Download Incentivising the private sector

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