EIB to turn up the heat on climate change

How important is this loan to Vietnam?

The EIB, as the EU Bank, is strongly committed to climate change action, as one of the EU’s global priorities. This loan is a new milestone in our excellent cooperation with the Vietnamese authorities and I am confident that the investments financed under this framework loan will help promote sustainable and high-quality economic growth in the country.

The loan will contribute to environmental sustainability and will make long-term financing available for investments that contribute to climate change mitigation through the avoidance or reduction of emissions of greenhouse gases by the use of renewable energy sources and energy efficiency enhancements, which are priorities for EIB lending.

The loan will be provided through the Ministry of Finance on behalf of the Vietnam’s government to four state-owned banks for on-lending to small-scale climate change projects. These banks have the ability to source and manage investment schemes in the energy and industrial sectors.

Interested promoters should address their requests to one of the participating banks, which cover different areas of the Vietnamese economy: Bank for Investment and Development of Vietnam, Vietnam Bank for Industry and Trade, Bank for Agriculture and Rural Development and Vietnam Development Bank.

This loan will last 15 years and has an annual lending rate far lower than that in the market, at 2.5-3 per cent. This is the eighth loan from the EIB for Vietnam and also the second loan of its kind in the country.

What is the cooperation plan between the EIB and Vietnam in the coming years?

The EIB has no clear cooperation priorities with any foreign partner annually. The EU has a fund which is annually determined by its leadership to give loans to feasible projects proposed by prioritised nations. After such projects have been appraised carefully, we will provide loans for them. This new loan proves that Vietnam’s projects are quite feasible and the EIB’s big cooperation with Vietnam.

The EIB’s first loan to Vietnam was worth €55 million ($71.5 million) in 1998 for construction of a 400 kilometre long gas pipeline from the Nam Con Son basin in Vietnam’s East Sea to the region around Ho Chi Minh City. Since then we have provided another six loans, excluding this new one, which were valued €438 million ($569.4 million).

In total, since 1998, the EIB has provided Vietnam with eight loans worth €643 million ($835.9 million). This has made Vietnam the EIB’s second biggest recipient country in Asia, after China.

Does the EIB see any risks when providing loans to Vietnam?

No, we don’t see any risks, because we have carefully considered all risks related to project categories and the economy’s financial health, as well as projects’ impacts on people’s life and the economy.

We also would like to note that the projects are made by either Vietnam’s government or private companies. For instance, we in 2006 provided a €47 million ($61.1 million) loan for German-invested Metro Cash&Carry Vietnam for constructing five wholesale stores as part of the company’s expansion programme in Vietnam.

At present, the EU is facing many difficulties, particularly the euro zone is under big pressure. So does this affect the ability of the EIB to provide loans to Vietnam?

No, the EU’s economic difficulties don’t affect the EIB’s cooperation with Vietnam. You can see that despite the EU’s difficulties, Vietnam remains one of the EIB’s priorities in loan provision.

Does the EIB has a plan to establish a branch in Vietnam, as the World Bank or the Asian Development Bank has done?

At present, we have no branch in Asia. We are planning to set up a branch in China as the first step in Asia. In Vietnam we are very lucky to have good cooperation with the European Union Delegation to Vietnam in providing information about the country to us.

Though the EIB started financing activities in Vietnam in 1997, we are not thinking about setting up an EIB branch in Vietnam.