Why Vietnam needs a circular economy for plastics

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Why Vietnam needs a circular economy for plastics Children playing on the beach next to rubbish washed up on the shore in Binh Thuan, Vietnam.

The increased use of plastics has accompanied Vietnam’s fast economic growth over the last decade. With growing urbanization and a rising middle class, the demand for plastics has grown rapidly in consumer packaging, construction, household goods, and automotive industries because of their convenience and versatility. In 2019, the plastic industry contributed about US$17.5 billion to Vietnam’s economy, equivalent to 6.7 percent of the country’s GDP.

However, increasing consumption of single-use plastics and mismanagement of wastes is visibly polluting the country’s cities and beaches, adversely impacting biodiversity and natural habitats, and contributing to climate change. These impacts are especially acute for Vietnam given its 2,000-mile coastline and dependence on key economic sectors like tourism and fisheries. The good news is that Vietnam is moving from creating awareness of the plastic waste problem to defining solutions by developing action plans and setting ambitious recycling targets . Its national action plan for management of marine plastic litter aims to reduce 75 percent of Vietnam’s marine plastic debris by 2030.

And yet, important as these steps are, incrementally tweaking waste management policies and overloaded solid waste management systems without addressing the current extractive and wasteful economic model will not achieve needed long-term solutions. Therefore, we must tackle the problem more aggressively and plan for a deliberate shift to a “circular economy,” in which used plastics are managed as valuable material resources rather than as wastes to be cheaply or indiscriminately discarded.

The World Bank and the International Finance Corporation are putting to work their collective public and private sector expertise to support policies and investments that could help build a circular economy by engaging stakeholders across the plastic value chain. We are developing upstream analytics and targeted interventions at the individual country and regional level to address both the stock and flow of plastics for this complex transboundary problem.

According to a new study by the World Bank Group, about 75 percent of the material value of recyclable plastics in Vietnam is lost – the equivalent of US$2.2 to 2.9 billion a year – because used plastics are not sorted, collected, or recovered . Although Vietnam has many small recyclers and an average recycling rate of 33 percent for the four key resins researched, the volume of plastics recycled is quite small compared to inputs to the economy. Circular economy approaches can help capture significant additional material value, but this will indeed require market and structural changes and significant investments to address infrastructure gaps.

The private sector is ready to drive innovations in project financing, packaging design, new business models, and advanced recycling technologies but it cannot do this alone. Governments must help support a plastics circular economy transition via policies and standards that enable the three Rs (3Rs): reduce, reuse, and recycle. Recent revisions to Vietnam’s Law on Environmental Protection (LEP) are a good start. The Ministry of Natural Resources and Environment should use this framework to develop directives and circulars that are enforceable and come with clear targets and responsibilities. The Extended Producer Responsibility (EPR) provisions under the revised LEP, which hold producers and importers of plastic packaging responsible for their waste management will help facilitate increased recovery and recycling, especially for flexibles and other low-value plastics that are currently not collected by the informal sector.

The proposed EPR scheme should be supplemented with other policy provisions to help scale-up the domestic recycling industry by creating a thriving secondary market for recyclables. This could, for instance, include mandatory “recycled content standards” for key products that go beyond voluntary commitments by global consumer brands. The government could lead by prioritizing purchases of environmentally friendly goods (e.g., products with recycled content) through a green public procurement program. Similar programs leveraging the substantial purchasing power of the public sector have helped increase the market share of sustainable products in Europe and Japan.

Although the current focus is on plastic recycling because that is where most investable opportunities are, the transition to a circular economy is not simply about recycling or more stringent waste management regulations . Rather it is about designing and enforcing the right upstream policies and promoting a materials innovation to eliminate plastics that we don’t need while keeping essential plastics recirculating in the economy for an extended time without leakage to the environment.

Building on the launch of the National Plastic Action Partnership, the revised LEP, and other plastic pollution reduction actions, Vietnam can further raise its level of ambition by incorporating circular economy actions for plastics in the next revision of its Nationally Determined Contributions under the Paris Climate Agreement. We must address materials management because conventional greenhouse gas (GHG) mitigation measures like energy efficiency, solar, and wind energy projects alone will not be sufficient to close the climate gap in the long run. This is key for emerging economies like Vietnam that will be adding new production capacity for virgin plastics based on fossil fuels resulting in increased GHG emissions.

Circular economy approaches can help reduce the pressure on Vietnam’s already stressed solid waste management (SWM) infrastructure by designing out wastes . Solid waste volumes have doubled in less than 15 years and are expected to double again by 2030. Therefore, 3R interventions must be supported by nationwide investments in SWM infrastructure for better waste sorting, collection, and transport. Increased coordination between national and provincial governments will further drive SWM efficiencies.

As Vietnam transitions to a low-carbon growth strategy and aims for a green recovery post-COVID, this is indeed the right time for mainstreaming a circular economy for plastics  to manage finite resources, design out wastes and emissions, and restore the environment.

The article was first published on the Vietnam News.

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Carolyn Turk

Country Director for Vietnam

Kyle Kelhofer

IFC Country Manager Vietnam, Cambodia and Lao PDR

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