Over the years, Vietnam has emerged as one of the most vibrant economies in Southeast Asia, a revelation resulting from various legal, economic, and social reforms, ultimately reflected in the persistent growth of its gross domestic product, which reached $476.3 billion in 2024, with a year-on-year increase of 7.09%, in line with the objectives set out in the Five-Year Socioeconomic Development Plan for the period 2021-2025. If this growth has been linked, as mentioned, to various reforms, investment, especially foreign investment, is also connected to these reforms, making it crucial to stay updated on the latest developments in this area to define a business plan, readjust an existing one, or successfully complete another that is already underway. These lines, focused on the sectors of energy, infrastructure, and taxation, aim to contribute as much as possible to this.
1. Energy
On March 5th, the Vietnamese Ministry of Industry and Trade (MOIT) approved Resolution No. 618/QD-BCT, which updated the Execution Plan of the National Energy Development Master Plan, incorporating 142 solar energy projects not only to meet the governmental commitment made by Resolution No. 233/NQ-CP but also to address outstanding challenges in this area and, even better, to promote legal certainty in it, which is key for investments in the sector. This update, a consequence of the modification imposed by the previous inclusion of 154 projects without a clear legal basis, in addition to including several large-scale solar farms totaling 9,000 MW, identifies project names, capacities, and provincial locations.
Almost a month earlier, on February 14th, MOIT submitted a draft Circular for public consultation, aimed at replacing Circular 27 of November 21, 2024, with this new one to align it with the provisions of Law No. 61/2024/QH15 of November 30, 2024, on Electricity, specifically regarding evaluation criteria to be considered in tenders and bids; types of eligible projects in either case; and templates for power purchase agreements (PPA) adapted to different types of projects. This change is significant because while the previous Circular evaluated investment efficiency based on electricity prices, practically limited by the range set by MOIT itself, the proposed one introduces a substantial change by adding projects that conform to the previously mentioned range and those that do not, as well as those related to direct power purchase agreements (DDPA).
2. Infrastructure
In terms of port infrastructure, Vietnam, with over 3,200 kilometers of coastline and more than 48 seaports, also offers interesting business opportunities. In this regard, the starting point is the Port Development Master Plan 2021-2030, approved through Decision 1579/QD-TTg on December 22, 2021, which is still halfway toward its final goals set for 2030 but potentially extending to 2050. With this Plan, succeeding the one from 2009, the aim is to move 1.423 billion tons of goods and transport 10.3 million passengers; and in terms of infrastructure, prioritize the development of certain international gateways such as Lach Huyen port in Hai Phong; Cai Mep in Ba Ria – Vung Tau; and Van Phong in Hanh Hoa, among others.
To achieve these goals—crucial for some of them like Van Phong to become true “container transit hubs”—Vietnam must overcome significant structural challenges arising in some cases from clearly insufficient port capacity to meet growing demand; underdeveloped port infrastructure and facilities, especially for large ships that cause transshipment issues and divert traffic to ports in Singapore, Malaysia, or Taiwan; road and logistical equipment incompatible with the situation and size of ports that generate serious connectivity problems, as seen in Hiep Phuoc in Ho Chi Minh City; or inadequate handling services that not only cause congestion and delays but also significantly increase costs as a result.
Although this Plan dates back to 2021 and the arrival of Spanish engineering firms and constructors could be considered somewhat late compared to competitors like those from the Netherlands, its scale—due to the number of affected ports, projects to be undertaken, and execution timelines—leaves enough room for them to participate, especially since they can compete with any others on technology and price. That said, it is worth noting that the construction, operation, and management of seaports are activities subject to certain conditions and that while in theory they are open to any foreign investor through a 100% wholly owned company, in practice it is often necessary to establish joint ventures with local partners to meet these conditions.
3. Taxation
The process of economic opening that Vietnam has been undergoing in recent years has taxation as one of its central axes; hence the Vietnamese government is progressively expanding tax incentives for attracting foreign investment, particularly in certain sectors and regions. Thus, some sectors considered priorities—such as high-tech industries, software development, and manufacturing with technological applications—can receive complete exemptions from corporate income tax (CIT) during the first four years; foreign companies can help their employees deduct their tax obligations for personal and family minimums; and exports of goods and services can benefit from a zero percent value-added tax (VAT) rate if certain requirements are met.
Antonio Viñal
Lawyer
AVCO Legal
madrid@avco.legal
