Helping Vietnamese Business Improve Competitiveness Through Energy Efficiency

Oct 21, 2005

HA NOIThe growing number of small and medium enterprises (SMEs) in Viet Nam is putting a heavy burden on the already stretched national capacity for energy production, said the United Nations Development Programme (UNDP) today. Unless energy use becomes more sustainable, Viet Nam may not be able to meet national power demands.

UNDP and the Ministry of Science and Technology approved a project today to confront this issue. The five-year project will continue to support the business sector to conserve energy and contribute to the reduction of carbon dioxide emissions.

“Timing for the project could not be better as Viet Nam deals with the need for economic growth and ever-increasing energy shortages,” said UNDP Resident Representative, Jordan Ryan. “SMEs are an important engine for economic development and poverty reduction. Managing energy better is a cost-effective business strategy as well as an important way to reduce carbon dioxide emissions and play a role in the battle against global warming.”

Private SMEs contribute more than 40% of GDP, 56% of regular jobs, and produce 1.2 million new jobs every year. With this increased contribution to the national economy, the financial implications of inefficient energy use are huge and impacting contributions to GDP and profit.

The project “Viet Nam Promoting Energy Conservation in Small and Medium Enterprise (SME) ” intends to remove barriers and promote the widespread use of energy efficient management practices, operations and technologies in SMEs in Viet Nam.

“Meeting the increased demand for energy is a top priority of the Government,” said Mr. Tran Quoc Thang, Vice Minister of Science and Technology. “And more investment in energy production and the adoption of energy efficient practices are key strategies to address this critical issue.”

The US$29 million project budget includes a contribution of US$5.5million from the Global Environmental Facility (GEF) through UNDP. Other contributions, in cash and in-kind, come from national counterparts including, ministries, universities, academic organizations, and the business sector. The GEF funds developing country projects that have global climate change benefits, in this case to support the reduction in greenhouse gas emissions, a major cause of the rise in average global temperatures and changes in the global climate.

For the next five years, UNDP, as a GEF implementing agency, will work closely with Vietnamese counterparts to introduce best practice in energy conservation with small and medium enterprises so that they will reduce energy cost and improve their competitiveness.

About 500 SMEs belonging to five energy-intensive sectors, including brick production and ceramics, will participate in trials supported by the project to decrease energy consumption though technical training and services. A fund of over $1.9 million will be established to aid SMEs to access domestic credit and loans for their own energy conservation projects.

The successful implementation of the project is expected to result in cumulative energy savings equivalent to over 136 thousand tons of oil and cumulative reductions in annual carbon dioxide (CO2) emissions of 962 thousand tons over the period 2006-2010.

Contact informationNguyen Viet Lan, UNDP Media and Publications Unit
(84-4) 942-1495 ext.186

Le Van Hung, Sustainable Development Cluster, UNDP
(84-4) 942-1495 ext.159