Looking at the broader regional picture, particularly Southeast Asia, Vietnam is somewhat behind the curve, especially in carbon capture, utilization and storage (CCUS). Malaysia, for example, already has numerous CCUS projects in development, while Indonesia is also advancing a number of projects in this area.
These projects are being led not only by national oil and gas companies such as Pertamina in Indonesia and Petronas in Malaysia but also by other companies through joint ventures, including ExxonMobil in several major projects in Indonesia.
For Vietnam, an important advantage is its significant potential from mature and declining oil and gas fields. Not every country has this resource base. But potential alone is not enough. Vietnam needs the right mechanisms to attract investment and unlock that potential. This is an area that deserves close attention.
The draft revised Law on Petroleum could provide a strong foundation for Vietnam to maximize this potential and accelerate efforts to catch up with other countries in the region, particularly in Southeast Asia.
Another important part of Vietnam’s strategy should be continued expansion into power generation and renewable energy, including wind power. This will provide an important foundation for the sector’s future development.
I believe Vietnam needs to take a comprehensive approach covering oil and gas, power, infrastructure, and related industries, while also developing the broader EPC (engineering, procurement and construction) ecosystem. All of these areas need to be developed in an integrated and coordinated manner.
* * *
The Law on Petroleum is being revised in a fundamentally different context. Another key difference, in my view, is that the Law is now being developed alongside new resolutions on private sector development, foreign investment, and State-owned enterprises (SOEs). Petroleum is a particularly important sector in demonstrating the role of SOEs. Previously, this role was held by the Vietnam Oil and Gas Group, and today by the Vietnam National Industry-Energy Group (PetroVietnam).
In the new context, I believe enterprises should have maximum autonomy in investment, production and business, while the State focuses on the legal framework, standards, and regulations, as well as inspection, auditing, and oversight.
The Law on Petroleum is unique in that it must both support development and respond to practical realities. For many years, PetroVietnam has not only carried out investment and business activities but has also, to some extent, represented the State and the host country in managing, coordinating, and directly implementing investment and business cooperation. Today, that role is being strengthened.
In my view, if the draft law gives PetroVietnam the greatest possible scope, within the law, to take the initiative in investment and development, that would be the right direction. It would also create greater opportunities for private businesses, other economic sectors, and foreign investors to participate more deeply in petroleum activities, strengthening both business autonomy and market mechanisms.
One of Vietnam’s longstanding challenges is that laws often lag behind reality, with some provisions becoming inadequate, contradictory, or incompatible with practical conditions. We then moved toward more detailed and comprehensive legislation that could be implemented immediately. But this approach also has limitations because circumstances are changing too quickly, particularly in today’s domestic and global environment. If legislation becomes overly prescriptive, the law itself can become an obstacle when circumstances change.
I therefore believe one of the more sensible approaches to legislative reform is to return to laws based on clear principles. Issues that are stable, certain, and sustainable should be established in law, while technical matters that change frequently should be handled more flexibly rather than prescribed in excessive detail.
I do not agree with the view that the Law is already sufficiently open and reasonable and that implementation is the only problem. Implementation, enforcement, oversight, and outcomes all begin with the Law. The rules determine what those responsible for implementation must do. When regulations are overly restrictive and officials are understandably cautious about their responsibilities, practical obstacles are difficult to resolve through implementation alone. Many of these obstacles ultimately stem from the Law itself.
One way to resolve conflicts and bottlenecks is to ensure that the Law on Petroleum is properly aligned with other laws. More importantly, however, the Law should be viewed as part of the broader reform agenda now underway. Vietnam is significantly reducing the number of conditional business sectors while accelerating administrative reform. Within this broader framework, I am less concerned that implementing regulations will return to the restrictive approach of the past and create difficulties for businesses.
The Law on Petroleum is moving in the same direction. Matters that need to be firmly established, particularly principles that have been tested in practice, should be set out in the Law. Other matters can be left to the government to regulate in greater detail, ensuring flexibility and adaptability.
I expect the issuance of implementing decrees to remain timely and accelerate further. Prompt implementation of detailed regulations, even as some provisions continue to be refined, will, in my view, address practical requirements more effectively than repeatedly amending the Law.
* * *
Vietnam is developing at an increasingly stable and rapid pace, accompanied by steadily-rising energy demand. As the country pursues ambitious goals to become a high-income, high-tech and green economy over the next two to three decades, energy demand is expected to grow significantly.
This demand, together with the need to expand energy infrastructure and improve access to energy resources, will continue to make Vietnam an attractive destination for foreign investment, whether through the country’s capital markets or direct investment in energy infrastructure.
