In the face of escalating climate change and environmental pollution, Vietnam is making strides towards transitioning to green industrial zones (KCN xanh), a trend that has become essential. Since 2014, the country has made significant progress in developing these zones, with cities like Da Nang, Can Tho, Ho Chi Minh City, and Dong Nai leading the charge. However, despite these advancements, only about 1-2% of the 290 operating industrial zones nationwide are currently undergoing a shift to an ecological or green model. Da Nang, in particular, aims to establish 2 to 3 national standard ecological industrial zones by 2030.
While the development of green industrial zones is promising, the scale of green credit remains modest compared to the increasing demand. Challenges such as long payback periods, high investment costs for green projects, and a lack of a clear classification system for green projects hinder progress. Many businesses are still unaware of green credit options, which could serve as a significant driver for the green transition.
To truly harness green credit as a catalyst for sustainable development, experts emphasize the need for solutions that enhance access to funding, increase the proportion of green credit, reduce costs to lower interest rates, improve communication strategies, and bolster the capabilities of financial staff. A comprehensive legal framework is also crucial to facilitate these changes.
During a recent forum, Dang Quoc Bao, Deputy General Director of Trung Nam Group, highlighted the importance of a clear legal framework for green credit. He stated, “Without a clear policy framework, there will be no trust for businesses to boldly invest long-term in green technology and innovate production processes.” Trung Nam is currently operating renewable energy projects with a total capacity of 1.6GW and generating revenue exceeding 7 trillion VND per year. However, all of the group's loans, amounting to over 26 trillion VND, are not classified as green credit due to the absence of guidance or verification of green project standards at the time of implementation. This situation is common among many domestic enterprises that have the capability and projects but lack a legal framework to access preferential funding.
Deputy Governor Dao Minh Tu of the State Bank of Vietnam noted that countries worldwide have established stringent requirements regarding net emissions and environmental protection in imported products. He warned that if Vietnamese businesses fail to adapt swiftly to these regulations, they will face challenges competing in the international market. To support the green transition of the economy, the banking sector has proactively implemented measures. Since 2017, when the green initiative was still in its infancy in Vietnam, the banking sector, with the support of major international organizations, has issued various mechanisms and policies to promote green credit. By 2022, a legal framework for green credit aimed at sustainable development had been established, although it is still incomplete.
Despite these efforts, there is a pressing need for additional solutions from various stakeholders, both at the central and local levels, to support the goal of developing green industrial zones. During the forum, Deputy Governor Tu expressed a desire for experts and businesses, both within and outside the industry, to collaborate and clarify several issues, such as how many industrial zones are currently moving towards green standards and what challenges they face that require assistance from the banking sector. TS. Dang Quang Hai from the Da Nang Biotechnology Center proposed that to ensure that green industrial zones are not just a slogan, it is essential to legalize the criteria for ecological industrial zones, establish a separate green credit policy, and create an independent ESG certification system. This would enhance competitiveness and facilitate long-term capital flow for the green economy.
In a related effort, Vietnam is also striving to achieve net zero emissions by 2025, with the real estate sector accounting for approximately 39% of total greenhouse gas emissions, including construction and operational processes. According to the 2024 Overview Report on Green Buildings in Vietnam by the EDGE certification system and the International Finance Corporation (IFC), there are currently 559 certified green buildings in the country, covering a total floor area of 13.6 million square meters. This includes 31,384 green-certified apartments and 3,234 individual houses. Notably, industrial buildings represent the largest share of green constructions, comprising 56.45% of the total, followed by office buildings at 15.61% and apartments at 14.15%. The growth of green buildings in 2024 has been remarkable, with 163 projects certified, a 2.1-fold increase from 2023 and three times that of 2022.
This surge in green building development signals a positive trend, indicating that green construction is gradually becoming a dominant force in Vietnam's construction industry. The shift towards green buildings not only meets environmental protection requirements but also serves as a strategy for sustainable competitive advantage for investors, as demand for green real estate is rising among buyers and investors alike.
In light of increasing pollution in major cities, younger generations are showing a growing interest in green living spaces and environmental standards when choosing homes. They prioritize experiences in clean air environments and natural lighting. Green real estate not only enhances product value but is also becoming a “passport” for businesses to access international funding. Many investment funds now prioritize ESG (environmental, social, and governance) criteria as prerequisites. Companies with green projects find it easier to secure favorable loans from organizations such as the IFC, ADB, or commercial banks offering green credit packages in Vietnam.
A survey conducted by Batdongsan.com.vn at the end of 2024 revealed that 86% of participants expressed interest in purchasing a green home, while 88% were willing to pay more for one. This shift is not limited to domestic consumers; international investors, particularly from Europe and Singapore, are also placing ESG criteria at the forefront of their investment decisions, creating significant opportunities for real estate developers in Vietnam.
However, despite the positive trends, the green real estate sector in Vietnam faces substantial challenges. One of the biggest barriers is the high initial investment costs, which deter many developers from pursuing green models due to concerns over short-term capital recovery. The lack of specific incentives from the government, such as tax breaks, green credit, or legal support, also diminishes motivation to enter this market. Furthermore, both consumers and real estate developers have limited awareness of the true value of green buildings, resulting in green projects primarily being concentrated in the high-end segment and not widely disseminated across the broader market.
Tong Van Nga, President of the Vietnam Building Materials Association, pointed out that the policies regarding green buildings are not cohesive, as regulations on green construction are scattered across various legal documents from different ministries. Additionally, the mechanisms encouraging businesses to develop green buildings remain limited, lacking specific regulations that would promote a more robust shift towards green investment in construction.
Despite these challenges, experts believe that the trend of establishing carbon-neutral and green-certified projects in Vietnam is inevitable. They argue that real estate developers need to actively update international green standards such as EDGE, LEED, and LOTUS, integrating energy-saving, sustainable materials, and technological solutions from the design and planning stages. On the government side, VARS experts recommend that regulatory agencies swiftly complete the system of standards, regulations, and legal frameworks related to green buildings, low-carbon urban development, and emissions neutrality. Furthermore, specific incentive policies for projects achieving green certification should be designed, such as prioritizing planning approvals, reducing land use taxes, and providing credit incentives or encouraging land bidding criteria. Alongside this, support for training and capacity building for consultants, contractors, and planning and construction inspectors is essential to ensure coherence and effectiveness in practical implementation.
