ADB Provides Climate Financing Package for Electric Mobility in Viet Nam

The Asian Development Bank (ADB) mobilized a US$135 million climate financing package for VinFast Trading and Production Joint Stock Company (VinFast) for manufacturing Viet Nam's first fully-electric public transport bus fleet and first national electric vehicle (EV) charging network.

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The climate financing package will help develop Viet Nam's first fully-electric public transport bus fleet and first national electric vehicle (EV) charging network - Illustration photo
The climate financing package will help develop Viet Nam’s first fully-electric public transport bus fleet and first national electric vehicle (EV) charging network – Illustration photo

The package targets to support Viet Nam’s bid to reach net-zero greenhouse gas emissions by 2050 and facilitate the high-tech automobile manufacturing industry here.

The climate financing comprises 7-year tenor financings, including a US$20 million loan funded by ADB, parallel loans of US$87 million facilitated by ADB as mandated lead arranger, and concessional financing of up to US$28 million, reported the VGP.

The climate financing is certified by the Climate Bonds Initiative, a scientifically-based standard for labelling bonds, loans and other debt instruments which contribute to addressing climate change.

o far, ADB has partially offset the project’s risks by utilizing concessional financing through its managed trust funds comprising loans from the Australian Climate Finance Partnership funded by the Australian Government (ACFP), the Clean Technology Fund (CTF) and a grant from the Climate Innovation and Development Fund, which is funded by Goldman Sachs and Bloomberg Philanthropies.

Parallel loans were also mobilized by ADB from Export Finance Australia, the Finnish Fund for Industrial Cooperation, Oesterreichische Entwicklungsbank AG, and responsAbility.

“This project delivers a high-impact, sustainable transport solution for Vietnam while helping it meet its climate goals and supporting the growth of climate finance in the region,” said ADB Private Sector Operations Department Director General Suzanne Gaboury.

“Asia and the Pacific are the frontlines of the global fight against climate change, and private sector projects like this one with innovative partners such as VinFast are crucial to help its countries decarbonize their economies.”

ADB Provides Climate Financing Package for Electric Mobility in Viet Nam
Vinfast Factory. Photo: Vinfast

Viet Nam’s transport sector accounts for 18% of the country’s annual greenhouse gas emissions, and its decarbonization, through options like e-mobility, will directly impact the country’s ambition to achieve net zero emissions by 2050.

Additionally, the project includes a technical assistance (TA) of $950,000 from the ACFP and the CTF, focused on raising consumer awareness about e-mobility’s economic, environmental, and social impacts to help advance its market penetration. The TA will also help promote the role of women studying for or working in fields related to science, technology, and mathematics.

“We are delighted to receive this extensive support and a long-term financing package from ADB and several esteemed international development finance Institutions. We see this as a vote of confidence in our efforts to become a global smart mobility company that offers environmentally friendly public transportation, and to advance Viet Nam’s transition to a low carbon economy,” said VinFast’s Global CEO Thuy Le

Established in 2017, VinFast is Viet Nam’s first domestic car company and e-vehicle manufacturer. VinFast is a subsidiary of Vingroup Joint Stock Company, Viet Nam’s largest private enterprise and the largest listed company in Viet Nam. VinFast develops e-cars for the domestic and international markets and is investing in a nationwide network of fast-charging units to support its e-vehicle expansion in Viet Nam, according to the ADB.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

Tarah Nguyen