Investment Incentives in Vietnam’s Central Highlands Region

The Central Highlands have long been a strategic economic, political location in the history of Vietnam. Sharing borders with Laos and Cambodia, this region is one of the most important location for the economic development of Vietnam in the next few years.

A region full of potential

The Central Highlands, or the Western Highlands, is located in the West and South West of Vietnam. The region contains five provinces: Lâm Đồng, Daklak, Dak Nông, Gia lai and Kon Tum. These provinces are expected to show high potential for development in renewable energy, agricultural and tourism in the coming years.

According to the Minister of Public Security’s speech in the fourth conference on investment promotion in Central Highlands total investment capital has reached VND 266 trillion in 2015 with an annual growth rate of 11.3 percent between 2011 and 2015. To date, there have been 140 FDI projects worth US$772.5 million in the Central Highlands. This number is expected to grow significantly in the next few years, especially as the government is trying to improve the region’s infrastructure and paying more attention to renewable projects in its long-term plan of development.

Tourism and agriculture are two important sectors that appeared very promising to foreign investors, especially investors from Korean, Japan, and China. However, Central Highlands are not being fully explored, thus, bringing more opportunities for future investors to enter the race.

Opportunities for renewable energy projects

The Central Highlands is a prominent location for solar potential maps in Vietnam. According to Vietnamese authorities, the total hours of sun in Central Highlands varies from 2000 to 2600 hours per year. Korean Solar power investors in this area are upbeat on the prospects for the region and have published findings indicating a direct solar radiation generation of 5 kWh per square meter. With this in mind, Vietnam’s Central Highlands is an ideal place to develop a solar power plant.

In addition, the region’s wind power capacity could reach 2000MW, which is even more than the second largest hydro power plant of Vietnam in Hoa Binh.

Realizing the favorable conditions for developing renewable energy of this region, Central Highland provinces have issued a number of preferential mechanisms and policies as well as simplified administrative procedures, to attract investors. Daklak is topping the list with 4 projects worth US$3.3 billion from AES Corporation, Vietnam’s Xuan Thien Limited Company, South Korea’s Solar Park Limited and Vietnam’s Long Thanh Infrastructure Development and Investment Company.

Promising land for coffee, tea, and pepper

In addition to its advantages in solar and wind power, the region is also getting more and more popular as a promising land for FDI projects in agriculture. Central Highlands cover an area of 5.46 million ha, in which 2 million ha are used for developing agricultural. Besides, the region contains 74.25 percent of the red basalt soil of Vietnam, making it an ideal place for large-scale production specialized in coffee, pepper, tea, cashew, cassava, rubber.

Realizing the growth potential of this sector, investors from Korea and Japan have launched several projects with advanced agricultural techniques to maximize production in the region. New policies and tax incentives are also available to encourage and attract investments. Although climate changes may appear to be a threat, agriculture will continue to grow and strengthen its position as an important sector of Central Highland’s provinces.

Top destinations for tourism

Dalat, Kon-Tum and Gia Lai are famous destinations for eco-friendly and historical tourism. Cool weather, beautiful natural sight-seeing, historical museums and also the variety of food specialties are the reasons why more and more tourist chose these destinations for a get-away on the weekend. In 2016, Dalat city of Lam Dong province welcomed 5.4 million visitors, an increase of 6 percent compared to 2015. On top of this, the number of international visitors reached 270,000 people with most travelers coming from South Korea, China, Thailand and the United States.

The city also has been ranked by The New York Times as one of top 52 tourist destination in the world. Although the region’s tourism industry used to suffer from the past because of poor infrastructure and facilities, the situation is getting better recently thanks to investments from government also foreign investors. New tourist products with better services are now provided, making the region even more attractive to tourist. Besides, many investments in hotels, amusement park, restaurants are about to kick off in the near future, helping these provinces to fully exploit tourism potential of this region.


The Central Highlands contributes 9 percent of Vietnam’s GDP. Ignoring all the advantages it has developed in its economy, the region still remains poor compared to others. Foreign investment is limited in both quantity and quality. However, with new incentives and support from the government, the investment’s environment of Central Highlands becomes more and more attractive.

Beside many investment incentives such as corporate income tax exemption, land use rental reduction, import tax exemption, etc., FDI projects can benefit from province-specific investment support. For example, investment project in high-tech applied agricultural business can receive support from Kon Tum province for the development of greenhouses and net houses with a support level of VND 50,000 per square.

