That was the comment of the experts at the Workshop on "Green Finance in Vietnam" held by the State Bank of Vietnam (SBV) in collaboration with the Asian Development Bank (ADB) in Hanoi on September 13, 2019.
The Workshop was co-chaired by Mrs. Hoang Thi Phuong Hanh - Deputy Director General of the SBV International Cooperation Department, and Mr. Satoru Yamadera - Principal Financial Sector Specialist of the ADB. Also attending the Workshop were representatives from the related departments, agencies and units under the SBV, the Ministry of Finance, the Ministry of Industry and Trade, the Ministry of Planning and Investment, the State Securities Commission, Viet Nam Bond Market Association, several commercial banks,… The Workshop was also attended by economists from the ADB, the Climate Bond Initiative (CBI), the International Capital Market Association (ICMA), the Central Bank of the Philippines (BSP), the Securities and Exchange Commission of Thailand, the Nomura Research Institute (NRI),…
In her opening remarks, Mrs. Hoang Thi Phuong Hanh - Deputy Director General of the SBV International Cooperation Department - said that Green growth is one of the important development goals of many countries around the world towards sustainable development. For an economy with a rapid growth rate like Vietnam, the issue of growth associated with deep, broad and sustainable development is an urgent issue. Vietnam's socio-economic development strategies have set out the GDP growth goals, while also setting specific targets for the national green growth strategy. However, in order to finance the Vietnam Green Growth Strategy (VGGS), Vietnam needs to mobilize huge investment capital. Therefore, Vietnam needs an appropriate green financial strategy and framework to create effective green financial instruments and products in order to raise capital for the sustainable development in Vietnam through the financial markets.
Mrs. Hoang Thi Phuong Hanh - Deputy Director General of the SBV International Cooperation Department - speaks at the Workshop
Recognizing the importance of a legal framework for green finance, Vietnam has taken steps to concretize action and implementation plans for this area. Specifically, in 2015, the SBV Governor signed Decision No. 1552/QD-NHNN issuing the Action Plan of the banking sector to implement the National Strategy on Green Growth toward 2020. In addition, the SBV has integrated the green credit program into the legal documents issued by the SBV, or drafted by the SBV and submitted to the Government for promulgation. In particular, on August 7, 2018, the SBV issued Decision No.1604/QD-NHNN approving the Scheme on green bank development, in order to increase the awareness and social responsibility of the banking system toward environmental protection, climate change response, gradually greening banking operations, directing credit capital into financing environmentally friendly projects...
Thus, the framework for green finance in Vietnam has been gradually forming and the financial system has actively participated in the campaign of greening the economy. A survey on the application of "green credit" in the banking sector of the SBV showed that 19 credit institutions (CIs) have developed strategies for managing the social and environmental risks, of which 13 CIs have integrated the content of social and environmental risk management into the “green credit” operating processes, 10 CIs have built bank credit products for "green credit", and 17 CIs have used manuals/handbooks to assess social and environmental risks for 10 economic sectors.
Financial investment figures in the green finance industry of the banking sector also look very positive. As of the first Quarter of 2019, there were 20 CIs providing green credit loans with a lending balance of VND 242,000 billion, an increase of 2% compared to 2018, in which, medium and long-term lending was approximately VND 188,000 billion, short-term lending was VND 54,000 billion. Most of the borrowers were operating in agriculture and rural development sector, with the total lending of VND 131,000 billion; lending to sustainable urban management was VND 31,000 billion; lending to sustainable forestry was VND 13,600 billion; while lending to renewable energy was VND 8,000 billion. Also as of the end of March 2019, the credit balance, assessed against social and environmental risks, reached nearly VND 314,000 billion, of which short-term lending was VND 138,000 billion.
According to Mrs. Hoang Thi Phuong Hanh, along with the first positive signs in the green finance sub-sector, Vietnam is also aware of many challenges and potential risks for this area, such as the banks’ balance sheets are mainly formed from short-term capital flows, and are often short of medium and long-term capital for green projects; the economy is also short of channels to mobilize medium and long-term capital for green finance,...; difficulties in managing the outputs of green projects as well as the appraisal and evaluation of the "green credit" elements in the project proposals ...
Therefore, Mrs. Hoang Thi Phuong Hanh expressed her hopes that the Workshop would be a platform to share lessons learnt and valuable knowledge/experience among the experts and participants, who are directly involved in the related fields; hence, practical recommendations for Vietnam could be brought up.
Mr. Satoru Yamadera – ADB Principal Financial Sector Specialist - speaks at the Workshop
Speaking at the Workshop, Mr. Satoru Yamadera, ADB Principal Financial Sector Specialist, said: “The Workshop is organized to share information about green finance activities and green bonds, in order to help the participants to have a deeper understanding of green finance and developing a green bond market, as well as the selection of appropriate green financial development policies and green bond markets, which are suitable to the practical conditions in each country. Mr. Satoru Yamadera emphasized that the ADB currently has several programs to support the initiatives for cooperation and mobilization of resources in the green finance sector in the ASEAN region. Specifically, the ADB could assist in the development of green bond rules and standards in the ASEAN region and the actual implementation to issue green bonds. Along with that, the ADB could also assist in finding potential investors, and evaluating sustainable green bonds.
At the Workshop, the experts and participants also exchanged and discussed on the state of the green financial market in ASEAN and Vietnam; issues of sustainable capital market development in the ASEAN region; issues and challenges in promoting green finance in the emerging economies; the principles and standards of regional and international green bonds; the role of the Central Banks in promoting sustainable finance; the role of green indices in developing green bond markets; the needed ecosystem for the green bond market in Vietnam; the good practices for developing the local currency bond market; and the policy options to promote green finance and green bond markets,...
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