• Contact us
  • Tiếng Việt
    Post
    Vietnam Green Credit Trust Fund

    Snapshot

    Total Amount

    $5 million

    Financing Mechanisms

    Grant , Loan guarantee

    Qualifying Projects

    Adaptation , Mitigation , Technology, Energy , Energy Efficiency , Fuel Switching , Industry , Low-Carbon , Services , Water , Water efficiency

    Eligibility

    Credit size: $10,000 – $1,000,000

    SMEs (either private sector or state-owned enterprises) with more than 50% Vietnamese ownership.

    Technology change project aiming to mitigation of GHG, ODS, POP and some other local environmental indicators by at least 30%

    Funding Objectives

    GCTF is a financial support initiative of the Swiss Secretariat for Economic Affair (SECO) to promote medium- and long-term investments of Vietnamese SMEs in cleaner production technology to achieve environmental improvements. Cleaner production aims at identifying solutions for environmental problems that improve the profitability of the companies and at the same time reduce emissions. Cleaner production includes "low-cost" options (good practices) and opportunities for investment (cleaner technologies).

    Entrepreneurs usually implement low-cost options, but they are not always ready to invest in cleaner technologies when the pay back time of the investment is longer than for "regular" investments. In many cases cleaner technologies seem to be less attractive financially, specially in countries with high rates of interest and/or short credit periods as is the case of Vietnam.

    The GCTF programme offers many benefits to local financial institutions (LFIs) and private firms alike. LFIs gain experience negotiating and establishing loan conditions (term, interest rate, currency, grace period, etc.) for green projects. At the same time, LFIs can identify new clients and promote the green credit line thereby becoming leaders in sustainable finance in Vietnam and expand their client base through this different product.

    Financing Mechanisms

    The GCTF provides support to SMEs in Viet Nam who offer products and/or services that decrease environmental degradation. SECO will provide up to US$5 million for the GCTF. The support is structured to provide two lines of support:

    • To reimburse the borrower part of the investment costs after the succesfull installation of the cleaner production technology, if the borrower can demonstrate a reduction of the negative impact on the environment. For example, if a project achieves >30% environmental improvement, 15% is reimbursed; with 50% environmental improvement, 25% is reimbursed.
    • To guarantee local financial institutions 50% of the principal of the green credit.

    A key aspect of the project maintains that Green Credits be provided by local financial institutions. For Viet Nam, these credits range between US$25,000 and US$ 1 million per project. Green Credits have a maximum maturity of five years with market-based interest rates.

    Application Procedures

    The interested company may have access to either one of three selected Banks or the Vietnam Cleaner Production Centre (VNCPC). The selected firm would then follow the application procedure described here:

    Project Types

    http://www.climatefinanceoptions.org/cfo/images/hide-icon.gifhttp://www.climatefinanceoptions.org/cfo/images/show-icon.gif

    The GCTF looks to finance projects that have a positive environmental impact for Viet Nam. The project should aim to shift to a more sustainable production manner (not for changing existing production to the production of environmentally friendly products). The GCTF will fund new investments rather than previously established ventures to ensure additionality. However, green credits could be used to finance new equipment/technology replacement, even for expanding the production capacity, of an established firm/business. Further, the GCTF will consider financial assistance for new production line investment.

    Decision-making structure

    http://www.climatefinanceoptions.org/cfo/images/hide-icon.gifhttp://www.climatefinanceoptions.org/cfo/images/show-icon.gif

    After an initial financial appraisal by the bank, potential GCTF projects will then pass through a technical appraisal by the VNCPC and SECO. For more information please see the GCTF contact information.

    Project Examples

    http://www.climatefinanceoptions.org/cfo/images/hide-icon.gifhttp://www.climatefinanceoptions.org/cfo/images/show-icon.gif

    Green credit financing can potentially be put to a number of uses:

    • Plastics company changed their obsolete moulding machines to new injection moulding machines with effective motor design;
    • Steel manufacturer changed their existing obsolete induction furnaces to modern ones;
    • Firms interested in switching from traditional brick kiln to vertical continuous kiln or non-fired brick production;
    • Plantations who wish to transfer from coal-fired dryer to solar technology in tea production.

    Links

    http://www.climatefinanceoptions.org/cfo/images/hide-icon.gifhttp://www.climatefinanceoptions.org/cfo/images/show-icon.gif

    GCTF Viet Nam homepageViet Nam Cleaner Production Centre homepage

    ©2012 Climate Finance Options. All Rights Reserved.
    Developed by MPI-UNDP-WB Address: 6B Hoang Dieu street, Ba Dinh district, Ha Noi
    Phone:0437.430.160
    Contact: Ms Dieu Trinh: trinh4mpi@gmail.com
    Legal Information & Privacy Policy