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STATE BANK OF VIET NAM MINISTRY OF EDUCATION AND TRAINING BANKING ACADEMY OF VIET NAM DUONG THI PHUONG ANH EFFECTIVENESS OF CONCESSIONAL LOANS AT ENVIRONMENT PROTECTION FUNDS IN VIET NAM Major: Banking and Finance Code: 9.34.02.01 SUMMARY OF DOCTORAL THESIS Hanoi, 2022 THE THESIS IS COMPLETED AT THE BANKING ACADEMY OF VIETNAM ACADEMIC SUPERVISORS: Assoc Prof Dr Nguyen Kim Anh Dr Nguyen Thanh Hai Referee 1: Referee 2: Referee 3: ……………………………………………………………… ……………………………………………………………… ……………………………………………………………… The doctoral thesis was defended against the dissertation examining committee’s judgment, held at Banking Academy of Vietnam at …………… 2022 The thesis can be found at: - Library of Banking Academy of Vietnam - National Library of Vietnam INTRODUCTION The necessity of the thesis In the industrialization and modernization of Vietnam, the mission of environmental protection always has special attention by the Party and Government because the strategy of environmental protection is associated with the strategy of sustainable socio-economic development of Viet Nam Overall assessment, environmental management in our country still has many gaps, laws and institutions are not strong enough, in addition of the lag in science and technology leads to the alarm of current environmental pollution situation Against this context, the Vietnamese government has many important policies to implement the sustainable development strategy, linking socio-economic development with environmental protection; establishing a financial support mechanism for environmental protection projects and activities through the establishment of Environment Protection Funds to support enterprises with concessional loans to invest in environmental protection projects Implementing the strategy of the Government, the Environmental Protection Funds (EPFs) in Vietnam have implemented concessional loans for environmental protection investment projects in the priority areas Currently, there are 48 Environment Protection Funds nationwide, including 01 national fund, 46 local funds, and 01 coal industry fund (belonging to Vietnam National Coal - Mineral Industries Holding Corporation Limited) The purpose of operation of the Environmental Protection Funds is not for profit; establishing a financial support mechanism for investment projects, programs, and activities of environmental protection; associating socio-development with environmental protection; encourage investment in environmental protection Up to the present, many environmental protection projects and programs have been successful with financial support from Environment Protection Funds and international organizations However, the operation of the Environment Protection Funds in Vietnam currently has many shortcomings, such as the operating capital of the Funds is limited compared to the demand for investment projects in environmental protection; there are no specific regulations on the minimum charter capital for the Funds; regulations on operation mechanism, credit process for concessional loans are not uniform; the shortcomings in the management and administration capacity in implementing projects entitled to concessional loans of some enterprises Up to now, the whole country has only 26 Funds of 48 Funds be able to implement lending activities, the rest simply receive deposits or carry out movement activities in environmental protection has led to the fact that the concessional lending activities in the past time at the Environment Protection Funds have not been effective and there are still many shortcomings For the above reasons, the author has chosen the thesis topic: "Effectiveness of concessional loans at environment protection funds in Viet Nam" for research, with the desire to propose a group of solutions and appropriate recommendations to improve the efficiency of concessional loans at the Environment protection Funds in Vietnam Overview of the research studies related to the effectiveness of concessional loans for environmental protection projects - Research on mobilizing capital for concessional loans for environmental projects - Research on evaluating the effectiveness of concessional loan projects - Research on concessional loans and factors affecting concessional loans Research gaps - There have been no studies domestic or abroad to assess the overall effectiveness of concessional loans for the Environment Protection Funds system in Vietnam in the period 2016 to 2020 In parallel, from the author's observations, most of the published studies only evaluate the overall performance of the EPFs (foreign studies) and qualitative statistical articles, individual reports, and information on concessional lending activities of the EPFs (domestic investigations) - There have not been any studies to identify and comprehensively evaluate the factors affecting the performance of concessional loans at EPFs in Vietnam Most of the studies focus on assessing the factors affecting the credit risk of commercial banks or the factors affecting the approach to loans of enterprises, concessional loans, the efficiency of ODA on-lending, or factors affecting the use of concessional loans by beneficiaries of social policies - Previous studies have not established and identified the intermediate factors affecting the effectiveness of concessional loans for environmental protection investment projects in accordance with OECD model guidelines at EPFs system in Vietnam Therefore, the thesis has no overlap with all previously published domestic and foreign research studies Research objectives 4.1 Overall research objective The thesis is carried out to survey the actual status of the effectiveness of concessional loans for environmental protection investment projects at EPFs in Vietnam On that basis, identify and evaluate the factors affecting the effectiveness of concessional loans and propose solutions and recommendations to improve the performance of concessional loans at EPFs in Vietnam, contributing to the implementation of a national environmental protection strategy in Vietnam 4.2 Specific research mission Systematize the theoretical basis related to the effectiveness of concessional loans in environmental protection; identify the research model; toolkit to evaluate the effectiveness of concessional loans at EPFs in Vietnam; assess the actual efficacy of concessional loans at EPF in Vietnam; investigate factors affecting the effectiveness of concessional loans at EPFs; proposing solutions and recommendations to improve the efficiency of concessional loans at EPFs in Vietnam Research questions (i) What are the characteristics of concessional loans in environmental protection, and what research methods are used to evaluate the effectiveness of concessional loans for environmental protection investment projects? (ii) What is the current effectiveness of concessional loans at EPFs in Vietnam? (iii) What factors affect the effectiveness of concessional loans at EPFs in Vietnam? How much influence these factors have on the effectiveness of concessional loans at EPFs in Vietnam? (iv) What are the solutions to improve the efficiency of concessional loans at EPFs in Vietnam? (v) What are the recommendations for relevant authorities to promote the effectiveness of concessional lending at EPFs? Research objects and scope - Research objects: Effectiveness of concessional loans for environmental protection investment projects - Research scope: + Scope of research content: The author focuses on researching the status of concessional loans at EPFs in Vietnam in period of 2016-2020 + Scope of research subjects: (1) In-depth interview subjects: 05 practical experts; 05 research experts; 05 business owners have been supported with concessional loans to invest the environmental protection projects; 10 officers and professional staff of the EPFs (2) Subjects surveyed by questionnaire: 427 staff of 26 EPFs + Scope of research area: 26 EPFs in Vietnam have implemented concessional loans for environmental protection investment projects + Scope of research period: Collecting data on concessional loans at EPFs in Vietnam during the period from 2016 to 2020 The implementation of in-depth interviews and survey questionnaires was carried out in 2020 and 2021 Research methods - Qualitative research method: The author uses the method of analysis and synthesis of documents; Expert interview method; Purposeful sampling method; Descriptive statistics method - Quantitative research method: analysis data collected from surveying 427 staff of EPFs in Vietnam through SPSS 22 software and linear structural model analysis (SEM) in AMOS 22 New