ADB leads $135 million climate financing package for VinFast

The assistance will support Vietnam's efforts to achieve net-zero greenhouse gas emissions and expand high-tech manufacturing industries.

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

The bank has partially offset the project's risks by utilizing concessional financing through its managed trust funds comprising loans from the Australian Climate Finance Partnership (ACFP) funded by the Australian government, 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 mobilised by the 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 director general of the ADB Private Sector Operations Department Suzanne Gaboury. "Asia and the Pacific is the frontline 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."

Vietnam's transport sector accounts for 18 per cent of annual greenhouse gas emissions, and its decarbonisation, through options like e-mobility, will directly impact the country's ambition to achieve net zero emissions by 2050.

Additionally, the project includes technical assistance of $950,000 from the ACFP and the CTF, focused on raising consumer awareness about e-mobility's economic, environmental, and social impact to help advance its market penetration. The assistance 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 the 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 transport and to advance Vietnam's transition to a low carbon economy," said VinFast's Global CEO Thuy Le.

The bank 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, including 49 from the region.

Established in 2017, VinFast is Vietnam's first domestic car company and electric passenger vehicle manufacturer. VinFast is a subsidiary of Vingroup, Vietnam's largest private enterprise. VinFast develops electric cars for the domestic and international markets, and it is investing in a nationwide network of fast-charging units to support its electric vehicle expansion.

With its widespread charging station system, VinFast is taking the lead in the electric vehicle sector, which is influencing the launch of electric cars by other manufacturers.

Responding to surging levels of food insecurity, IFC has launched a new $6 billion financing facility to strengthen the private sector's ability to respond to the crisis and help support food production.

At the 2021 United Nations Climate Change Conference (COP26), Vietnam pledged to reach net-zero carbon emissions by 2050 and to phase out coal-fueled power generation by 2040.