IFC Prioritizes Job Creation and Trade Flow in Vietnam
Despite overlapping crises and challenges, climate projects, smaller businesses, women, and farmers in Asia and the Pacific have benefited from record amounts of funding from IFC, with Vietnam among IFC's top five countries for long-term investment in the region for the fiscal year ending June 30, 2023.
IFC's total commitments in Vietnam reached close to $1.9 billion in FY2023, of which $520 million was in long-term finance. IFC' investment and advisory programs addressed core challenges for Vietnam—from climate change and food security to trade barriers and housing finance gap—helping local companies recover from the COVID-19 pandemic and navigate challenging internal and external environments.
The majority of the long-term funding increased lending to thousands of small and medium enterprises (SMEs), including women-owned businesses, and supported lower and middle-income home buyers— together creating jobs and boosting economic activity. IFC's investments in BaF, a leading livestock producer, and in the retail operator GS25, along with a commodity-backed warehouse finance facility for TTC AgriS, helped strengthen agribusiness value chains and improve food security in the country.
IFC also provided over $1.3 billion in short-term trade and supply chain finance to local companies in Vietnam, particularly garment and agribusiness suppliers, enabling them to continue importing and exporting goods while protecting about 100,000 jobs.
In line with the government's twin goals to become a high-income country by 2045 and achieve net zero by 2050, climate and sustainability have become a bigger focus for IFC engagements in Vietnam. To date, IFC has committed over $900 million in long-term finance to support climate-related projects in the country.
"As businesses gradually recover from the pandemic while weathering uncertainties of ongoing global crises, it's the right time for the private sector to embark on a greener and more sustainable pathway of development to improve resilience and efficiency. This not only makes a strong business case for companies but will also help unlock the potential of the private sector as a driving engine of the country's transition to a low-carbon economic growth model," said Thomas Jacobs, IFC Country Manager for Vietnam, Cambodia and Lao PDR.
IFC's advisory program in Vietnam has focused on facilitating climate business markets and building capacity for local businesses to grasp opportunities in the climate space. For example, IFC is supporting relevant ministries to develop policies to incentivize green projects and encourage private sector participation in the voluntary carbon market, among others. IFC is also advising manufacturers in heavy industries including steel, cement, and plastics to adopt decarbonization solutions to greener their production.
In addition, IFC supports the State Securities Commission of Vietnam to promote the adoption of environmental, social and governance (ESG) standards and practices and to enforce ESG requirements among market players. This effort will help leverage the capital market to tackle climate change through green and sustainable finance.
Across the Asia and Pacific region, IFC committed a record $11 billion to 108 projects in FY2023, a 10 percent year-on-year increase. This comprised $4.7 billion in long-term financing from its own account, $3.4 billion in mobilization, and $2.9 billion in short-term trade and supply chain finance to facilitate trade flows.
