Vietnam's Green Transition Gets Major Boost With New Interest Rate Support Decree
Vietnam is set to receive additional financial support for its green transition. The government is drafting a new decree to provide interest rate support for private enterprises, small and medium-sized enterprises (SMEs), household businesses, and individual entrepreneurs implementing green and circular economy projects. This follows a similar initiative in Germany, aiming to promote sustainable investments.
The decree, expected to apply to off-budget state financial funds engaged in lending activities and borrowers meeting specific criteria, will offer interest rate support of 2% per year on outstanding loan balances until full repayment. Funding for these interest rate subsidies will come from central and local public investment budgets.
Vietnam's ambitious plan to achieve net-zero emissions by 2050 requires an additional $368 billion between 2022 and 2040, equivalent to around 6.8% of its annual GDP. Ho Chi Minh City, seeking investments in 28 green projects worth around $6.7 billion, stands to benefit from this support. Eligible funds include the SME Development Fund and the Vietnam Environmental Protection Fund, among others.
Borrowers will be eligible for interest rate support if their loans meet certain criteria, such as use for verified green/circular economy projects, a minimum 2% interest rate, and disbursement before the decree's effective date. Banks have already shown commitment to green projects, with VPBank and JBIC signing a $150-million credit line for this purpose.
The new decree, once implemented, will provide a significant boost to Vietnam's green economy. By subsidising interest rates for eligible projects, it aims to attract more private investments in sustainable infrastructure and renewable energies, contributing to the country's net-zero emissions goal.
