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Circular economy a work in progress

Released at: 08:13, 16/12/2019

Circular economy a work in progress

Photo: Viet Tuan

While the benefits of a circular economy are largely undisputed, stakeholders told VET that while transition from a linear economy is indeed taking place it remains in the initial stages.

Mr. Ernesto Hartikainen, Senior Economist, Sitra (Finnish Innovation Fund)

The transition to a circular economy, in which materials are used more effectively and waste is no longer created, requires a system-level change in national economies. Economies around the world are linear and we create a lot of waste when producing products and services. To make this system-level change, we need to bring together the public and the private sector to cooperate in moving towards a circular economy. We need political will from our governments and political leaders. By sharing good examples of circular business practices companies around the world are already implementing we can inspire others to learn and integrate these practices into their own activities.

We also need investments into new circular economy businesses and a market environment that supports this development by making the circular alternatives more viable than the linear model. Countries that are pushing forward in the circular economy include Finland, the Netherlands, France, Japan, Columbia, Chile, South Africa, Rwanda, Nigeria, and Canada, as well as the EU. 

Governments in general can support local business communities by supporting research and development and innovation. They can educate the public about smarter resource use and the prevention of waste. They can also require high standards for the durability and repairability of products. Governments can set targets for the reuse and recycling of materials. Tax policy can also support the circular economy by having lower tax rates on repair services for instance and increasing taxation on linear economy-based products such as fossil fuels and virgin materials. Costs for landfills and fines for polluting the environment could also be increased. 

I know the Vietnam Chamber of Commerce and Industry is actively promoting the circular economy. Many opportunities for the circular economy in Vietnam can be found in agriculture, construction, waste management, and energy.

The Vietnamese Government should shift the weight of taxation from labor to consumption of natural resources, set numeric targets for the circular economy (use of renewable energy and materials, recycling rates, share of services in the national economy, etc.), and set long-term goals to shift away from fossil resources (coal, oil, and gas).

Transitioning to a carbon-neutral circular economy requires a broad set of regulatory changes as the topic covers so many different sectors, such as environmental, labor, social, agricultural, forestry, energy, and so on. One single law will likely not be able to cover everything. What is needed is an overarching circular economy strategy and/or roadmap that will consider various aspects of the economy and make regulatory changes accordingly. 


Dr. Nguyen Hoang Nam, Institute of Strategy and Policy on Natural Resources and Environment

In many countries and territories the circular economy is about innovation in materials, business models, and benefits for enterprises. It is worth noting that enterprises are the main drivers and governments are there to direct and support the transition from a linear to a circular economy. Thus, key criteria should include (i) having a systematic and feasible roadmap for this transition; (ii) removing barriers that prevent innovation in materials and business models; and (iii) promoting the benefits of a circular economy in awareness raising programs, professional training, and education. Green public procurement is also necessary to direct the market.

The circular economy is not only about material circulation but also about reducing the use of materials that cannot be recycled, such as single-use plastics, micro plastics, and certain toxic chemicals, etc. Having said that, we understand that not only single-use plastics need to be eliminated from our economy. For now, single-use plastics are in the spotlight, but it could very well be micro plastics next year. Thus, it would be more systematic if we attach policies to a roadmap, which could also include Decisions and guiding Circulars to support implementation within a certain period. 

I believe all enterprises want to harmonize profit growth and reducing emissions and supporting sustainable development. Enterprises, however, are facing certain challenges, including (i) Technology (some innovation requires a certain level of technology); (ii) Understanding of the economic benefits of a circular economy and understanding about the circular economy itself (some fairly simple innovation in the production process could provide great economic benefits to enterprises and at the same time environmental benefits to all); and (iii) External barriers to innovation and changes (for e.g., institutional barriers, outdated polices, and customer preferences).

The local business community may want to initially invest more on research and development to identify opportunities to apply a circular economy and gain benefits. A circular economy could start with some simple innovation within businesses. Tax policy also plays an important role in changing behavior of producers and consumers. 

Vietnam could consider developing a law on the circular economy or revising existing laws and policies to systematically promote the transition to a circular economy. This is because some elements of a circular economy have been regulated in existing laws and policies. I personally think a circular economy roadmap is needed. 


Mr. Hoang Trung Son, Vice Chairman, Vietnam Paper and Pulp Association

We are delighted that government agencies are supportive of recycling in the circular economy, and recycling starts with collection. All materials should be collected and recycled. There is a risk from single-use plastics being released into the environment, while paper products decompose in the natural environment much faster than other packaging products.

