Mapping current incentives and investment in Viet Nam’s transport sector: informing private climate finance

Working and discussion papers
June 2015
Emily Darko, Nguyen Manh Hai and Shelagh Whitley

    The government of Viet Nam has not published specific financing needs for green and climate smart transportation, but it has clearly highlighted the need for additional investment, including private finance and has indicated a role for the Ministry of Planning and Investment and the Ministry of Finance in reviewing financial demands, allocating domestic financial resources and coordinating foreign assistance sources, policies and mechanisms to promote implementation of the strategies.
      By linking the key findings on current incentives, sources of capital, and investment trends in the transport sector, and comparing them with Viet Nam’s stated objectives for (i) mobilising private investment and (ii) addressing climate change and green growth we were able to identify some important considerations for those seeking to mobilise private climate finance in Viet Nam’s transport sector.
        Climate finance needs to support approaches that respond to sub-sector priorities while ensuring consistency at the overall sector level. In land transport, international public finance broadly follows national public expenditure by investing primarily in roads, with the notable exception of metro rail investment, which seems driven by international public investment priorities. 
          In order to further promote shifts to public transport and low-carbon modes of transport (such as encouraging modal shifts from private road vehicle use to bus, rail and water), climate finance could support the government’s development of incentives for both public and private investment in affordable and high-quality service provision in these areas. This could include incentives for improved and more extensive bus, train and ferry services, and increased provision of freight services over rail and water.