Each province in the region have different types of support and incentives to attract foreign direct investment, thus to maintain the sustainable growth of the region. In the future, Central Highlands will continue to consolidate its position as an important region in the economic development of the whole country.


Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout the Vietnam and the Asian region.


This column does not necessarily reflect the opinion of the editorial board or Frontera and its owners.

How Morocco Is Making A Bid For The Crown In Clean Energy Tech In Emerging Markets

Anyone who has gone windsurfing in Essaouria or has felt the sun on their back while trekking through the Moroccan Sahara will understand why the country is a renewable energy leader among emerging economies. Morocco’s physical environment allied with a relatively stable political scene and supportive legal framework means the country already recieves 32% of its electricity needs from renewables sources.

Now the government wants to build on these achievemens and ramp up the use of clean energy technology to ensure that 52% of the country’s power comes from solar, wind and hydro by 2030 as well as begin exporting its expertise to the rest of Africa.

Morocco’s strategy of moving towards clean energy was originally borne out of weakness, lacking the abundance of gas and oil reserves enjoyed by its neighbour Algeria meant it faced heavy import bills for hydrocarbons, this cost as well as a desire to reduce greenhouse gas emissions and embrace the future led the country’s government to embrace renewable energy wholeheartedly.

There is little doubt the Kingdom has the environment for such ambitious plans, Essaouira has an average wind speed of between 7 to 8.5 m/s at 10 meters, while the Saharan sun provides around 3000 hours of sunshine a year. But physical attributes need to be allied with the right policies and political backing.

The Moroccan government’s renewables strategy is a combination of funding from international financial institutions (IFIs) such as the African Development Bank, new state policies such as cutting fossils fuel subsidies alongside encouraging private foreign investors to back clean energy projects. The centre piece of this drive is the 580 megawatt Noor (Arabic for light) solar power farm near Ouarzazate, closely followed by the Tarfaya wind farm – a 300 megawatt project which is the biggest of its type in Africa. Both these projects were heavily backed by the government and IFIs to make them a reality.

This environment offers opportunities for those looking to finance energy projects, supply and construct solar and wind facilities or like Elum Energy provide innovative solutions to power issues. Elum Energy is a software as a service company which has developed an energy intelligence platform which uses artificial intelligence to save money on electrical bills. By taking forecasts and monitoring supply Elum uses software to analyse the best time to deploy and save energy.

Now more foreign investors are taking an interest, US firm Nano PV are planning a new solar energy plant in Tangier. Chinese firm Chint are teaming up with Saudi firm ACWA energy to build the Noor VI solar facility which will provide energy at relatively cheap US$ 4.79 c kWh. A wind farm in Taza built by French firm EDF Energies Nouvelle and Japanese Mitsui should come online this year.

Morocco is also using its expertise in renewables to help invest in other African countries. Many African countries have large sections of the population which lack access to electricity, this creates the opportunity to construct new energy infrastructure around renewable energy rather than fossil fuels. African countries can learn a lot from Morocco – it has more financial clout than other nations the continent, but the falling cost of solar and wind installations combined with the increasing efficiency of the equipment means that it is an increasingly viable option and often cheaper than coal and gas. Perhaps most of all Morocco is proof of what can be achieved in terms of clean energy in a frontier market.

Another area in where emerging economies can emulate Morocco is through its legislation. The correct legal framework is important for countries keen to encourage renewable energy, allowing the construction of facilities and easy integration with national grids. Moroccan Law 13 – 09 was passed in 2010 and governs renewable energy in the Kingdom. The law was updated in 2015 to include a metering scheme for renewable projects connected to the grid – private investors are be able to sell some of their surplus energy to the grid. In the past the Office National de l’Elecriticite (ONE) controlled the generation of electricity, now private firms can do the same.

In Morocco renewable projects are typically structured in a particular way:

  • A Special Purpose Vehicle (SPV) is created to operate the project.
  • Long term power purchase agreements are signed between the SPV and ONE or MASEN the Moroccan Agency for Solar Energy.
  • Financing typically comes from international finance institutions IFI’s such as the European Bank for Reconstruction and Development (EBRD) and the Clean Tech Fund but local banks like BMCE have also been heavily involved.
  • The SPV is financed by MASEN which borrows from IFIs who benefit from a state guarantee. MASEN also offtakes the electricity generated by the project. This is done via long term power purchase agreement – the price is based on a tariff tendered by a bidder. MASEN then on sells electricity to ONE.