contributions to the thesis - In terms of theory: The author has generalized the theoretical basis system for the concessional loan for environmental protection investment projects Identify and propose a toolkit concept to evaluate the effectiveness of concessional loans, and propose a research model to survey concessional loans for environmental protection investment projects In particular, the author identified a group of financial criteria, economic, social, and environmental factors that reflect the effectiveness of concessional loans for environmental protection investment projects (suitability; effectiveness; efficiency; impact; sustainability), group of factors affecting lending for environmental protection investment projects (mechanisms and policies; quality of personnel; loan control process; credit risk management and local support) and the intermediary variable “Management capacity of business owners get concessional loans” - In practice: The results of the study on the effectiveness of concessional loans at EPFs in Vietnam is the first study in Vietnam in this field, so it supports the Environmental Protection Funds to have an overview of the concessional loans; identify the influence of factors on the effectiveness of concessional loans as well as the relationship between the management capacity of business owners receiving concessional loans On that basis, it will support the leaders of Environmental Protection Funds to plan step by step to improve the effectiveness of concessional loans through a system of solutions and recommendations with governing bodies and related parties The research results are a good reference to help change the views of the governing bodies, the People's Committees of the provinces in investment and financial support for the environmental protection field; help the leaders and staff of the EPFs to raise awareness and responsibility, ensure to improve the effectiveness of concessional loans at the EPFs in Vietnam in the coming time Structure of thesis Besides the Introduction, Conclusion, References, and Appendices, the thesis is structured into five chapters: Chapter 1: General issues on the effectiveness of concessional loans in the environmental protection field Chapter 2: Research Methods Chapter 3: Concessional loan performance status of Environment Protection Funds in Vietnam Chapter 4: Evaluate factors affecting the performance of concessional loans at Environment Protection Funds in Vietnam Chapter 5: Solutions to improve the performance of concessional loans at Environment Protection Funds in Vietnam CHAPTER 1: GENERAL ISSUES ON THE EFFECTIVENESS OF CONCESSIONAL LOANS IN THE ENVIRONMENTAL PROTECTION FIELD 1.1 OVERVIEW OF CONCESSIONAL LOAN IN ENVIRONMENTAL PROTECTION 1.1.1 Definition of concessional loan Organization for Economic Cooperation and Development (OECD, 2003); United States Agency for International Development - USAID (2021); Robert Dippelsman and Andrew Kitili (2004) give the definition: concessional loans are loans that are extended on terms that are substantially more generous than market loans Offers are obtained through interest rates lower than those currently available in the market, a grace period, or a combination of both Concessional loans usually have an extended grace period This point of view has pointed out the difference between concessional loans and other ordinary commercial loans in terms of loan terms and the preferential of the loan expressed through preferential interest rates, grace period, or a combination of both In this study, the author uses the OECD (2003) definition of concessional loans as the theoretical basis Accordingly, concessional loans in the field of environment are understood as: Concessional loans in the field of environmental protection are loans from the state budget or non-budget capital to invest in environmental protection projects with preferential terms and conditions following regulations on interest rates, loan terms, loan guarantees, repayment terms, and grace periods for sustainable development 1.1.2 Targeted borrowers (i) The Government; (ii) The poor and the other policy beneficiaries; (iii) The enterprises are implementing the national strategy 1.1.3 Features of the concessional loan in environmental protection - The purpose of using preferential capital for EPFs - Eligible customers for concessional loans of the Funds - Incentives from loan capital for environmental protection 1.1.4 The role of concessional loans for environmental protection investment projects Implement guidelines and policies of the Party and Government in supporting investors of environmental protection projects; an important tool of the Government in environmental protection and regeneration activities, is a financial intermediary; supporting investors have the opportunity to supplement capital to expand production and business scale, innovate technology, change production and business structure in the field of environmental protection, create jobs for workers, increase responsibility to the community; promoting the settlement of social security and environmental issues, contributing to the sustainable development of the economy 1.2 THEORETICAL BASIS ON THE EFFECTIVENESS OF CONCESSIONAL LOANS 1.2.1 Definition of concessional loan effectiveness The effectiveness of concessional loans for environmental protection investment projects is the rational allocation of capital structure and the implementation of concessional loans to the right subjects, according to the process and regulations to ensure capital safety and deliver economic, social, and environmental effects to stakeholders 1.2.2 Criteria reflecting the effectiveness of concessional loans for environmental protection investment projects 1.2.2.1 Criteria to reflect financial performance: Growth rate of mobilized capital; the growth rate of outstanding loans; Capital performance; Return on net assets (ROA); Return on Equity (ROE) 1.2.2.2 Criteria that reflect the social and environmental performance of concessional loan activities In the OECD Guidelines for the Assessment of Development Assistance (1991); OECD (1986), OECD (2002); Development Cooperation Assessment: Summary of Key Norms and Standards (OECD, 2000); ADB (2016) has guided and specified the scope of the field to evaluate the effectiveness of concessional loans from different perspectives Accordingly, the evaluation model follows the OECD guidelines, including Relevance, Effectiveness; Efficiency; Impact; and Sustainability 1.3 FACTORS AFFECTING THE EFFECTIVENESS OF ENVIRONMENTAL PROTECTION INVESTMENT PROJECTS 1.3.1 Group of factors from the Government authorities Zhang Kun (2003); Nelly Petkova (2006); Vietnam Environment Administration in association with the World Bank (2009); Ministry of Planning and Investment in association with ADB (2008); Tran Thi Thanh Tu et al (2020); Tran Thi Luu Tam and Nguyen Hoang Dung (2020); The Vietnam Environment Protection Fund's credit manual and the annual summary reports of the Environmental Protection Funds in Vietnam from 2016 to 2020 identify factors such as: Mechanisms and policies of authorities; inadequate investment policy; low investment efficiency; environmental policies and the Government's policies and regulations in environmental protection; the role of the Government, and green capital mobilization tools; Directions for socio-economic development; Development cooperation relations and policies of international donors; Legal framework on on-lending of ODA are factors that affect the effectiveness of concessional loans This will be the basis for the author to use a combination of expert interview methods to determine the factors that most affect the effectiveness of concessional loans for investment projects in the field of environmental protection in Vietnam 1.3.2 Group of factors from financial institutions Kyungwoon University, 2008; Park, 2011; Kim, 2015); Steinmann (2001); Nelly Petkova, Olivier Dumoulin, Andrei Piskunov, Oksana Volosko (2006); Sadler and McCabe (2002); Report by OECD (2014) Vietnam Environmental Protection Fund (2014); Summary report of Environmental Protection Funds in Vietnam for the period 2016 - 2020; Ahmad and Ahmad (2004); Tuyet Pham Thi (2018); Abedalfattah Zuhair Al-abedallat (2016); Le Thi Hiep Thuong (2012); Tran Viet Hung (2020); Hassan Al-Tamimi and Mohammed AlMazrooei (2007); Misker Bizuayehu (2015); Nguyen Thi Bich Vuong (2016; Salas and Saurina (2002); Rajan and Dhal (2003) confirm factors such as: how to disburse concessional loans; loan control process; credit risk management ; quality of personnel; guidance of the central bank; capacity of managers; professional