Nguyen Anh Duong, Director of the Department for General Economic Issues and Integration Studies under the Central Institute for Economic Management (CIEM). (Photo: VNA)Following isthe full text of the interview:
Reporter: What is the rationale for theCircular Economy Development Project in Vietnam which was approved by the PrimeMinister in Decision 687/QD-TTg on June 7 last year?
Mr Nguyen AnhDuong: Circular economyhas evolved in Vietnam for decades, albeit in very simple forms (so-called VAC,VACR, etc.). Law on Environmental Protection 2020 and Decree 08/2022/ND-CPdated January 10, 2022 detailing a number of articles of the Law were the firstlegal documents that officially mentioned the concept, criteria, roadmap andmechanisms to encourage the development of circular economy.
However, theseregulations do not clearly demonstrate the economic mechanisms and benefits ofthe circular economy model, such as the ability to generate added value, promoteinnovation and foster linkages among industries and businesses, as well asincrease productivity and income for workers. In addition, established policiesand regulatory framework to create conditions for circular economic developmentin the medium and long term have not been sufficiently enabling.
For these reasons,the Prime Minister issued Decision 687/QD-TTg dated June 7, 2022 approving theCircular Economy Development Project in Vietnam. The Decision emphasises theapproach focusing more directly and more specifically on the economic benefitsof circular economy models. With that approach, the Decision highlights thenecessity of promulgating long-term policies to encourage and facilitatecircular economy development, associated with specific roadmaps and results.These policies will serve as solid legal basis for sectors, industries andlocalities to take initiatives promoting circular economy models in a flexible,adaptive and responsive manner.
Reporter: Since then, what have ministries and localitiesbeen doing to implement the project?
Mr Nguyen AnhDuong: To date, a numberof ministries, agencies and localities have been working on action plans toimplement the assigned tasks in the Law on Environmental Protection andDecision 687. Some localities have already issued plans to implement Decision687/QD-TTg (such as Ca Mau); proactively studying topics and projects oncircular economy (Hanoi, Da Nang, Hue, etc.); working on waste management andenvironmental protection policies in some localities; and activelydisseminating information to raise public awareness of the circular economy andits benefits.
Regulatory effortsare on-going. The Ministry of Planning and Investment has chaired andcoordinated with ministries, agencies and localities to develop a decree onRegulatory Sandbox for Circular Economy, and has been gathering publiccomments.
The Ministry ofNatural Resources and Environment is working, in collaboration with governmentagencies and localities, on a draft national action plan for the circulareconomy.
The Ministry ofAgriculture and Rural Development is drafting a project for scientificdevelopment and application and technology transfer to promote circular economyin agriculture until 2030.
Reporter: What are the challenges and shortcomings in theprocess of developing the circular economy in Vietnam?
Illustrative image. (Photo: Vneconomy.vn)Vietnam also hasnot established a database system covering life cycle of a product fromproduction to consumption. This limitation makes it difficult to assess thelevel and the extent of readiness in developing circular economy in varioussectors and localities.
Vietnam stillfaces market-based difficulties in both production and consumption stages inthe circular economy. Developing the input material market requires that wastebe converted into valuable goods used as input materials and their quality mustbe good enough for reuse. On the other hand, Vietnam does not have a strongenough supporting industry for recycling activities. In this regard, Vietnamremains short of resources for recycling such as capital, highly qualifiedhuman resources, specialised equipment and the ability to master newtechnology.
Regarding theoutput market, Vietnam still awaits mechanisms and policies to promote theconsumption of products from recycled waste. Furthermore, the quality ofproducts using recycled materials remains at an average or low level. Fewrecycled products are of high quality, or those of high quality also have highprices.
Awareness of thecircular economy and the need to develop a circular economy model is stilllimited. In particular, the circular economy requires classification andcleaning of waste before being reused and recycled, which is also a bigchallenge due to people's low awareness of waste classification at the source.Meanwhile, we are short of communication to help improve the understanding ofthe circular economy.
