Vietnam's Green Pivot: Successes, Gaps, and the $368 Billion Price Tag

Vietnam's commitment to a green transformation has yielded notable wins in renewable energy and sustainable practices, but further progress hinges on synchronized policy execution and major financial investment, a top communist party economic official told the Vietnam Connect Forum 2024.

Nguyen Duc Hien, Deputy Head of the Central Economic Commission, emphasized the need for a whole-of-society approach to the green transition, underscoring three key pillars: institutional reform, technological innovation, and financial resources.

Vietnam's Wins and Its Transformation Agenda

Mr. Hien stressed that Vietnam has a comprehensive policy framework in place, with directives on green growth and the circular economy integrated into national development strategies and party resolutions.

"In terms of policies, guidelines and strategies, they are very complete," he noted before an audience of hundreds of international and local businesses, organizations and government officials in the northern port city of Hai Phong.

The country's achievements back up his point. Renewable energy is a bright spot, accounting for over a quarter of installed power capacity.

Moreover, the digital economy is expanding rapidly, contributing to a more resource-efficient model. Green credit has seen strong growth in recent years, while Vietnam has successfully tapped into emerging green bond markets.

These developments demonstrate Vietnam's recognition that pursuing a sustainable path is not just an environmental imperative, but also unlocks new economic opportunities.

But Can Policies Translate to Real-World Change?

The core issue, Mr. Hien said, lies in effective policy execution and aligning the raft of existing strategies. He pinpointed six key areas where Vietnam needs to step up its efforts.

Firstly, there is a need to translate high-level goals into concrete, time-bound action plans. Secondly, Vietnam must conduct a rigorous assessment of its National Action Plan on Green Growth implementation to identify where progress lags and course correction is needed.

Furthermore, Vietnam must prioritize the identification of breakthroughs in science and technology needed to make 'greening' a reality across critical sectors like energy, industry, and transportation.

Additionally, the country must fundamentally reimagine its foreign direct investment (FDI) strategy. Attracting foreign investment that aligns with sustainability goals necessitates a fresh approach that prioritizes not just capital flows, but also technology transfer and capacity-building.

Crucially, Mr. Hien stressed that Vietnam must support the green transition of its vast network of small and medium-sized enterprises (SMEs). This involves creating tailored programs and mechanisms to enable SMEs to access green financing and to build the capabilities needed to embrace greener production and supply chain practices.

Finally, there's the enormous question of finance. Vietnam needs a staggering $368 billion by 2040 to meet its decarbonization and resilience targets. Tapping into private capital alongside public investment is essential, and this requires innovative financial instruments and a robust regulatory framework for green finance.

Closing the Ambition-Execution Gap

Mr. Hien's analysis spotlights an emerging theme within developing nations: setting bold environmental agendas is one thing, but execution is another.

For Vietnam, the stakes are high. It is proving itself as a rising Asian economy, yet needs a sustainable growth model to weather the climate shocks ahead. Can it turn green ambition into tangible action and secure the vast sums needed to make it happen? The world is watching.