Nguyễn Thế Chinh, director of the Environmental Economic Policy Institute.

Academic studies show that the transition to a circular economy offers US$4.5 trillion in economic opportunities globally by creating jobs, reducing waste, and promoting sustainable production.

These economic opportunities have been well-perceived by many Vietnamese firms over the past few years but not so many have been able to exploit them due to various financial and legal problems.

Nguyễn Thế Chinh, director of the Environmental Economic Policy Institute, spoke to Việt Nam News reporter Lê Việt Dũng about the situation in Việt Nam and the measures to accelerate the transition.

What are the benefits of the circular economy to Vietnamese firms?

The circular economy is highly beneficial to firms. Economically, it allows the conversion of waste into useful resources that could bring in huge profits.

Let's take fish processing as an example. Traditional fish processing disposes of fish heads, skin, and blood as waste, which normally ends up in landfills. A circular economy, in contrast, enables seafood producers to reclaim the waste and sell it at a price higher than the fish itself. In other words, it is a value-capturing loop that is far better than the traditional linear way of production.

A circular economy also saves firms the costs associated with environmental issues. It increases the share of recyclable and renewable resources while reducing waste and the consumption of raw materials. As such, it lies at the heart of corporate social responsibility.

Given its benefits, the circular economy is a sustainable approach that needs to be employed in place of the traditional unsustainable make-take-use-dispose approach, which, without a doubt, would cause a serious environmental impact in the long term.

Is there any legal document in Việt Nam that covers the circular economy?

The first legal document that covers the notion is the Socio-Economic Development Strategy between 2021 to 2030, which specifies favourable policies on circular economy in Section 7.

Another noteworthy document is the Law on Environment Protection, which provides for the topic in Article 142. Recently, Decree 08 has been introduced to add to the legal coverage.

The decree has paved the way for a national action plan that is expected to be submitted to the Prime Minister for approval before late December 2023.

A circular economy always comes high on the Government's and the Party's agendas. The legal framework regulating it has become almost full-fledged in recent years.

What are the obstacles for Vietnamese firms on their way toward a circular economy?

The first obstacle is about changing business leaders' mindsets toward the circular economy. It is never an easy task to budge someone who always holds on to the traditional way of production.

The second obstacle centres around technology. Firms need advanced technologies to close their production loops but such technologies are not always at their disposal.

The third obstacle involves the absence of detailed regulations. For example, many firms want their treated water to be reused in their production rather than discharged back into the environment.

Unfortunately, the current legal framework has not provided for the practice, leaving firms with no choice but to return the effluent to nature because closing the water loop would put them at risk of being whistle-blown.

The transition to a circular economy requires some initial outlays. How do Vietnamese firms come up with the money?

Firms could plough back their revenues into the transition or take out bank loans to get the job done. Another source of finance could be the financial support offered by the Government, which is specified in the Law on Environment Protection.

Money should not be a matter of concern because the benefits that a circular economy brings to firms will far outweigh its costs.

What should the Government do to promote a circular economy in Việt Nam?

The Government needs to fix the above-mentioned legal gap to facilitate the transition to a circular economy among firms. For instance, regulations could be introduced to allow the reuse of treated water in production. The same goes for after-treatment solid waste and electronic waste.

Additionally, the Government should offer preferential bank loans to help firms obtain the technologies needed for the transition. In fact, technology edges sometimes require such huge initial investments that many firms can not pull off if left to their own devices.

It is also worth noting that some firms have begun to turn to green credit and green bonds to meet their financial needs for the transition.