05/03/2020
Along with the socio-economic development, Việt Nam is one of the countries greatly affected by environmental pollution and climate change. One of the reasons leading to the above situation is that enterprises and individuals lack investment capital sources for environmental protection, especially preferential capital sources.
Vietnam Environment Protection Fund and preferential loan policy
In order to solve this problem, on June 26, 2002, the Prime Minister issued Decision No. 82/2002/QD-TTg on the establishment, organization and operation of the Vietnam Environment Protection Fund (Fund). Accordingly, the Fund is a State-owned financial institution that functions as a financial sponsor in the field of environmental protection and operates for non-profit purposes. The Fund is a State financial instrument to finance public investment capital for environmental protection nationwide through lending activities with preferential interest rates and grants.
When it was first established, the Fund belonged to the Ministry of Science, Technology and Environment; by the end of 2002, the Fund was transferred to be under the Ministry of Natural Resources and Environment (MONRE) with an initial charter capital of VND 200 billion. Up to now, the Fund's charter capital is VND 1.000 billion and is allocated from the State budget according to the Prime Minister's Decision No. 78/2014/QD-TTg dated December 26th, 2014, on the organization and operation of the Fund. As a State-owned financial institution, the Fund has the function of lending with preferential interest rates, financing and interest rate support for programs, projects, activities and tasks of environmental protection and climate change response nationwide.
Subjects and fields of loans are specified in the Government's Decree No. 40/2019/ND-CP dated May 13, 2019 (amended Decree 19/2015/ND-CP); loan interest rate, loan term and other criteria are specified in Circular No. 03/2017/TT-BTNMT dated March 21st, 2017 of the MONRE; Accordingly, the loan interest rate must be guaranteed to be less than 50% of the State investment loan interest rate and fixed during the loan term; the maximum loan term is 10 years (normally 7 years), based on each project. Currently, in 2019, the loan interest rate is 2,6% or 3,6%, depending on the priority field and loan guarantee measures; the loan interest rate is fixed throughout the loan term. For a project, the maximum loan amount is equal to 70% of the total project investment; For an investor, the maximum loan amount is 10% of the Fund's actual charter capital.
Industrial waste incinerators with a capacity of 1,000 kg/h of the Green Industrial Environment
Company Limited in Vĩnh Phúc Province are supported with loans by the Fund
In case of the project owners of solid waste treatment projects, if applying the treatment technology with the rate of waste to be landfilled after treatment is less than 30% of the total collected solid waste, they are allowed to get a total loan of up to 80% of the total investment of the project.
Preferential loan results for solid waste treatment projects
After more than 17 years of operation, the Fund has achieved many results in financial support activities contributing to environmental protection. The Fund has granted preferential loans to 310 projects, with a total capital of more than VND 2.900 billion nationwide. In particular, in the field of solid waste treatment, the Fund has committed to lend more than VND 1.000 billion to 93 projects nationwide as of September 30th, 2019 (Table 1).
|
No. |
Solid waste treatment field |
Loan amount (VND) |
Number of projects |
|
1 |
Domestic waste |
525.480.200.000 |
30 |
|
2 |
Industrial and hazardous waste |
438.183.000.000 |
35 |
|
3 |
Facilities for collection and transportation of waste |
119.615.200.000 |
28 |
|
Total |
1.083.278.400.000 |
93 |
|
Table 1: Loan results by type of solid waste in the period of 2004 - 2019
Lending activity in solid waste treatment focuses on three main types (domestic, industrial and hazardous waste treatment, investment in waste collection and transport facilities) (Figure 1). Accordingly, the loan for domestic waste is more than VND 500 billion (more than 49%) in solid waste treatment due to the nationwide investment demand as well as the large investment scale of these projects. Industrial and hazardous solid waste treatment also accounts for 40%, equivalent to more than VND 438 billion. The type of investment in waste collection and transportation facilities accounts for a small proportion despite the large number of projects, mainly due to the smaller investment scale of this type.
