Want to be in the loop?
subscribe to
our notification
Business News
POSITIVE SIGNS IN VIETNAM'S GREEN CREDIT SECTOR
'Green credit' refers to the kinds of loans provided by banks for projects that are considered environmentally friendly or protective of the ecosystem. Green credit is now a trend in the global banking and finance industry, and more Vietnamese banks are following suit.
"Although many problems persist, the legal framework on green credit has been improving day by day," said Nguyen Ba Hung, chief economist of the Asian Development Bank (ADB) in Vietnam, at a conference on green financing held by Vietnam Investment Review in Hanoi on December 4.
The State Bank of Vietnam (SBV) has issued many legal documents and policies to promote green credit, including Directive No.03/CT-NHNN, Circular No.08/2016/TT-NHNN, and Circular No.06/2022/TT-NHNN.
The SBV has also implemented many solutions to promote green credit with more efforts made to support credit institutions to issue green bonds, access capital from international organisations, and participate in green financial cooperation programmes.
As a result, green credit activities in Vietnam have gained traction. Vietnam's total green credit balance stood at VND528 trillion ($22.3 billion) in June, accounting for about 4.2 per cent of the total outstanding credit. Vietnam boasts over 40 credit institutions offering green funding, exhibiting an annual growth rate of approximately 20 per cent.
According to Hung, businesses can seek cooperation opportunities with international financial institutions. These institutions play an important role in mobilising capital for green credit through forms such as direct loans, indirect loans, non-refundable grants, guarantees, technical assistance, financial support, and policy support. Some international financial institutions include the Asian Development Bank (ADB), the World Bank Group, including the International Finance Corporation, along with other bilateral partners such as France's AFD, the German Development Agency, the EU, and USAID.
However, Hung also pointed out some setbacks to unlocking Vietnam's green credit. Currently, the legal framework for green finance is unable to meet practical requirements and there is a lack of driving forces to promote green credit development, while the number of green products is also limited.
To promote the development of Vietnam's green finance market, one expert from the ADB recommended that Vietnam continue to improve the legal framework surrounding the green economy and green finance to meet international standards.
"Currently, commercial green capital sources do not bring many financial benefits. Therefore, the government needs to issue incentive mechanisms, such as reducing corporate income taxes for financial institutions to develop green credit and support interest rates for green credit loans," he said.
He further noted that policymakers need to maintain flexible financial management policies and proactively access international capital sources through bilateral cooperation as well as international financial institutions.
In addition, the government must accelerate the implementation of certificate validation and the formation of a domestic carbon market connected to the international carbon market. This channel can create additional revenue for economic activities, giving incentives for businesses to convert to green activities faster and on a larger scale.
Hung recommended that the government take pioneering steps in issuing green bonds based on budget expenditure management for green items. "As a result, the green bond market will become more vibrant and draw in major investors," he said.
Source: VIR
Related News
PHONE AND COMPONENT EXPORTS HIT $18.4 BILLION IN FIRST FOUR MONTHS
In terms of markets, the United States has become Vietnam's largest customer instead of China (in the first quarter of last year). Specifically, in the first quarter of this year, the US spent more than $3.05 billion importing all types of phones and components from Vietnam, an increase of 30.4 per cent on-year. The Chinese market ranked second with more than $2.5 billion, down 28 per cent on-year.
BA RIA-VUNG TAU PROVINCE RANKS FIRST IN FOREIGN INVESTMENT CAPITAL
Statistics published by the Foreign Investment Agency under the Ministry of Planning and Investment showed that between January and April, Ba Ria-Vung Tau lured $1.52 billion in overseas funding, equalling 16.4 per cent of the total foreign investment in the whole country.
INFOGRAPHIC SOCIAL-ECONOMIC SITUATION IN THE APRIL AND FOUR MONTHS OF 2024
The monthly statistical data presents current economic and social statistics on a variety of subjects illustrating crucial economic trends and developments, including production of agriculture, forestry and fishery, business registration situation, investment, government revenues and expenditures, trade, prices, transport and tourism and so on.
KEY DRIVER GAINS A MUST FOR GROWTH
Only slight order number improvements and enterprise confidence sentiment mean it may be difficult for the country to hit its desired growth goals this year.According to the World Bank’s biannual economic update report released last week, it is expected that the Vietnamese economy may grow by 5.5 per cent this year and 6 per cent next year, making it among top growth leaders in the world.
ADDED VALUE OF INDUSTRIAL SECTOR UP 6.18 PER CENT IN Q1
Vietnam’s industrial sector posted significant growth in the first quarter of 2024, of an estimated 6.18 per cent compared to the first quarter of 2023. In particular, manufacturing and processing saw robust growth of 6.98 per cent.
TEXTILE AND GARMENT BUSINESSES FACE DIFFICULTIES DUE TO LACK OF DOMESTIC SUPPLY
Infrastructure for weaving, dyeing and fabric production is still limited, and there is no spatial planning for development and centralised wastewater treatment, said Nguyễn Thị Tuyết Mai, Deputy General Secretary of the Việt Nam Textile and Apparel Association (Vitas).