Secondly, we hope to receive support from State agencies in terms of policies, while local businesses are proactively addressing difficulties regarding finance and management. The most important factor is the law. For example, Japan enacted a law on saving and recycling, and all products are collected and recycled. 

In addition to the law, it is necessary to adopt a uniform policy, such as not collecting taxes on collection activities, because people working on collection are poor and should be not the targets of tax policies. Collected products are taxed at the cost price, and the cost of recycled products would therefore be higher than products from new raw materials.

State agencies, businesses, and related organizations must have a common voice in changing consumer habits, behavior, and attitudes about the classification of waste to facilitate the collection activities of recyclers.

We are working with the Packaging Recycling Organization Vietnam (PRO Vietnam) to resolve issues surrounding the final pre-treatment stage, ensuring collection volumes are large enough, that transportation costs are reduced, and the quality of pre-collection is high.  


Ms. Pamela Phua, General Director, AkzoNobel Vietnam 

As Vietnam faces new, interlinked sustainability challenges from economic growth being high, it is vital to slow the speed of natural resources consumption. From our observations, Vietnam has been in the wheel of a circular economy, with progress made in cleansing urban environments and supporting cooperation on pressing environmental issues. The circular market is getting busier, with more enterprises developing and offering sustainable solutions and consumers welcoming them and being willing to try new things.

We see great potential in Vietnam, as the country is experiencing robust economic growth, but its large population and high levels of construction are raising concerns about ensuring environmental quality. Massive building booms in major cities result in a requirement for large quantities of paint, especially those with sustainable benefits that could help air be more breathable and energy consumption more efficient. Sustainable manufacturing and products mark our dominance over others in retaining and acquiring customers.

There are several ways to boost circular practices in the country. I think the most important thing lies in mobilizing efforts to work together towards a shared target.

The circular economy is a new concept, so enterprises may be hesitant to invest in it. However, it is a trend with a viral effect. Once there are pioneers that create clear benefits, there will be more enterprises becoming involved. 

When you look at total carbon emissions in the supply chain, it becomes clear that the key to reducing our environmental impact is to work collaboratively. Some impacts occur beyond the scope of our processes, with our suppliers and customers. Thus, we have joined forces with suppliers to drive the use of bio-based materials, recycled content, or raw materials produced with renewable energy to reduce emissions from raw materials such as pigments, resins, and solvents.

We have significant potential to deliver sustainability benefits in our marketing, sales, technology, and innovation activities. We use these to get the best out of our existing value proposition through our eco-premium and eco-performer solutions. These solutions deliver clear benefits to customers in terms of economic, environmental, and social performance, and they keep us ahead of the competition. They accelerate our business agenda by meeting societal needs and consistently demonstrate higher growth than more traditional products.

Another significant portion of our portfolio fits into the eco-performer category. These are solutions offering clear sustainability benefits but are overall on par with other offers. Initial assessments indicate that eco-performers represent 20 per cent of sales, with total sales of sustainable solutions standing at 42 per cent. 


Mr. Pavel A. Poskakukhin,Chairman, Dutch Business Association in Vietnam

In recent years we have seen greater awareness about sustainability issues by companies in Vietnam. The Netherlands is a leader in sustainable practices and has very good relations with the Vietnamese Government in working together to support transition. In my work I see a lot more FDI coming to Vietnam that brings ideas, products, and expertise related to sustainable operations. 

Since the Ministry of Finance released Circular No. 155/2015/TT-BTC in 2015, sustainability reporting has been a major concern of the business community in Vietnam. Following this Circular, the launch of the Corporate Sustainability Index (CSI) supports the business community in perfecting their sustainability initiatives. As a member of the Assessment Council of the CSI Program, we have received many requests from companies in various industries (banking, consumer, energy and resources, etc.) to consult on their sustainability reports.

There is significant potential in implementing a circular economy in Vietnam and we have numerous members that focus on this model. With proper support, we can see that developing this would bring benefits to companies in being able to reduce costs by reducing dependency and re-using existing materials. The environmental cost would also be cut, and consumers would have greater awareness about the products and services they decide to purchase.

In general, it is good to see the involvement of the public sector in this space and cooperation with foreign governments. The involvement of various social and business communities is also encouraged. Incentivizing companies that practice sustainability and are involved in the circular economy is also a sound policy, as the companies we help set up in Vietnam often raise this point to us when discussing compliance.

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