competence of fund staff; design of loan products/packages; promotion/communication of concessional loan policies; tools/methods/processes of project appraisal have positive influences on the effectiveness of concessional loans in environmental protection field in particular and credit performance at commercial banks in general 1.3.3 Group of factors from borrowers and local people Leen Decadt (2001); Del Furia, L and Wallace-Jones J., (2000); Pohjola et al (2011); Wang et al (2003); Reed (2008); Silas (2013); JICA Vietnam (2016); International Finance Corporation (IFC, 2012); Vu Thi Thanh Minh (2015; Tran Thi Luu Tam, Nguyen Hoang Dung (2020); Tran Dinh Nam (2017); Krasnikov and Jaynchandran (2008); Mavi, R.K and Standing.C (2018); Young, C.S and Samson D (2008); Knippenberg.D.V and Hogg.M.A (2003); Koene, Bas A.S; Vogelaar, Ad L.W & Soeters, Joseph L, 2002; Le Thi Phuong Thao (2016); Luong Thu Ha (2015); Tran Thi Thanh Huyen et al (2020); Le Quan et al (2011) have studied from many different perspectives but have in common and affirmed: the support from local authorities, media agencies, civil society organizations in project implementation supervision and financial capacity; organization capacity; executive capacity; leadership's vision; adaptability; risk management and effectiveness of project implementation; leadership knowledge; leadership skills and qualities; leadership capacity have impacts on the effectiveness of the concessional loan project implementation as well as the business results CHAPTER 2: RESEARCH METHODS 2.1 RESEARCH PROCESS To carry out the research, the process is established and developed using references based on the standard research processes of Nguyen Dinh Tho (2011) The steps are as follows: EFFECTIVENESS OF PREFERENTIAL LOANS AT VIETNAM ENVIRONMENT PROTECTION FUND Implementation Steps Implementation Methods Overview of research problem Analysis of domestic and foreign documents Defining research gaps, method Semi structured in depth interview Qualitative Research Pilot Test, Scale validity Test Quantitative research - Second test of scale validity - CFA, SEM -Regression analysis Results Proposing the model of the study and construction of preliminary scales - Scale editing and research model improvement - Completed scale -Proving research hypothesis; -Analyzing qualitative research data Perfecting and reporting research results/findings Reporting research results/findings Figure 2.1: Research process Source: Author’s research 2.2 RESEARCH HYPOTHESES AND MODEL 2.2.1 Research Hypotheses Combined with qualitative research results by in-depth interview method, and an overview of influencing factors, the author proposes the following hypotheses: H1: Mechanisms and policies have a positive impact on the effectiveness of concessional loans for investment projects in environmental protection H2: Personnel quality has a positive impact on the effectiveness of concessional loans for investment projects in environmental protection H3: The loan control process has a positive impact on the effectiveness of concessional lending for investment projects in environmental protection H4: Credit risk management has a positive impact on the efficiency of concessional loans for investment projects in environmental protection H5: Local support has a positive effect on the effectiveness of concessional loans for investment projects in environmental protection H6: Mechanisms and policies have a positive impact on the management capacity of investors taking loans for environmental protection H7: Personnel quality has a positive impact on the management capacity of investors taking loans for environmental protection H8: The loan control process has a positive impact on the management capacity of investors taking loans for environmental protection H9: Credit risk management has a positive impact on the management capacity of investors taking loans for environmental protection H10: Local support has a positive effect on the management capacity of investors taking loans for environmental protection H11: Management capacity of investors with concessional loans has a positive impact on the suitability of investment projects for environmental protection H12: The management capacity of investors with concessional loans has a positive impact on the effectiveness of environmental protection investment projects H13: The management capacity of investors with concessional loans has a positive effect on the efficiency of environmental protection investment projects H14: The management capacity of investors with concessional loans has a positive impact on the impact of investment projects on environmental protection H15: Management capacity of investors with concessional loans has a positive impact the sustainability of investment projects in environmental protection 2.2.2 Proposed Research Model Figure 2.2: Proposed Research Model 2.2.3 Scales used in the research model Table 2.1: Interpreting scales used in the research model Variables Mechanisms, Variable Code Scale Content Sources Independent Variables: Factors impact the effectiveness of concessional lending CC1 State and local budget spending on Nelly Petkova (2006); ADB Variables policies Variable Code CC2 CC3 CC4 CC5 Quality of personnel NS1 NS2 NS3 NS4 NS5 NS6 Loan control process KS1 KS2 KS3 KS4 KS5 KS6 KS7 Scale Content environmental protection projects with preferential loans does not meet practical requirements Preferential interest rate policy is not synchronized between the Funds The organizational structure of the Funds at the central level and the local level is not synchronized The policy of operation coordination and capital coordination between the national and local funds has not been determined The policy of mobilizing capital from domestic and international organizations and individuals requires more attention Officials at environmental protection funds have a solid understanding of professional processes and provide accurate and effective consultation Officials working in professional departments/divisions at environmental protection funds have expertise in credit and appraisal, selecting feasible projects Risk management officials are able to identify, measure, monitor, and control problem loans The structure of personnel managing concessional lending projects is consistent with the approved projects of the Funds Officials working in professional departments/divisions at environmental protection funds are frequently trained and fostered in professional knowledge and development Officials working at environmental protection funds comply with regulations on professional ethics Concessional lending projects' appraisal and selection process is based on specific, objective, transparent and clear criteria Client records are kept in the funds’ document storage areas and publicized Selection and appraisal officials of the projects and collaterals have high levels of specialization The funds have effective media schemes to ensure all businesses have equal access to information and opportunities to evaluate their projects Checking conditions and content for disbursement Checking preferential loans applied in accordance with the genuine purposes of the plan The loan management department prepares plans to monitor periodically with scientific and effective methods Sources (2008); Tu Quang Phuong and Pham Van Hung (2013); Credit Handbook, Vietnam Environment Protection Fund (2014); Annual reports of the Vietnam Environment Protection Fund; Expert interviews; CC4 proposed by the author Applying with adjusted scale in Credit Handbook, Vietnam Environment Protection Fund (2014); OECD (2014); Tran Viet Hung (2020); Ahmad and Ahmad (2004); Expert interviews Applying with an adjusted scale of Nelly Petkova (2006); Credit Handbook, Vietnam Environment Protection Fund (2014); Ahmad & Ahmad (2004); Al-abedallat (2016); Hassan Al-Tamimi & Mohammed AlMazrooei(2007); Nguyen Thi Bich Vuong (2016); Expert interviews 11 Variables Variable Code TĐ2 TĐ3 TĐ4 TĐ5 Sustainability BV1 BV2 BV3 BV4 BV5 BV6 BV7 Management capacity of business owner NL1 NL2 NL3 NL4 NL5 NL6 Scale Content The implemented project brings positive socioeconomic impacts (at the local and regional level) The project creates positive impacts and needs to be replicated Implementation outcomes of the project have positive impacts on the safety of concessional lending capital of the environmental protection funds The selection of technology, construction items, and project activities The enterprise's financial statements are transparent and thoroughly indicate reliable financial indicators Enterprises not violate their commitment of interest paid during