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