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financial sector has taken active steps to boost access to green finance in order to
facilitate sustainable and environmentally friendly production and business activities.

However, the cost of the green transition and carbon reduction process is estimated at
around US$ 17 billion per year and requires significant external resources.
The French Development Agency (AFD) provided US$ 100 million concessional
loan and technical assistance to help establish green financing in Vietnam. This is the
first green finance fund AFD has set up in Vietnam. The assistance from the AFD is a
significant first step in the transition to green financing in Vietnam. AFD’s support has
given three critical takeaways for Vietnam. First, it will improve its operational
efficiency in financing Vietnam’s green development. Second, it will establish a

partnership between two countries for future green development loans or projects.
Finally, it signals to international partners Vietnam’s willingness to participate in green
development projects or financial partnerships.
In 2023, Luxembourg Ministry of the Environment, Climate and Sustainable
Development and Vietnam’s Ministry of Finance (MoF) signed a memorandum of
understanding on green finance cooperation for 2020-2025. If Vietnam has a

standardized management framework, a clearer definition of green projects,
international banks can support the Vietnamese Government in promoting the green
economy.
5. Conclusion
ASEAN is faced with a significant investment gap, requiring US$ 1.5 trillion to
finance its green transition by 2030. Urgent collective action from governments,
corporations, and investors is essential. Standardizing regulations, mitigating

investment risks and fostering a conducive environment for green investments through
regional collaboration are crucial.
It is forecasted that the green economy of Southeast Asia has the opportunity to
bring in a value of more than US$ 1 trillion by 2030. Financial institutions will play an
important role in providing capital to invest in renewable energy activities, climate
change adaptation technology and transition to a circular economy. Green investment

and finance are essential for the region to succeed in its goals of decarbonization and
sustainable development. Private investment is encouraged to transition ASEAN's
existing energy system to low-carbon alternatives.
Southeast Asia needs to have more solutions and policies to actively encourage
green finance and devote more resources to building capacity for green finance. To
mobilize the necessary capital resources to finance environmentally sustainable
development, ASEAN governments and regulatory agencies need to take on a more
prominent role, helping the market allocate resources in a more sustainable way and can

announce a roadmap to transition to a green financial system as the UK has done.

References
1. Ariyapruchya, S., & Volz, U. (2022). Sustainable finance in Southeast Asia. In D. Schoenmaker, & U.
Volz (Eds.), Scaling up sustainable finance and investment in the global south (pp. 281–302). CEPR Press.

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