10:18 | 02/06/2017 Economy
(VEN) - Credit for environmentally friendly projects– green credit - is one of the goals of the Vietnam Green Growth Strategy and is of great interest to credit institutions. However funding for green projects remains small.
In the past, virtually no domestic banks had preferential credit policy for energy-saving, emission-reducing and environmentally friendly projects. However, green credit has become an indispensable part of commercial banks’ business activities in recent years. The State
Bank of Vietnam (SBV) issued a directive on promoting green credit growth and environmental and social risk management in credit granting
activities in 2015, and required commercial banks to gradually increase the proportion of green credit in their credit portfolio.
Some commercial banks have deployed green credit packages for businesses to implement environmental protection projects, such as the US$90-million Da Phuoc solid waste treatment
complex project in Ho Chi Minh City implemented by the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV)
and the VWS Company. In addition, Agribank, Sacombank, Vietcombank and BIDV have been involved in pilot loans for renewable energy and waste recycling projects and those to mitigate the negative impacts of climate change valued at VND2 trillion.
Many international financial institutions, such as the World Bank and the International Finance Corporation, have signed legal
agreements with the SBV and domestic commercial banks to implement environmental protection projects and energy-saving credit programs for small and medium-sized enterprises (SMEs) valued at several hundred million US dollars.
To help green credit prove its efficiency, the SBV should develop credit sources and attract green capital for environmentally friendly projects. On May 10, a conference was held in Hanoi on promoting investments of the private sector for green growth via the banking system. It was co-organized by the SBV and the Macroeconomic Reforms/Green Growth Program implemented by GIZ Vietnam on behalf of the German Federal Ministry of Economic Cooperation and Development (BMZ). Speaking at the event, SBV Deputy Governor Nguyen Thi Hong emphasized the decisive role of the banking system in
“greening” investment capital flows to the economy, and in credit risk management towards green growth.
Hong also said that thanks to GIZ support of Vietnam, the SBV has drafted a list of green projects that will be piloted in the framework of the SME development program financed by the Japan International Cooperation Agency (JICA). “After the trial,
green projects will be extended to all industries and economic sectors in accordance with international standards and applied throughout the banking system,” Nguyen Thi Hong affirmed.
Michael Krakowski, Program Director and Chief Technical Advisor of the Macroeconomic Reforms/Green Growth Program,
says the program will further strengthen cooperation with the SBV in the implementation process of the Vietnam Green