Vietnam Policy Updates on Extended Producer Responsibility

Extended Producer Responsibility (EPR) was first introduced in the European Union to assign producers responsibility for the end-of-life of products. It is designed to encourage environmental-friendly design, reuse and recycling of products, while sharing the burden of waste management with private actors. An EPR regime has been introduced in Vietnam via Decree No. 08/2022/ND-CP implementing some Articles in the Law on Environmental Protection (“Decree No. 08“), and Circular No. 02/2022/TT-BTNMT on the Detailed Implementation of some Articles in the Law on Environmental Protection (“Circular No. 02“), both effective 10 January 2022. The policy would be critical to Vietnam as the growing volume of solid waste, doubled in less than 15 years, would put the country’s infrastructure and management in overload [1].?

In brief, under EPR, the producers/ importers are obliged to either (i) self-organize the recycling of products and packages, or (ii) make a financial contribution to the Vietnam Environment Protection Fund (VEPF) to support the recycling of products and package. The latest Draft Decision identifies six groups of products subject to EPR, namely packages, batteries and accumulators, electric and electronic devices, tires, lubricants, and transportation vehicles.??

The graph below shows the comprehensive institutional arrangement of multiple stakeholders in implementing EPR.?

While the?implementation framework is clear, the Circular Economy Working Group (CE WG) from Green Growth Sector Committee (GGSC) would like to advocate for some key adjustments to the regulations for better compliance from the companies: ?

1.On the calculation of the Fs - a reasonable and valid norm of recycling costs for a unit volume of product packaging.?

Fs is important as it will directly factor in the overall financial contribution of companies to the VEPF. ?

• The adjustment coefficient?

The adjustment coefficient in the Fs formula, which represents the rate of collection and recycling value of products and packaging, has not fully reflected the high rate of collection and profitability of high-value waste materials, such as aluminum, rigid plastic packaging and electrical electronic equipment.?

Thus, the CE WG would like to call for the reduction of adjustment coefficient from 0.2 to approximately 0. The recommendation accounts for the premature development of Vietnam recycling value chain. Where formal, centralized waste management system has been lacking, the informal sector has taken the brunt of waste collection, sorting and recycling in small-scale junk shops and craft villages. In particular, the informal sector accounts for more than 90% of plastic waste recycling in Vietnam, with manual processing and outdated technology, causing high emission rates [2]. ?

In the coming years, it is crucial that the government?either supplant or integrate the informal sector into a new formal, centralized system [3]. Either way, to build a well-established recycling value chain, the government would need to enhance cooperation with the private sector. A more reasonable adjustment coefficient would significantly relieve the financial burden on companies to incentivize research and development of advanced, clean recycling technology and facilities. ?

• The administrative cost?

The?admin cost in the Fs formula is currently at 2% of the overall adjusted recycling costs?in the latest Draft Decision. Although this is a reduction from 3% in the previous Draft, the CE WG would like to advocate for the minimization of admin cost below 2% in the first few years so businesses have ample time to invest in recycling technology and facilities. After which, the fees can increase over time to cover management and monitoring efforts by the state officials.?

2. On the effective date?

In the latest Draft Decision, the effective date is January 1, 2024. Administrative penalties are applicable to those who do not fulfill the obligations in time. The CE WG would like to recommend that the first two years (2024 & 2025) focus on trial implementation without any penalties to strengthen the legislative framework and effective guidelines for businesses. ?

3. On the management of VEPF?

The CE WG calls for greater clarity in the usage of VEPF. The distribution of funds, whether in payment to recycling facilities, capacity building, technology investment or other supporting activities, should be publicized for increased transparency to all parties. ??

4. On the development of recycling value chain?

The?CE WG believes that waste collection should be prioritized to unlock the full potential of Vietnam’s recycling value chain. Waste collection by the formal sector has been difficult due to bulky transportation [4]. In addition, collection without segregation has compromised the quality of the collected waste, especially plastics, as they are contaminated with other general wastes, which would undermine the value of the recycled products [5]. The government needs to address these concerns on the collection and transport system to incentivize higher rate of recycling, especially for plastics, of which only 11-12 percent were treated, according to 2021 data [4].?

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Source:?

[1] Extended Producer Responsibility: an approach to improving solid waste management in Viet Nam | IUCN?

[2] Plastic Recycling Practices in Vietnam and Related Hazards for Health and the Environment - PMC (nih.gov)?

[3] A circular economy for all: The case for integrating the informal waste sector in developing countries – KENNEDY SCHOOL REVIEW (hkspublications.org)?

[4] VN faces challenges in plastic waste?collection, recycling (vietnamnews.vn)?

[5] Market Study for Vietnam: Plastics Circularity Opportunities and Barriers (worldbank.org)?

** The latest Draft Decision on EPR Implementation: Du-thao-QD-TTg-ban-hanh-Fs.docx (live.com)?