Vietnam and Singapore have signed a landmark agreement paving the way for joint participation in international carbon trading, in a move both governments say will bolster global efforts to curb climate change.

The deal, concluded virtually on September 16 and reported by Viet Nam News, falls under Article 6 of the Paris Agreement, which allows countries to cooperate on reducing greenhouse gas emissions through cross-border carbon credit schemes. It was signed by Vietnam’s Acting Minister of Agriculture and Environment, Trần Đức Thắng, and Singapore’s Minister for Sustainability and the Environment, Grace Fu.

Hanoi said the agreement will establish a legal framework for Vietnamese companies to launch projects that cut emissions and generate carbon credits, which can then be transferred to Singapore. Officials argue the scheme could unlock new streams of climate finance, attract foreign investment and speed up the shift towards renewable energy, sustainable agriculture and the circular economy.

Thắng called the arrangement a “breakthrough”, the report went on to say, adding that it would help foster the use of advanced technology while positioning both nations as regional leaders in building a future carbon market.

Singapore’s environment minister meanwhile described the pact as a “significant new frontier” in bilateral ties, expressing confidence that it would stimulate further cooperation on reducing emissions and strengthen ASEAN’s collective response to climate change.

The Vietnamese ministry said guidelines on project approvals and eligible methodologies will be released later. It added that cooperation with Singapore is expected to draw international capital into Vietnam while also delivering wider social and environmental benefits, such as job creation, clean water access and improved energy security.