Vietnam has been making remarkable progress in the realm of sustainable agriculture through two significant deals. These initiatives aim to support eco-friendly practices and drive positive change in the agricultural sector. Let's delve into the details of these important developments.
Unveiling Vietnam's Sustainable Agriculture Milestones
Deal 1: Bond Issuance for Eco-Friendly Fish Farming
The International Development and Investment Corp., a prominent Vietnamese processor and exporter of catfish, has taken a significant step by issuing what is being hailed as the first green bond in Asia's aquaculture sector by a non-financial institution. This bond issuance was oversubscribed, attracting investments from insurance providers like Manulife Vietnam and AIA Vietnam. The proceeds from this bond will be utilized by IDI to expand its eco-friendly breeding, hatchery, and processing facilities. This expansion is in response to the high demand for Vietnamese pangasius, with the country exporting more than 83,000 tons of this catfish variety alone in May. The move towards eco-friendly fish farming not only benefits the environment but also positions Vietnam as a leader in sustainable aquaculture.Furthermore, GuarantCo, which mobilizes private funding for infrastructure projects in Africa and Asia, is providing a trillion Vietnamese dongs ($40 million) guarantee for these bonds. Helena McLeod from the Global Green Growth Institute, which collaborated with GuarantCo on this transaction, emphasized the importance of securing access to green finance for Vietnam as it aims to establish itself as the world's leading seafood processing center. GuarantCo's parent company, the Private Infrastructure Development Group, will also provide technical assistance grants to International Development and Investment. This deal marks a significant milestone for the firm in the aquaculture sector and follows its $50 million partial credit guarantee in 2022 for a bond issued by Vietnamese non-bank financial institution EVN Finance. The transaction is expected to address infrastructure financing gaps in Vietnam and serve as a demonstration and replication model for the use of green bonds by non-financial companies in the country.Deal 2: Impact-Linked Loan for Organic Rice Farming
Separately, California-based impact investor Beneficial Returns has made its inaugural loan in Vietnam to Hoa Nang Organic, a female-founded rice producer and exporter to Japan, the US, and Europe. Hoa Nang is dedicated to helping farmers in Vietnam's Mekong Delta region, where the majority of the country's rice is grown, transition to organic farming. Their "shrimp-rice" model integrates farming and aquaculture, using organic waste from shrimp as rice fertilizer and creating dual-income streams for farmers. This approach allows farmers to fetch a 15% to 20% premium above non-organic rice prices.Beneficial Returns' investment will assist Hoa Nang in paying farmers after harvest and helping them purchase inputs at the start of the season. Hoa Nang is also a portfolio company of the gender-lens investment fund Beacon Fund. The investor provides impact-linked loans through its Reciprocity Fund, which offers debt to businesses in Latin America and Southeast Asia that serve Indigenous communities. In March this year, the fund re-upped its investment in Indonesia's Kawanasi to purchase automatic nut packaging equipment, and in September, it provided a loan to Peruvian cacao cooperative Coa Vraem during its near $700,000 fundraising effort. These initiatives showcase the growing importance of impact investing in Vietnam's agricultural sector and its potential to drive sustainable development.READ MORE