Contact

Nguyen Le Hang (Ms.)
Viet Nam Cleaner Production Centre

Information

This is an official funding.

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:

cfo@ntt