International Finance Corporation's Regional Vice President for Asia and the Pacific, Riccardo Puliti.

Việt Nam News reporters talk to International Finance Corporation's Regional Vice President for Asia and the Pacific, Riccardo Puliti about the corporation's latest project in Việt Nam's rice sector and its strategy for the Southeast Asian country in the years to come. 

The IFC has signed an advisory project with A An Food, a subsidiary of Tân Long Group, a key food producer in Việt Nam. What are IFC's objectives for the project?

We have been very lucky and grateful to be able to work with CEO Trương Sỹ Bá of Tân Long Group (TLG), who is committed to sustainability in his business operations. IFC's advisory project with A An Food, the rice subsidiary of TLG, aims to support the company in developing a sustainable rice production strategy to realise its goal of supplying up to five million tonnes of green, safe, and high-quality rice within the next 10 years.

We are also trying to help Tân Long Group accomplish that goal while adopting low-carbon production practices in line with international standards, reducing the rice sector’s emissions and boosting the country’s climate and economic resilience. By supporting local agribusinesses like Tân Long Group to develop local food systems that are greener, more productive, and resilient to a changing climate, we are not only helping strengthen the country’s food supply chain but also reducing emissions from agriculture, enabling Việt Nam to achieve net-zero by 2050.

IFC is seeing climate business opportunities in the agricultural sector as the sector is promoting sustainability and lowering emissions. Could you please elaborate more on this?

I think Việt Nam's agriculture sector has a lot of potential, especially its rice-producing capacity. Việt Nam has established itself as one of the world's major rice producers and as rice is a staple food for three to four billion people, the country certainly has a lot of growth potential in agriculture. Our mission objective is to support Việt Nam in producing more rice, of higher quality and doing so in a sustainable manner. 

The agriculture sector is also a main employer, creating about 14 million jobs in the country. Sustainable growth in the agriculture sector will give people good job opportunities without having to abandon the rural areas and move to the cities, so the issues of urbanisation, which we have seen all over the world, will be less critical.  So, I think Việt Nam is realising that rice needs to be produced in a sustainable environment, with environmental and social issues well taken into account and the agriculture sector is in a good position to do so.

In addition, Việt Nam is a large country with a young and dynamic population of over 100 million, and a growing middle class and there are great opportunities here not just in agribusiness but also in tourism, hospitality, manufacturing and financial services in the future. I also believe that Việt Nam has the ability to sustain rapid growth in the years to come. 

How can Việt Nam better attract financial resources from the private sector? How is it doing on this front compared to regional peers?

In my opinion, Việt Nam can do better in attracting financial resources from the private sector in two areas. The first is to ensure an appropriate legal and regulatory framework that is clear, transparent and predictable. It should be clear how policy decisions are made and it's important for both domestic and international investors. The second is Việt Nam should employ all available financial instruments including green bonds, sustainability-linked bonds, and green equity.  It is critical to find a way to make sure financing can reach small and medium enterprises which can grow in the future. 

One of the traditional ways of doing this is working through banks. With a set of lending criteria and financial tools, commercial banks can lend money to SMEs and not just focus on large companies, which usually can access the financing they need. As for comparison, I think that Việt Nam has been doing it quite well, compared to other countries in the region. 

Given Việt Nam's opportunities and challenges, what's IFC's long-term strategy for the local market?

As a development institution, IFC has worked to help promote sustainable economic growth and job creation in Việt Nam since the early 90s. Given the country’s transition to a productive, high-value and low-carbon growth model, climate and sustainability are now a key focus for IFC’s programme in Việt Nam, encompassing all aspects of our operations. We are going to continue our work with the Vietnamese Government and private companies to make sure financing from domestic and international investors will come in to accelerate the country’s green transition. We believe that Vietnamese companies have the potential to grow into regional, and even global economic powerhouses and they have an important role in driving Việt Nam’s stronger, greener and inclusive growth.

We at the IFC are confident in Việt Nam, and our ambition is to increase our investment programme in Việt Nam from US$2 billion to $5 billion in the next three years but to do so, we must look at ways to mobilise international capital to support the private sector, especially SMEs. We will work to make sure capital markets are developed enough so that funding can arrive through every possible pathway. For example, we just committed the local currency sustainability-linked bonds (SLBs) of up to VND 3,500 billion (around $150 million) issued by BIM Land and its subsidiary Thanh Xuan Joint Stock Company – the first of its kind in Việt Nam. We strongly believe the IFC investment will signal the viability of innovative green financing instruments as an alternative source of capital for climate-smart projects in the country and encourage developers to align their interests with responsible investment and mobilise funding from green capital markets.

The IFC has been working alongside many commercial banks in Việt Nam, especially on governance and risk assessment because the more they understand risks, the more they can loan out money in longer maturity, and we'd like to see the private sector having greater financial support. We are in discussion with several local commercial banks to issue green bonds to increase funding for climate-friendly projects. To date, we have provided over $300 million in green financing to local banks in Việt Nam, accounting for about 35 per cent of the total $950 million climate-tagged long-term finance IFC has committed in the country so far. VNS