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Incentivizing 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

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Incentivizing Private Sector

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  1. Incentivizing Private Sector Nguyen Tuan Anh Ministry Of Planning and Investment Vietnam

  2. 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

  3. 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)

  4. 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

  5. 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 DoiMoi 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.

  6. 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

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