Saturday, December 14, 2024 11:44:22 PM - Markets closed
VN-INDEX 1,262.57 -4.78/-0.38%
HNX-INDEX 227.00 -0.99/-0.43%
UPCOM-INDEX 92.54 -0.14/-0.15%
Vietnam needs a comprehensive national green transition strategy
vietnamnews - 10/1/2024 9:45:46 AM
 (0 ratings. You must sign in to rate.)

Vietnam is accelerating its commitment to achieving net-zero emissions with numerous policies aimed at developing green growth and emissions reduction, but the readiness of Vietnamese businesses for this transition remains low.

Tân Sơn Town (Ninh Thuận) is developing its urban area with a focus on green and smart growth. VNA/VNS Photo

The three most significant systemic challenges faced by Vietnamese businesses in their green transition efforts are a lack of financing, skilled personnel and technical solutions for implementation.
 
Because the challenges are systemic, they will not be easily resolved, according to the Private Sector Development Research Board (Board IV) under the Prime Minister's Advisory Council on Administrative Procedure Reform.
 
Pham Thi Ngoc Thuy, Director of the Board IV Office, said that the board recently submitted a report to the Prime Minister assessing the readiness and difficulties faced by Vietnamese businesses in their green transition efforts.
 
The report, based on diverse sources including secondary research, a broad survey of 2,734 businesses, roundtable discussions with leaders from nearly 50 associations and leading domestic businesses, and consultations with international organisations and experts, highlights the global nature of the 'green race.' Major countries are allocating significant resources and designing comprehensive legal and practical frameworks to promote the green transition within their borders and set an example for other nations.
 
Vietnam must participate with a commitment and effort equal to the government's strong pledges made at COP26 and COP27. This is necessary not only to assert the nation's leadership but also to effectively leverage international resources during the green transition.
 
The green transition requires a system of policies and practical implementation programmes covering everything from investments, trade and sectoral development to emission reduction initiatives. Việt Nam needs a comprehensive national green transition strategy led by the government, with close coordination between ministries, sectors, local authorities and both public and private sectors. This strategy should have clear responsibilities, timelines, targets and measurable outcomes.
 
Unprepared despite awareness
 
According to the business survey, 48.7 per cent of businesses believe that emissions reduction and a green transition are necessary or very necessary, with 16.9 per cent deeming it highly necessary. However, 17.4 per cent of businesses find it unnecessary or very unnecessary, and 33.9 per cent rate the necessity as average.
 
Interestingly, there is little difference in the perceived necessity for emissions reduction between domestically focused businesses and export-oriented ones. Agriculture, forestry, fishery and industrial businesses show a higher perceived need for a green transition than those in construction and services.
 
The report highlights a disparity between domestic and foreign-invested enterprises (FDI), with 55.2 per cent of FDI businesses acknowledging the need for emissions reduction, compared to 48 per cent for domestic businesses.
 
However, the more concerning number is that 64 per cent of businesses surveyed have not yet prepared for emissions reduction or the green transition. Only 5.5 per cent have actively reduced emissions in critical activities, and just 3.8 per cent have been tracking and publicly reporting their annual emissions reductions.
 
This lack of preparation, especially considering evolving policies in major markets like Europe and the US, creates significant pressure as transition periods end and mandatory compliance begins. The readiness levels are notably lower for businesses that operate solely in the domestic market compared to those engaged in export activities.
 
Challenges in the Green Transition
 
The survey also reveals that businesses face various challenges, including access to information, financing and skilled personnel. The three largest obstacles are financing for emissions reduction, skilled personnel for the green transition and suitable technical solutions.
 
The green transition requires substantial financial resources across all sectors. According to the World Bank’s 2022 estimate, the additional financial needs for Việt Nam to build resilience and reduce greenhouse gas emissions through 2040 will total US$368 billion, with adaptation accounting for 4.7 per cent of Việt Nam's annual GDP and decarbonisation requiring 2.1 per cent of GDP.
 
Approximately 50 per cent of this funding will come from the private sector ($184 billion), with public sector contributions of $130 billion, supplemented by international financial support.
 