Figure 1: Loan proportion by type of solid waste in the period of 2004 - 2019
The lending by type and amount of loan from 2004 - 2019 tends to grow in the number of loan projects as well as loan amounts (Figure 2). While the total annual loan amount reached less than VND 50 billion in the period of 2004 - 2009, the total loan amount fluctuated from VND 50 to 100 billion in the period of 2010 - 2016. From 2017 - 2019, the annual loan amount is nearly VND 200 billion. The increase in annual loans is consistent with the actual capital needs of the project owners as well as the urgent need for solid waste treatment investment nationwide.
Figure 2: Lending results of solid waste treatment by type from 2004 to 2019
The loans for industrial and hazardous waste treatment are kept at an average of VND 40 billion in the period of 2009 - 2019. Meanwhile, the loans for domestic waste treatment have increased sharply in the period of 2017 - 2019 among six socio-economic regions, focusing mainly on developed economic areas. The Red River Delta, the North Central Coast and the South Central Coast and the Southeast account for 81% of the total loan amount in the field of solid waste; while the remaining three regions of the Northern Midlands and Mountains and the Central Highlands and the Mekong River Delta account for 19% (Table 2).
|
No. |
Region |
Number of projects |
Loan amount |
Ratio |
|
|
1 |
Northern Midlands and Mountains |
6 |
79.650.000.000 |
7% |
|
|
2 |
Red River Delta |
34 |
301.210.100.000 |
28% |
|
|
3 |
North Central Coast and South Central Coast |
25 |
311.335.300.000 |
29% |
|
|
4 |
Central Highlands |
1 |
13.000.000.000 |
1% |
|
|
5 |
Southeast |
20 |
255.083.000.000 |
24% |
|
|
6 |
Mekong Delta |
7 |
123.000.000.000 |
11% |
|
|
Total |
93 |
1.083.278.400.000 |
100% |
||
Table 2: Lending results of solid waste by 6 socio-economic regions
In recent years, waste treatment technology projects that borrowed money for investment has also been constantly increased, upgraded and changed the technology over time. Initially, the projects invested in landfilling technologies, followed by the formation and improvement of incinerators, microbiological fertilizer production technology with the trend of waste to energy incinerators.
Annually, the Fund organizes a Financial Assistance Conference to introduce loan policies and invite enterprises operating in the field of environmental protection, consulting organizations and companies specializing in waste and wastewater treatment technology and renewable energy to attend for the presentation. In 2019, the Fund organized the Financial Assistance Conference in Hồ Chí Minh City with the participation of more than 300 enterprises. The loan growth rate for the waste treatment sector has increased rapidly in the period of 2017 - 2019, in line with the Fund's general growth rate, the Fund's overall disbursement growth rate was 33% in 2018, compared to 2017.
Development orientation in the future
Facing increasing investment requirements for solid waste treatment in recent years, especially capital for investment in domestic waste treatment; in the coming time, the Fund is requesting additional charter capital and other sources to meet the preferential loan demand of organizations, individuals and enterprises nationwide in the field of environmental protection. The Fund focuses on providing financial support for solid waste treatment, especially domestic solid waste treatment projects using modern technology, contributing to reducing the amount of landfilled waste.
Nguyễn Đức Thuận
Director of Vietnam Environment Protection Fund
(Source: Vietnam Environment Administration Magazine, English Edition III - 2019)
|
With the motto of accompanying enterprises in environmental protection activities, the Fund is pleased to cooperate with organizations and individuals in the field of solid waste treatment. For further information, consultancy and support, please contact the Fund - Address: 6th Floor, Cartographic Publishing House Building, 85 Nguyễn Chí Thanh, Đống Đa, Hà Nội. The Centralized Credit Department, Tel: 024.62542736, the Uncentralized Credit Department, Tel: 024.39429734; Fax 024.39426329; www.vepf.vn |