Now other renewable energy firms can join the party and benefit from the country’s renewables boom the number of private firms looking to invest in the country should rise rapidly. If Morocco can continue to attract private and public investment the falling cost and increasing efficiency of renewables could mean that it beats the emissions targets it set out in Cop22 UN Climate Conference in 2016 in Marrakech.


Merlin Linehan has worked in development finance within Eastern Europe and Asia, and spends much of his time investigating the risks and opportunities that are created from the ongoing expansion of Chinese businesses that invest overseas in emerging markets.

This column does not necessarily reflect the opinion of the editorial board or Frontera and its owners.

Where Now For India’s Solar Revolution?

When I first visited India fifteen years ago, solar panels were rare, their use largely limited to the farsighted NGOs I met with who typically used them for jobs like powering pumps for small rural water cleaning facilities, they certainly posed no competition for coal fired power stations. But even fifteen years ago the terrible pollution caused by motor vehicles, power plants and factories in India was stark, Delhi’s air felt thick with dust and dirt, being outside near major roads quickly resulted in a headache. Fast forward fifteen years and India’s economy and power demands have grown enormously, and its pollution problem is now a public health crisis.

India has seen demand for electricity rise roughly 10% a year over the last decade, driven by fast economic growth and energy intense industrialisation which in turn has made the government look increasingly towards using renewable technology to help meet the country’s requirements. Energy demand is expected to double by 2030, at the same time around 300 million people have limited or no access to electricity.

The falling cost of renewables (particularly solar) in the last five years, the devastating human cost of pollution caused by fossil fuels (over one mllion deaths a year are caused by air pollution in India according to the Health Effects Institute) which is evident to anyone who has visited major Indian cities, these factors along with the need to reduce carbon emissions has made solar and wind power increasingly attractive.

The government has acted through renewable energy targets, currently the ambition is to install 100 GW of solar capacity and 60 GW of wind capacity by 2022 (right now solar capacity is 8 GW). The Renewable Purchase Obligation for solar power now means that project developers building thermal power plants will have to supply 8% of the energy from renewable sources. In 2015 the government also instructed government owned entities like the mighty Indian Railways to add solar and wind capacity to their energy supply mix.

There is little doubt that renewable energy has taken off in India, it is hoped that the country can meet about 25% of its energy projects from renewables by 2030, projects like SB Energy’s project in Andhra Pradesh and Adani Green Energy’s farm in Tamil Nadu show that renewable capacity is being installed at scale. Current tariff levels are also encouraging – an auction in Rajasthan delivered a record low price of Rs 2.44 kWh (US$ per mWh) last year, representing a 40% drop in price over a year and undercutting fossil fuel prices in the process.

These new projects have help propel India to become the world’s fourth largest renewable energy market, some observers like Tim Buckley a director of the Institute for Energy Economics and Financial Analysis attributed this to the Indian Government’s long term commitment to renewable energy and well considered policy environment, which has created certainty for investors, all these efforts have helped attract foreign investment in renewables worth US$ 1.77 billion over the last three years.

The falling cost of clean energy has also helped prompt plans to cancel new coal fired power stations, which in the current energy market are no longer be viable.

However there are risks in India’s blooming solar scene, low tariffs and tough competition have driven down costs, but this could be to the detriment of some energy company’s long term health. Indian dependence on Chinese solar panels (which account for around half of project costs) have increased which has made the cost of future plants rise. There are also reports that falling tariff levels has resulted in some States waiting for further falls in costs before signing agreements.

In another case 15 solar project developers were asked to reduce the tariff for the project, normal practice straight after an auction where bidders are asked to match the lowest bid, but not a few years later when the development costs have been sunk and energy is about to be supplied. All these factors could result in problems for the industry as it matures (like clean energy ventures failing) and could delay the deployment of clean energy. Doubts have grown and the Lok Sabha’s standing committee on energy recently called the 100 GW target unrealistic and recommended a rethink.

But India must push the rollout of renewable technology, the forecast increase in energy demand cannot be met by fossil fuels without a further devastating impact to public health and threatening India’s Intended Nationally Determined Contribution (INDC) which confirms its aim to reduce greenhouse gas emissions intensity by 20 – 25% by 2020 by increasing the share of renewables in newly installed capacity by up to 40% in 2030. As well as the benefits for the environment, renewable energy can produce much needed jobs across the India, a recent IRENA report indicated that a million new jobs in solar and 180,000 in wind could be generated by 2022 if targets are met.

