More Resources Needed for Implementing Green Growth Strategy

The workshop "Solutions for implementation of National Green Growth Strategy", held by the People’s Daily Newspaper in cooperation with the State Bank of Vietnam, the Ministry of Planning and Investment, and the Vietnam Chamber of Commerce and Industry (VCCI) in Hanoi on September 15, raised the issue of resources to promote the green growth of Vietnam’s economy.

 

In Vietnam, green growth has been adopted by many localities and many businesses; though it has not become a trend since the importance of green growth has not really been upheld as much as economic growth acceleration. Therefore, a majority of citizens and businesses are not fully aware of the urgency of green growth. This will be a particular weakness of Vietnamese businesses in the context of the current globalisation when they want to attract foreign capital, and seek customers and partners. Today, professional financial institutions are imposing green growth criteria on assessing investment and people are increasingly sensitive to environment impacts of business operations.

 

Today, cleaner production is becoming a more popular trend of enterprises as it can help them save money by reducing energy waste, raw materials and additives, thus raising operational efficiency, enhancing production stability and improving product quality. The highest barrier to businesses is a relatively high investment for technological innovation. Most businesses in Vietnam are small or medium-sized, and they usually face difficulty accessing sufficient capital and lack security assets to be qualified for bank loans. This difficulty has weakened motivations for technological innovation to enhance production efficiency and reduce environmental impact.

 

Banks’ role is expressed by green credit granting and environmental risk management. Mr Nguyen Tien Dong, Director of Economic Sectors Credit Bureau under the State Bank of Vietnam (SBV), said, in recent years, credit institutions have spent funds on green projects like funding high-tech vegetable planting, high-tech flower planting; financing machine and equipment purchases to reduce agricultural losses with zero interest in the first two years and a half reduction in the third year; replanting coffee trees in Central Highlands provinces in the 2014-2020 period according to two methods: replanting and grafting coffee trees; lending forestation programme under Resolution 30a.

 

To make green projects more effective, some specialists proposed the State Bank of Vietnam (SBV) assign commercial banks with big agricultural loans to use refinanced credits and foreigner-funded sources guaranteed by the SBV or the Government with preferential interest rates to make highly effective investments,

 

Mr Pham Hoang Mai, Director of the Department of Science, Education, Natural Resources and Environment under the Ministry of Planning and Investment, said, Vietnam will need some US$30 billion for green growth strategy till 2020, of which 70 percent will come from non-State sectors.

 

He suggested that capital sources can be raised from the private sector in the form of foreign direct investment (FDI), securities, and sub-loans by the Government and commercial banks. Government investments and official development assistance (ODA) will be a catalyst to attract and facilitate private investment for green growth.

 

Although green growth is a new direction with a lot of institutional and resource challenges, this will be an apparent path for Vietnam's economy. This strategy requires specific policies and actions to achieve its objectives. In particular, it is important to spread information and knowledge to raise public awareness towards green growth. But, it is noted that green credit growth cannot be superficial or an activity to simply polish the name of banks and businesses.