsoft to opening data centres in the country. The Vietnamese market is currently dominated by domestic telecommunication companies such as Viettel IDC, FPT Telecom, VNPT, and CMC Telecom. Source: VN Express International
- Room for big data. Chinese tech giant plans to build a data centre in Vietnam to meet legal requirements for local data storage and to meet increasing demand in one of Asia’s fastest-growing economies. The data centre market in Vietnam is forecast to reach US$1.26 billion by 2030, with a compound annual growth rate of 10.8 per cent. Source: Vietnam Investment Review
Industrial parks
- Park expansion. Sembcorp Industries announced that it will add three industrial parks under the Vietnam-Singapore Industrial Park (VSIP) model to its portfolio, namely the 333-hectare VSIP Thai Binh in the northern province of Thai Binh, the 498-hectare VSIP Quang Ngai II in the central province of Quang Ngai, and the 468-hectare Becamex-VSIP Binh Thuan in the central province of Binh Thuan. Source: The Investor
- New partnership. Japanese trading house Marubeni Corporation announced its participation in the development and operation of an industrial park in Vietnam run by a subsidiary of Thailand’s largest industrial developer, Amata Corporation. Marubeni has bought a 20 per cent stake in Amata City Ha Long Industrial Park, and the value of the deal was VND271 billion (US$10 million). Source: Nikkei Asia
Aviation
- Back in the air. After a three-month hiatus due to lack of aircraft, Pacific Airlines will resume operations with one aircraft leased from parent company Vietnam Airlines. Earlier this year, Pacific Airlines returned all its leased airplanes because of financial difficulties, which forced it to temporarily cease operations. It had been unable to make lease payments in time. Source: VN Express International
- Plane door closed. The Ministry of Planning and Investment (MPI) has opposed a proposal by Bamboo Airways to increase the foreign ownership limit (FOL) in domestic airlines to 49 per cent from the current 34 per cent. MPI said that any proposal to increase the FOL to 49 per cent would need to be carefully considered, adding that Vietnam had previously allowed this higher 49 per cent FOL, but later had to adjust it down to the current 34 per cent cap. Source: Vietnam News
Renewable Energy
- The end of FiT. The feed-in-tariff (FiT) mechanism was introduced to support early development of renewable energy sources by providing a guaranteed, above-market price for producers to sell energy back to the grid. Now, Vietnam has seen a significant rise in the number of renewable energy projects. Therefore, the Ministry of Industry and Trade (MoIT) proposed removing the FiT to develop a more competitive pricing mechanism to increase efficiency in the system and ensure competition as well as a stable and sustainable energy supply. Source: Vietnam News
- Clean energy footprint – Singapore. Singapore’s Sembcorp Industries has acquired a majority interest in three subsidiaries of Vietnamese conglomerate Gelex, adding 196 MW of operational wind and solar assets to its portfolio in the country. Sembcorp Industries said the acquisition was completed by its wholly-owned subsidiary Sembcorp Solar Vietnam Pte Ltd. As part of the move, Sembcorp will later acquire a 73 per cent stake in another subsidiary of Gelex, which owns a 49 MW hydropower asset. Source: The Investor
- Clean energy footprint – Spain. EDP Renewables (EDPR), the renewable energy development arm of Spanish giant EDP, is seeking further renewable energy opportunities in Vietnam’s south-central region, with a focus on the coastal province of Khanh Hoa. Source: The Investor
- Clean energy footprint – Japan & Korea. Marubeni has entered into an agreement with South Korea’s Doosan Enerbility Vietnam to jointly develop offshore wind power in Vietnam. Doosan and Marubeni are strategic partners in the energy sector in the Asia-Pacific region, and the two companies have previously developed the Nghi Son 2 build-operate-transfer thermal power plant in the central province of Thanh Hoa. Source: Vietnam Investment Review
LNG
- Pricing. The MoIT has proposed a pass-through mechanism that will allow LNG purchase prices to directly impact the retail selling prices of LNG-fueled power, starting from 1 August 2024. The proposal is part of a draft decree and other documents being prepared by the ministry on management of LNG-fired power plants and has been sent for appraisal to the Ministry of Justice with the aim of submitting to the government. Source: The Investor
- The Quang Trach 2 project. Doosan Group is interested in working with Vietnam Electricity (EVN) to develop the LNG Quang Trach 2 project. The government approved the Quang Trach 2 project in 2021, initially as a coal-fired plant, with EVN assigned as the developer. Quang Trach 2 was approved under Power Development Plan VIII to transform into an LNG-to-power project, with a higher capacity of 1,500MW. Source: Vietnam Investment Review
Natural Resources
- Rare opportunity. Trident Global Holdings, a South Korea-based conglomerate focused on mining, real estate, and carbon capture technology, has announced the acquisition of rights to three rare earth mines in Vietnam. Under a cooperation agreement recently signed with Hung Hai Construction Company, Trident will commence its new mining operations in Vietnam later this year. Source: The Investor
Oil & Gas
- Come on stream. A US$1.27-billion Block B-O Mon gas pipeline project is set to start pumping gas to the O Mon gas-to-power complex, located in Mekong Delta city of Can Tho, in 2027. The pipeline, 51 per cent held by state-run PV Gas, will become part of the US$12 billion Block B – O Mon gas-to-power complex chain. It will be the longest of its kind in Vietnam, with a total length of 431 kilometers, including 329 km undersea and 102 km onshore. Source: The Investor
