Results & Challenges in Vietnam's Circular Economy Implementation

Abstract:

The circular economy is an economy that is restorative and regenerative by design to utilize resources. The goal of developing a circular economy model has been concretized in the guidelines and policies of the Communist Party of Vietnam and the Government of Vietnam. This paper analyzes the achieved results and challenges to Vietnam’s circular economy development process over the period from 2025 to 2030. Based on the paper’s findings, some recommendations and solutions are proposed to help Vietnam overcome challenges in developing a circular economy.

1. The development policies and strategies for circular economy in Vietnam

At the 13th National Party Congress in 2021, for the first time, the circular economy was mentioned in the documents of the Communist Party of Vietnam. Considering the international context and the domestic reality, the 10-year Socio-economic Development Strategy for 2021-2030 laid out the "directions, tasks, and solutions for economic and social development," which included the content of "encouraging the development of the circular economy model to use the synthesis and effective output of the production process." Currently, various regulations related to the circular economy are reflected in certain laws and decrees.

Under the 2020 Environmental Protection Law, there are provisions for implementing the circular economy in Vietnam, specifically in Chapter XI, Section 2, Article 142, which states:

(1) The circular economy is defined as an economic model in which activities such as design, production, consumption, and services aim to reduce resource and material exploitation, extend the product life cycle, limit generated waste, and minimize adverse environmental impacts.

(2) Ministries, ministerial-level agencies, and provincial People's Committees shall integrate the circular economy into their development strategies, planning, programs, and projects from the outset; they shall also manage, reuse, and recycle waste.

Production facilities, businesses, and service providers are responsible for establishing management systems and implementing measures to reduce resource exploitation, minimize waste, and increase the level of waste reuse and recycling from the project development and product design stages to the production and distribution phases.

Based on the provisions of Article 1 in Decree No. 08/2022/NĐ-CP, which details some articles of the Environmental Protection Law, the following are specific criteria for a circular economy:

Article 138 outlines general criteria for a circular economy:

a) Reduce the exploitation and use of non-renewable resources and water resources; increase the efficiency of resource utilization, raw materials, and materials; save energy;

b) Extend the lifespan of materials, equipment, products, goods, components, and parts;

c) Limit the generation of waste and minimize adverse environmental impacts, including: reducing solid waste, wastewater, and emissions; reducing the use of hazardous chemicals; recycling waste, recovering energy; reducing single-use products; promoting green shopping.

Based on Article 138 of Decree No. 08/2022/NĐ-CP, which provides details on certain articles of the Environmental Protection Law, the following are specific criteria for a circular economy:

Article 138 outlines general criteria for a circular economy:

a) Reduce the exploitation and use of non-renewable resources and water resources; increase the efficiency of resource utilization, raw materials, and materials; save energy;

b) Extend the lifespan of materials, equipment, products, goods, components, and parts;

The circular economy is a model that government agencies responsible for policy planning, implementation, and especially for production and business activities of enterprises and industries need to encourage and develop. This model focuses on optimizing resource use, reducing waste, and promoting sustainable practices to create a more environmentally friendly and efficient economic system.

The government encourages the following activities to promote circular economy development:

1. Research and development of technology, technical solutions, and the provision of consulting services, design, and evaluation for implementing circular economy practices as prescribed by the law.

2. Developing models of collaboration and shared use of circular products and waste, establishing cooperatives, partnerships, cooperative alliances, recycling associations, regional linkages, urban-rural linkages, and other models as prescribed by the law to carry out investment, production, business, and service activities that meet circular economy criteria.

3. Implementing industrial symbiosis measures as stipulated by the law on industrial park and economic zone management.

4. Developing markets for the reuse of discarded products and recycling of waste materials.

5. Mobilizing resources within society to implement circular economy practices in accordance with the law.

6. International cooperation, exchange of experiences, knowledge, and technology related to circular economy practices as prescribed by the law.

