IFC invests $1.6 bln in Vietnam, focusing on green transition, private sector resilience

IFC, the private sector lending arm under the World Bank Group, has committed to provided loans totaling over $1.6 billion, including more than $750 million in long-term finance, in Vietnam in its fiscal year ending June 30.

Of the amount, a total of $310 million in new long-term financing from IFC’s own account was committed to projects that will help address climate change and marine-plastic waste, a record for Vietnam.

The country received the highest volume of IFC's own-account climate financing in fiscal year 2024 in the East Asia and the Pacific region, IFC said in a statement on Thursday.

Investment and advisory programs in the country also addressed other core development challenges, from food security and trade facilitation to manufacturing competitiveness.

Notably, IFC provided $896 million in short-term trade and supply chain finance to local companies to boost trade flows, helping them grow business and create more jobs.

IFC supported Vietnam’s first blue bond and green bond issued by Southeast Asia JS Commercial Bank (SeABank), which will help promote a sustainable ocean economy and increase climate resilience.

SeABank was also the first private bank to issue a green bond in the country with IFC’s support. IFC also facilitated the Asian Infrastructure Investment Bank (AIIB) to invest $75 million in SeABank climate bonds, alongside IFC’s own investment.

IFC also facilitated the issuance of the country’s first local currency sustainability-linked bonds, issued by BIM Land JSC and its subsidiary, Thanh Xuan JSC, which will help foster a more sustainable tourism sector.

Alongside the financing, in partnership with the Australian government, IFC supported client banks and companies in the development of sustainable finance frameworks, laying the groundwork to scale up climate investments.

To promote greening the banking sector, in partnership with the Swiss State Secretariat for Economic Affairs (SECO), IFC supported the State Bank of Vietnam in issuing environmental risk management regulations, which will create a level playing field and help local banks enhance their management systems to mitigate financial risks related to the environment and climate.

Additionally, IFC, along with other development partners, is working with regulators to develop a green taxonomy for Vietnam.

Thomas Jacobs, IFC country manager for Vietnam, Cambodia, and Laos, said: “IFC's funding will signal the viability of a climate-finance market in Vietnam, encouraging banks to tap into this new segment and pushing real sector investors to align their interests with responsible investment and mobilize funding from sustainable capital markets, supporting the country's low-carbon growth model."

In the non-financial sector, IFC advised agribusinesses on sustainable-rice farming and manufacturers in hard-to-abate industries on adopting greener solutions. With IFC’s support in the improvement of Vietnam's legal framework for carbon markets, a revised decree on GHG emissions mitigation and the development of carbon markets is expected to be issued soon.

Efforts are also focused on promoting GHG reduction measures in the livestock sector and facilitating Vietnamese livestock companies to participate in the carbon market after adopting carbon emissions mitigation.

“As Vietnam advances on its path to becoming a high-income economy, the private sector has a critical role to play in driving sustainable economic growth,” Jacobs added. “IFC’s robust program in the last fiscal year is a testament to our commitment to supporting Vietnam in building a more resilient and greener economy that can navigate both global and domestic challenges.”

IFC committed a record $12.2 billion to 123 projects in Asia Pacific in fiscal year 2024, an 11% year-on-year increase. IFC’s projects delivered significant impact across the region, addressing pressing development challenges, including climate change, gender inequality, food insecurity, and financial inclusion, while creating jobs and improving services.