Last, the majorityof Vietnamese businesses are small and medium-sized enterprises (SMEs), withvery limited technological capacity to recycle and reuse, not to mention thecapacity to contribute to the recovery of natural resources. As a popularconcern, there are very few links among SMEs or between SMEs and large-scaleenterprises. Developing a circular economy centred on SMEs and their inter-firmlinkages is thus no easy task.
Reporter: What does businesses' ESGpractice mean in addressing the above challenges?
Mr Nguyen AnhDuong: Shifting towardssustainable development and doing business responsibly have become globaltrends. Under this circumstance, the application of ESG standards to production and business activities becomes vitalfor Vietnamese enterprises. I think the enterprises should take a friendlierview. ESG is not solely for compliance. ESG practices can help businessesbetter manage risks, improve business position, reduce operating costs andincrease access to investment capital sources.
On the other hand,implementing ESG to realise production and business targets in a sustainableway means getting economic benefits without compromising environment pollutionand social welfare. It is a development path in the direction towards thecircular economy. As many partners have issued regulations related to carbontaxes, reducing carbon emissions has become a challenge for businesses. Accordingly,businesses need to redesign their production and business models, build abusiness roadmap and strategy in the direction of reducing the exploitation ofnatural input materials, increase the use of renewable energy sources and focuson training human resources. Being able to work on ESG disclosure and follow-upactions also means that enterprises are already ahead of other competitors.
Reporter: According to Decision 687, the Prime Ministerassigned the Ministry of Planning and Investment to develop a decree on aRegulatory Sandbox for Circular Economy. In your opinion, when this decreetakes effect, how will it impact the ESG practices of businesses?
Mr. Nguyen AnhDuong: While long-termrevisions of laws and regulations are necessary for the circular economy,enterprises cannot wait. The Decree thus aims to provide a pilot mechanism forcircular economy development, to encourage investors and businesses to quicklyrealize circular economy ideas and initiatives, and at the same time contributeto green transition and green recovery in Vietnam. In addition, the results ofthe implementation of the Decree will serve as a practical foundation forimproving the legal framework for the circular economy in Vietnam.
When the decree isissued and appropriate policy incentives take effect, enterprises will leveragetheir initiatives to invest in circular economy projects in a number of areassuch as agriculture, forestry and fisheries, industry, energy and constructionmaterials. These sectors already offer a broad space and lots of potential,which enables and rewards creativity, innovation and entrepreneurship at theenterprise level. Only on that ground can enterprises stay committed to theirESG implementation plans.
Reporter: Could you share some international experiencesand practices that have been and are probably being applied in Vietnam towardsgreen and sustainable development?
Mr Nguyen AnhDuong: From our review ofpolicy actions in other countries, some lessons can be drawn as follows:
High politicalwill and openness towards promoting “economic benefit” of circular economy arecrucial. There should be a comprehensive approach to the circular economy on anational level, from which the legal framework system to develop the circulareconomy will be improved.
Promotingcorporate social responsibility (CSR) is also necessary. Developing regulationsto enforce CSR is important, but may not be the first step. Again, theenterprises need to be incentivised and clearly communicated in terms of theirroles and contributions in a green transition, including via the circulareconomy. Developing a platform where enterprises can share their experiencesand seek policy support would be ideal.
Challenges andopportunities related to the transition to a circular economy will varydepending on differences in the development stage, natural resources andpolitical institutions of each country. Developing the circular economy shouldnot be done uniformly for the whole economy, but instead focus on severalpriority, key areas. While these areas vary from country to country, a commonrequirement is to develop strong governance frameworks to minimise health andenvironmental risks from poor management of production and business operation.
Finally,international cooperation plays a very important role. Developing the circulareconomy requires discussing and sharing experiences and difficulties in themost open way. It is also important to align international cooperation at theG2G level with the B2B cooperation. Underlying that approach is the strongpartnership between government agencies and the business community, so that wecould identify the areas where international cooperation can quickly delivergood outcomes.
Reporter: Thank you very much for your interview./.
VNA
