Shaping Asia's Infrastructure: Legal and Regulatory Drivers of Growth in Japan, South Korea, Indonesia, and Vietnam

This blog is the second in our series: “Shaping Asia’s Infrastructure”, which explores legal developments shaping infrastructure across Asia, and sits alongside our “Inside Infrastructure” series covering infrastructure trends globally. Building on our first blog on key legal and regulatory developments in Singapore and Hong Kong, in this second instalment we turn our attention to Japan, South Korea, Indonesia, and Vietnam and  look at how these jurisdictions are driving sustainable project development and addressing the region's surging demand for energy. 

Fueling the future: Asia’s hydrogen markets embrace CfD models to drive investment

As Asia accelerates its transition to low-carbon energy, several governments are turning to contracts-for-difference (CfD) schemes as a market-based mechanism to de-risk investment and scale up hydrogen production.

• Japan is one of the latest countries to legislate a CfD type scheme facilitating the development of low-carbon hydrogen. The Hydrogen Society Promotion Act came into effect in 23 October 2024 and introduces subsidies for approved businesses engaging in the supply or use of low-carbon hydrogen. The government began accepting business plan applications for CfD-style subsidies this year, administered by the Japan Organization for Metals and Energy Security (JOGMEC). The subsidies will bridge the price gap between the production and transportation of hydrogen and conventional fossil fuels, driving Japan towards its goal of becoming carbon neutral by 2050.
• In May 2024, South Korea has launched a similar CfD-style scheme via the Clean Hydrogen Power Standard (CHPS), which enables companies to bid for 15-year clean hydrogen purchase contracts. The first round of auctions concluded in December 2024 with Korean Southern Power selected as the preferred final bidder. Permits for the project are expected by 2026 with construction starting in 2027.
• Green hydrogen financing has also become a legislative priority in Indonesia. In September 2024, the Indonesian Ministry of Energy and Mineral Resources and the Green Hydrogen Organisation signed a memorandum of understanding to accelerate the implementation of Indonesia’s National Hydrogen Strategy. While it remains to be seen whether CfD-type schemes will be offered, the Indonesian government aims to attract US$25.2 billion in private sector investments into green hydrogen development by 2060.

These developments signal a regional shift towards market-based support for clean energy, rather than relying solely on direct subsidies or state-owned infrastructure. This approach mirrors successful models used in other regions and is designed to reduce investor risk while accelerating decarbonisation.

Electricity Law reforms and renewable energy challenges in Vietnam

Vietnam’s energy sector is undergoing significant reform, driven by policy changes and infrastructure development. The new Electricity Law of 2024 (Electricity Law), effective 1 February 2025, is a major step forward. This Electricity Law aims to promote sustainable energy, investment flexibility and modernisation, especially for LNG and offshore wind projects. 

Since the Electricity Law came into effect, numerous guiding decrees and circulars have been enacted to open the market for renewable energy. In particular:

• Direct Power Purchase Agreements (DPPAs): Decree 57/2025/ND-CP, effective 3 March 2025, sets out a framework for large electricity consumers to directly buy power from renewable energy generators (solar, wind, and biomass) with a capacity of 10 MW or more, bypassing the traditional state-owned utility.
• Offshore Wind Framework: A dedicated regulatory regime for large-scale offshore wind projects was established by Decree 58/2025/ND-CP, also effective 3 March 2025. This decree gives a clear roadmap for project approvals, incentives, and permitting.
• Amended Power Development Plan VIII (Amended PDP8): The PDP8 was updated by Decision 768/QD-TTg on 15 April 2025, and its implementation plan was detailed in MOIT Decision 1509/QD-BCT on 30 May 2025. The revised plan increases long-term capacity targets and renewable energy shares, updates project lists, and outlines new timelines for grid and energy storage development.

