The boon of capital source, employment and microeconomic stability contributed by foreign direct investment (FDI) projects is undeniable. However, foreign investors seem to be ignoring long-term impact on the environment. In a bid to seek for a solution to this reality, the Central Institute for Economic Management (CIEM) in collaboration with the EU-MUTRAP Project organised a workshop on “Mitigation of Environmental Impacts Related to FDI in Vietnam” in Hanoi.
Businesses still discharge
Dr Nguyen Thi Tue Anh, Vice President of CIEM, said FDI is playing an important role in Vietnam’s economic growth, evidenced by overwhelming export share, employment, contributions to economic restructuring toward industrialisation and modernisation. But, to have sustainable development, we need to say no to FDI projects that cause negative impacts on the environment. Attracting FDI must ensure the least impacts on the environment.
Mr Nguyen Manh Hai, Director of the Public Service Policy Committee, CIEM, said, in recent years, the world has seen a popular trend that developed countries are exporting pollution to developing countries through increasing FDI. In reality, Vietnam is faced with the high import of pollution. Many FDI enterprises have imported substandard - obsolete and outdated - technologies, equipment and machinery into Vietnam. Worse, many environment-polluting and nature-exploiting FDI companies do not have recovery and conservation measures.
He said CIEM surveys showed that 67 per cent of FDI enterprises operating in Vietnam are export manufacturing companies with low value-added products, backward energy-consuming technologies and high emissions to the environment. From 1988 to 2013, only 28 water supply and solid waste projects were licensed out of nearly 16,000 FDI projects invested in Vietnam. Besides, there are more signs that FDI companies operating in environment-polluting fields like garment and textile, footwear and chemical are invested in Vietnam. Specifically, only 5 per cent of FDI companies have high industries, 80 per cent have average technologies, and 14 per cent use low technologies. Meanwhile, investment and corporate income tax laws only give priority to high-tech, environmentally friendly industries and professional waste treatment processes.
According to a survey on 15 FDI companies in Vietnam, up to 45 per cent have not applied low-emission production processes. Low cost is also the most important factor for companies to opt for technologies. In fact, a lot of businesses do not make reports on environmental impact assessment and do not commit or do not comply with environmental commitments. The survey results also showed that nearly 70 per cent of respondents said that they would not carry out emission reduction processes if they were not mandatory. On the other hand, only 66 per cent of industrial zones have centralised wastewater treatment plants. Does this mean that 34 per cent of FDI industrial zones discharge untreated waste into the environment? Many industrial zones do not build waste treatment facilities, or they do not operate built ones, or they do not operate them effectively or those facilities have been downgraded. For example, in the Mekong Delta, 75 per cent of large-scaled industrial zones and 85 per cent of small-scaled industrial complexes do not have centralized sewage treatment facilities.
These are really alarming numbers concerning environmental health in Vietnam. If we exchange natural resources for economy, we will have to pay very heavy prices when foreign firms leave. Dr Nguyen Thi Tue Anh said that attracting FDI sources is essential, but we must focus on sustainable development in the future and reduce environmental impacts.
Environmental legislation is not strong enough
Dr Nguyen Thi Tue Anh warned that there are differences in behaviour and compliance with environmental laws between production facilities placed in developed countries and those situated in developing countries. Although Vietnam like other countries such as China, Japan and South Korea has environment laws, a company investing in Japan or South Korea will more strictly comply with environmental laws than it does in Vietnam. Foreign companies will more likely bring outdated and polluting technologies to Vietnam than developed countries, she said.
Explaining this, Anh said that, in addition to rolling out the red carpet to welcome foreign investors, Vietnam has also made a great effort to introduce environmental protection policies and mechanisms in line with international practices and laws. However, the weakness in Vietnam is still weak in enforcing environmental laws in reality. Therefore, the urgent and immediate requirement is to quantify and address shortages of institutional capacity of environmental management organisations in Vietnam.
According to Dr Nguyen Manh Hai the introduction of environmental laws in Vietnam is the weakest point in institutional stages and human resources. Many businesses have said that they have faced difficulties in these issues like official channels on environmental regulations, overlapped regulations and excessive compliance costs.
Anh Phuong
Vietnamese