the lending tenure The project’s internal rate of return is aligned with the project's original plan The project contributes to increasing income levels and stabilizing life for local people in the long term Preferential financing help businesses reduce environmental pollution (water, air, land) in the area The project contributes to the protection of natural resources, landscapes, and historical sites (if any) Businesses granted preferential loans commit to continue implementing environmental protection projects even after the expiration of incentive policies Mediating variable Having knowledge of industries and business fields related to investment in environmental protection projects Having knowledge of business strategy Having knowledge of financial and personnel management Having the capability to plan, organize, operate and control the project Open to innovation The owner of the environmental protection investment project has the capability to mobilize capital from other sources Sources OECD (1986); (1991); OECD OECD (2002); ADB IFC's East Asia Advisory Programs Expert opinions OECD (2000); (2016); Pacific (2012); Applying with adjusted scale according to the guidance of OECD (1986); OECD (1991); OECD (2000); OECD (2002); ADB (2016); X Wang et al (2012), J Balkema et al (2002); Huimin Li et al (2019); Tam (2010); L Shen et al (2010); M Lundin M Morrison (2002); Expert opinions Applying with adjusted scale of Koene, Vogelaar Soeters, 2002); Knippenberg Hogg (2003); C ScottYoung D Samson; R K Mavi and C Standing (2018); Le Quan et al (2011); Luong Thi Thu Ha (2015); Tran Thi Thanh Huyen et al (2020); Credit Handbook, Vietnam Environment Protection Fund (2014); Le Quan (2011); Tran Thi Van Hoa (2011); Tran Thi Phuong Huyen (2014) 2.3 METHODOLOGY 2.3.1 Qualitative research As the original scale is collected based on the OECD and foreign studies guidelines, in the qualitative research phase, the author conducts in-depth individual interviews with respondents, researchers, and practitioners regarding the thesis topic to determine the appropriate research model 12 -Sampling strategy for the expert interviews (in-depth individual interviews): Purposive Sampling (According to Miles and Huberman (1984) 2.3.2 Quantitative research Phase Respondents surveyed by the questionnaire: 427 management officials and staff from professional departments/divisions of 26 Environmental Protection Funds have been implementing concessional lending activities Methods of analyzing and processing research data: (i) Descriptive analysis: is a statistical analysis of frequencies to describe the attributes of the survey sample group, including gender, age, education level, and work experience; (ii) Evaluating the reliability of the scale by analyzing Cronbach's Alpha coefficient (iii) Exploratory Factor Analysis (EFA) (iv) Confirmatory factor analysis (CFA) in SEM linear structural model using AMOS 20 software (v) Hypothesis tests using SEM linear structural model CHAPTER 3: CONCESSIONAL LOAN PERFORMANCE STATUS OF ENVIRONMENT PROTECTION FUNDS IN VIETNAM 3.1 OVERVIEW OF THE ENVIRONMENT PROTECTION FUNDS IN VIETNAM 3.1.1 General outlines of legal basis and organizational structure of the environment protection funds in Vietnam - Law on Environmental Protection, No 72/2020/QH14, dated November 17, 2020, which has been effective since January 01, 2022 - Decision No 82/2002/QD-TTg dated June 26, 2002 of the Prime Minister - Decision No 78/2014/QD-TTg of the Prime Minister, dated December 26, 2014 on the organization and operation of the Vietnam Environment Protection Fund - Decision No 02/2014/QD-TTg dated January 13, 2014 on the organization and operation of the Vietnam Environment Protection Fund - Circular No 132/2015/TT-BTC dated August 28, 2015 of the Ministry of Finance on the instruction of financial management for Vietnam Environment Protection Fund - Decision No 2168/QD-BTNMT, dated July 17, 2018 of Minister of Natural Resources and Environment of Viet Nam on issuing Charter of organization and operation of the Vietnam Environment Protection Fund, 3.1.2 Functions and Tasks of the Environment Protection Funds in Vietnam The Vietnam Environment Protection Fund has the function of lending preferential interest rates, financing, and interest rate support for programs, projects, activities, and tasks in environmental protection and climate change response nationwide Specified at Article Tasks of the Fund, Decision No 78/2014/QD-TTg of the Prime Minister, dated December 26, 2014; and in Article on functions and tasks, Decision No 2168/QD-BTNMT, dated July 17, 2018 of the Minister of Natural Resources and Environment, defines the tasks of the Vietnam Environment Protection Fund including 12 tasks For local EPFs: Regarding the legal basis, the local Environmental Protection Fund is specified at Point p, Clause 9, Article of Decree No 36/2017/ND-CP dated April 4, 2017 of the Government regulating the functions, the tasks, powers and organizational structure of the Ministry of Natural Resources and Environment stipulates: "The Ministry of Natural Resources and Environment guides the organization and operation of environmental protection funds of sectors, fields and localities"; Clause 2, Article 49a, Decree No 40/2019/ND-CP dated May 13, 2019 of the Government stipulating that “The Ministry of Natural Resources and Environment shall assume the prime responsibility and coordinate with concerned ministries and local government on guiding the organization and operation of the local environmental protection fund” Although up to now, the Ministry of Natural 13 Resources and Environment has not issued a Circular guiding the organization and operation of the Environmental Protection Fund of provincial level, but the People's Committees of provinces have specific regulations on functions and tasks of the local Environmental Protection Funds and includes 12 specific tasks such as: Mobilizing domestic and foreign financial sources according to the provisions of law to create investment capital for environmental protection; Financial support for programs, projects, activities to prevent and overcome pollution, degradation and environmental incidents in the province; Receive and manage capital sources from environmental protection fees for wastewater, solid waste, emissions, mineral extraction and deposit for environmental restoration in mineral mining in accordance with law; Receive and manage entrusted capital from the Vietnam Environmental Protection Fund, from domestic and foreign organizations and individuals to provide financial support for programs, projects, activities of environmental protection 3.2 FINANCIAL PERFORMANCE STATUS OF CONCESSIONAL LENDING ACTIVITIES AT ENVIRONMENTAL PROTECTION FUNDS IN VIETNAM 3.2.1 Size of capital resources of the environmental protection funds in Vietnam Operating capital is limited, thus the operation of EPFs has to face many difficulties and challenges Meanwhile, investments in the field of environment demand high costs for a very long time 3.2.2 Growth rate of mobilized capital The chart shows the growth rate of capital (%) in the period 2016-2020 of the Vietnam Environmental Protection Fund and local EPFs as follows: Figure 3.1: Growth rate of mobilized capital of Vietnam Environmental Protection Fund and local EPFs Source: Authors synthesizing the reports of the VEPF and local environmental funds 3.2.3 Implementation outcomes of the concessional financing plan during the period 2016 – 2020 In general, from 2016 to 2020, the loan amount of credit agreements was relatively high, but the annual disbursement amount was lower, at most in 2017 (the loan amount of the agreements signed with customers reached 667,663 billion, but the disbursed amount was only 372,903 billion, at 55.85% as compared to the value of the credit agreements signed in the same time point) A similar trend was witnessed in 2019 and 2020 This might imply the difficulties faced by the environmental protection funds in terms of capital, or the reason could come from the eligible project owners receiving preferential loans for environmental protection 3.2.4 Structure of the concessional lending sector during the period of 2016 - 2020 at Environmental Protection Funds in Vietnam During the period of 2016 to 2020, the Environmental Protection Funds gave the utmost preferential loans to projects in the fields of waste, hazardous waste and wastewater 14 treatment; deploying the application of technologies and products that are environmentally friendly, energy-saving, adapting to climate change, followed by preferential loans granted on investment in waste collection equipment and in 2017, 2018 The