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Thursday, September 29, 2022

Accessing green credit worth a try

By Dung Nguyen

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HCMC – Though it is hard for enterprises to access green credit, it is worth the effort due to its long-term benefits, experts told a session at the “Green Economy Forum 2022” organized by the Saigon Times Group on April 22.

Speaking of access to green credit to green production as the highlight of the session themed “Green Production, Choose to Change,” Ha Dang Son, director of the Center for Energy and Green Growth Research, USAID, said that many businesses want to shift to green production, but find it tough to get long-term credit.

The conversion into green production requires long-term capital resources, while bank loans come with terms of four to five years, Son added.

Echoing the view, Luong Phuong Mai, Senior VP, Team Lead Large Corporate South and CRE, HSBC Vietnam, said that a majority of banks in Vietnam are providing credit of up to 10 years, so it is hard for projects which need loans with terms of 15-20 years.

The big challenge facing green projects is capital, said Tran Trong Kien, chairman of Thien Minh Group and member of the Private Sector Development Committee.

Hi-tech-based green projects are not inexpensive. “I have seen no investors get cheap loans to develop meaningful projects,” Kien said.

Mai also said that green credit is not cheap one, meaning that securing loans does not depend on interest rates.

Foreign financial institutions are willing to offer cheap credit to firms heading towards sustainable development, Son said, adding that enterprises with green production will see a big chance to access credit.

If enterprises get green credit, they will save costs in the long run. Cost overruns are unavoidable, but they will create positive effects, according to Mai.

However, if firms choose to become outsiders of the green growth trend, they might face a spike in costs in the future as the market will set more stringent standards on environmental protection in production and business, Mai said.

The executive of HSBC Vietnam also said that firms are under pressure on conversion into green development for not only renewable energy but also many other fields.

Such a challenge will also create a great opportunity, she said.

Firms with modest capital should shift to green production step by step, said Kien from Thien Minh Group.

Seeing some factors for green growth, including not impacting the environment, not destroying nature and preserving local culture and developing local economy, Thien Minh is using no plastics in production and cooperating with local suppliers and workers and ensuring female employees get income as high as possible, Kien stressed.

In reality, several groups have been executing green production. For example, NS BlueScope Vietnam has been cutting emissions since 2018, while VinFast has switched to electric vehicle production to protect the environment, according to Kien.

In the real estate industry, NovaGroup saw its housing project awarded an EGDE certificate in 2016. The group’s projects are being developed in line with green standards.

The challenge seems bigger to small enterprises that have weak financial capacity for green production.

As such, Mai from HSBC encouraged Vietnamese firms to enter into negotiations with the bank on credit if they come up with ideas for green production.

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