Foreign Businesses Sound the Alarm on Power Shortages

Foreign companies operating within Vietnam have voiced increasing concerns regarding potential electricity shortages and their potential impacts on production schedules.

Of particular concern were the risks associated with electricity deficits in the northern regions, especially during the months of May and June.

During a meeting with Prime Minister Pham Minh Chinh on Tuesday, representatives from foreign direct investment (FDI) firms highlighted challenges faced in the previous year, notably instances where industrial zones experienced frequent planned blackouts, disrupting normal business operations and production cycles.

Leading these discussions was the Japan Chamber of Commerce and Industry in Vietnam (JCCI), whose representative stressed the adverse effects on the intricate “just in time” inventory system, crucial for precise production scheduling.

The inability to predict delivery dates due to inconsistent power supply severely hindered operational efficiency, leading some member units to reconsider their global production strategies.

Echoing similar concerns, Hong Sun, Chairman of the Korean Chamber of Commerce and Industry in Vietnam (Kocham), emphasized the essential nature of stable electricity supply for FDI enterprises. He urged the government to take decisive action to ensure sufficient electricity reserves, particularly during peak demand periods, to safeguard ongoing industrial activities.

Hong emphasized the negative impact of insufficient power supply on South Korean businesses, especially those engaged in high-tech sectors, citing it as a significant deterrent to further investment in Vietnam.

Joseph Uddo, Chairman of the American Chamber of Commerce in Hanoi (AmCham), warned of potential obstacles to Vietnam’s economic goals in the absence of a reliable and cost-effective electricity supply. He referenced World Bank estimates, indicating substantial economic losses of around US$1.4 billion, equivalent to 0.3% of GDP, attributed to electricity shortages last year.

Responding to these concerns, Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan assured foreign investors of concerted efforts to address electricity supply challenges. Tan affirmed the government’s commitment to ensuring an uninterrupted power supply moving forward, highlighting ongoing initiatives to enhance infrastructure and transmission systems, particularly in the northern region.