By Yeo-Ri Kim, Research Intern, East-West Center in Washington. Yeo-Ri is a Master's candidate in Global Policy Studies at the Lyndon B. Johnson School of Public Affairs, University of Texas.
Note: this article originally appeared in the East-West Center’s Asia Matters for America/America Matters for Asia initiative on July 6, 2017.
In late May, General Electric (GE) announced that GE Renewable Energy signed a $2 billion Joint Development Agreement with Phu Cuong Group, a Vietnamese company, and Mainstream Renewable Power, an Ireland-based global wind and solar company. GE Renewable Energy will collaborate to develop, build, and operate the 800 megawatt (MW) Phu Cuong Wind Farm in the Soc Trang province of Vietnam. The new wind power facility will be completed in 2018, and will be the largest wind farm in Vietnam. GE’s Hai Phong facility will produce wind turbines for the project.
As Vietnam’s economy grows, domestic demand of electricity continues to increase. Currently, the main energy sources of Vietnam are coal and hydropower. Due to growing domestic energy consumption, the Vietnamese government has sought to develop and produce electricity from renewable energy sources, targeting 10% renewables by 2030. In May of 2016, GE signed a Memorandum of Understanding (MOU) with the Vietnamese Ministry of Industry and Trade on developing one gigawatt (GW) of wind energy by 2025 in the country. The new agreement will support the implementation of Vietnam’s National Target Program on climate change.
GE, a US-based global corporation, has over 20 years of experience operating in Vietnam. This wind power project is one of five agreements – worth $5.58 billion collectively – to support the development of Vietnam’s energy and aviation industry. GE inked the agreement with state energy group PetroVietnam to build two 750 MW gas-fired turbine power plants. The agreement with VietJet includes a 12-year engine service contract and 20 jet engines made by CFM International, a joint venture of GE and French aircraft engineering company Safran.
As of April 2017, Vietnam is the 6th largest importer of US goods. In 2016, the total value of US exports to Vietnam was $10.2 billion. The main US export goods to Vietnam are electrical machinery, aluminum, aircraft, and other machinery. US investment in Vietnam has grown significantly, and was estimated at $1.5 billion in 2016.
GE’s agreements with Vietnamese companies were a part of $17 billion in trade deals that the United States and Vietnam signed when Vietnamese Prime Minister Nguyen Xuan Phuc visited the White House on May 31. Honeywell and Hilton Worldwide also signed deals with Vietnamese companies, which are worth $100 million and $650 million respectively. This new renewable energy project by GE in Vietnam aligns with the joint statement on enhancing the US-Vietnam comprehensive partnership released by the White house after the May 31 meeting.