Lawyer in Vietnam Oliver Massmann Solar Power Vietnam Breaking News: First Ever Regulations GOVERNMENT’S INCENTIVES TO DEVELOP SOLAR POWER PROJECTS IN VIETNAM

1. Lawyer in Vietnam Oliver Massmann Solar Power Vietnam
Breaking News: First Ever Regulations
GOVERNMENT’S INCENTIVES TO DEVELOP SOLAR POWER PROJECTS IN VIETNAM
Vietnam is among the countries located in the area with the world’s highest sunshine allocation in a year
on the world’s solar radiation map. It is an advantage for Vietnam to develop solar power industry,
especially in the context of increasing demand for electricity and potential risks of traditional electricity
production sources.
To encourage investment in renewable energy projects, the Ministry of Industry and Trade (MOIT) has
proposed the first Draft Decision of the Prime Minister on incentives for solar power projects, especially
in terms of investment capital, tax and land use right. These incentives would apply for power generation
projects using the photovoltaic method. The following analysis is based on the latest Draft Decision and
would be subject to further changes when the official Decision is adopted.
Investment incentives
Investment capital: Investors may mobilize capital from domestic or overseas organizations and
individuals to invest in solar power projects. Such projects are entitled for investment credit and export
credit incentives. In particular, investors could apply for a loan of up to 70% of the total investment
capital of their project with a term of maximum 12 years. Moreover, investors could also enjoy export
credit incentives in the form of a loan of up to 85% of the export/ import contract value or L/C value also
with a term of maximum 12 years.
Import duty: Solar power projects are exempted from import duty on goods imported to create fixed
assets of the projects; components, materials and semi-finished products which are not available at home
for the project’s operation.
Corporate income tax: solar power projects will also enjoy the same corporate income tax exemption and
reduction as projects in sectors receiving investment incentives according to the current regulations on
taxation. For example, corporate income tax rate of 10% will be applied for 15 years, tax exemptions
within 4 years and tax reduction by 50% in the next 9 years.
Land: Solar power projects, lines and transformer stations connected to the national grid enjoy the same
exemptions and reductions in land use, land rental as projects being entitled for special investment
treatment. Such incentives, among other things, include exemption of land rental within 3 years from the
operation date of the project.
Who will be the off-taker
According to the Draft Decision, the Electricity of Vietnam (EVN) or its authorized member units will be
the power purchaser. The power sale and purchase will be conducted by negotiating and signing the
power sale and purchase agreement according to the template agreement stipulated by the MOIT. Term of
the agreement is 20 years from the commercial operation date of the project. We are following up on the
issuance of the template agreement by the MOIT. Please contact us if you need to get the information.
Feed-in-tariff rate
EVN is responsible for buying the whole electric output from solar power projects with the electric
buying price at the point of electricity receipt to be 1,800 dong/kwh and 3,500 Vietnamese dong/kWh
(equivalent to 12 UScents/kWh and 16.7Uscents/kWh).
For solar power projects installed on the roof of houses and connected to the grid, if the electricty
generated is more than that consumed, the difference would be bought at the point of electricity receipt is

2. 3,150 Vietnamese dong/kWh (not including VAT, equivalnet to 15Uscents/kWh). This price will be
adjusted based on the fluctuation rate between Vietnamese dong and USD. If the electricty generated is
less than that consumed, the electricty received from the grid must be paid at the normal commercial price
that the electricty purchaser charges.
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Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any
questions or want to know more details on the above. Oliver Massmann is the General Director of Duane
Morris Vietnam LLC.