Plastics Industry Seeking Green Financial Solutions

Mr. Chung Tan Cuong, Chairman of the Ho Chi Minh City Plastics Association, emphasized the imperative of seeking green financial solutions during a workshop “Importance of financial stability in attracting investment and promoting business growth for Ho Chi Minh City Plastic Industry” organized by the association and Atradius Vietnam.

An overview of the workshop 

Facing a downturn in major markets and a significant drop in orders throughout 2023 due to the world economic recession, Vietnamese plastic sales have been severely impacted. According to the General Department of Vietnam Customs, plastic exports witnessed a 12.2% year-on-year decline, reaching US$3.71 billion in the first nine months of 2023. In this context, providing Environmental, Social, and Governance (ESG) information has become a pivotal challenge for plastics companies aspiring to attract green investments.

Mr. Cuong underscored the significance of attracting green investments as a key growth factor for the Ho Chi Minh City Plastics Association and its member companies. Beyond merely producing environmentally friendly products, he emphasized the importance of enhancing financial reporting transparency. This, he noted, is essential for businesses to effectively attract green investments and improve overall competitiveness.

In alignment with this green investment focus, the plastic industry in Ho Chi Minh City and Vietnam is actively exploring green financial solutions to meet sustainable development goals. This strategic approach aligns with the Government's commitment to achieving net-zero emissions by 2050. Plastic companies are proactively addressing liquidity risks by collaborating with financial institutions to establish reserve funds and manage credit risks.

Cuong further emphasized the role of commercial credit insurance as a potent tool in managing risks, protecting exporters' rights and assets, and bolstering confidence in product sales. Commercial credit insurance serves as a key factor in ensuring current financial stability and enhancing companies' credit reputation, making them more attractive to green financial resources.

Ms. Vu Thi Duc Hanh, Country Director of Atradius Vietnam, emphasized that commercial credit insurance acts as a robust "shield," minimizing risks and instilling confidence among exporters. Given the challenge businesses face in accessing green investments, commercial credit insurance becomes pivotal in securing financial stability and enhancing credit reputation.

Despite its widespread use globally, commercial credit insurance is still underutilized in Vietnam. In 2021, nearly US$3,000 billion of global trade was covered by commercial credit insurance, contrasting sharply with the limited adoption of around 1% by Vietnamese companies. Recognizing the shared goal of minimizing payment risks, Atradius collaborated with VSPA to understand and address challenges faced by the business community, especially in meeting green finance requirements for plastic companies.

By My Chau, Vietnam Business Forum