|Policy makers, scholars and enterprises discussed local content requirements in energy at a workshop yesterday in Ha Noi. — Photo moit.gov.vn
HA NOI (VNS) — Policy makers, scholars and enterprises discussed local content requirements in energy at a workshop yesterday in Ha Noi. Local content requirements (LCRs) are policy measures that require a certain percentage of intermediate goods used in production processes to be sourced from domestic manufacturers.
The Ministry of Industry and Trade workshop aimed to promote sustainable energy development co-operation within the Asia-Pacific Economic Cooperation (APEC) forum. It also hoped to help create a favourable business climate for energy enterprises.
Deputy Minister Nguyen Cam Tu said at the workshop that energy security played an important role in economic development of any country, especially when energy demand was on the rise and energy resources became scarcer.
He said that some countries used local content requirements in energy, for example they imposed requirements to energy generating devices for wind power, solar power or bio-energy.
Tu said that although the policy aimed to promote domestic manufacturers, overusing the policy could lead to protectionism that was against international commitments.
"It will have negative impacts on free trade processes in the region, hinder global value chains and affect enterprises' efficiency," Tu said.
Nguyen Duc Cuong, director of the Energy Centre under the Viet Nam Energy Institute, said that by 2030, coal fired power will make up more than half of total power generation in Viet Nam. When launching local content requirements, the country could help promote renewal energies projects and clean energy.
However, the imposition of local content requirements can make the power price high and cause negative impacts to the trade and investment environment if market scale is small, workshop attendees noted.
Cuong said that to ensure increased local content and a healthy trade/investment environment, Government should offer incentives in import/ export taxes, land use fees, or low-interest loans for domestic engineering enterprises.
Ronald Steenblik, a researcher from the Organisation for Economic Co-operation and Development (OECD) said that policy makers should consider alternative policies for local content requirements, for example, those that support research and development. — VNS