To make the economy 'greener'

Green transformation is not only an inevitable choice, but also an opportunity for Vietnam to become a pioneer in the region, catching up with the world's development trend.

Vietnam is actively “greening” its economy. (Photo: Vu Dung)

In Vietnam, green growth receives special attention from the Party and State, supported by a legal framework, guided by a national strategy and action plan. The Vietnamese Government made a commitment with the international community to achieve net zero emissions by 2050 at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26).

At the end of November 2023, the Ministry of Planning and Investment, as the national focal point for green growth, announced that it had advised the Prime Minister to issue the National Strategy on Green Growth for the 2021-2030 period, with a vision to 2050, and the National Action Plan on Green Growth for the 2021-2030 period.

Actively "green"

Currently, Vietnam’s key commodity export markets have been “joining hands” to prepare for specific regulations on sustainable production, linked to environmental protection. For example, in Europe, the region has an action plan to comply with the Border Carbon Adjustment Mechanism (CBAM) and the Regulation on Deforestation Prevention (EUDR). The US has also issued a draft Clean Competition Law.

Vietnam’s economic growth is largely dependent on exports. The US market accounts for 30% of the export market share and Europe accounts for 10%. Therefore, the application of the above standards by the US and Europe will create pressure on Vietnamese enterprises when trading with these two markets. Therefore, to “retain” the market, green transformation is the inevitable path for Vietnamese enterprises to expand exports, attract investment, and integrate into the international economy, etc.

With domestic policy and practice movements after the strong commitment at COP26, Vietnam is actively "greening" the economy. In particular, some policies are very important and have a wide impact on businesses such as the Draft Decree regulating environmental protection fees for emissions; Decree amending and supplementing a number of articles of Decree No. 156/2018/ND-CP of the Government on detailed regulations for the implementation of a number of articles of the Forestry Law, including the addition of carbon absorption and storage services; Draft Decision on promulgating environmental criteria and certification for projects granted green credit, issuing green bonds, etc.

The deciding factor

Recently, at the Conference on implementing economic diplomacy in 2024 to serve socio-economic development held at the Ministry of Foreign Affairs, Vietnamese Ambassador to Belgium, Head of the Vietnamese Delegation to the European Union (EU) Nguyen Van Thao said that mobilizing resources, including financial resources, is a decisive factor in implementing the green transition process.

Concerns about financial resources for green transformation. Ambassador Nguyen Van Thao suggested that in the coming time, Vietnam can mobilize financial resources through four basic channels.

Firstly, official development assistance (ODA) capital. The amount of ODA may not be much, but it is a source of capital available in bilateral and multilateral budgets. Ambassador Nguyen Van Thao believes that this is a good resource that Vietnam should take advantage of to mobilize in the green transition process.

Sharing specifically about the EU, the Ambassador said that the EU always has budgets for green transformation. However, during the negotiation process to increase the ODA level, the EU raised the issue of disbursement progress. Relevant ministries, departments and sectors need to improve this issue to attract and mobilize more ODA capital from the 27-member bloc.

Second, financial resources in EU initiatives. To receive this support, Vietnam needs suitable projects related to the bloc's initiatives.

Third, direct investment from businesses. Many businesses have a need to invest in green transformation. They will make quick decisions, have available investment capital and can support sustainable development. “This is the most important source of capital, accessible and most sustainable development,” the Vietnamese Ambassador to Belgium stated.

Fourth, indirect investment sources. Ambassador Nguyen Van Thao said that Vietnam can issue green bonds. Vietnam and Luxembourg have signed a Green Finance Strategic Partnership Agreement. The Ambassador emphasized: “Economic diplomacy can be applied in this field to promote and attract resources. Green bonds are a good resource for us to carry out green transformation and Vietnam should not miss it.”

“Vietnam and Luxembourg have signed a Green Finance Strategic Partnership Agreement, but there has been no progress so far. Economic diplomacy can be applied in this area to promote and attract resources. Green bonds are a good resource for us to implement green transformation and Vietnam should not miss it.”

Vietnamese Ambassador to Belgium Nguyen Van Thao

Accelerating the green transition

In addition to financial concerns, Associate Professor Dr. Vu Minh Khuong, Lee Kuan Yew School of Public Policy, National University of Singapore, said that Vietnam is facing a number of challenges on the green transformation path. For example, the country is heavily dependent on the traditional model.

At the same time, Vietnam's value creation capacity is an issue that needs attention when resources, capacity, and efforts are great but there is no systematic strategy and no motivation to do well. In that context, Associate Professor, Dr. Vu Minh Khuong realized that strategic thinking and breakthrough vision are very important.

In addition, on the green transformation journey, the private economic sector is the main driving force. Small and medium enterprises are the “backbone”, determining the success or failure of green transformation in the economy. However, currently, the small and medium enterprise sector faces many difficulties in digital transformation; limited ability to invest in green technology; low awareness of environmental and resource issues; low access to knowledge and finance...

A survey of 2,734 enterprises by the end of 2023 by the Private Economic Development Research Board under the Prime Minister's Advisory Council for Administrative Procedure Reform showed that the green transformation picture has changed a lot but there are still many "gray areas". 64% of enterprises have not prepared anything for emission reduction and green transformation; nearly 52% assessed the necessity of transformation at normal, unnecessary and very unnecessary levels.

Through studying international experience combined with the context in Vietnam, Mr. Arnaud Ginolin, General Director of BCG Vietnam, recommended that Vietnam should build a green classification system in line with sustainable development goals, international standards and economic sector systems; launch green incentive and incentive mechanisms; and support green pilot projects.

At the same time, it is necessary to promote green finance through supporting the development and application of green financial instruments such as green bonds, carbon markets, and blended finance; enhancing cooperation between agencies, implementing multi-channel communications with national and provincial programs, and attracting the participation of stakeholders in both the public and private sectors, domestically and internationally.

“If we can do the above, Vietnam will accelerate the green and comprehensive transformation process, towards green and inclusive development,” affirmed General Director Arnaud Ginolin.

Source: https://baoquocte.vn/de-nen-kinh-te-xanh-hon-262515.html