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Unlocking the Double Transition: Navigating the Financial Packages

20 November, 2024

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Speaking at the workshop “Pioneering Dual Transition for a Greener Vietnam,” held recently in Hanoi, Attorney Vu Minh Tien, a member of the Board of Directors of VIAD Group, shared that many businesses are still unclear about the dual transition, unsure of whether to prioritize digital or green transformation.

“Most of the businesses currently focusing on and driving the dual transition are large enterprises. Meanwhile, given the characteristics of Vietnam’s economy, the majority are small and medium-sized enterprises, and they are not keen on the idea of dual transition. How can we help these businesses overcome the initial hurdles and embrace green and digital transformation? This is an urgent issue,” emphasized Attorney Vu Minh Tien.

CHALLENGES FOR SMALL BUSINESSES

According to Mr. Le Viet Anh, Head of the Science, Education, Natural Resources, and Environment Department (Ministry of Planning and Investment), digital and green transformation are pressing requirements in the current context, as the economy and society face environmental and sustainable development challenges. As a result, Vietnam has adopted the National Green Growth Strategy for 2021–2030, with a vision towards 2050, and the National Strategy on Climate Change until 2050.

The issue of green transition has also been actively integrated and promoted through various strategies, plans, programs, and projects of the nation, and initial positive outcomes have been achieved.

“The industry has witnessed significant changes in modernizing production, enhancing the effective application of science and technology, and restructuring resource and energy-consuming sectors. The proportion of renewable energy in the national power system is higher than that of many other countries,” affirmed Dr. Le Viet Anh.

Regarding the digital transition, although it came after the green transition, it has become a significant trend in the development process of countries worldwide, including Vietnam, especially under the impact of the Covid-19 pandemic. Digital transformation optimizes production and business processes, reduces costs, and enhances competitiveness through automation, data analysis, and efficient information management.

Despite initial achievements, Ms. Do Le Thu Ngoc, Head of Inclusive Development at UNDP Vietnam, pointed out that in a rapidly changing world with constantly emerging issues, businesses will struggle to adapt and will be left behind if they do not transform, transform slowly, or transform ineffectively.

“Large enterprises have far better access, adaptability, and ability to turn strategies into action than small, micro, women-owned enterprises, and cooperatives. This is a concern when 97–98% of Vietnamese businesses are small and medium-sized,” Ms. Ngoc emphasized.

Sharing this view, Mr. Truong Bui, CEO of Roland Berger, stated that the dual transition is a trend pursued by countries worldwide, presenting both pressure and new momentum and opportunities for businesses.

“Dual transition includes energy and digital transformation. Both processes put pressure on businesses, especially small ones with limited resources and personnel,” Mr. Truong Bui stressed.

FINDING A WAY FORWARD

Although there is no one-size-fits-all model for dual transition, according to Mr. Truong Bui, green or digital transformation can be as simple as an initiative or idea to save energy or operate a business more efficiently.

“Dual transition is not about spending billions of dongs on technology or energy solutions. It’s about the mindset, vision, and clear orientation of the business in running its operations efficiently in terms of both economics and energy. This will not only help businesses expand their market reach but also enhance their competitiveness and effectiveness,” said Mr. Truong Bui.

Attorney Vu Minh Tien, a member of the VIAD Group’s Board of Directors, suggested expediting the development of a carbon credit market to address financial constraints.

Attorney Vu Minh Tien suggested that to promote the transition of the business sector, especially small and medium-sized enterprises, support policies for businesses need to be implemented more effectively. Additionally, accelerating the development of a carbon credit market is crucial to addressing financial constraints during the transition.

“Many non-governmental organizations, funds, and international banks have started to offer practical financial packages that Vietnam can access. However, we lack the legal framework to evaluate which projects are green and eligible for green credit. To address this, some financial institutions have applied similar standards from other countries for green deposit or bond offerings. But this is only a temporary solution. Vietnam needs a comprehensive and timely legal and policy framework to quickly disburse these funds to businesses,” emphasized Mr. Tien.

According to Mr. Nguyen Dinh Tho, Director of the Institute of Strategy, Policy, Natural Resources, and Environment, Vietnam is part of a “global game,” and Vietnamese businesses must follow global rules to compete and find their place in the market. Currently, EU-listed companies are required to report on sustainable development. Consequently, Vietnamese businesses in the EU supply chain must also comply with these regulations or risk being excluded. While this is a challenge for Vietnamese businesses, it also presents an opportunity to make a “breakthrough” through green transformation.

“If the transition is slow, businesses may miss out on opportunities in the developing market. However, if it’s too fast, they may lose their competitiveness due to high transition costs, which can increase their product prices and make it difficult to compete. But this is only a short-term challenge, as in the long run, EU businesses will have to look for other partners if our businesses cannot meet their requirements,” said Mr. Tho.