The world is entering a new era in energy, one where sustainability and emission reductions are no longer choices but imperatives. In Vietnam, a strong transition in the energy sector is now underway, driven by the rise of wind, solar, and LNG power. This shift is opening vast opportunities for the country’s energy industries, while demand for equipment, materials, components, and technological solutions is rising exponentially.
Amid this promising landscape, support industries are emerging as the “key” to unlocking Vietnam’s path to the global market. Experts believe the renewable energy segment alone could generate a multibillion-dollar market for Vietnam’s support industries over the next decade. The transition presents a crucial chance for the country to move deeper into global value chains, master advanced technologies, boost localization, and strengthen its position in building a modern, sustainable energy sector.
Strides forward & strains
At a recent seminar entitled “Opening New Directions for Supporting Industries in the Energy Sector”, Dr. Vu Van Khoa, Deputy Director of the National Research Institute of Mechanical Engineering, said that since the government introduced Decision No. 797/CP-CN, dated June 17, 2003, on power projects launched in 2003-2004, and Decision No. 400/CP-CN, dated March 26, 2004, on mechanisms for hydropower projects, Vietnam has gained mastery in developing hydropower and pumped-storage plants.
This contributed to the completion of some 30 hydropower plants of over 50 MW each in Vietnam, most notably in northern Son La and Lai Chau provinces, allowing them to come online 1-2 years ahead of schedule and saving thousands of billions of VND. Mastering technology not only significantly cut costs but also created thousands of jobs at major corporations like the Vietnam Machinery Installation Corporation (LILAMA) and the Mechanization Electrification Construction Corporation (Agrimeco).
Vietnam has also made notable progress in renewable energy. Localization in the solar sector now stands at 35-40 per cent, focusing on support frames, cables, and electrical cabinets. The country has even emerged among the world’s Top 10 solar panel manufacturers, with companies such as Boviet Solar and IREX Solar playing a key role.
Mr. Le Van An, Vice Chairman of the Vietnam Association of Mechanical Industries (VAMI) and Chairman of Agrimeco, said domestic companies have mastered, and in many cases excelled at, providing all support services for power, thermal, and gas projects, covering both large and small energy works around the country and even for export.
However, challenges remain. Many energy investors lack deep technical expertise, leading to poor assessment of contractors during bidding. Instead of prioritizing technical criteria, they often focus solely on cost, resulting in project failure. Intense competition amid a limited workload has also led to unhealthy price-cutting, which compromises quality.
Dr. Khoa underlined that the number of companies deeply integrated into global energy supply chains remains small. Vietnam has around 2,000 enterprises in energy support industries, but only about 300 participate in global supply chains. Localization in newer sectors like wind power is modest, at around 25-30 per cent, and is mainly limited to structural works and installation.
Mr. Chu Viet Cuong, Director of the Industrial Development Support Center at the Ministry of Industry and Trade, noted that while localization in energy projects - especially wind, solar, hydropower, and thermal power - has improved, it still falls short of government expectations. In wind energy, localization accounts for only about 25-30 per cent of equipment value, mainly foundations, steel structures, piles, turbine towers, and connection systems, while in solar energy it stands at some 35-40 per cent, focusing on mounting frames, cables, electrical cabinets, inverters, and some photovoltaic (PV) modules; still far below Thailand (60-65 per cent) and Malaysia (55-60 per cent).
Mr. Cuong attributed the gap to limited financing, outdated technology and equipment, a shortage of skilled workers, and technical barriers that make it difficult for local companies to enter global supply chains.
Adding to these concerns, Mr. Tran Kien Dung, an expert with the International Labor Organization (ILO) and Director of ProfM Vietnam, warned of a widening technology gap. Most Vietnamese enterprises have yet to master advanced technologies and remain weak in research and development (R&D). As a result, the intellectual and technological content of their products remains low, limiting added value.
Further compounding the problem are strict quality and technology requirements from major global buyers who already have stable supply chains. Internally, a race to the bottom on price, at the expense of technical standards, has led to growing risks and frequent project failures.
Coordinated strategies
To overcome barriers in capital, technology, and human resources, and to achieve a 40-50 per cent localization rate in the energy sector in the years ahead, experts suggest a coordinated strategy between the government, enterprises, and research institutes.
On the government side, Dr. Khoa recommended a strong policy requiring that each sector have a clear localization roadmap to create market capacity. He also emphasized the importance of government support for building fully equipped laboratories, enabling companies to test products to international standards, noting that setting up such labs is costly.
Responding to these suggestions, Mr. Cuong said the MoIT is actively drafting a new decree to promote the application of science and technology and the development of manufacturing in the power sector, focusing on three key areas: financial mechanisms, technological innovation, and workforce quality improvements. Notably, the draft includes tax, land, and credit incentives for companies producing electrical equipment and energy storage technologies; support for R&D and advanced technology transfer; and prioritization of domestic products in projects using State capital.
For enterprises, now is the time for a decisive transformation. Mr. Dung emphasized the need for a long-term development strategy, which would guide companies in the right direction.
To succeed in this new era in energy, Mr. An proposed that enterprises act on three fronts: strengthen technological capacity and the technical workforce, invest in automation, and adopt international management standards; link supply chains and specialize to form clusters of mechanical support industries, with each company focusing on a specific segment to create synergy rather than working in isolation, while improving governance and financial capacity; and ensure transparency in standards and obtain international technical certifications, which serve as the “passport” to participate in global supply chains.
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