Vietnam’s new regulations are gradually opening the wholesale electricity market. While the introduction of DPPAs marks a significant shift, their pricing remains subject to a statutory ceiling rate to ensure market stability and fairness. Although EVN (the national and sole public power company in Vietnam) remains a dominant buyer, the power offtake structure is clearly evolving. Investors should anticipate a measured transition toward more competitive procurement models—such as expanded DPPA frameworks—that are designed to ensure bankability, and support long-term pricing and revenue stability.

A key challenge remains: the requirement for acceptance certificates as a condition for Commercial Operation Date (COD) recognition to qualify for Feed-in-Tariff (FIT) prices. As of April 2025, 172 wind and solar power plants (or parts thereof) have not yet received state approval at the time of COD recognition. It has been argued that this action breaches the 20-year power purchase agreements, creating substantial financial uncertainty. Investors from more than 100 wind and solar projects have jointly petitioned the authorities, raising concerns over the potential retroactive application of electricity prices—an issue that threatens over USD 13 billion in total of investment capital.

While the Vietnamese government is taking steps to address these issues, the situation highlights the crucial risks of regulatory change and the importance of robust contracts and dispute-resolution mechanisms. 

Vietnam’s infrastructure drive

Vietnam's public investment landscape shows a strong commitment to infrastructure and construction: both being key drivers for economic growth and sustainable development. From 2024 to May 2025, significant resources have been allocated to transportation, energy, housing, and green infrastructure, supported by public funding, foreign direct investment (FDI), and public-private partnerships (PPPs). The government initially earmarked VND657 trillion (US$26.8 billion) for public investment in 2024, with a significant portion—VND422 trillion ($17.2 billion)—dedicated to transportation infrastructure. In February 2025, the government adjusted its public investment plan, increasing the allocation to VND875 trillion ($35 billion) – reflecting a 37.7% increase compared to the VND635.6 trillion ($25.5 billion) spent in 2024. The total public investment for 2025 is equivalent to approximately 10.5% of the projected GDP. This strategic focus aligns with the government’s vision to stimulate the economy whilst enhancing connectivity, supporting urbanisation, and the transition to a green economy.

Key areas of investment in Vietnam generally include:

• Transportation: Major projects like expressway expansion, urban railways in Ho Chi Minh City, the USD 67 billion North-South High-Speed Railway connecting Hanoi and HCMC, Long Thanh International Airport and the Tứ Liên Bridge and connecting roads in Hanoi are underway.
• Renewable Energy Projects: 21 LNG power projects have been approved under the Amended PDP8, aiming for 22.524 MW by 2030, which would contribute 9.5-12.3% of the national power capacity. To support LNG power development, Vietnam has reduced import duties on LNG from 5% to 2%. Under the new Decree 100/2025/ND-CP, for imported LNG gas power plants that receive approval for acceptance results and achieve COD before 1 January 2031, the Vietnamese Government  ensures that, the power purchaser (including EVN) will guarantee an offtake of at least 65% of the plants' average annual output for up to 10 years.

On this last point, although the Vietnamese government is actively promoting the LNG sector, investors still face significant hurdles. A major challenge is securing long-term, bankable power purchase agreements, which are crucial for financing large-scale projects. Additionally, investors must navigate complex approval processes and ensure their projects align with evolving government plans. 

Stay informed on the latest developments in Vietnam's infrastructure sector by exploring our Freshfields' Vietnam Infrastructure Spotlight:

• June 2025 briefing: [https://www.freshfields.com/en/our-thinking/briefings/2025/06/vietnam-infrastructure-spotlight-june-2025]
• September 2025 briefing: [https://www.freshfields.com/en/our-thinking/briefings/2025/09/vietnam-infrastructure-spotlight-september-2025].

Conclusion

The evolving legal and regulatory frameworks across Japan, South Korea, Indonesia, and Vietnam distinctly underscore Asia's dynamic and determined push towards sustainable infrastructure development and energy transition. As these nations continually refine their regulatory landscapes to meet surging energy demands and ambitious sustainability targets, a nuanced understanding and proactive navigation of these legal and policy developments will be paramount for investors and project developers seeking to contribute to, and ultimately benefit from, the region's significant growth trajectory.