Vietnam is well positioned to attract the capital needed to sustainably develop its resources, including offshore resources and renewable energy. The key is to ensure that new regulations promote decentralization, simplify and streamline procedures, accelerate decision-making, remove bottlenecks, and reduce administrative burdens.
Enacting good regulations is certainly positive. But if they are not implemented transparently and consistently, and investors cannot be confident that they will receive equal treatment over the course of a long-term investment strategy, those regulations will struggle to achieve their intended goals.
Vietnam should also leverage its existing petroleum infrastructure, technical expertise, and skilled workforce to develop emerging resources and technologies such as carbon capture, utilization and storage (CCUS), wind power, particularly offshore wind, and solar power. These will be critical to integrating new and existing energy sources.
As an Advisory Board Member at the Vietnam International Financial Center in Ho Chi Minh City (VIFC-HCMC), I believe Vietnam’s energy development will not be possible without access to substantial capital.
Vietnam has made significant progress thanks to the efforts of domestic banks. However, it is clear that domestic resources alone will not be sufficient to meet the country’s ambitious goals becoming a high-income, high-tech, and green economy over the next two to three decades.
This is where international capital can play a critical role. The VIFC’s efforts could help mobilize a broader pool of capital for Vietnam’s infrastructure and energy needs from institutional investors, major strategic investors, infrastructure funds, international banks, and pension funds.
The goal is essentially to connect these international sources of capital with energy projects that are already underway or in preparation. But the VIFC should not be viewed simply as a channel for attracting investment. Capital can also help build a broader financial ecosystem in which new products and instruments, such as green finance, can be developed; new approaches to risk management and sharing can be introduced; and innovative project-financing tools can emerge.
All of this can take place within the VIFC framework, not necessarily only in a physical location but also through its regulatory framework and operating orientation.
The ultimate goal is to align Vietnam’s energy strategy with its financial strategy and develop a new financial architecture capable of delivering the country’s broader development ambitions.
* * *
The draft revised Law on Petroleum has made significant progress, simplifying many procedures, strengthening decentralization and delegation, improving the contract framework, and expanding the legal framework into new areas such as carbon capture, utilization and storage (CCUS), offshore energy, high-tech services, as well as marginal and late-life fields. In my view, these are timely changes that will strengthen the competitiveness of Vietnam’s investment environment.
However, new incentives are only a necessary condition for attracting capital. For international investors, three factors are particularly important: transparency in implementation, policy predictability, and the speed of decision-making and project execution. These are also key criteria when investors choose between Vietnam and other countries in the region.
A financially-viable project needs more than attractive incentives. It must demonstrate the ability to generate cash flow over 10-15 years, operate within a stable legal framework, and provide investors with protection when policies change. The question, therefore, is not simply how a project gets approved, but whether its entire lifecycle - from obtaining development rights and completing investment procedures to licensing, contract signing, financing, construction, operation, revenue generation, and eventual exit - is legally secure.
Throughout this lifecycle, an energy project may be subject to the Law on Petroleum, the Law on Electricity, the Law on Construction, and regulations governing investment, land, the environment, planning, electricity pricing, and other specialized areas. If I had to identify one change that could help ensure capital actually flows into projects, it would be greater consistency among these laws and regulations.
In my view, this is a potential bottleneck that could determine the effectiveness of institutional reform. A law may be designed to be highly open and supportive, but if related laws contain overlapping or incompatible provisions, businesses can still face obstacles during implementation. The necessary conditions may be in place, but capital may still not be disbursed.
Vietnam should also look beyond attracting capital for individual petroleum or offshore energy projects and focus on building an energy investment ecosystem. Funding should be mobilized from a diverse range of sources, including financial institutions, infrastructure funds, green finance, equity, project finance, and strategic investors.
As the energy transition accelerates, capital needs will extend beyond conventional power sources to LNG, renewable energy, CCUS, offshore wind, and other emerging technologies. Vietnam has an opportunity to develop new ecosystems spanning finance, the maritime economy, maritime finance, aviation, and an international financial center. The common challenge across these ecosystems is how to mobilize the substantial capital required for the country’s next phase of growth.
Over the next decade, Vietnam could require around $1.5 trillion in investment across all sectors, with energy and infrastructure among the largest capital needs. Energy sector institutional reform should therefore be part of a broader policy agenda, with the ultimate goal of creating an investment environment that is transparent, predictable, and efficient enough for international capital to choose Vietnam.
Google translate