Vietnam teaches Japan a lesson

Nikkei Asian Review | Mon, Dec 5, 2016 02:25:54 PM Share this on

A failed bid to build nuclear power plants in Vietnam has provided Japan with a bitter lesson: It has to carefully assess a recipient country's needs and a project's financial feasibility before it pushes certain pieces of infrastructure into a nation.

Vietnam on Nov. 22 abandoned its plan for nuclear power plants in the southern province of Ninh Thuan, citing construction costs of about 3 trillion yen ($26.3 billion).

The plants would have been the first of their kind in Southeast Asia.

The Japanese government and private-sector businesses joined hands in pushing the project, which was also backed by Russia.

Now that the bid has fallen by the wayside, the question arises as to whether still-poor Vietnam really needed nuclear power plants.

In 2010, Japan won contracts for nuclear power plants in Vietnam during a meeting in Hanoi between Naoto Kan, then Japanese prime minister, and his Vietnamese counterpart, Nguyen Tan Dung.

Officials from Japan's Foreign Ministry on hand for the meeting were seen clapping their hands in delight.

International Nuclear Energy Development of Japan, a consortium also known as JINED, played a major role in conducting feasibility studies and offering technical assistance to the Vietnamese government and Vietnam Electricity.

JINED comprises nine Japanese power companies, Mitsubishi Heavy Industries, Hitachi, Toshiba and the Innovation Network Corp. of Japan.

It can be assumed that JINED representatives interacted plenty with Vietnamese people. But did anyone involved in the bid ever entertain the thought that the project would be financially and technically difficult to realize?

As things stand now, Vietnam gets 40% of its electricity from hydropower generation and 30% from thermal power plants.

Construction is underway in a massive project to increase the number of coal-fired thermal power plants from the current 19 to 52 by 2030. The idea is to cut down on fuel costs by burning coal mined in Vietnam.

Chinese companies were awarded 90% of the contracts for these plants because they offer low initial costs -- expenditures required until the plants start generating electricity.

According to a senior executive of a Japanese trading house, Vietnam "puts high priority" on initial costs.

"Cutting-edge Japanese technology that has little impact on the environment is not required," the executive added.

Another Japanese entity, the big retailer Aeon, has noticed a similar tendency in Vietnam.

At its Vietnam stores, private brand products, inexpensive goods made in South Korea and Thailand as well as other low-cost items sell well. High-quality Japanese products, which often carry comparatively high price tags, do not.

It is important to examine customers' financial capabilities and their needs, then offer products suited to them. This holds true regardless of whether you are selling consumer goods or infrastructure.

Source: Nikkei Asian Review