The negative side of attracting investment
The marine environmental disaster in four central provinces as a result of Formosa Steel’s toxic waste discharges has made environmental management a pressing issue more than ever before. Since Vietnam opened up its economy to attract foreign direct investment long ago, the country has faced a fundamental dilemma. The government does not want to exchange the environment for economic growth, but as an economy with many limits, the choice of advanced, environmentally friendly technology is mostly impossible. In addition, with the objective of engaging in deeper processing to create more value, Vietnam also has to face difficult environmental problems never encountered when the country only assembled and processed products.
Toxic waste discharges are the consequence of a unidirectional approach when it is viewed only from the angle of treatment costs, leading to a sentiment that the lower the costs, the better. But the issue of waste and its discharges is much more complex. It is essentially the effective use of output and the control of energy loss during production.
This fact has demonstrated that amid depleting natural resources, a population boom and conflict-triggered migration, which have increased enterprises’ costs, advanced economies tend to relocate their manufacturing to countries when they can take advantage of lower costs for environmental protection. According to a study by the Central Institute of Economic Management in April 2016, nearly 70% of foreign-funded enterprises said that investing in Vietnam would help them save environmental costs by between 10% and 50% compared with in their home countries.
Serious environmental consequences are valuable lessons so that Vietnam will be more determined to change its behaviour to establish an economy with sustainable production and consumption.
The green value of a circular economy
In a linear economy, people begin using products, and the end of the process is waste. But now products are converted as the beginning of an endless process. This is called a circular economy, which turns products we use today into resources for the future.
One of the biggest benefits of a circular economy is that resources are used effectively, helping to protect the environment and promote sustainable development by building a zero-emissions economy. It is also what Vietnam values and pursues to realise the Paris agreement on cooperation against climate change at the COP 21 Conference and the 2030 Agenda on sustainable development.
The idea of a circular economy is still relatively new to Vietnam. Therefore, the consensus of the government, the people and enterprises is needed to foster the transition process and it is necessary to create a mechanism to encourage activities beneficial to society as well as sanctions to phase out environmentally damaging actions.
When investing in the circular economy, enterprises will also enhance their competitiveness on the global playground. However, because more than 95% of Vietnamese enterprises are small and medium-sized enterprises (SMEs), it is questionable whether this transition is feasible. But SMEs are easily adaptable when they are aware of the need for transition. The only remaining question is whether we can create an environment that can facilitate that transition and whether we can communicate to the business community that inevitable trend.
To create an ecosystem for a circular economy, the Vietnam Business Council for Sustainable Development is implementing a plan to form a materials market as well as working and realising initiatives on a circular economy in Vietnam.
With this inevitable trend, it is believed that Vietnam will soon become a green economy.
| A circular economy helps renovate production technologies in a way that reuse resources effectively. The process of building awareness about the importance of the “three Rs”—“reduce,” “reuse” and “recycle”—into action will take time. But Vietnam cannot avoid the common trend of the world. |
