HANOI, May 9 (Xinhua) -- At least 15.5 billion U.S. dollars, under the partnership between Vietnam and industrialized nations, will pour into the Southeast Asian country to support its efforts to meet carbon neutrality target by 2050, Vietnam News reported on Tuesday.
The Just Energy Transition Partnership between Vietnam and the Group of Seven nations, announced last December, is expected to raise 15.5 billion dollars, half from donor governments and the other half from the private sector, for the country over the next three to five years.
Strong flows into Vietnam's green sector in the coming years will require the country's regulators to come up with measures to efficiently manage the green funds, said Pham Xuan Hoe, former head of the Banking Strategy Institute.
He suggested a set-up of a professional institution that would act as an intermediary helping local firms get easier access to green funds.
Experts also raised concerns over the lack of regulatory support to boost financing for green projects.
Green or sustainability-linked loans in Vietnam's banking sector accounted for only 4.2 percent of total loans at the end of 2022, up 12.9 percent from a year earlier, to around 500 trillion Vietnamese dong (21 billion U.S. dollars), according to the central bank.
The green loan market in the country has remained relatively small due to the lack of regulatory framework, on top of the low awareness of environmental, social, and governance among local companies, experts said.
Vu Sy Cuong, an economist from the Academy of Finance, said an exchange-based market for trading carbon credits and more financial assistance for companies exposed to the risk of stranded assets as a result of the low-carbon transition would help unlock the potential of green funds.
Vietnam would incur an annual loss of 15 billion dollars, equivalent to 5 percent of the country's gross domestic product, due to climate change, non-profit organization DARA International predicted, stressing that if the country fails to take action in time, the cost could soar to 11 percent of its economic growth by 2030.
The International Finance Corporation said in the transition away from coal and boosting renewable energy, Vietnam needs international cooperation as well as solutions to raise investment funds from the private sector. ■