Green credit is not lacking, but hard to access
Speaking at the Workshop "Unblocking green credit flows" organized by Lao Dong Newspaper in coordination with the State Bank, Ms. Phung Thi Binh - Deputy General Director of Agribank - shared that since 2017, the unit has implemented many preferential credit programs to support green production. A typical example is the "Clean Agriculture" program in coordination with the Ministry of Agriculture and Rural Development (now the Ministry of Agriculture and Environment), with a lending interest rate 0.5 - 1.5 percentage points lower than usual. These programs have been maintained to date, divided into two groups: For individual customers and for corporate customers.
Although banks are always ready to provide green credit, the biggest problem is still the ability of businesses to access reality. Many previous agricultural value chain pilot models - such as the sunflower growing model in Da Lat - have been invested heavily but have not yet promoted the expected efficiency. From this reality, banks are forced to change their implementation methods, aiming to lend the entire value chain from input to consumption to control risks and improve investment efficiency.
For example, in the 1 million hectare high-quality rice program in the Mekong Delta, we designed a credit package of VND30,000 billion, with an interest rate 1-2% lower if the parties in the chain borrow at the same bank.
Another problem that makes it difficult for banks to appraise is collateral. Agricultural enterprises often rent land for annual payments or use public land, not eligible for mortgage. Assets invested in land such as greenhouses and net houses are not recorded as owned, leading to banks being unable to value them as collateral. Despite repeated recommendations, the regulation has not yet been adjusted appropriately.
policy is not synchronous, lacking a mechanism to confirm green projects
Agribank representative also raised concerns about green investment projects such as biomass and waste-to-energy. These projects are large in scale and require high investment capital, but do not have clear financial efficiency. Typically, a waste treatment project in Quang Ninh has invested in 4 factories, but the operational efficiency has not met expectations.
If some thermal power projects can be done, it will be very good, but it requires the forest production - processing - power generation chain to operate synchronously, while in reality, there is no complete model. Banks cannot lend when they are not sure about their ability to recover capital" - Agribank representative emphasized.
Not to mention, unstable planning policies also increase risks. Continuously changing planning makes it impossible for banks to accurately assess the project's effectiveness. Even with solar power, PV or waste-to-energy, if there is no clear policy on output, it will be difficult for us to accompany.
Another disadvantage is the requirement to determine a "green project" to get incentives. Commercial banks currently have to mobilize capital themselves and take full responsibility for the loan, while being required to evaluate the project according to green criteria without sufficient tools and mechanisms for confirmation. This causes difficulties for banks, businesses waste time and money to re-issue existing procedures, such as the environmental impact assessment report.
"We recommend that if we use state budget sources, we can request confirmation of green criteria. However, if it is self-medicated capital of commercial banks, it should not apply additional green appraisal conditions, because if risks occur, the bank must take responsibility" - Ms. Binh said.
Finally, the problem of capital costs is also a major barrier. With 80% of capital mobilized from residents, mainly 6-12 month term, banks must balance input - output interest rates very carefully. If possible, allocate cheap capital from international organizations, such as revenue from selling carbon credits or the 1 million hectare rice program, to implement green lending effectively and in the right direction.
Agribank representative said that in order to develop truly and sustainably green credit, it is necessary to have synchronous coordination between ministries and branches to perfect policies, create a clear legal corridor and reduce risks for commercial banks when participating in this specific capital flow.
