Diep Thi Kim Hoan from Deep C Industrial Zones told a forum held on September 10 in Hanoi that they had faced difficulties when applying for a green loan. 

Speaking at the forum on the national strategy on green growth and capital, Hoan said the difficulties in accessing information about green credit institutions are just the "tip of the iceberg", while the unseen parts of the iceberg are the obstacles when applying for green capital.

“We were Introduced to a credit institution providing green capital, so we rushed to submit a dossier for a green loan to develop a solar power project, which we thought had an interest rate of just 3 percent. But when we met the credit provider, we realized that in addition to the 3 percent interest rate as quoted, we would also have to pay many kinds of fees, including bank guarantee service fee (about 3 percent) and dossier handling fee ($30,000-50,000) and others,” Hoan said.

“When counting all kinds of fees, we realized that the total cost to pay for the preferential green loan would be even higher than interest rates of a commercial loan,” she said.

For DEEP C, there was another obstacle that businesses faced when they want to access green credit: criteria about ‘green’ projects are still not clear. Every credit institution sets criteria on their own.

“We hope there will be a legal framework with clear criteria about green projects so that we can know if our projects can be listed as green projects and eligible for green capital,” she said.

Hoan said some funds do not accept borrowers’ assets as collateral, but require bank guarantee certificates. This means that businesses have to pay guarantee fees, which is an additional cost that burdens enterprises.

Meanwhile, if borrowing capital from foreign institutions, businesses face the risk of exchange rate fluctuations.

Therefore, she said she still cannot decide whether to expand the project.

“Previously, the World Bank stated that it was ready to support ecological Industrial Zone projects. But when we came to ask for loans, they told me that they would not provide capital to projects capitalized below $30 million,” she said.

In general, credit institutions prefer providing short term loans to avoid risks. But enterprises want long-term capital as they need a long period of time to recover their investment capital.

Tam An