Funds granted preferential loans to a number of projects specified as others in Decree 40/2019 3.2.5 Assessment outcomes of financial performance status of concessional loan activities at environmental protection funds in Vietnam Outstanding debt, operating capital, and total assets of Environmental Protection Funds increased over the research period, but net profit decreased in 2018-2020, of which the maximum decrease was recorded in 2020 Growth rate of credit balance increased steadily from 2016 to 2019, especially in 2018, it increased by 16.739% However, in 2020, possibly due to the impact of the covid pandemic, which severely affected lending activities for environmental protection projects, the credit growth rate in the system of environmental protection funds in Vietnam only reached 7.124% The efficiency of capital use H1, H2 are always less than 100% in the period 2016-2020, indicating that business owners' demand for concessional loans is low There were times when the Funds had capital without project applications and had to re-lend capital resources at lowinterest rates, which might reduce the operational effectiveness of the Funds Moreover, H2 being less than 50% implies that the Funds are wasting capital and that the capital has not been used optimally However, the gradual increase of H1, H2 over the research period also shows the improvement in the Funds’ concessional lending activities 3.2.6 Bad debt situation of environmental protection funds in Vietnam The bad debt ratio of Environmental Protection Funds in Vietnam is continuously below 3%, meeting the Ministry of Natural Resources and Environment requirements for the Funds Besides, the rate of bad debt recovery is relatively positive 3.3 SOCIAL-ENVIRONMENT PERFORMANCE STATUS OF CONCESSIONAL LOAN ACTIVITIES AT ENVIRONMENTAL PROTECTION FUNDS IN VIETNAM 3.3.1 Results of the expert interviews about the relevance of the model and the variables in the research model The results of the expert interviews confirm the relevance of the scale and research model in this study Along with the research findings applying evaluation criteria from previously published studies, the author has designed a questionnaire to conduct the survey in accordance with the research process 3.3.2 The results of Cronbach's Alpha test The Cronbach's Alpha test results show a relatively high-reliability coefficient (above 0.6) for 11 variables and 68 observed variables This means the observed variables are reliable and valid in this study Table 3.1: Synthesizing the reliability of the scales in the study Number of Cronbach’s Scale observed Alpha variables Dependent variable Suitability (PH) 0.918 Effectiveness (HQ) 0.957 Efficiancy (HS) 0.934 Impact (TD) 0.822 Sustainability (BV) 0.865 Independent variable Mechanisms, policies (CC) 0.792 15 Quality of personnel (NS) Loan control process (KS) Credit risk management (RR) Local support (DP) 0.896 0.889 0.924 0.850 Mediating variable Management capacity of business owner (NL) 0.792 Source: Author's synthesis and calculation from survey data 3.3.3 The assessment results of performance status of concessional lending activities at Environmental Protection Funds in Vietnam 3.3.3.1 The assessment results of performance status of concessional lending for investment projects in environmental protection The respondents in the sample survey of the study all confirmed that the relevance of the project received the highest score with a mean of 4.08 and the standard deviation of 0.704, classed as good according to the convention of this study, followed by the sustainability of the project classed as “good” (mean= 4.06); The impact of environmental protection projects granted preferential loans classed as “good” with a mean of 4.05 and the standard deviation of 0.473 Next is the efficiency of concessional loans for environmental protection projects with a mean of 3.85 and a standard deviation of 0.706, which is classed as good according to the convention in this study, and the last is the effectiveness of the project granted preferential loans to invest in environmental protection with a mean of 3.56 and the standard deviation of 0.961 3.3.3.2 The assessment results of factors influencing the effectiveness of preferential loans for environmental protection investment projects In determining the factors influencing the effectiveness of preferential loans for environmental protection investment projects using various research methods, the author defines factors: Mechanisms and policies; Quality of personnel; Loan control process; Credit risk management and the Support from local community Among the influential factors, the survey respondents consider Mechanism and policy is the most important factor in affecting the effectiveness of concessional loans for environmental protection investment projects at the Environmental Protection Funds in Vietnam currently (with a mean of 4.22 and the standard deviation of 0.480) followed by the loan control process (a mean of 4.17 and the standard deviation of 0.451); Quality of personnel (a mean of 4.07 and the standard deviation of 0.625); the Support from the local community has a mean of 4.00 and the standard deviation of 0.657 and finally the credit risk management (a mean of 3.61 the standard deviation of 0.797) 3.3.3.3 The assessment results of the current status of the management capacity of eligible business owners who received concessional loans for environmental protection investment (mediating variable) After assessing the opinions of the Environmental Protection Funds’ officials about the management capacity of the business owners granted concessional loans, the results indicate this is a relatively important factor affecting concessional financing effectiveness with a mean of 4.05 and the standard deviation of 0.457 Among the perspectives of business owner management capacity, Environmental Protection Funds’ officials in the survey group rate the capability to mobilize capital from other sources of environmental protection investment project owners highest average score in the scale with a mean of 4.16, followed by having knowledge of financial and human resource management with a mean of 4.07 and business owners should have knowledge in the field of investment-related environmental protection projects with a mean of 4.06 The capability to plan, organize, monitor and control the project and having knowledge of business strategies is one of the important factors 16 affecting the project implementation of the project owners with a mean of 4.03 and 3.99 respectively However, the survey results show that officials at the Environmental Protection Funds in Vietnam rate the project owner's openness to innovation the lowest score in the scale but the average score is still classed as “fairly good” in this study (mean = 3.96) 3.4 CASE STUDY OF THE EFFECTIVENESS OF CONCESSIONAL FINANCING GRANTED BY THE VIETNAM ENVIRONMENT PROTECTION FUND TO THE SOCIETY AND ENVIRONMENT DURING 2016-2020 In the recent years, environmental protection projects have approached VEPF more and more in terms of quantity and the variety of applications and extended in investment scale, VEPF's criteria for evaluating, screening and prioritizing credit lending for projects such as advanced technologies, environmentally friendly technologies to ensure that they are in accordance with the orientation of green growth and sustainable development; the number of employees, additional income; contribution to the local budget; regulations on prevention, response and remedy of environmental issues; environmental sensitivity level where the project is implemented most of the projects are good and highly replicable Environmental pollution from industrial zones and clusters has been gradually improved There are some environmental protection projects in which financial efficiency is limited but still, they are due to their socio-economic benefits The projects are not only creating positive social and environmental impacts and consequences but also encouraging other local projects CHAPTER 4: EVALUATE FACTORS AFFECTING THE PERFORMANCE OF CONCESSIONAL LOANS AT ENVIRONMENT PROTECTION FUNDS IN VIETNAM 4.1 DISCOVERED FACTORS ANALYSIS RESULTS 4.1.1 Discovered factors analysis for the dependent variable The analysis results show that the structure of the dependent variable is consistent with variables and discovered factors analysis explains 67.781 percent of the variation Kaiser Meyer-Olkin Index measures sample accuracy by 0,897, which is greater than the acceptable level of 0,5; the indicators of Bartlett’s test are consistent with 2 = 9645, Sig = 0.000, this result shows that the discovered factor