The commitment of the Government of Viet Nam towards green growth, including restructuring the energy sector is highly commendable. However, this paper argues that there are still substantial, largely indirect, fossil fuel subsidies. Fossil fuel fiscal policy reform has substantial benefits including enhanced energy efficiency, energy supply and national energy security, a reduction of the fiscal burden, higher GDP growth in the medium to longer term, as well as positive impacts on the environment. Phasing out fossil fuel subsidies is also an opportunity to make energy policies more progressive and overall resource allocation more efficient and inclusive. Many of the positive effects would be significantly amplified with the gradual introduction of carbon pricing.
The paper highlights that current reform efforts need to be significantly accelerated to meet the ambitious targets of the Green Growth Strategy and for Viet Nam to move towards a more inclusive and sustainable growth trajectory. Fossil fuel fiscal policy reform requires comprehensive energy sector reform, pricing reform and a communication and consultation strategy to solicit broad based support for reform. Measures will also be required to protect the poor and vulnerable and the most affected businesses from higher energy prices. By outlining concrete reform options in each of these areas, I believe that this paper makes an important contribution to the development of a roadmap for reform.
Green Growth and Fossil Fuel Fiscal Policies in Viet Nam – Recommendations on a Roadmap for Policy Reform is based on research by many national research partners and international
experts, and has benefitted from an extensive dialogue with major stakeholders including affected households, businesses, development partners and policy makers.