Incentivizing Private Sector Nguyen Tuan Anh Ministry Of Planning and Investment Vietnam

Policy Framework The VGGS is focussing on “greening production”, “ low carbon growth” and green lifestyles: MPI mandated to develop the Vietnam Green Growth Strategy in April 2011 Final draft has been developed. The VGGS is part of a wider effort to restructure the economy: “To promote economic restructuring, transformation of growth model, give top priority to growth quality, productivity, efficiency, competitiveness; focus on intensive development and knowledge economy” The VGGS will green existing business, creating green business opportunities and stimulate “green” technology development

The role of the Private Sector Vietnam has developing policy mechanism and instruments to stimulate Public Private Partnerships (PPP), which are within MPI’s Mandate (see: No.71-2010-QD-TTg, No. 108-2009-ND-CP)_ With the VGGS, the aim is to strengthen and harness market forces to: Stimulate green innovations Create a fair playing field for green business development Stimulate engagement of private sector in efforts to restore natural capital through PES and carbon market mechanism The GOV will promote private sector engagement through a variety of mechanism: Creating business opportunities: Green procurement (key to facilitate change as the government is a key consumer) Introduction of market based mechanism To strengthen Research and Development stimulate innovation through securing access to capital (guarantees)

Proposed Mechanisms Mechanisms will be designed to stimulate green business development and enable the greening of existing business, key elements are: Fiscal incentives, to overcome initial investment barrier: Tax incentives Targets subsidies Ensure secured access to land Gradual removal of subsidies in the energy sectors will provide new opportunities for: Renewable energy development; Currently policy is 1 cent/ Khw subside; Investments in energy efficiency (ESCOs) for which the new energy efficiency law provides opportunity Provide credit access through loan guarantee schemes

Challenges The GoV has limited fiscal space, however removing fuel subsidies (2% of GDP) might generate new resources. Some initial positive results from work supported by the IFC with national banks in energy efficiency  however financial sector has not stepped in. Viet Nam domestic private sector has emerged after the Doi Moi reforms in the early 90’s both financial resources and skills are still developing and understanding on green growth remains limited SOE are still a significant part of the economy but required additional support.

Conclusions Through the VGGS, Vietnam is establishing and enabling environment for private sector engagement building on existing economic restructuring and PPPs and creating a fair playing field. The VGGS foresees a comprehensive framework for private sector engagement in green growth Resource availability remains a constrain, in particular under current fiscal conditions