analysis is appropriate cCc indicates that variables within the same variable are all clustered on the same factor, none of variable loads on another factor The coefficients are all greater than 0.5 According to research by Hair et al (2006), load factors are greater than 0.5 means it has practical significance Thus, the dependent variables have separated variables structure and are five different variables 4.1.2 Discovered factors analysis for independent variables The method to conduct discovered factor analysis is Principal Component Analysis methos, the basis of factor extraction is based on the Eigen value which is greater than Analyzied result shows that the structure of the dependent variables is consistent with five variables and discovered factors analysis explains 64.042% of the variation, within the rotation method as Varimax Kaiser Meyer-Olkin index measures a sample’s accuracy of 0.915 which is greater than the acceptable level of 0.5; The indicator of Barlett’d test are consistent with 2 = 6842, sig = 0.000, proving that the discorvered factor analysis is appropriate According to the calculation results from survey data, it describes that the variables on mechanism, pocily, control procesas and credit risk management have variables on the same factor Only variables NS5 and DP3 caused on factors, but the difference of load factor is greater than 0.3 Therefore, the discorvered factor analysis reults of independent variables have variable structure of different factors 17 4.2 AFFIRMATIVE FACTOR ANALYSIS 4.2.1 Affirmative factor analysis of dependent variable The affirmative factor analysis result for the dependent variable in this research is presented in Figure 4.1 Figure 4.1: The affirmative factor analysis result for dependent variable The results show high appropriation of the model 2 /df = 1,562 is less than acceptable level of 3; GFI index (Goodness of Fit) of 0,906 is greater than acceptable level of 0,9 RMSEA (Root Mean Square Error of Approximation) index is 0,036 which is less than 0,8 CFI (Comparative Fit index) is 0,971 which is at good level, TLI (Tucker Lewis Index) close to shows that the model fits at high level and is valid in this research Learn more about composite reliability indexes (CR); Average Variance Extracted (AVE) and Maximum Specific Variance (MSV) to confirm variable structure, see Table 4.1for the results from detailed survey data Table 4.1: The affirmative factor analysis indicators of the dependent variable (1) Efficiency (2) Effectiveness (3) Impact (4) Suitability (5) Sustainable (1) -0.042 -0.032 0.177 0.013 (2) (3) (4) (5) 0.091 -0.007 -0.113 -0.173 -0.071 0.049 CR 0.935 0.957 0.827 0.919 0.869 AVE 0.632 0.762 0.491 0.656 0.490 MSV 0.031 0.013 0.031 0.031 0.013 Sources: Calculation results from survey data According to research by Hu Bentler (1999), Composite Reliability (CR) is greater than 0,7 which is an acceptable value The Average Variance Extracted of the efficiency, effectiveness and corresponding calculation are greater than the acceptable value of 0,5 proposed by Hu Bentler (1999) However, according to Hair et al (2006) the AVE should be greater than 0,5; but in specific research it is acceptable for an AVE of 0.4 Fornell Larcker (1981) suggested that if the AVE is less than 0,5, but the composite confidence is higher than 0.6, the validity of this structure is still appropriate and acceptable The largest individual variances are all smaller than AVE, showing that the variable structure of the dependent variables in the research model is precise 18 4.2.2 Affirmative factor analysis for independent variables Figure 4.2: Affirmative factor analysis result for independent variables The results show high appropriate level of this model 2 /df = 1,559 is less than acceptable level of 3; GFI index (Goodness of Fit) is 0,915 which is greater than acceptable level of 0,9 RMSEA (Root Mean Square Error of Approximation) index is 0,036 in which is less than 0,8 CFI (Comparative Fit Index) is 0,969 at good level, TLI (Tucket Lewis Index) is approxiamtely equal presented the high appropriate level of this model Learn more about composite reliability (CR); Extracted Variation (AVE) and Maximum Specific Variation (MSV) aim to affirm the structure of dependent variable See Table 4.2 for the results from detailed survey data Table 4.2: Affirmative factor analysis indicator of independent variables Independent Variables (1) Loan control process (2) Quality of personnel (3) Credit risk management (4) Policies and mechanisms (5) Local support (1) (2) 0.516 0.040 0.133 (3) (4) (5) 0.352 0.388 0.141 0.506 0.671 0.143 0.351 CR AVE MSV 0.890 0.504 0.266 0.898 0.597 0.450 0.927 0.680 0.021 0.793 0.437 0.151 0.852 0.591 0.450 Sources: The result from survey data According to the research by Hu Bentler (1999), CR - Composite Reliability are all greater than 0,7 which is acceptable level The results show that Average Variance Extracted – AVE of those variables, which is (1) Loan control process, (2) Quality of personnel, (3) Credit risk management, (5) Province’s support are all greater than acceptable of 0,5 proposed by Hu Bentler (1999) AVE of (4) policies and mechanisms variable is 0,437 closed to the acceptable level of 0,5 However, Hair et al (2006) supposes that AVE should greater than 0,5 but can set the acceptable level of 0,4 Fornell Larcker (1981) consider AVE is less than 0,5, but the acceptable level is greater than 0,6, the effect of this structure is still relevant CR of policies and mechanism variable is 0,793 which is greater than 0,6 If MSV (Maximum Shared Variance) are less than AVE , it proofs the variable structure of independent variable is relevant 4.3 ANALYSIS OF STRUCTURAL REGRESSION RESULT 4.3.1 Results of model regression and hypothesis testing The results show the high appropriate level of this model 2 /df = 1,475 is less than acceptable level of 3; GFI (Goodness of Fit) index is 0,837 less than acceptable level 0,9 19 RMSEA (Root Mean Square Error of Approximation) index is 0,033 which is less than 0,8 CFI (Comparative Fit index) is 0,945 at acceptabe level, TLI (Tucker Lewis Index) is 0,945 which is greater than 0,9 Firgure 4.3: Result of structual regression The structural regression analysis results show that the model's fit is quite high 2 /df = 1,508 is less than the acceptable level 3; GFI (Goodness of Fit) index of 0.821 is less than the acceptable level 0.9 The RMSEA (Root Mean Square Error of Approximation) index is 0.035 less than 0.8 The CFI (Comparative Fit index) is 0.937 which is acceptable, the TLI (Tucker Lewis Index) is 0.934 which is greater than 0.9 Table 4.3: Result of regression and hypothesis testing S.E C.R P Lưu ý  HQCVV < - CC 0,022 0,058 0,388 0,698 Accepted H1 HQCVV < - NS 0,051 0,026 1,409 0,079 Denied H2 HQCVV < - KS -0,030 0,042 -0,717 0,473 Accepted H3 HQCVV < - RR 0,084 0,028 3,051 0,002 Denied H4 HQCVV < - DP 0,080 0,043 1,852 0,064 Denied H5 Sources: Calculation results from survey data 4.3.2 Results of model regression and hypothesis testing Analysis from research data shows that not all predictors: policy mechanism, quality of personnel, loan control process, credit risk management and local support all positively affect the management capacity of the project owner with preferential loans for environmental protection investment Structural regression analysis reflects a rather high degree of the model, with 2 /df = 1,502 smaller than the acceptable level of 3; GFI index of 0.821 is less than the acceptable level of 0.9 The RMSEA index is 0.034 which is less than 0.08 The CFI index of 0.937 is acceptable, the TLI of 0.935 is greater than 0.9 Firgure 4.4: Result of structual regression 20 Among the model indicators, only the GFI index does not fit However, according to Doll, Xia and Torkzadeh (1994) a GFI greater than 0.8 is an acceptable level in the case of limited sample size Thus, the model in this study is quite suitable and valid Table 4.3: Result of regression and hypothesis testing Lưu ý S.E C.R P  NL < - CC 275 072 3.819 *** Accepted H6 NL < - NS 184 040 4.595 *** Accepted H7 NL < - KS 069 048 1.447 148 Denied H8 NL < - RR 219 022 9.850 *** Accepted H9 NL < - DP 095 044 2.160 031 Accepted H10 PH < - NL 298 079 3.746 *** Accepted H11 HQ < - NL 227 116 1.956 050 Accepted H12 HS < - NL 259 083 3.114 002 Accepted H13 TD < - NL 158 062 2.544 011 Accepted H14 BV < - NL 174 048 3.635 *** Accepted H15 Sources: Calculation results from survey data 4.3.3 Summary of hypothesis testing results Based on the results of the regression analysis of Model and Model 2, the author summarizes the results of testing the research hypothesis of the thesis topic in detail in the