European firms worry about power shortages in Vietnam
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The European Chamber of Commerce in Vietnam (EuroCham) has called on the government to focus on long-term plans to mitigate power shortages, which it fears are cyclical.
Power shortages were among the concerns raised by EuroCham in its second quarter Business Confidence Index report.
A survey of its member companies found the recent power shortage significantly affected their business.
While the situation has improved thanks to the heavy rains in recent weeks, 60% of the companies said the shortage had created challenges for them, with 10% saying they have been seriously affected.
According to EuroCham, reliable power supply is a central requirement for the business sector and overall economic resilience.
The Government should focus on making long-term plans since power shortages are likely to occur in cycles, EuroCham president Gabor Fluit said.
Between late May to mid-June this year the northern region was crippled by regular blackouts as electricity demand shot up even as hydropower, one of the two main sources, decreased due to drought.
European businesses also said Vietnam’s infrastructure is poorer than that of many neighboring countries, with 53% rating it inadequate.
But the bright spot is that the Government is taking active measures to address this problem like accelerating key infrastructure projects, they said.
The survey also found that business optimism has increased slightly and Vietnam continues to be considered an attractive destination for foreign investors.
Some 48% of respondents expected their companies’ direct investment in the country to rise sharply in the next quarter.
Questions & Answers
Q.What proportion of EuroCham members reported being significantly affected by the recent power shortage?
What proportion of EuroCham members reported being significantly affected by the recent power shortage?
A survey revealed that 60% of EuroCham member companies experienced challenges due to the recent power shortage. Of these, 10% reported being seriously affected by the outages, impacting their business operations.
Q.What was the primary reason for the power shortages experienced in Vietnam's northern region this year?
What was the primary reason for the power shortages experienced in Vietnam's northern region this year?
The northern region faced regular blackouts between late May and mid-June this year. This was caused by increased electricity demand coinciding with a decrease in hydropower, a main source, due to drought conditions.
Q.How do European businesses rate Vietnam's infrastructure compared to neighbouring countries?
How do European businesses rate Vietnam's infrastructure compared to neighbouring countries?
European businesses consider Vietnam’s infrastructure poorer than that of many neighbouring countries. The survey indicated that 53% of respondents rated the country's infrastructure as inadequate.
Q.Despite the power concerns, is there any positive sentiment from European businesses regarding Vietnam?
Despite the power concerns, is there any positive sentiment from European businesses regarding Vietnam?
Yes, there is a positive sentiment. Business optimism has slightly increased, and Vietnam is still seen as an attractive destination for foreign investors. Also, 48% expect their direct investment to rise sharply next quarter.
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