Vietnam's Power Bill Hides A Market Economy Lie

For years, Hanoi maintained relatively low electricity prices in order to: contain inflation, support exports, preserve social stability, and sustain GDP growth. However, this policy has also created mounting financial pressure inside EVN, especially following global fuel price shocks and rising generation costs.

Vietnam now faces a difficult balancing act. If electricity prices remain artificially low, EVN's financial position will continue to deteriorate. But if prices rise too quickly, inflationary pressure and public dissatisfaction will intensify.

The result is a compromise model in which losses are distributed across society while the electricity sector itself remains only partially liberalized.

This creates a paradox that US policymakers are unlikely to ignore. In market economies, price increases are generally justified by market competition, transparent cost structures, investment risks and consumer choice. Vietnam's electricity sector does not fully meet those conditions.

Although Vietnam has partially opened the solar energy and independent power generation sectors to private investment, EVN still retains dominant control over transmission infrastructure, grid management, and retail pricing mechanisms. Consumers cannot freely choose electricity providers.

Nor do they have meaningful influence over how prices are determined. Yet when the system accumulates losses, the burden is transferred to consumers through administrative pricing adjustments.

From Washington's perspective, this raises broader questions about how Vietnam defines“market principles.”

If electricity prices are tightly controlled in the name of economic stability when necessary, but suddenly adjusted according to“market pricing” once losses become unsustainable, many US lawmakers may view the system as selectively market-oriented rather than genuinely competitive.

Vietnam's effort to gain market-economy status has long faced skepticism from both the Republican and Democratic parties.

Conservative trade hawks increasingly see Vietnam as an extension of China-centered supply chains. Meanwhile, progressive lawmakers and labor advocates continue to raise concerns about state-owned enterprises, labor rights and unequal market competition.

The EVN case further reinforces these concerns because electricity prices directly affect export competitiveness. Electricity is a core input for industries such as steel, electronics, chemicals, solar equipment and industrial manufacturing.

If US authorities conclude that electricity prices are distorted by state intervention rather than driven by market competition, they may argue that Vietnamese exporters continue to benefit from advantages inconsistent with the standards of a market economy.

This matters greatly because in anti-dumping investigations, Washington closely examines whether domestic prices genuinely reflect market conditions.

To be fair, Vietnam is not the only country facing this type of power challenge. Many developing economies struggle to liberalize strategic sectors without triggering social instability. Even advanced economies intervene heavily in energy markets during periods of crisis.

The difference, though, lies in institutional structure. In more mature market economies, electricity price increases are typically accompanied by stronger independent regulators, greater financial transparency, more meaningful competition and clearer accountability mechanisms.

Vietnam, by contrast, still operates under a more centralized system in which state-owned enterprises remain closely tied to macroeconomic management and social stability objectives.