State Agro-bank to issue first green bonds

Official lending is going green in Thailand as the Finance Minister approved plans by the state-run Bank for Agriculture and Agricultural Cooperatives (BAAC) to issue $640 million in “green bonds” to fund community projects that will protect forests and promote sustainable farming.

“BACC was the first institution allowed to issue green bonds for environment development, in line with the bonds’ international standard,” said Minister of Finance Uttama Savanayana. “These bonds are checked and guaranteed by related organizations.”

The bonds will be sold to Thai financial institutions first, and they are expected to buy up the entire tranche. The BAAC will use the money raised to provide low-interest loans to rural small and medium-size enterprises or those involved in green businesses. The funds will also go to community enterprises, and farmers planning green projects.

Increasingly, Thai farmers are growing more organic produce, and transitioning towards more sustainable and environmentally friendly farming methods. Financing through bonds is a tool to help community projects that promote that transition, and ones that do more to protect the country’s forests.

Agriculture, although it contributes a relatively small percentage to the gross domestic product, is vital to the Thai economy – and Thai culture. It generates employment for over 40 percent of the population, supplies the country with a treasure trove of natural resources and raw materials for biotechnology and biosciences, and advances the nation’s reputation because of the high quality of its commodities.

Thailand is the only net food exporter in Asia and a key pillar in regional food security. The country ranks among world leaders in shipments of rice, sugar, cassava, seafood, and other agricultural goods.

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