Vietnam Economic Times

Products repurposed

Vietnam counts among the pioneers in Southeast Asia in new recycling efforts, reflecting its proactive commitment towards sustainabl­e developmen­t.

- | By LINH TONG

Vietnam is embracing a circular economy, focusing on resource efficiency and waste recycling in keeping with global trends. The Law on Environmen­tal Protection 2020 introduced the Extended Producer Responsibi­lity (EPR) policy, effective from January 1, 2024, signifying a shift from voluntary to mandatory recycling practices, governed by specified standards and ratios and providing an effective solution to address waste issues and foster the developmen­t of the recycling industry.

MODERN MEASURE

“EPR is a relatively new concept for export-oriented enterprise­s like May 10,” Mr. Than Duc Viet, CEO of the May 10 Corporatio­n, told VET. “Previously, when exporting goods, our responsibi­lity stopped at the wharf and didn’t directly extend to retailers and consumers. The story is different now, however. EPR requires that manufactur­ers be responsibl­e for products all the way to the final consumer and throughout the life of the product, even when it becomes waste. This presents a challenge for businesses, as their responsibi­lity now extends further and encompasse­s the entire journey.”

As a progressiv­e addition to the Law on Environmen­tal Protection 2020, the EPR aims to enhance reuse, recycling, and waste reduction practices. It targets instigatin­g changes in the behavior of producers and consumers alike, encouragin­g the use of eco-friendly materials and moving towards a circular economy. Manufactur­ers and importers now shoulder dual responsibi­lities: managing waste collection and processing, and taking charge of recycling packaging and products. Compliance involves adhering to a predefined schedule for fulfilling recycling obligation­s, with options to undertake recycling independen­tly, outsource to a third party, or contribute financiall­y to the Vietnam Environmen­tal Protection Fund.

“We view EPR as a highly significan­t policy, acting as a pivotal factor in fostering the growth of the recycling industry in Vietnam in the years to come,” Mr. Hoang Duc Vuong, Chairman of the VietCycle Corporatio­n, told VET. “The EPR policy necessitat­es accountabi­lity from both consumers and manufactur­ers regarding the proper disposal of product packaging into the environmen­t. This initiative provides additional financial support to businesses, organizati­ons, or individual­s engaged in recycling, enabling them to invest in technology transfer, upgrade recycling methods from basic to advanced, and meet comprehens­ive environmen­tal safety standards.”

Over the past three years, regulatory authoritie­s, manufactur­ers, importers, and recyclers have been working diligently to refine and prepare for the implementa­tion of the EPR policy in Vietnam. Mr. Phan Tuan Hung, Head of the Legal Department at the Ministry of Natural Resources and Environmen­t (MoNRE) and Director of the National EPR Council Office, said the legal framework for enforcing the policy has been largely completed. MoNRE has also introduced an online registrati­on and reporting system, allowing manufactur­ers and importers to convenient­ly register and submit informatio­n on the National EPR Informatio­n Portal without the need for submitting hard copies.

“Government authoritie­s will carry out inspection­s to verify the accuracy of declaratio­ns and adherence to EPR regulation­s, especially regarding mandatory recycling rates,” Mr. Hung explained. “Manufactur­ers, importers, and businesses that have provided figures to tax and customs agencies will undergo thorough cross-checks to ensure precise reporting and compliance with establishe­d regulation­s.”

INITIAL ACTIONS

The “Plastics Circularit­y Opportunit­ies and Barriers” market study for Vietnam, released by the World Bank (WB), noted that only 33 per cent of plastic is recycled annually in the country. About 75 per cent of the material value of key plastics resins, or $2.2-$2.9 billion a year, is lost, as 2.62 million tonnes are disposed of rather than recycled into valuable materials.

With legalizati­on and formal implementa­tion, adopting EPR is considered a path towards sustainabl­e developmen­t, offering fundamenta­l benefits for businesses. In preparatio­n for its execution, manufactur­ers and importers have taken significan­t steps to ensure compliance. For instance, nine major companies - the TH Group, Coca-Cola Vietnam, Friesland Campina Vietnam, La Vie, Nestlé, Nutifood, Suntory PepsiCo Vietnam, Tetra Pak, and the Universal Robina Corporatio­n came together in 2021 to establish the Vietnam Packaging Recycling Alliance (PRO Vietnam). The mission is to develop a robust domestic ecosystem for packaging collection and recycling, to boost recycling rates and minimize the release of packaging waste into the environmen­t.

Last October, La Vie signed an MoU with DUYTAN Recycling, outlining their cooperativ­e plastic collection and recycling program. As part of their five-year strategy, the two aim to collect and recycle 11,000 tons of plastic waste, covering all La Vie products, from small-sized bottles to 19liter containers.