table below: Table 4.5 Summary of hypothesis testing results No 10 11 12 13 14 15 Research hypothesis H1: Mechanisms and policies have a positive impact on the effectiveness of concessional loans for investment projects in environmental protection H2: Personnel quality has a positive impact on the effectiveness of concessional loans for investment projects in environmental protection H3: The loan control process has a positive impact on the effectiveness of concessional lending for investment projects in environmental protection H4: Credit risk management has a positive impact on the efficiency of concessional loans for investment projects in environmental protection H5: Local support has a positive effect on the effectiveness of concessional loans for investment projects in environmental protection H6: Mechanisms and policies have a positive impact on the management capacity of investors taking loans for environmental protection H7: Personnel quality has a positive impact on the management capacity of investors taking loans for environmental protection H8: The loan control process has a positive impact on the management capacity of investors taking loans for environmental protection H9: Credit risk management has a positive impact on the management capacity of investors taking loans for environmental protection H10: Local support has a positive effect on the management capacity of investors taking loans for environmental protection H11: Management capacity of investors with concessional loans has a positive impact on the suitability of investment projects for environmental protection H12: The management capacity of investors with concessional loans has a positive impact on the effectiveness of environmental protection investment projects H13: The management capacity of investors with concessional loans has a positive effect on the efficiency of environmental protection investment projects H14: The management capacity of investors with concessional loans has a positive impact on the impact of investment projects on environmental protection H15: Management capacity of investors with concessional loans has a positive impact the sustainability of investment projects in environmental protection Testing result Denied H1 Accepted H2 Denied H3 Accepted H4 Accepted H5 Accepted H6 Accepted H7 Denied H8 Accepted H9 Accepted H10 Accepted H11 Accepted H12 Accepted H13 Accepted H14 Accepted H15 21 4.4 RESEARCH OUTCOMES 4.4.1 Result - Capital for environmental protection investment activities of Vietnam Environmental Protection Funds mainly come from charter capital and capital provided by the State budget Some Environmental Protection Funds have mobilized capital from the World Bank for environmental protection focusing on industrial parks - Results of the implementation of the concessional loan plan for the 2016-2020 period, the bad debt ratio of Vietnam Environmental Protection Funds is always below 3% In general, the Environmental Protection Funds achieved and exceeded the targets of disbursement, collection of principal and interest according to the plan - Considering the financial efficiency of concessional loan activities, it shows that the growth rate of credit balance increases gradually, although there is a decrease in 2020, but it may be due to the objective influence of the covid pandemic, investment activities in general have stalled - Assessment of the current status of socio-economic efficiency of preferential loans for environmental protection shows that projects with concessional loans are suitable for local needs and priorities and the overall national goal of environmental protection The staff of the Environmental Protection Fund affirmed that the project implementation results contribute to reducing the risk of pollution of water, air, soil and greenhouse effects and contributing to an increase in the number of jobs for people in the surrounding area near - In addition, the profit-to- revenue ratio and the ratio of operating cash flow to capital, internal rate of return (IRR) are in line with the initial plan and are the three important targets focused on by the Funds implementing concessional lending activities - The projects have had positive impacts on society (local and regional levels) as well as the safety of concessional loans from the Environmental Protection Fund - Reviewing the sustainability of the project reflects the current situation of concessional loans to help businesses reduce environmental pollution (water, air, land) in the area, contributing to the protection of natural resources, landscapes and Historical sites and businesses eligible for concessional loans commit to continue implementing environmental protection projects even after the loan's preferential policies expire - Management capacity of business owners has a relatively high influence on the efficiency of concessional loans of environmental protection funds and factors affecting the effectiveness of concessional loans for environmental protection investment projects 4.1.2 The other issues - Firstly, the research shows that the assets and owner’s equity, concessional lending and concessional loan policies at Environmental protection Funds are not used effectively, lack of investor’s awareness Most of those Funds have not applied to any multicommunicated channel or online marketing to promote its resources and capacity to reach out relevant business - Secondly, there are three aspects noted such as appropriation; the efficiency and impact of project’s design, use of domestic technology, appropriate technical assistance to achieve set goals which have not been recognized by investor - Thirdly, the criteria of approving project between those Funds are not united - Fourthly, human resource quality of credit unit, appraisal unit of investment project at those Funds need to improve - Fifthly, the result of survey data debates that Environmental Protection Funds staffs need to focus on credit risk management 22 - Sixthly, “province’s support” variables present that the participation of local participants during appraisal or implemental process is the least effective impact among others - Seventhly, the result of structural regression shows that out of factors have potential effect to investor’s capacity These factors include policies and mechanisms, quality of HR and Province’s support Other factor is loan control process which has not had any positive impact on project owner’s management capacity - Eighthly, the result of structural regression reflects that the owner’s management capacity variables have a positive impact on dependent variables of this model such as: Appropriation, Efficiency, Effectiveness and Sustainable Among these elements, Owner’s management capacity highly impacts on appropriation and efficiency CHAPTER 5: SOLUTIONS TO IMPROVE THE PERFORMANCE OF CONCESSIONAL LOANS AT ENVIRONMENT PROTECTION FUNDS IN VIETNAM 5.1 NATIONAL ENVIRONMENTAL PROTECTION STRATEGY AND DEVELOPMENT DIRECTION OF ENVIRONMENTAL PROTECTION FUNDS IN VIETNAM 5.1.1 National environmental protection strategy to 2030, vision to 2050 5.1.2 Development directions of environmental protection funds in Vietnam 5.2 SOLUTIONS TO IMPROVE THE EFFECTIVENESS OF CONCESSIONAL LOANS AT ENVIRONMENTAL PROTECTION FUNDS IN VIETNAM 5.2.1 Solutions to improve the organizational structure of environmental protection funds in Vietnam 5.2.2 Solutions to concentrate and attract concessional loans for environmental protection investment projects 5.2.3 Solutions for planning the use of concessional loans for environmental protection investment projects 5.2.4 Solutions for training and fostering to improve the quality of personnel at Environmental Protection Funds 5.2.5 Solutions to strengthen the cohesion and coordination between Environmental Protection Funds to improve the effectiveness of loan control 5.2.6 Solutions to improve credit risk management 5.2.7 Solutions for implementing a communication plan for the Environmental Protection Fund's concessional loan programs to investors 5.2.8 Solutions to improve the management capacity of investors 5.3 RECOMMENDATIONS 5.3.1 Recommendations to the Government Firstly, the Government needs to review, amend and supplement Decrees, regulations on the implementation of the Law on Environmental Protection, regulations on tools and management measures, control and monitoring measures, monitoring waste discharge activities, causing environmental pollution and climate change Secondly, the Government promulgates regulations specifying the ratio of investment capital to treat environmental pollution for different investment projects and service charges in waste treatment, especially