Hanoi's plan to gradually pass nearly 45 trillion dong (about US$1.8 billion) in accumulated losses from Vietnam Electricity (EVN) onto future electricity bills has exposed a deeper contradiction at the heart of the country's economic model. For years, Vietnamese officials have lobbied Washington to recognize the country as a "market economy," yet the electricity sector continues to operate under a hybrid system where risks are socialized and competition remains tightly controlled.
The issue is not merely about rising power costs. It raises a fundamental question: can Vietnam convincingly claim to operate on market principles while maintaining politically managed pricing and the dominance of state-owned enterprises in strategic sectors? The debate comes at a sensitive moment, as Hanoi faces growing risks of expanded US trade investigations related to subsidies, dumping, and transshipment linked to China-centered supply chains.
The Political Price of Power
Under the Ministry of Industry and Trade's proposal, EVN's losses would not be addressed through deep restructuring, shareholder dilution, or genuine market competition. Instead, the costs would gradually be incorporated into retail electricity prices paid by households and businesses. This reflects a longstanding feature of Vietnam's economic governance: electricity prices are neither fully market-driven nor entirely subsidized—they are politically calibrated.
For years, Hanoi maintained relatively low electricity prices to contain inflation, support exports, preserve social stability, and sustain GDP growth. However, this policy has created mounting financial pressure inside EVN, especially following global fuel price shocks and rising generation costs. Vietnam now faces a difficult balancing act. If 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.
US Skepticism Deepens
Vietnam's effort to gain market-economy status has long faced skepticism from both Republican and Democratic parties in Washington. Conservative trade hawks increasingly see Vietnam as an extension of China-centered supply chains, while 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 alone in facing this 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. This hybrid model helped Vietnam industrialize rapidly over the past two decades, but it also complicates Hanoi's current effort to convince Washington that its economy now operates primarily on market principles. The EVN debate ultimately reflects a broader strategic challenge: Hanoi wants greater access to Western markets, but its domestic policies often tell a different story.
As Vietnam continues to navigate its relationship with the United States, the power bill controversy serves as a reminder that market-economy recognition is not just a technical designation—it is a political judgment about how a country actually governs its economy. For now, the EVN losses suggest that Vietnam's market economy remains, at best, a work in progress.