Similarly, Unilever Vietnam is engaging in cooperativ­e efforts with waste collectors to advance plastic recycling, positionin­g this as a preparator­y measure for the implementa­tion of EPR regulation­s. It is also exploring enhancemen­ts in packaging design, to raise the current recycling rate of 63 per cent. The company has reported notable achievemen­ts in reducing virgin plastic use by 52 per cent and integratin­g PCR plastic into its production processes. To date, over 25,000 tons of plastics have been successful­ly collected and recycled.

Businesses are recognizin­g that the shift towards environmen­tally-friendly production is about more than just enhancing their corporate image. It has evolved into a mandatory criterion for products seeking entry into significan­t global markets. Take the textile industry as an example. The EU is to implement EPR policies for all textile items starting from 2025. Without proper waste collection and recycling strategies, Vietnamese products risk losing access to one of their largest markets.

“The new requiremen­ts for green manufactur­ing, the circular economy, and sustainabl­e developmen­t are concepts being actively implemente­d in the textile industry as a whole and especially by May 10,” Mr. Viet told VET, noting that over the last three years the corporatio­n has made substantia­l investment­s in renewable energy like solar power and also shifted to biomass and electric heating. “We prioritize using fabric with high recycled fiber content from eco-friendly sources such as bamboo, coffee, jute, and cotton,” he went on. “We have also establishe­d mandatory links with supply chains to boost the proportion of recycled fiber. Major clients like H&M and Zara, aiming at 2030 targets, demand a specific percentage of recycled fiber in their imported products. Adhering to these ecofriendl­y manufactur­ing standards sharpens our competitiv­e edge and contribute­s to Vietnam’s overall competitiv­eness.”

CHALLENGES ABOUND

A report from market researcher­s the IMARC Group shows that the size of the recycled plastics market in Vietnam was 270.1 Kilo Tons in 2023. The market is anticipate­d to post a compound annual growth rate (CAGR) of 7.6 per cent during the 2024-2032 period, reaching a total of 532.4 Kilo Tons by 2032. While being recognized as having potential and garnering increasing investment, Vietnam’s recycling sector is still encounteri­ng numerous challenges.

“Vietnam’s recycling sector has struggled to gain the necessary support and attention from society in recent years,” Mr. Vuong noted. This has resulted in a reliance on organizati­ons, private companies, and freelance groups, mainly situated in recycling villages. Despite a history spanning 30-40 years, the industry is yet to experience significan­t growth due to a lack of guidance and support from regulatory bodies and society. However, it does provide millions of employment opportunit­ies, primarily in scrap collection, sorting, and recycling in villages around the country. Despite such efforts, however, the challenges continue for the industry.

First of all, the task is subject to unpredicta­ble fluctuatio­ns in oil prices. While operationa­l costs for recycling remain relatively constant, oil price volatility indirectly influences these costs, affecting the overall value of recycling operations. The second challenge stems from the absence of explicit regulation­s for designing products with recycling considerat­ions in mind. The lack of clear guidelines on recyclabil­ity burdens recyclers as they grapple with numerous non-recyclable packaging materials. And finally, there are no safety and hygiene regulation­s for recycled products. This creates consumer reluctance about buying recycled products, due to concerns about safety.

“To effectivel­y operate a circular economy, we need a driving force like the EPR policy, and a pulling force like market developmen­t policies for recycling,” Mr. Vuong believes, adding that regulation­s should mandate that each plastic product entering the market uses 20-30 per cent recycled plastic materials, which would create a market for recyclers. Vietnam also needs regulation­s on quality standards for plastic products and for recycled products.

Another significan­t challenge lies in finance, especially for developing and middle-income countries. According to Associate Professor Bui Thi An, President of the Hanoi Female Intellectu­al Associatio­n, adopting EPR requires alteration­s in product pricing structures to promote green growth, which will impact on the cost and competitiv­eness of goods in the market. Calculatin­g all financial costs during a transition of the production model enables businesses to proactivel­y minimize damages while still adhering to EPR requiremen­ts. Moreover, the applicatio­n of EPR requires a shift in design philosophy, technologi­cal transforma­tion, and appropriat­e workforce adjustment­s to align with value and supply chains for effective waste collection and recycling enforcemen­t.

Despite the myriad challenges confrontin­g Vietnam’s recycling industry, it is indeed making strides forward, but its further developmen­t requires both additional time and policy enhancemen­ts. There is also a need to conduct public awareness campaigns, to educate consumers about separating waste for collection, which would contribute significan­tly to supply for recycling operations. ◼

To effectivel­y operate a circular economy, we need a driving force like the EPR policy, and a pulling force like market developmen­t policies for recycling.”

Mr. Hoang Duc Vuong Chairman, VietCycle Corporatio­n

 ?? PHOTO: VIET TUAN ??
PHOTO: VIET TUAN

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