solid waste Thirdly, the Government review, amends, and organizes applying criteria on environmental protection to consider and recognize localities meeting new rural standards Fourthly, improve management capacity and mobilize resources for environmental protection step by step 23 Fifthly, the Government considers and approves the plan to ensure the budget for environmental protection activities in the direction of increased investment from the state budget, considers gradually increasing the rate of recurrent expenditure from the state budget for environmental protection, striving to reach 2% of the total expenditure of State budget Sixthly, assigning to the Ministry of Natural Resources and Environment in allocating and monitoring budget expenditures for environmental protection activities, linking and enhancing responsibility, promoting the role of EPFs in Vietnam, Seventhly, the Government considers and empowers the rights and responsibilities of the community in environmental protection, which should be clearly expressed in legal documents and regulations on environmental protection 5.3.2 Recommendations to the Ministry of Natural Resources and Environment and related agencies Firstly, review, develop and promulgate guiding documents and regulations in order to unify the model, organizational structure, and operating and financial mechanism of the Environmental Protection Funds from the Central Government to the local Secondly, improve the proactiveness of Environmental Protection Funds in operation Thirdly, review, supplement, and complete concessional loan conditions to encourage investors to apply new scientific and technological machinery, lines and equipment Fourthly, the governing authorities of EPFs should prioritize the concentration of financial resources of the locality for environmental protection activities in general and preferential credit policies for investors of environmental protection projects in particular Fifthly, develop mechanisms and policies to submit to the Prime Minister in mobilizing funding, support and contributions from domestic and foreign organizations, enterprises and individuals for environmental protection; increase preferential capital sources for localities in environmental protection activities Sixthly, the People's Committees of provinces need plans, guidelines and legal regulations to focus on thoroughly handling and relocating establishments causing serious environmental pollution out of residential areas and moving into industrial zones Seventhly, issue unified documents clearly specifying the roles, functions, and duties of local authorities, representatives of local people, and communities in monitoring the implementation of environmental protection projects where the investor implements the project Eighthly, the governing authorities of EPFs and related parties should increase the more effective coordination between the agencies managing investment capital from the state budget and the EPFs in the role of the intermediate body of using preferential capital for investment in environmental protection projects from the state budget CONCLUSION In this study, with the goal of systematizing the theoretical basis related to the effectiveness of concessional loans for environmental protection investment projects, the author has generalized the theoretical basis and reviewed different studies related to the research topic The thesis has clearly indicated the basis for determining the evaluation criteria for concessional loans for environmental protection investment projects and selected the OECD's guiding model for evaluating effectiveness as a basis for the researched model in this study, including criteria: Suitability; Effectiveness; Efficiency; Impact; Sustainability The thesis identifies five factors affecting the effectiveness of concessional loans for environmental protection investment projects, including policy mechanisms, quality of personnel, loan control process, credit risk management, and local support 24 The study applied a combination of both qualitative and quantitative methods The research results reflect the current situation of EPFs in Vietnam, where there is no consensus on structure, organization, and policies on funding from the state budget for environmental protection activities, and the quality of human resources has not really met the requirements to effectively deploy concessional loans The results of the analysis of the effectiveness of concessional lending for environmental protection investment projects at the EPFs in Vietnam show that there are three aspects that need special attention, which is appropriate; effectiveness and impact Regression results reflect the fact that out of factors affect the capacity of project investors to receive concessional loans for investment in environmental protection (policies, personnel quality, credit risk management, and local support) The last variable is the loan control process which does not have a positive impact on the management capacity of the project owner with concessional loans for investment in environmental protection In particular, the intermediate variable is the management capacity of the business owner, which has a positive impact on all five dependent variables of the model (Efficiency; Impact; Suitability; Effectiveness; and Sustainability), in which management capacity has the greatest impact on Suitability and Efficiency Based on the findings of the study, the author has proposed 08 solutions for the EPFs in Vietnam and recommendations to the Government, the Ministry of Natural Resources and Environment, and other agencies to improve the efficiency of concessional loans for environmental protection investment projects in Vietnam in the coming time Besides the new contributions, the thesis has certain limitations, such as (i) The number of interview samples is not really large enough and is only representative of a part of research and practice experts Therefore, there may still be many different views in evaluating the effectiveness of concessional loans at EPFs; (ii) The number of Funds implementing concessional loan activities is still limited, which makes the collected data not really rich; (iii) In terms of content, the relationship between the demographic characteristics of the survey subjects have not been analyzed with the effectiveness of concessional loans for environmental protection projects The above limitations will guide the expansion of research related to the field of preferential lending for environmental protection investment projects in the future LIST OF PUBLISHED WORKS RELATED TO THE THESIS Duong Thi Phuong Anh, 2017 Effectively manage and use capital resources at the Vietnam Environmental Protection Fund Banking Science and Training Review, No 178, 57-62 Duong Thi Phuong Anh, Le Hai Lam, 2021 Preferential lending for environmental protection in Vietnam: Current situation and some recommendations Banking Review, issues 15, 24-31 Duong Thi Phuong Anh, Le Hai Lam, 2021 Developing capital to support the environmental protection projects of Germany and Romania and practice in Vietnam Review of Finance, No 1, 70-75 Duong Thi Phuong Anh, 2021 Effective management of preferential loans for environmental protection projects of the National Environment Fund of the Czech Republic Natural Resources and Environment Magazine, 39-42 Duong Thi Phuong Anh, 2022, Research on concessional loan activities at Environmental Protection Funds in Vietnam Industry and Trade Magazin, no 2, 168-175 Duong Thi Phuong Anh, Le Hai Lam, 2019 International experience in financial support in environmental protection activities, print: The First International Conference on Banking and Finance (ICBF 2019) - The Banking System and the Fourth Industrial Revolution Labor and Social Publishing House, pp 433-456 Duong Thi Phuong Anh, 2022 Factors Affecting the Efficiency of Concessional Loans at Environment Protection Funds in Vietnam International Journal of Advanced Engineering and Management Research http://dx.doi.org/10.51505/IJAEMR.2022.7301 Vol 7, No 03 ... examining committee’s judgment, held at Banking Academy of Vietnam at …………… 2022 The thesis can be found at: - Library of Banking Academy of Vietnam - National Library of Vietnam 1 INTRODUCTION... Vietnam? (iii) What factors affect the effectiveness of concessional loans at EPFs in Vietnam? How much influence these factors have on the effectiveness of concessional loans at EPFs in Vietnam?... Vietnam Environmental Protection Fund (2014); Summary report of Environmental Protection Funds in Vietnam for the period 2016 - 2020; Ahmad and Ahmad (2004); Tuyet Pham Thi (2018); Abedalfattah