By reducing dependence on fossil fuels India will also improve its balance of payments position and reduce exposure to geo-political shocks that could disrupt supplies of oil. And above all as a major energy user of the present and future its commitment to renewable technology will be a key plank of the global battle to reduce greenhouse gas emissions.


Merlin Linehan has worked in development finance within Eastern Europe and Asia, and spends much of his time investigating the risks and opportunities that are created from the ongoing expansion of Chinese businesses that invest overseas in emerging markets.

This column does not necessarily reflect the opinion of the editorial board or Frontera and its owners.

ETF Investing: The Two Most Attractive Countries In The World For Renewable Energy Are Emerging Markets

Emerging markets lead the charts in renewable energy attractiveness

Emerging markets (EEM) (VWO) are clearly gaining ground over their developed market (EFA) (VEA) counterparts when it comes to investment in renewable energy. Notably, emerging markets such as China (FXI) and India (EPI) ranked above the United States (SPY) and Germany (EWG) in Ernst & Young’s Renewable energy country attractiveness index (RECAI). Emering markets constituted 50% of the 40 economies that were ranked, and 4 of the top 10 rankings. Interestingly, the top 30 economies included four African markets (EZA).

Up until now, challenges including limited institutional capacity, lack of scale and competition, high transaction costs, and high perceived risk have kept investment flow into clean energy on the lower side. However, this is changing by the day.  Governments in emerging markets are increasingly turning to renewable energy to diversify energy sources and reduce carbon emissions. As a result, these markets are transforming their energy mix at an unprecedented pace.

Solar Power holds enormous potential

Within the clean energy spectrum, solar power holds enormous potential as an alternative energy source in emerging markets. A strong catalyst for this transformation has been the reduction in solar energy production costs. In recent years, the cost of solar photovoltaic technology has fallen dramatically, leading to a decline in the average cost of implementing new solar projects. As a result, solar PVs can now deliver power less expensively and with more long-term price certainty as compared to coal-fired power.

The chart below depicts the average capital expenditure required for onshore wind and solar PV projects in 58 emerging markets.

The Guggenheim Solar ETF (TAN)

The Guggenheim Solar ETF (TAN) tracks the MAC Global Solar Energy Index which tracks companies operating in or deriving significant revenue from, the solar power industry. As of August 18, 18% of the fund was invested in companies based in the emerging markets. Chinese companies alone command an 11.2% portfolio allocation in this ETF.  TAN is up 28.3% YTD (as of August 20), +17% over the past 3 months. Top 10 holdings of the fund include:

TAN Fund Holdings as of August 18, 2017

Ticker/Cusip Name Country Weighting


The ETF has attracted close to $128 million in net fund flows since the beginning of the year (as of August 21), with fund activity accelerating since May.

Other renewable energy ETFs

Other ETFs tracking companies operating in the clean energy space include the iShares Global Clean Energy ETF (ICLN), the PowerShares Wilderhill Clean Energy ETF (PBW), the First Trust ISE Global Wind Energy Index ETF (FAN), and the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN).

In part 2, we’ll look at investment flows into the clean energy segment of emerging markets.

Kazakhstan’s Enormous Renewable Energy Potential Is Still Looking For Traction

Does the knowledge-based diversification economy hold weight?

“Kazakhstan’s government is focusing its efforts on transforming the country into a knowledge-based diversified economy driven by the private sector,” says Baljeet Grewal, director for strategy and portfolio investments at Samruk-Kazyna, Kazakhstan’s $67.4 billion sovereign wealth fund. The landlocked Central Asian (AAXJ) (VPL) economy is already striving to diversify its economy beyond energy. The country is currently focused on pushing for investment in the development of the IT, renewable energy (PBW) (ICLN) and tourism industries.

Enormous renewable energy potential

The frontier market (FM) (FRN) has enormous renewable energy potential, particularly from wind and small hydropower plants. The UNDP estimates that the potential for wind energy alone exceeds Kazakhstan’s current energy consumption ten-fold. However, electricity generation from renewable sources over the years has remained far below its potential due to investment barriers such as relatively high financing costs and an absence of uniform feed-in tariffs for electricity from renewable sources.

In 2013, the government tried to address this by adopting legislation which established feed-in tariffs for renewables for 15 years, while also providing capital subsidies. With the rationalization of tariffs and by offering subsidies, the government is attempting to generate 10% of their electricity by non-fossil fuels over the next 15 years. The country has also established a renewable energy fund of $50 million together with Islamic Development Bank to attract investments into the sector.