The lack of access to finance is the biggest hurdle for businesses in reducing emissions and transitioning to green practices, with 50 per cent of surveyed businesses identifying this as a challenge. Only 5.9 per cent reported no difficulty in accessing funds.
 
While businesses need substantial capital for the green transition, green finance has not developed proportionally. Over the past decade, green finance in Việt Nam has grown, but its scale remains small. Green credit accounts for only 4.5 per cent of total outstanding loans as of the end of 2023, and the green bond market remains underdeveloped.
 
Currently, 47 financial institutions in Việt Nam have green credit with a total outstanding loan balance of nearly VNĐ621 trillion, a 24 per cent increase from 2022, representing about 4.5 per cent of total loans in the economy. Green credit is primarily focused on renewable energy (45 per cent) and green agriculture (30 per cent).
 
Green bonds face challenges due to a lack of detailed guidance on project criteria, monitoring frameworks and legal regulations. As of 2023, green bonds in Việt Nam only account for 1 per cent of the corporate bond market, compared to Malaysia’s 5 per cent and Singapore’s 7 per cent.
 
The report stresses that international financial resources, such as the $15.5 billion pledged under the Just Energy Transition Partnership to help Việt Nam implement specific projects, must overcome administrative barriers for effective utilisation.
 
According to the report, Việt Nam must address these financial, technical and institutional challenges to meet its green transition goals and maintain global competitiveness. VNS
 
 
Read original article here
Newer News
13/12 B2C e-commerce market in bloom
13/12 Garment industry urged to gain self-sufficiency in raw materials for UK expansion
13/12 PM orders swift resolution of challenges for renewable energy projects
13/12 Vietnam’s growth prospects remain resilient amid global challenges: forum
12/12 Standard Chartered forecasts US dollar trends and highlights Vietam’s positive but cautious outlook in 2025
12/12 NA Standing Committee gives nod to the foundation of an investment support fund
12/12 Ninh Thuan nuclear project seen as development driver
12/12 Vietnam’s coffee exports possibly surpass $5 billion for first time
12/12 PM issues directive on e-invoice implementation
12/12 MoIT sets export growth at 6% in 2025
Older News
30/09 Green investment funds forecast to grow in Vietnam
30/09 As recovery continues, Việt Nam awaits further lift
30/09 5G will play key role in building a digital economy, experts say
30/09 Khanh Hoa draws Korean investors to green, sustainable industries
30/09 South Africa launches anti-dumping investigation on car and bus tyres from Vietnam
30/09 Vietnamese firms urged to focus on high-quality tea products
30/09 Rubber industry implements green growth to promote exports
30/09 Unprecedented opportunity for oil giants in offshore wind power
30/09 Businesses need to strengthen capacity for responding to trade defence lawsuits
27/09 Vietnam's wood exports rise, but challenges from market and natural disasters persist
 
Newsletter Signup
Top Stories
VCCI recommends mineral mining rights be granted through auction and bidding
Central bank works to raise interbank rates and ease forex market
Inflation a concern following salary increases
National Council for Sustainable Development established
Việt Nam, Cambodia look forward to $20 billion trade
Market Update
Last updated at 3:05:01 PM
VN-INDEX 1,262.57 -4.78/-0.38%
Real-time chart
Top 5 Actives
Top 5 Gainers
Top 5 Losers
My Favorite Quotes
Your most recently viewed tickers will automatically show up here if you type a ticker in the Get Quotes box on the top of the page.
Company Research
Type in the symbol above for thorough background information, key statistics and financial information.
Stock Sectors
We continuously improve our services, here are the latest updates...
Portfolio
Allow you to monitor a customised group of securities. You can set up multiple Portfolios to help you better manage your investments.
Trigger Alerts
Get up-to-date alerts delivered directly to your email address.
Stock Screener
Allow you to filter the market and find exactly what sort of company you are looking for.
Live Terminal
Get instant access to FREE REAL-TIME streaming quotes for hundreds of stocks from HOSE, HNX and UPCOM exchanges.