On June 7, 2022, the Government issued Decision No. 687/QD-TTg approving the Circular Economy Development Plan in Vietnam. Decision No. 687/QD-TTg affirmed that the development of a circular economy is essential and appropriate to the trend and requirements for making breakthroughs in economic recovery and achieving sustainable development goals, contributing to realizing the National Strategy for Green Growth for the period 2021-2030 with a vision to 2050. Therefore, the guiding principles for circular economy development outlined in the Party's Development Strategy for the 2021-2030 period serve as the basis for various sectors and fields to implement and abide by the laws on circular economy, aiming to pursue green growth and sustainable development.

2. Results and Challenges in Implementing the Circular Economy Policy and Economic Development in Vietnam

2.1. Achievements

Firstly, the concepts of the circular economy have been incorporated into laws, decrees, and party documents, demonstrating that the ideas of the circular economy have been reflected in various national development strategies and policies in the recent period. This shows that Vietnam is aligning with the global trend of transitioning from a linear economy to a circular economy. At the same time, it confirms that Vietnam has established a relatively comprehensive policy and legal framework to promote the implementation of the circular economy. Notably, Vietnam is one of the first countries in ASEAN to institutionalize regulations on the circular economy in its laws.

Secondly, through the implementation of the circular economy model, businesses and production units have gained a clearer understanding and proactively applied solutions for cleaner production (CP) to reduce waste generation, resource consumption, energy and water usage, and save production costs. As a result, the CP model has been strongly promoted and widely applied. According to statistics from the Ministry of Industry and Trade, up to now, nearly 350 businesses and production facilities have received quick assessments and 90 enterprises have been supported to become pilot models for CP application. Over the 12 years of implementing the Clean Production Strategy in the industry, 68.5% of businesses have recognized the benefits of CP application, an increase of 20.5% compared to 2010. 46.9% of production facilities have applied CP, an increase of 35.9% compared to 2010, and 12% of them have achieved energy and fuel savings of 8% or more per unit of product. Additionally, 21% of medium and large enterprises have established specialized departments for cleaner production activities. It is evident that businesses and production units have gradually been proactively complying with all environmental protection regulations.

Thirdly, the deployment of the circular economy model has helped mobilize all social resources to implement effective energy-saving solutions to achieve the goals by 2025. Specifically, the targets include achieving 5 - 7% energy savings in the total national energy consumption from 2019 to 2025, reducing electricity losses to less than 6.5%, and lowering the average energy consumption for industrial sectors compared to the period from 2015 to 2018.

Fourthly, various sustainable business management initiatives and circular economy promotion strategies to cope with climate change have been proposed and gradually implemented. Several notable programs include waste collection and recycling initiatives by professional business groups and large corporations, as well as initiatives to prevent emissions into the environment and establish eco-industrial parks in some major cities. Specific results from the circular economy model have been successfully applied in large enterprises like Heineken Vietnam, and Unilever Vietnam, as well as small and medium-sized businesses such as the supply chain for catfish farming and production. Additionally, the UNIDO's Eco-Industrial Park project being implemented in six industrial zones across Ninh Binh Province, Da Nang City, and Can Tho City has also shown promising outcomes. All of these initiatives and economic models have laid the first foundation for the economic transition.

2.2. Some challenges posed:

Firstly, the policy framework for the development of a circular economy has been mentioned, but it has not been specifically and clearly constructed. Vietnam has some circular economic models and eco-industrial parks in operation, but there is no legal corridor for the development of circular economy models.

Secondly, there is resistance from traditional thinking. Economic activities until now have primarily relied on a linear economic approach. To transition to a circular economy, a clear roadmap is needed, and furthermore, there should be an emphasis on innovating thinking and awareness, encouraging initiatives in the production and supply chain to support businesses in transitioning to a circular economy. Correct understandings of the circular economy need to be implemented from the stages of input materials, design, consumption, deployment, reuse, recycling, and waste treatment for each industry and sector, and they require consensus and unity from leadership, management levels, businesses, and citizens.

