Provincial Environmental Protection Fund: High Demand - Low Supply

​Cooperatives, small and medium enterprises operating in the environmental field are given priority in borrowing.

However, the EPF financial resources are limited, so the management unit has to divide into small loans. Some projects that completed its application refused to continue such process, because the loan was too small.

Great loan demand

According to Ms. Nhung, each year there are dozens of loan applications from several billion dong up to hundreds of billion dong. Worried about not being able to borrow money, many investors sent loan applications before the deadline of nearly a year so that the Fund had time to appraise and consider. In 2020, the fund received more than 10 loan applications. In which, there is a proposal to borrow VND 500 billion, after balancing the finances and the number of projects, The Management Board approved the loan of 50 billion, but the investor refused because the loan amount was too small. An industrial wastewater treatment plant project also proposed a loan of VND 100 billion, but the Fund can only lend VND 30 billion, equal to more than 20% of the investment value of whole project. “All qualified and well-intentioned projects can get loans from the fund, however, some projects refuse because the allocated capital is too little compared to their needs.” - said Ms. Nhung.

Sharing about this issue, Mr. Nguyen Ngoc Thuong, Deputy Director of the Department of Natural Resources and Environment (Fund’s Operation Management Unit) said that each year, the province has a lot of new construction and upgrading projects related to environmental protection such as: buying garbage trucks; investment in waste treatment zones of all kinds; increasing capacity of industrial and domestic wastewater treatment plants, etc. These works and projects all need to borrow capital from the provincial EPF because the interest rate is only equal to 50% of commercial banks interest rate; Loan term lasts up to 10 years; Debt maybe paid-off when having enough finance without being fined, etc.

However, due to limited funds, the Department of Natural Resources and Environment directs to carefully review, the loan project must be approved for environmental impact assessment, in the list of projects to be borrowed according to the province’s regulations. A reasonable loan balance and allocation must then be made, to avoid a situation where one project gets a lot of loans while the other cannot.

Priority for Small and Medium Enterprises and Cooperatives

 
Vinh Tan Waste Treatment Plant, the largest project with loans from the EPF in 2020

According to the regulations of the provincial EPF approved by the Provincial People’s Committee, investors whose works and projects related to environmental protection are in the list of environmental protection activities with collateral are eligible to borrow preferential loans from EPF.

Director of the Department of Planning and Investment Ho Van Ha said that, in terms of loan process and procedures, most investors are guaranteed loan conditions. But due to limited funds, it should consider carefully. For projects with large investment capital, investors have better access to external credit, it is advisable to cede loan opportunities to small and medium enterprises and cooperatives that are “weaker” in accessing bank capital. This both encourages businesses to invest in projects for environmental protection, and ensures that many subjects can borrow capital from the fund.

Many comments agree with the said point. However, the Fund Management Unit said that small and medium projects are more risky because collateral is investment property (garbage trucks, production machines and equipment) that can be worn out and no longer valuable during use. “In 2018, we lent money to a cooperative in Vinh Cuu District to invest in garbage trucks. This cooperative has not done well, and our capital and interest have not yet recovered. Now, if foreclosure of the property, the garbage truck, the fund still has to offset the capital” – shared Ms. Nhung, EPF Director.

Vice Chairman of the Provincial People’s Committee Vo Van Phi said that the provincial EPF is biased towards social purposes, towards community values. The fund exists depend on annual provincial funding, corporate environmental fees and interest income from lending activities. The fund management unit’s task is to preserve and develop the capital. Therefore, the provincial EPF, the departments, branches that are members of the Fund Management Council must carefully review the documents and borrowers, balance the loan amount in accordance with the scale of each project. Priority must be given to community projects, prioritizing capital for small and medium enterprises, cooperatives with little or no access to commercial credit.

Vice Chairman of the Provincial People’s Committee Vo Van Phi also instructed the Department of Trade and Environment to study the proposal of planning the waste recycling zone. “Current recycling facilities are mostly spontaneous, have no management, no technology assessment. When there is an inspection, there is a violation. It is necessary to plan a recycling area near the centralized waste disposal area. Enterprises should be encouraged to recycle waste by site, invested in technology and strictly managed.” - Vice Chairman Vo Van Phi emphasized.

In addition to the provincial EPF source, there is also Dong Nai Development Investment Fund; funds from programs and projects such as supporting clean production enterprises; ‘Green credit’ by banks also lends to projects related to the environment.

Phan Anh