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State financial transfers in environmental protection: The case of Vietnam. This paper examines the practice and the effectiveness of the instrument of state financial transfers to the business sector in the implementation of investment in the field of environmental protection through Environment Protection Funds. | Journal of Economics and Development, Vol.16, No.2, August 2014, pp. 93-120 ISSN 1859 0020 State Financial Transfers in Environmental Protection: The Case of Vietnam Tran Khanh Hung National Economics University, Vietnam Email: hungtk@neu.edu.vn Nguyen Duc Hung National Economics University, Vietnam Email: hungnguyenduc.neu@gmail.com Abstract This paper examines the practice and the effectiveness of the instrument of state financial transfers to the business sector in the implementation of investment in the field of environmental protection through Environment Protection Funds. Focusing on the case of Vietnam Environment Protection Fund, we found that the instrument of state financial transfers including grants, soft loans, accelerated depreciation allowances, tax incentives, and subsidies have propensity for lack of effectiveness due to creating insufficient incentives and increasing burden on the State budget. The application of market-based instruments is more effective but in Vietnam the rate of this figure is only 1% for market-based instruments while most of its budget (99%) spends on soft loans projects. Therefore, the recommendations are proposed to reduce the instruments of state financial transfers and foster use of market-based instruments in environmental protection activities for the sustainable development. Keywords: State financial transfers, environment protection, market-based instruments, market-based polices, Vietnam. Journal of Economics and Development 93 Vol. 16, No.2, August 2014 1. Introduction amount while its budget is quite tight. Second, some decrees regarding incentives and supports for environment protection activities are inconsistent and ambiguous. Last but not least, if the enterprise wishes to access the favorable conditions, it has to go through numerous procedures and process, which is time-consuming and frustrating. Thus, this lack of experience is one crucial reason why we need to learn from the lessons of other .