Thirdly, the infrastructure and industrial zone planning for the circular economy direction and connectivity still face numerous limitations. Many separate plans are driven by linear economic development thinking, lacking integration, and not being aligned with resource balancing and efficient resource utilization. Additionally, recycling technologies, supporting industries, and resources for implementing the transition to a circular economy are still weak. The circular economy needs to be associated with scientific innovation, access to advanced and environmentally-safe technologies. To develop the circular economy, a team of experts proficient in science, technology, and practical knowledge is required to address the entire production process of businesses and foster collaboration among enterprises.

Fourthly, the number of plastic waste treatment plants in Vietnam is still too few, leading to the wasteful use of "waste resources" as seen today. With a population of over 90 million people, the amount of waste increases by 10% annually, equivalent to hundreds of thousands of tons of wasted garbage. Currently, Vietnam still has to import about 80% of the raw materials for production, and only about 10% of the total plastic waste is collected for recycling each year, with the rest being dispersed into the environment. If more waste can be recycled and reused, Vietnam can save a significant amount of resources.

Fifthly, currently, many businesses, especially small and medium-sized enterprises in certain sectors and regions, still lack the conditions and opportunities to access and implement these circular economy models. Developing a circular economy requires innovation and the adoption of modern technologies. However, Vietnam is a developing country with mostly outdated technology and fragmented, small-scale production. Moreover, a circular economy demands a team of experts proficient in various stages of the production process, especially in the final stages of efficient and safe waste reuse and recycling. However, Vietnam currently lacks sufficient experts in this field, relying heavily on collaboration and funding from developed countries. The capacity for technology in waste reuse and recycling of Vietnamese businesses is still limited. Additionally, the habits of production and consumption, especially concerning single-use plastic and nylon products, among the population are deeply entrenched and difficult to change in the short term. This poses a significant challenge during the transition, as the circular economy model requires proper sorting and cleaning of waste before recycling and reuse.

Sixthly, the policies to incentivize and encourage organizations and individuals to participate in environmental protection activities are not clearly defined and difficult to implement, thus failing to generate a breakthrough in mobilizing social involvement in environmental protection. Some tools such as environmentally-friendly product certifications, environmental restoration and recovery funds, and deposit-refund schemes have been established but are not fully functional. Many new tools with potential, such as green credits, green bonds, and green consumption, have emerged but lack a legal basis for implementation.

3. Some recommendations for solutions to cope with the challenges in the development of the circular economy in our country:

3.1. Objectives for implementing the circular economy model during the period 2025 - 2030:

By 2025, initial circular economy projects will be implemented and effectively contribute to economic, social, technological, and environmental development. They will contribute to the restoration of renewable resources, reduce energy consumption, increase the proportion of renewable energy in the total primary energy supply, increase forest coverage, enhance the recycling rate of waste, and increase the localization rate of agricultural, forestry, aquatic, and industrial export products. By 2025, 85% of plastic waste will be reused, recycled, or treated, reducing 50% of plastic waste in the seas and oceans compared to previous periods. The production and use of non-biodegradable nylon bags and single-use plastic products in daily life will be gradually reduced. Significant improvements will be made in the capacity to recycle organic waste in urban and rural areas. Awareness among government agencies, organizations, businesses, communities, and citizens regarding the production, consumption, and disposal of plastic waste, non-biodegradable nylon bags, and single-use plastic products in daily life will be enhanced.

By 2030, circular economy projects will become a major driving force in reducing primary energy consumption, with a significant proportion or the entire energy demand being self-sufficient through renewable energy sources, and in increasing forest coverage. The rate of collected and treated solid waste in urban areas will meet standards and regulations through circular economy models, reaching 50%. Organic waste in urban areas will be 100% recycled, and 70% of organic waste in rural areas will be recycled. Direct landfilling of solid waste from circular economy models in urban areas will be eliminated. The collection and treatment of urban wastewater will maximize compliance with standards and regulations in urban areas.

