Overcoming Barriers to Promoting Sustainable Economic Development in Vietnam

Dr. Nguyen Quoc Hung shared about challenges and opportunities, and proposed specific solutions in promoting sustainable economic development.

Green growth and sustainable development are major and consistent policies of the Party and State. General Secretary To Lam in an important topic on the country's development orientation: New development era, the era of the Vietnamese people's rise; The General Secretary requested to promote strategic technology, digital transformation, green transformation, taking science and technology, innovation as the main driving force for development.

Green finance is considered an important method that countries around the world and Vietnam focus on to achieve green and sustainable growth. According to the World Bank's estimates, Vietnam needs huge resources, about 368 billion USD for the entire period from 2022 to 2040, equivalent to 20 billion USD per year to achieve the goal of green growth and green transformation. This requires mechanisms, policies and solutions to mobilize domestic and foreign capital, promote the development of the green financial market, and encourage private capital flows to invest in green fields. In addition to financial resources for green growth such as from the state budget or loans, support from other countries, or international financial institutions and organizations; to develop the green financial market, Vietnam needs to develop both the green capital market and the green credit market in parallel.

Cong Thuong Newspaper had an interview with Dr. Nguyen Quoc Hung - Vice Chairman and General Secretary of Vietnam Banks Association on the issue of promoting green finance towards sustainable development in Vietnam.

Dr. Nguyen Quoc Hung - Vice Chairman and General Secretary of Vietnam Banks Association

How do you evaluate the outstanding green credit balance as well as the number of credit institutions participating in lending to this sector? How have green credit activities been implemented by the association's members, sir?

The State Bank has pioneered in implementing action plans and implementing policies issued by the Government to promote green credit. An important milestone is the issuance of the Environmental and Social Risk Management Handbook, with a 15-year roadmap, from 2017, creating a foundation for credit institutions to use as a basis for lending, especially in green sectors.

Under the direction of the State Bank, credit institutions have proactively developed internal plans, completed criteria and processes to increase investment in environmentally friendly projects. The results achieved so far are that 50 credit institutions have participated in green credit issuance with a total outstanding loan balance of nearly VND 680 trillion, accounting for 4.5% of the total outstanding loan balance of the entire system. The average green credit growth rate is 22% per year, higher than the general growth rate of economic credit. In particular, in 2023, this rate will reach a record high of 24%.

In the context of climate change and the need to transition to a circular economy, banks such as BIDV, Agribank, Techcombank, VietinBank, and VPBank have actively promoted green projects. Some banks have even invited experts to develop internal standards for green credit. For example, BIDV not only pioneered in providing capital but also spread the message of environmental protection right from its brand and community activities.

However, looking back since 2017, the number of credit institutions participating in the green credit sector has grown strongly, from 15 to 50 organizations. This shows a shift in awareness of financial institutions as well as the whole society. Changes in consumption and production patterns after the Covid-19 pandemic also contributed to promoting 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.

In the coming time, the banking industry needs to continue to promote capital provision for areas such as renewable energy, clean agriculture, and circular economy. From production, processing to consumption, every stage must ensure green and clean criteria, meeting social requirements. This is not only a responsibility but also an opportunity for the banking industry to contribute to achieving the goal of committing to net zero emissions by 2050.

Promoting sustainable economic development

Although always encouraging banks to provide green credit, in the recent National Assembly session, State Bank Governor Nguyen Thi Hong admitted that there are many difficulties in pushing capital into this field. From the reality of member credit institutions, can you share the difficulties that banks encounter when implementing green credit, including personal credit?

Protecting the rights of consumers is one of the important tasks, requiring attention to ensure that the products they buy actually meet quality and environmental protection standards. We cannot rely solely on commitments about the “cleanness” of products, but must have competent authorities to confirm their accuracy. For example, when a customer takes out a loan to buy an electric car or an energy-saving air conditioner, they need to be assured that the product not only meets performance standards but also ensures that the waste from the product does not affect the environment. However, this is not only the responsibility of credit institutions or banks, but also part of the overall strategy that the Government has implemented.

