Prioritize financial resources for green growth

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Dr. Nguyen Nhu Quynh, Director of the Institute of Strategy and Financial Policy, Ministry of Finance.

How have financial plans, policies and financial resources for green growth been implemented by the Ministry of Finance, sir?

Green growth and sustainable development are not new topics but are receiving more attention recently.

In terms of policy, this content has been mentioned in the Resolutions of the Party and Central Committee. The Government has promulgated the National Strategy on Green Growth for the 2021-2030 period, with a vision to 2050, and the Vietnam Renewable Energy Development Strategy.

Accordingly, the Ministry of Finance has implemented the policies of the Party, the Resolution of the National Assembly and the Government in three aspects: promulgating tax policy; spending and mobilizing resources and raising awareness.

Regarding tax policies for green growth, the Ministry of Finance has reviewed and issued tax policies to contribute to creating a legal framework to promote green growth and sustainable development. This tax policy addresses two pillars – limiting the production and use of goods that cause environmental pollution; encouraging investment in production in line with clean technology, saving and using clean energy, green consumption, and raising awareness of environmental protection.

Firstly, on tax policies to limit the production and use of goods that cause environmental pollution, the Ministry of Finance has promulgated environmental protection tax, a number of items have been increased, including a number of items that have increased dramatically, such as gasoline, diesel, fuel oil, lubricants, and plastic bags.

The excise tax also has an incrementally adjusted tax rate for goods with adverse effects on the environment and a differential tax rate for goods subject to a more environmentally friendly excise tax.

In particular, in order to encourage the development of eco-friendly battery-powered electric cars, the excise tax rate has been adjusted down by 3-12% compared to the previous tax rate, down to 1–3 % depending on the vehicle type and being applied from March 1, 2022 to the end of February 28, 2027, then the tax rate is from 4-11%.

Accordingly, this tax policy has contributed to limiting the production and use of goods that cause environmental pollution.

Secondly, on tax policy to encourage investment in production in line with clean technology, energy-saving and environmental protection, there are taxes such as corporate income tax, VAT, export tax, import tax and environmental fees are amended and supplemented to promote the use of clean energy, renewable energy and greening production, promoting sustainable lifestyles and consumption.

Regarding spending policy, along with the Government's policy of always giving priority to green growth, the Ministry of Finance has increasingly improved its spending policy by submitting to competent authorities such as the National Assembly for promulgation the Law on Environmental Protection, Law on Public Investment, Law on Bidding, and regulations on budget spending for environmental protection.

For example, budget expenditure for the environmental cause has been implemented in the spirit of Resolution 41 of the Politburo. Accordingly, the annual allocation level for environmental causes is not less than 1% of the total budget expenditure, both central and local.

In which, spending on science and technology development on the use of renewable energy resources, high-tech development using budget resources, national programs, projects on the development and use of renewable energy, research projects on solid waste treatment.

According to preliminary calculations by the Ministry of Planning and Investment and the World Bank, in order to implement Vietnam's green growth strategy by 2030, it is expected to need about US$30 billion, of which the state budget can only meet 30% and 70% is from other resources. How are these resources being mobilized, sir?

As one of the policy-making and resource-balancing agencies together with the Ministry of Planning and Investment, the Ministry of Finance is always aware that budget resources are limited and need the companionship of society, businesses, and governments, foreign donors, agencies to achieve the set goals of green growth and sustainable development.

Recently, in the socio-economic development program, ministries also prioritized the integration of sustainable development goals, investment priorities, a number of target programs associated with green growth and sustainable development criteria.

In mobilizing capital and resources of green bonds, the stock market has launched green government bonds, government-guaranteed bonds and local government bonds to serve green building projects such as irrigation, and environmental protection.

Specifically, in 2016, Ho Chi Minh City issued VND523 billion for green projects, Ba Ria - Vung Tau issued VND80 billion; by 2018, Ho Chi Minh City has issued VND3,000 billion of green local government bonds for projects.

Could you share some information about the implementation of financial plans for green growth?

The Government has approved the Financial Strategy to 2030, which focuses on the goal of balancing resources, harmonizing economic development and environmental protection, and adapting to climate change.

Accordingly, the Ministry of Finance will focus on reviewing tax policies to serve the goals of green growth and sustainable development and prioritize budgets for projects on environmental protection, combating climate change and saltwater intrusion.

However, as mentioned above, the budget capital is not enough to cover all costs for sustainable development and green growth. Therefore, it is necessary to have the support of society, donors and ODA capital.

On the side of the Ministry of Finance, we are always aware that green growth and sustainable development is one of the important tasks and always prioritize resources to serve this goal. The Ministry of Finance is also very interested in raising capital on the stock market and hopes to issue green corporate bonds in the near future to support investment in environmental protection projects.

Thank you, sir!