Renewables attracting financial support

The EBRD’s (European Bank for Reconstruction and Development) $57.3 million (€50 million) Kazakhstan Renewable Energy Financing Facility or KazREFF aims to provide development support and debt finance to solar (TAN), wind (FAN), small hydropower, geothermal, biomass, and biogas projects which meet required commercial, technical and environmental criteria.

Moreover, Kazakhstan is currently (from June 10 to September 10, 2017) hosting the World Expo 2017 Astana exhibition, dedicated to ‘Future Energy’.

Chinese Renewable Energy: A Transformation Seen Even From Space

In a transformation that can be seen from space, a corner of the Far Western Chinese province of Qinghai has witnessed a remarkable transformation, neat blue-grey rectangles have steadily spread across the land to the point where they cover an area the size of Macau. Together these solar panels have created the world’s biggest solar facility, the Longyangxia Dam Solar Farm, which now creates 850 megawatts of energy, enough for 200,000 households.

With Trump at the helm and the US going backwards in its commitment to green energy, China has an opportunity to forge ahead and become the global leader in renewable energy technology. Already five of the world’s top six solar panel manufacturers are Chinese, as are five of the top ten wind turbine manufacturers.

That said the country itself remains heavily dependent on coal and other fossil fuels for its energy needs, to put it in perspective only 1% or 66.2 GW of its energy mix was met by solar power in 2016. However the country has a government set target to hit 20% of energy production from renewable sources by 2030 and HK$2.82 trillion will be ploughed into the sector to make this a reality.

The strength and reach of China’s renewable tech firms, along with the government’s realisation that it must cut greenhouse gases and improve the nation’s catastrophic air quality are both drivers in the race to reduce dependence on fossil fuels. China needs to meet international targets and keep a populace increasingly unhappy with the environment placated.

China has made major strides domestically in rolling out renewable energy technology, but its firms are now also beginning to make waves overseas, joining Chinese firms which are already leaders in sectors like natural resources, infrastructure and manufacturing. Now Chinese solar panel producers are beginning to export to both emerging and developed markets, and also to manufacture in other countries as the race to become the leader in renewable technology globally heats up.

In China leads the world in solar panel manufacturing and installation, the major producers are TrinaYingliChina Sunergy  Jinniu EnergySuntech Power, and Hanwha SolarOne , CHINT Group Corporation and JA Solar Holdings.

Similarly China is the largest manufacturer of Wind turbines since 2010, the market is dominated by Goldwind (19% market share), followed by Goudian (11% market share) and Mingyang (9% market share). Now these companies have also started to make their impact felt abroad.

Goldwind is headquartered in the far western region of Xinjiang, its wide open spaces are ideal for wind turbines. Goldwind took its postion as global leading in wind turbine production in 2015 overtaking Danish firm Vestas.

Trina Solar is a Jiangsu based firm which recently overtook Yingli as the world’s largest solar panel producer, the firm has global operations and was listed in the New York stock exchange but recently its shareholders voted for it go private as part of a merger with Red Solar. The company has grown rapidly to take the top spot, but now the pressure is on to maintain its explosive growth.

The State Grid Corporation of China is a obscure little known entity, but represents the world’s largest utility company with a staggering 1.9 million employees and revenues of US$330 billion a year comparable with tech giant Apple. With the Chinese government contemplating a shake up of the domestic market the State Grid are looking abroad to expand.

China Three Gorges Corporation are better known thanks to its construction of the world’s biggest hydro-electric facility, namely the Three Gorges Dam which produces 22.5 GW of power. The company has become a world leader in dam construction and now operates over 60 GW of energy production worldwide.

Tianqi Lithium is another less known firm, but that could be about to change as the global rise of electric cars continues. The batteries of electric cars look set to be dependent on lithium and Tianqi just happens to be the world’s biggest processer of Lithium ion thanks to the recent takeover of a Chilean firm.

The next article will look at how Chinese renewable energy firms are making a global impact with rapid expansion abroad.


Merlin Linehan has worked in development finance within Eastern Europe and Asia, and spends much of his time investigating the risks and opportunities that are created from the ongoing expansion of Chinese businesses that invest overseas in emerging markets.

This column does not necessarily reflect the opinion of the editorial board or Frontera and its owners.