In particular, the implementation of action plans related to climate change mitigation and environmental protection is one of the priorities in the Prime Minister's decisions. However, putting policies into practice still faces some difficulties, especially in implementing support mechanisms for businesses and consumers. To achieve green product standards, businesses need to meet very high requirements in terms of costs and technology. Policy mechanisms need to be synchronous and effective to not only help these businesses maintain operations but also help them grow sustainably.

Commercial banks play a very important role in financing green production and sustainable consumption projects. However, the problem lies in how to have appropriate financial policies to help people access these products, especially environmental protection products that are still suitable for consumers' financial capacity. This requires close coordination between credit institutions, businesses and the government to ensure the feasibility and sustainability of these programs.

In addition, improving lending mechanisms and financial incentives is very important. Credit institutions need to set clear criteria and build internal processes to support businesses and consumers in accessing capital. In particular, there is a need for tax support mechanisms, technical support, and specific types of policies to promote investment in green products.

In the coming time, with strong changes in policies and active participation from credit institutions, I believe that there will be appropriate programs and strategies to improve access to environmental protection products, thereby promoting sustainable consumption. However, to achieve this goal, it is necessary not only for the participation of credit institutions but also for the drastic participation of the Government and relevant ministries and branches to build a sustainable ecosystem for consumers and businesses.

In short, consumer protection is not only about providing products that meet standards but also about synchronizing policies, financial mechanisms and environmental management. We need a comprehensive strategy in which all stakeholders have responsibilities and specific actions to create a sustainable economic development, protect the environment and consumer rights.

In order for green finance in general and green credit to develop commensurate with their potential and advantages, based on the reality of member credit institutions, what recommendations do you have for the Government, state management agencies on the banking industry, consumer rights protection, or training institutions themselves?

In reality, although there have been many documents, there are still some issues that need to be resolved. First, I propose that the Government direct relevant ministries and branches to implement specific plans and develop a clear list and criteria for green products. This list and criteria must be determined in a transparent and complete manner, and the current situation of lack of clarity cannot be allowed to exist.

Ministries and sectors such as the Ministry of Natural Resources and Environment, the State Bank, and the Ministry of Industry and Trade also need to develop specific criteria, not just general regulations but also requirements for transparency and clarity. In addition, having a consistent and synchronous policy, especially related to taxes and technical issues, is essential.

Not only is it a problem for large enterprises, but also in the agricultural and rural areas, green products are needed, from seeds, fertilizers to pesticides or aquaculture. These products, from input to production techniques, need clear criteria to ensure quality and origin. To do this, responsibility cannot be assigned to just one ministry or sector, but there needs to be synchronous coordination between agencies.

In addition, inspection and testing of green product processes and criteria should be carried out from the very beginning, with close supervision from competent authorities. The government should direct ministries and sectors to effectively implement these plans, and at the same time, local authorities should also step in to ensure that the criteria and lists are enforced at the grassroots level.

Equally important is raising public awareness. Communication programs need to be organized to make people understand the benefits of using green products and sustainable consumption. The government needs to coordinate with ministries, sectors, businesses and social organizations to widely disseminate this issue, especially in communities and villages, where consumers may not be fully aware of the change in their approach to sustainable products.

To achieve this goal, I also propose specific support mechanisms from the Government, such as creating preferential policies and tax reductions for businesses that produce and consume green products, as well as supporting credit institutions to provide low-interest loans to these businesses.

Finally, to effectively implement these strategies, I think there needs to be close coordination between functional agencies, from the Government to ministries, branches, local authorities, and credit institutions, to create a favorable environment for the development of green consumption. This is not just the task of a single ministry or branch, but a comprehensive strategy, requiring the participation of all parties to move towards a sustainable society and environmental protection.

Source: https://congthuong.vn/vuot-qua-rao-can-de-thuc-day-phat-trien-kinh-te-ben-vung-tai-viet-nam-361223.html