Banking capital flows are strongly focused on green development such as solar energy and clean high-tech agriculture.
Strong capital inflow to solar energy
Orient Joint Stock Commercial Bank (OCB) arranges fund to supplement working capital for TTC Energy Joint Stock Company (TTC Energy) and sponsors the solar system for rent. OCB receives collateral as the main solar energy system financed by its loan, with a funding rate of up to 70 percent of the total investment value of the project.
Meanwhile, HochiminhCity Development Joint Stock Commercial Bank (HDBank) spent 7,000 billion dong on solar power projects until 2020. The borrowing conditions are that customers must have equity of 150 billion dong or more and the minimum equity ratio of the project accounts for 30 percent of the total investment. HDBank also requires that all project revenue will be transferred to customers’ payment accounts at HDBank.
Vietnam Bank for Agriculture and Rural Development (Agribank) and Vietnam Development Bank (VDB) signed a co-financing agreement for Phong Dien solar power plant project (Thua Thien Hue province). In this project, the investor’s reciprocal capital and bank loans account for 40 percent and 60 percent respectively. The project is invested by Gia Lai Electricity Joint Stock Company (GEC), built on an area of 45 hectares, with a total investment of nearly 1,000 billion dong, a capacity of 35 MW and a power output of about 50 million KWh per year. The project was constructed from the fourth quarter of 2017 and put into operation on October 5, 2018.
As for Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), it sponsored thousands of billions dong for solar power. The bank has just signed a credit contract with Bac Phuong Solar Joint Stock Company (BP Solar) to finance BP Solar 1 Power Plant Project. The total loan amount is 785 billion dong and Vietcombank Transaction Office is responsible branch.
In September 2018, Vietcombank Thu Thiem branch (HCM City) also signed a contract to finance the Serepok 1 Solar Power Plant Project with Dai Hai Power Investment and Development Joint Stock Company. The project has an installed capacity of 50 MWp and total investment of nearly 1,000 billion dong.
In the wave of capital pouring into solar energy, Vietnam Joint Stock Commercial Bank of Industry and Trade (VietinBank) has funded 1,000 billion dong for TTC 01 Solar Power Project in Tay Ninh with the scale of 68.8 MW and total investment of 1,600 billion dong.
Promoting green credit
In the action plan of the government, credit institutions are considered as important links.
According to Directive No. 03/ CT-NHNN dated March 24, 2015, the State Bank of Vietnam (SBV) requires commercial banks to promote green credit for projects with clear goals on environmental protection, and to encourage environmentally friendly business. In early 2017, SBV issued Directive 01/2017, continuing to emphasize the banks’ implementation of national strategy on green growth by 2020.
Accordingly, many banks have had incentives in green credit. As one of the pioneers to carry out this programme to contribute to environment protection, Nam A Joint Stock Commercial Bank (Nam A Bank) signed with the Global Climate Partnership Fund (GCPF) about the implementation of the Green Credit Programme in Vietnam.
Specifically, Nam A Bank will provide medium and long-term green credit for projects that promote CO2 reduction and projects that save 20 percent of energy demand. Tran Ngoc Tam, general director of Nam A Bank, said that with the supporting credit package in this area, the interest rate for incentive loans is about five to six per cent per year.
Maud Savary Mornet, Regional director of GCPF in the Asia Pacific, said that with the green credit programme, GCPF and Nam A Bank would accompany customers in financial goals, as well as environment protection.
Meanwhile, HDBank financed10,000 billion dong for developing high-tech applied and clean agriculture, in which interest rates were reduced by one per cent per year compared to normal rates. Moreover, it accepted assets formed from loans with a loan rate up to 80 percent and tenor of up to ten years.
However, according to experts, green credit is not only an opportunity but also a challenge for both enterprises and banks. The former have to cope with strict requirements from banks to qualify for funding. Meanwhile, the latter consider it an opportunity to expand their business and to contribute to a more sustainable economy. In general, they all aim at a sustainable development.
