Vietnam currently has 50 credit institutions participating in green credit provision. Photo: BIDV

The growth Green credit

According to experts, green finance is a strategic tool, playing an important role in promoting green growth and sustainable development, both globally and in Vietnam.

The World Bank estimates that to achieve its green growth and transformation goals, Vietnam will need to mobilize a huge amount of resources of up to US $368 billion in the period 2022–2040, equivalent to about US $ 20 billion per year.

Ngân hàng Thế giới ước tính, để đạt được các mục tiêu về tăng trưởng và chuyển đổi xanh, Việt Nam sẽ cần huy động nguồn lực khổng lồ lên tới 368 tỷ USD trong giai đoạn 2022–2040, tương đương khoảng 20 tỷ USD mỗi năm

Sharing about Vietnam's green finance market within the framework of the workshop "Promoting green investment and green financial market - Towards Net Zero in Vietnam" held recently in Ho Chi Minh City, Mr. Le Duy Binh, Director of Economica Vietnam, said that the green finance market in Vietnam is developing positively with three main components: green credit, green bonds and green stocks.

In particular, the banking and financial system is the "bloodline" that leads capital to green projects, creating a solid foundation to promote sustainable development and realize global environmental goals.

In the period of 2017 - 2022, the system's outstanding credit balance for green sectors had an average growth rate of more than 23% per year.

With only five credit institutions participating in green credit in 2017, Vietnam has fìfty credit institutions generating outstanding green credit and outstanding debt of about VND 650,000 billion.

In particular, the outstanding credit balance that credit institutions assess for environmental risks when granting credit has increased to about VND 3.2 million billion out of the total outstanding debt of the whole system of VND 15 million billion.

This shows the change in awareness of financial institutions as well as the whole society. Changes in consumption and production patterns after the Covid-19 pandemic have also contributed to this trend.

People and businesses are increasingly paying attention to sustainable products that meet environmental standards, forcing banks to adjust their credit strategies to match global criteria, said Nguyen Quoc Hung, Vice Chairman and General Secretary of the Vietnam Banks Association.

It is difficlut for small and medium enterprises to access green capital

According to experts, although green finance has been implemented in Vietnam for about 10 years, its scale is modest.

According to statistics, green credit accounts for only 4.5% of total outstanding loans, green bonds are still very small with about US $ 1.16 billion issued in the period 2019-2023.

In addition, there is currently no clear set of criteria to define and evaluate projects eligible for green capital.

Mr. Le Trung Thong, Director of Lagom Vietnam Company, said that banks often prioritize green credit for areas such as renewable energy, clean energy... thanks to their clear potential and high capital recovery ability

Meanwhile, projects in other sectors, especially those of small and medium-sized enterprises, are facing difficulties, as they have not been able to demonstrate short-term investment efficiency.

This makes it difficult for financial institutions to manage risks, while businesses are vague in designing projects that meet the criteria... leading to many difficulties for businesses, especially small and medium enterprises, in accessing green capital.

Therefore, many enterprises have to turn to commercial loans or seek capital from individual shareholders instead of accessing green credit.

The above story is not uncommon in the small and medium-sized enterprise community.

This is a concern of most enterprises in the process of green transformation, especially those in the agricultural sector.

Many units have plans to expand production, invest in green projects, upgrade technological equipment for green transformation, but are "held back" because of the difficulty in accessing "green" capital.

Mr. Lu Nguyen Xuan Vu, General Director of Xuan Nguyen Group Joint Stock Company, said that enterprises have been operating in the agricultural sector for more than 20 years, but their access to green credit in the past few years has been unsuccessful.

Currently, businesses need VND 100 - 200 billion to change machinery and equipment, but because it is difficult to access preferential credit packages, especially green credit, businesses are not bold enough to invest.

Therefore, for green finance to become a driving force to support Vietnamese businesses to improve their competitiveness in the globalized business environment, there needs to be close coordination between the government, financial institutions and businesses in removing barriers.

Only when these efforts are synchronized, green finance can truly become a driving force for sustainable development for the Vietnamese economy.

Ms. Le Hoang Lan Nhu Ngoc, Cushman & Wakefield Vietnam proposed that the Government should support Vietnamese businesses through providing training programs, tax incentives, or separate support funds to help them access green finance more effectively.

However, in addition to changes in financial institutions, businesses need to invest in financial management and staff specialization to meet international standards when accessing green capital.