Speaking at the recent seminar “Diversifying Capital for Sustainable Development” hosted by Finance – Investment, Pham Thi Thanh Tung, Deputy Director of the Credit Department for Economic Sectors at the SBV, said the Prime Minister has directed the SBV and the Ministry of Finance to jointly draft the decree.

According to Ms. Tung, the draft outlines how state budget funds will be used to subsidize interest rates for loans taken by private enterprises, households, and individual businesses through commercial banks to implement green or circular economy projects that align with ESG standards.

“The draft has already been appraised by the Ministry of Justice. It will be submitted to the Government this week and is expected to come into effect early next year,” she added.

Pham Thi Thanh Tam, Deputy Director of the Department of Financial Institutions under the Ministry of Finance, shared that as of October 2025, outstanding corporate green bond debt had reached approximately USD 1 billion.

However, Ms. Tam noted that a major weakness in the bond market is the limited investor base, lacking financially strong institutions with long-term capital. This poses a challenge for developing both the general and green bond markets.

She also pointed out that the relatively low yields on Vietnamese government bonds make them less attractive to foreign investors compared to regional benchmarks.

Ms. Tung of the SBV emphasized that in the past five years, green credit has grown at an average annual rate of 21% - outpacing the overall credit growth of the national economy.

In 2017, only 15 financial institutions had outstanding green credit portfolios. Today, that number has surged to 58.

To further accelerate green credit, Ms. Tung said that beyond the forthcoming 2% interest subsidy decree, coordination with the Ministry of Agriculture and the Ministry of Environment is crucial to define what qualifies as a “green project,” “circular project,” or one that meets ESG criteria.

On July 4, 2025, the Prime Minister issued Decision No. 21/2025/QD-TTg, which set forth an environmental criteria framework and a national green taxonomy.

This clear classification system helps banks more accurately identify, assess, and provide financing for green projects - minimizing the risk of "greenwashing" while improving access to state incentives for eligible enterprises.

Decision 21 also clarifies which entities can verify a project's green status. These may include competent government agencies (during the environmental impact assessment or environmental licensing process) or internationally accredited independent organizations certified under ISO/IEC 17029:2020.

According to Ms. Tam, while green bonds were late to develop, they have shown strong momentum recently. Previously, companies issuing green bonds had to adhere to international standards.

But since the release of Decision 21, Vietnamese firms can now issue and disclose green bonds in accordance with domestic standards - streamlining the process and opening new financing opportunities.

PV