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Vietnam adopts circular economy urban planning for greener future

Vietnam adopts circular economy urban planning as it starts transitioning from a linear economy in order to achieve long-term economic development.

Vietnam’s changes to the Law on Environmental Protection (LEP) aim to strengthen producers’ and importers’ extended producer responsibility through recycling. Despite the government’s increasing attempts to embrace environmental solutions, the country still has a long way to go before fully transitioning to a circular economy.

Vietnam’s economic operations have primarily been built on a linear economy, which implies following the classic “take-make-dispose” system. This approach maximizes the use of acquired raw materials during the manufacturing process, finally culminating in the disposal of unsuitable resources.

This generates a substantial amount of undesired, and often toxic, landfill garbage while also adding to the shortage of raw resources because of its irrational consumption.

Circular economy urban planning is Vietnam's strategy towards green economy.
Circular economy urban planning is Vietnam’s strategy towards green economy.

Currently, around 85 percent of trash generated in Vietnam is buried without treatment at landfill sites, causing significant environmental risks.

Vietnam is progressively transitioning to a circular economy urban planning. The circular economy is built on a three-pillar structure that includes the “make-use-recycle” concept, which encourages waste reduction and reduces resource extraction by recycling, reducing, and reusing.

A circular economy views used plastics as valuable material resources that may be repurposed rather than as garbage that must be discarded. This is extremely beneficial for promoting sustainable development since it provides a chance for Vietnam to increase recycling and other plastic circularity activities.

Plastic and waste management, fundamental to circular economy urban planning

Vietnam has serious environmental difficulties, notably in waste management and plastic pollution, as an expanding industrial centre with fast economic expansion. Each year, the country generates around 25.5 million tons of garbage, 75 percent of which is disposed of in landfills.

According to the World Bank, Vietnam is one of the top four producers of plastic garbage, with 280,000 tons produced each year. The pandemic has compounded the problem by increasing the use and disposal of facemasks, e-commerce packaging, and sanitizer bottles.

Consumption and demand for plastics have increased significantly in the consumer packaging, construction, home goods, and automotive industries as cities have developed and the middle class has grown.

In 2019, the plastic sector contributed around US$17.5 billion to the Vietnamese economy, or 6.7 percent of the country’s GDP. A Vietnamese person currently consumes 41.3 kg of plastic per year, which equates to 7,600 plastic shopping bags.

To address the crisis and move toward a more sustainable economy, the government has implemented long-term action plans and set lofty recycling goals.

National action plan for plastic management

Vietnam has created a national action plan for the management of water plastic trash, with the goal of reducing 75 percent of Vietnam’s marine plastic garbage by 2030. By that time, the country hopes to have eliminated the use of single-use plastics and non-biodegradable plastic bags in all coastal tourism zones. Meanwhile, all marine protected zones should be clear of plastic debris.

With its promise to reach net-zero carbon emissions by 2050 at the Conference of the Parties (COP26), the government has also displayed a strong commitment to addressing sustainable development and climate change.

Building a circular economy urban planning involves more than simply facilitating recycling, reusing, and regenerating. It defines a hierarchical revolution and restructuring in distribution and consumption at the micro-level that includes production, companies, and consumers, the mid-level – eco-industrial parks, and the macro-level – city, region, and country.

Vietnam is now working its way up the waste management and recycling ladder by promoting waste management and recycling at the micro-level.

Law on Environmental Protection

The new Law on Environmental Protection (LEP) 2020 went into effect in January 2022. In general, the legislation emphasizes ministries’ and towns’ responsibility to include circular economy urban planning, as well as include circular economy into waste management,  development plans, and waste recycling.

Vietnam takes measures to manage waste problems.
Vietnam takes measures to manage waste problems.

The 2020 LEP adopts the notion of circular economy through promoting extended producer responsibility (EPR) policy, emphasizing producers’ and importers’ responsibilities to recycle products and packaging. Following this, the government introduced Articles 54 and 55, which define the criteria for waste product collection, disposal, and recycling, as well as other regulations.

EPR is an environmental policy strategy that extends a producer’s responsibility for a product all the way through waste disposal. It was initially introduced in the 2005 Environmental Protection Law, but no required recycling quotas for businesses were established.

As a consequence of the absence of standards from the government, they were hesitant to facilitate EPR. As a result, the EPR provisions in the updated LEP establish a legal foundation for EPR enforcement.

Household solid wastes must be separated into reusable or recyclable food wastes, solid wastes, and other solid domestic wastes, according to the legislation. Furthermore, Article 54 states that makers and importers of items and/or packages with recycling value must collect them for post-use recycling at the mandatory recycling rates.

This is true for both recyclable items and packaging, as well as trash treatment. Manufacturers have two choices for complying with the law:

  • facilitate the recycling in accordance with the rates and parameters provided; or
  • donate monetarily to the Vietnam Environment Protection Fund (VEPF) in order to help waste recycling

Laptops, for example, have a high recycling value. As such, they must be collected for recycling at a rate of 20% and in accordance with the (X) standards. For example, if Producer A sells 3 million kgs of laptops under brand A in Vietnam in one year, Producer A must collect and recycle 600,000 kg of after-use (abandoned) computers.

Article 55 states that “Organizations and individuals producing and/or importing packages, containing toxic substances, which are hardly recyclable or impede the collection and treatment, shall pay financial contributions to support daily-life solid waste treatment activities.”

According to the law, cigarette manufacturers and importers must pay VND 100 (US$0.0044) to the fund for every 20 cigarettes manufactured. Because cigarette tubes are difficult to collect and treat, makers and importers must contribute to the VEPF, as previously indicated.

What does this imply for businesses?

Encouragement of plastic recycling in enterprises is intended to generate more private sector investment to aid in the reduction of plastic pollution while supporting essential industries such as tourism, shipping, and fisheries.

The circular economy urban planning also offers four advantages for enterprises’ long-term growth: resource efficiency, environmental protection, economic development, and social benefits.

To comply with the law, Vietnam’s manufacturers and producers must now register recycling plans and submit recycling outcomes report to the Ministry of Natural Resources and Environment on an annual basis. Local and foreign-invested businesses are also urged to establish recycling strategies and EPR budgets in order to meet the new standards set by the new law.

However, transitioning to a circular economy necessitates a stringent legal framework that permits all economic sectors to incorporate the model into their operations, from production to consumption and waste management.

As a result, in order to accelerate the process, Vietnam should increase government engagement with corporate entities, promote efficient interaction with the private sector, and develop business trust. Vietnam is poised to become a competitive leader in pursuing sustainable economic growth, thanks to increased government policies and increased awareness among enterprises and the community.



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