Climate change, Finance sector development

Revisiting green bond market development in Viet Nam

Revisiting green bond market development in Viet Nam

Green bonds (GBs) are being used around the world as a financial tool for raising capital for projects that can benefit the environment (World Bank 2019). The money raised by GB issuances can fund investment in programs that enhance adaptation and mitigate the effects of climate change, such as projects for clean energy, public transport, and clean water. The GB concept was proposed by the World Bank in its Strategic Framework on Development and Climate Change in 2008 to help countries around the world raise capital for strategies for solving the problems of air pollution and global climate change (Trang 2015). What separates GBs from other common bonds is that the purpose of GB mobilization is to fund special environment-related projects. Because of the advantages of GBs, Viet Nam is trying to develop its GB market.

Determinants of the green bond market in Viet Nam

To assess the importance of various factors influencing GB market development in Viet Nam, Tu, Sarker, and Rasoulinezhad (2020) use a multi-criteria decision-making method, called the analytic hierarchy process, to evaluate and rank criteria and their associated factors. Among the four major criteria—namely economic, political, social and cultural, and infrastructural—infrastructural and economic factors have the most important role.

For the economic criterion, the presence of efficient monetary policy and a high GB interest rate are important, meaning that Viet Nam’s government support for the GB market is important among the different political factors. Social concern for environmental matters can also help in developing the GB market. Environmental concern on the part of society—in other words, social environmental responsibility—can accelerate the willingness of the population to enter and invest in the GB market. Among the infrastructural factors, the legal framework and Viet Nam’s international cooperation on GB issues are the most influential. An appropriate legal framework can expand the GB market and ensure a stable and reliable investment climate for investors.

Consideration of all 16 influential factors related to the economic, political, social and cultural, and infrastructural criteria reveals that the most important influencing factors are a legal framework for GB operations, the monetary policy of Viet Nam’s central bank, and the official interest rate of the GBs. In other words, infrastructural and economic factors are more important than the political and social and cultural requirements.

Policy implications

Overall, demand is increasing the potential for vigorous promotion of the GB market in Viet Nam. Coordination among the public, private, domestic, and foreign sectors and linkages between financial institutions, banks and enterprises, and technology solution providers are essential for maximizing resources for the development of a clean and sustainable economy.

In addition to the pilot issuance of green local government bonds, the authorities in Viet Nam should work to develop a comprehensive plan for implementing GB issuance in accordance with international practices. Accordingly, for the GB program, there should be a legal document at the level of a government decree that stipulates the purpose of using capital from bond issuances. The document should report on the use of capital and tax policy as a basis for implementation.

GBs are not the answer to all issues on sustainable development in Viet Nam. However, they are likely to be a springboard for sustainable development initiatives and solutions. With GBs, we no longer have to choose between economic development and environmental protection. We can encourage those businesses that have the highest emissions in the economy to move toward self-mitigating and eliminating the negative impacts on the environment while ensuring their profitability. Local communities will have the opportunity to participate in the economic system and not only increase their income but also enjoy an improved quality of life.


Trang, N. M. 2015. Green Bonds and its Prospects in Vietnam. Vietnam Journal of Theoretical Activities, 5: 14–23.
Tu, C. A., T. Sarker, and E. Rasoulinezhad. 2020. Revisiting Development of the Green Bond Market: Evidence of the AHP Approach. ADBI Working Paper 1082. Tokyo: Asian Development Bank Institute.
World Bank. 2019. 10 Years of Green Bonds: Creating the Blueprint for Sustainability Across Capital Markets. Washington, DC: World Bank.

About the Author

Tapan Sarker is an associate professor at Griffith Business School, Griffith University, Australia.

About the Author

Chuc Anh Tu is an associate professor at the Academy of Finance, Viet Nam
Ehsan Rasoulinezhad

About the Author

Ehsan Rasoulinezhad is an assistant professor at the Faculty of World Studies, University of Tehran, Iran.

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