Key solutions for green financial development

DNVN - One of the most important points to develop the green financial market is to issue a green classification list to ensure consistent implementation from green credit to green financial development, even green incentive mechanisms.

Knots to be untied

Green finance, simply understood, is the direction of financial capital flows from banking, credit, insurance and investment into activities that benefit the environment. This is an important field to promote sustainable growth, bringing benefits to the environment, society and the economy .

At the workshop “Developing the green financial market in Vietnam: barriers, urgent issues and breakthrough solutions” on October 31 in Hanoi, Dr. Bui Thi Quynh Tho - Member of the National Assembly's Economic Committee, said that Vietnam needs a large amount of capital to achieve green growth goals. The World Bank 2022 report indicates that Vietnam needs about 368 billion USD by 2040, equivalent to 6.8% of GDP per year, to pursue a sustainable development path.

Vietnam has taken the first steps in developing green finance with a growth rate of 20% per year in the field of green credit and green bond issuance since 2017. However, the green finance market has not developed commensurate with its potential, accounting for only 4.4% of total outstanding economic debt. With a modest figure of 1.16 billion USD in green bonds issued in the past 5 years, Vietnam still has a large gap compared to the green conversion capital demand of up to 20 billion USD per year.

Dr. Bui Thi Quynh Tho - Full-time member of the National Assembly 's Economic Committee.

Mr. Nguyen Ba Hung - Chief Economist of the Asian Development Bank (ADB) in Vietnam, commented that green finance in Vietnam faces obstacles due to large capital amounts, long investment periods and low financial efficiency. Regulations on green economy are still lacking in uniformity, lack of standards for classifying green projects and regulations on carbon markets are not complete.

According to Mr. Hung, the issuance of a unified legal framework is urgent to address these challenges, creating the premise for Vietnam to access international capital and develop an internationally connected carbon market.

Dr. Nguyen Thanh Nga - Deputy Director of the Institute of Strategy and Financial Policy, proposed that it is necessary to supplement a clear legal framework for the financial market and green bonds. This policy needs to diversify incentives, such as reducing green loan interest rates and tax incentives for investors, while encouraging green investment funds to participate in developing the green bond market.

Key Solution

According to Dr. Nguyen Thi Hai Binh - Head of the Research and Coordination Department of Supervision Policy, National Financial Supervision Commission, the list of green projects must be issued soon. Decree 08 of the Government on guiding the Law on Environmental Protection requires the Ministry of Natural Resources and Environment to take the lead in order to issue a decision on the green classification list before December 2022. Up to now, nearly 2 years have passed, and this list has not been issued.

"This is one of the most crucial points to develop the green financial market in general as well as the goal of sustainable development and greenhouse gas reduction. We need this list to ensure consistent implementation from green credit to green financial development or even green incentive mechanisms," Ms. Binh emphasized.

The second solution, according to Ms. Binh, is to add specific incentive mechanisms for green finance. The Committee proposed to immediately amend Circular 39 of the State Bank in the direction of adding green credit to the list of short-term interest rate incentives.

At the same time, it is necessary to complete the legal framework for green public procurement, reduce taxes for organizations issuing green bonds and exempt issuance costs. The construction of a synchronous database on green projects, credits and green investors is also proposed to serve the management and warning of environmental risks, contributing to improving the effectiveness of sustainable development policies.

At the event, experts shared the view that green finance is not only a need but also a great opportunity for Vietnam to move towards a green, low-emission economy. To realize this goal, solutions need to be applied quickly and synchronously to bring long-term benefits to the country.

Moonlight

Source: https://doanhnghiepvn.vn/kinh-te/tai-chinh-ngan-hang/giai-phap-mau-chot-phat-trien-tai-chinh-xanh/20241031042839839