3.2. Proposed Solutions

Based on the Government's Resolutions, the National Strategy for Green Growth from 2021 to 2030, the 2050 Vision, and the current reality of circular economic development in our country, the author proposes the following recommendations for coping with the challenges in circular economic development:

Firstly, the Government needs to develop and issue comprehensive, unified, and legally binding policy documents, with a short-term priority being the establishment of an overall strategy for circular economic development. Additionally, the Government should promote scientific research on circular economics to provide a basis for proposing, building, and refining circular economic policies that align with relevant existing programs and policies, such as the National Program on Sustainable Consumption and Production from 2025 to 2030, and the Decree on the Development of Environmental Industries.

Secondly, it is essential to raise awareness and enhance public understanding of circular economics to change old-fashioned mindsets among citizens and businesses. Moreover, the Government should provide a clear direction and guidance on circular economic development for officials at all levels, the business community, and the general public. Developing a skilled workforce to support circular economic development should begin with specific sectors and localities within the Government's jurisdiction. For businesses, incentives such as tax benefits, financial support, and credit facilities should be provided to encourage cleaner production and increased recycling. Businesses should also be held accountable for managing packaging and post-consumption waste responsibly. The Ministry of Finance can introduce financial sanctions to ensure that businesses take responsibility for their products throughout their lifecycle.

3.3. Technology-related Solutions for Circular Economic Development

Thirdly, it is essential to establish mechanisms, policies, and solutions related to technology to promote the development and implementation of circular economic models in the economy. Circular economy demands research and development in technology, materials, and product design. Therefore, supportive measures to encourage research and development, particularly for businesses, should be put in place, which may include the establishment of funds to incentivize research and development.

Fourthly, there should be a stronger emphasis on exchanging and learning from international experiences, especially from countries that have successfully implemented circular economies. These lessons can then be adapted and applied to the specific circumstances of Vietnam. Circular economic models are closely tied to advanced technologies and the Fourth Industrial Revolution. Hence, policies and mechanisms for the development of clean technology, waste reuse, and recycling should be in place, considering both production and consumption aspects.

Integrate specific criteria for implementing circular economy practices in the process of formulating strategies, plans, programs, and development projects. This integration involves managing, reusing, and recycling waste.

Organize pilot projects to implement circular economic models in energy, resources, and waste sectors according to the action plans outlined in points 4 and 5 of this provision.

Article 140 outlines the mechanisms to encourage the implementation of circular economies, stating that the state prioritizes investments in the development of circular economic activities, including:

a) Scientific research, application development, technology transfer, and equipment production, as well as workforce training to implement circular economies.

b) Providing a shared platform for information and data exchange on circular economies: Organizations and individuals engaged in circular economic activities or projects related to circular economies are eligible for incentives and environmental protection support.

These proposed solutions aim to foster the integration of circular economic principles into various sectors of the economy, encouraging sustainable practices and resource efficiency in Vietnam.

Thirdly, it is crucial to establish mechanisms, policies, and solutions focused on technology to promote the development and implementation of circular economic models in the economy. Circular economy requires advancements in technology, materials, and product design. Therefore, supportive measures should be implemented to encourage research and development, particularly for businesses. This may include the establishment of funds to incentivize research and development activities.

Fourthly, there should be a strong emphasis on exchanging and learning from international experiences, especially from countries that have successfully implemented circular economies. These lessons can then be adapted and applied to the specific circumstances of Vietnam. Circular economic models are closely linked to advanced technologies and the Fourth Industrial Revolution. As such, policies and mechanisms for developing clean technology, waste reuse, and recycling should be established, considering both production and consumption aspects.

It is essential to integrate specific criteria for implementing circular economy practices into the process of formulating strategies, plans, programs, and development projects. This integration should encompass effective management, reuse, and recycling of waste.

Additionally, organizing pilot projects to implement circular economic models in energy, resources, and waste sectors should be carried out according to the action plans outlined in points 4 and 5 of this provision.

a) Supporting scientific research, application development, technology transfer, equipment production, and workforce training to implement circular economies.

b) Establishing a shared platform for information and data exchange on circular economies: Organizations and individuals involved in circular economic activities or projects related to circular economies are eligible for incentives and environmental protection support.

Source: Industry and Trade Magazine