Ho Chi Minh City has been prioritizing green FDI as part of its international economic integration process.

With an ambition of becoming a “safe, green, and attractive destination” for
the next generation of FDI, Ho Chi Minh City is developing a policy ecosystem that
selectively prioritizes investment, fostering “green” projects ranging from clean
industries and renewable energy to green transportation and the circular economy.

The challenge for the southern city is no longer simply attracting large volumes
of FDI but rather high-quality FDI aligned with environmental, social, and governance
(ESG) criteria, as a commitment within its process of international economic integration.

Green FDI for sustainable growth

Green FDI creates a “dual advantage”, combining economic growth with emissions
reductions. Though Ho Chi Minh City is the country’s largest economic hub, its traditional
growth model – reliant on fossil fuels and exponential expansion – has increasingly
exhibited limitations, such as environmental pollution, the overuse of resources,
and rising greenhouse gas emissions.

In this context, green FDI projects that apply clean technologies, manage resources
and energy efficiently, and comply with sustainability reporting requirements are
seen as a “double lever”, simultaneously driving quality growth while contributing
to emissions reductions and environmental protection.

Green investments not only facilitate the transfer of advanced technologies
but also enhance domestic management capacity. Moreover, they help Ho Chi Minh City
strengthen its position as a regional green economic center, contributing to realizing
its vision of becoming a “carbon-neutral metropolis”.

Given new market requirements for green standards, adopting a green mindset
in the export sector has become urgent. Key export markets such as the EU, Japan,
South Korea, and North America are increasingly applying stringent ESG standards
on suppliers. This compels both FDI enterprises and domestic companies in Ho Chi
Minh City’s supply chains to adapt quickly.

According to Mr. Yamada Kenji, an expert from the Japan International Cooperation
Agency (JICA), Ho Chi Minh City possesses advantages in infrastructure and human
resources, and if these are coupled with green policies it can fully become a renewable
energy hub in the region. By prioritizing green FDI, the city not only increases
its participation in global supply chains but also enhances its image as a “clean
importer” in the eyes of the global business community.

Pursuing low emissions and clean energy production has become one of the city’s
top priorities. It has announced a series of important strategic goals, including
developing rooftop solar power in industrial parks, harnessing biogas from waste
treatment processes, and gradually shifting from fossil fuels to clean and renewable
energy sources.

To achieve these goals, a comprehensive policy framework is needed to encourage
FDI enterprises to implement green projects. This involves not only offering incentives
but also ensuring a clear legal corridor, adequate supporting infrastructure, and
transparency in execution.

Policy tools

To attract “green” FDI, experts have put forward suggestions for building an
effective policy toolkit.

Specifically, financial – tax – land incentives could include corporate income
tax exemptions or reductions for certified green projects, such as those using ≥
50 per cent renewable energy, adopting sustainable construction, or applying waste
circularity, during their initial operational phase, helping reduce investment costs
and improve competitiveness.

Land rent exemptions or reductions could be applied in green industrial parks
and high-tech parks equipped with shared infrastructure such as rooftop solar systems,
wastewater reuse facilities, and energy storage, to encourage early-stage FDI investment.

Priority land allocation could be given to FDI investors in clean energy, renewable
energy equipment manufacturing, circular economy projects, and the development of
a “green energy belt” around the city.

“If Ho Chi Minh City offers more favorable tax policies and faster administrative
support for renewable energy projects, it will attract even more green FDI enterprises,”
said Mr. Nguyen Van Be, Chairman of the Ho Chi Minh City Industrial Park
Business Association (HBA).

Many have proposed that the city establish a one-stop green investment service
center to centralize application processing and progress monitoring, with a commitment
to complete procedures within a maximum of 60 days from the date of receiving all
required documents, to shorten project kick-off times.

Additionally, digitizing the environmental impact assessment process, from
application submission and appraisal to licensing, would help reduce paperwork,
increase transparency, and improve efficiency. A priority processing regime could
be applied to green investment models, enabling FDI enterprises with “green” projects
to begin operations more quickly.

Experts also suggest issuing mandatory ESG criteria for incentivized FDI projects,
including carbon intensity indicators, monitoring of the percentage of renewable
energy used, strict waste management plans, and annual sustainability reports audited
independently. Priority sectors could include renewable energy, green transportation
(electric vehicles (EVs) / green logistics), waste-to-energy projects, and high-tech
buildings with green certifications such as LEED and EDGE.

Notably, experts have emphasized the role of green finance and a domestic carbon
credit market in promoting sustainable development. Issuing municipal green bonds
could help mobilize investment capital for green infrastructure, such as building
EV charging stations, installing rooftop solar in industrial parks, and treating
landfill gas emissions.

To meet the needs of green FDI projects, green infrastructure must be developed,
such as on-site renewable energy systems in industrial parks (for example, rooftop
installations and shared infrastructure hubs). Investment is also needed in EV charging
stations, green logistics, and smart grids to optimize renewable energy use when
available and manage loads intelligently. Authorities could commit to fast-track
grid connections for certified green FDI projects, shortening the time needed to
access clean energy.

To ensure a stable and affordable energy supply, long-term power purchase agreements
(PPAs) between Ho Chi Minh City and renewable energy projects in neighboring provinces
such as Dong Nai and Tay Ninh would be essential. This would allow FDI enterprises
to purchase clean energy directly from external sources through legally-recognized
PPAs, lowering financial and technical barriers to accessing green energy.

To implement these policies, experts believe a strong, cross-sector coordination
mechanism is needed, with clear responsibilities assigned to relevant municipal
departments and local administrative levels.

The Ho Chi Minh City People’s Committee would take the lead, assign specific
tasks to each participating unit, and establish an inter-agency Green FDI Steering
Committee responsible for reviewing, monitoring, and reporting on the progress of
the policy package’s implementation.

Departments such as Finance and Agriculture and Environment, along with the
Management Boards of industrial parks and export processing zones, would contribute
within their functions and mandates to realizing this ecosystem and policy framework,
ensuring a coordinated and unified management mechanism.

Key focus areas include developing green credit products, selecting green FDI
projects, building environmental impact assessment systems, monitoring the application
of green criteria, and developing shared energy infrastructure such as EV charging
stations and solutions for waste-to-energy recovery.

The city is now finalizing a policy toolkit that prioritizes green FDI, covering
financial incentives, land support, and fast-tracked licensing procedures.

Alongside coordinated execution, many suggest the city should establish a transparent
and accountable mechanism. This would involve publicly disclosing investment application
details, processing times, lists of incentivized green FDI projects, and annual
reports on implementation and results, creating pressure for administrative reform
and transparency. Penalties, such as administrative fines or special oversight,
should be applied if any agency delays or fails to meet its committed timelines.

With its economic strengths, geopolitical position, and drive for innovation,
Ho Chi Minh City has the potential to become a leading green FDI destination domestically
and internationally, including within Southeast Asia. This requires not just preferential
policies but also coordinated, efficient, and transparent execution, from the legal
framework, financial incentives, and procedures to monitoring and evaluation systems.

-Anh Khue