Greener orientation in demand for IZs

May 06, 2022 | 15:00
With the importance attached to Vietnam’s many industrial zones, attractive incentives towards green growth are necessary to move investors in the right direction.
Greener orientation in demand for IZs
Vietnam’s Green Growth Index in regional and relative comparison (2019)

Deep C is one of the few industrial zones (IZs) selected by the Ministry of Planning and Investment to develop into an ecological and circular IZ.

Bruno Jaspaert, general manager of Deep C Industrial Zones said, “Efforts are underway to develop an eco-industrial park (IP) with high sustainability standards, with a focus on renewable energy, recycling, and efficient waste and wastewater management, along with green building construction and mangrove conservation.”

According to investment incentive policies such as Decree No.82/2018/ND-CP, the procedures for recognition of eco-IPs specified in the decree are not enough to encourage investors to partake in the infrastructure development of eco-IPs and the circular economy model.

“Decree 82 merely sets out regulations that are generally applicable to IZs and economic zones,” said Jaspaert. “However, the government needs to continue issuing guidelines to develop IZs towards an eco-friendlier and circular approach.”

Jaspaert cited current regulations and lamented that businesses involved in eco-IPs have not received significant incentives. For example, if energy-saving measures are applied in a park, the density of land use must be increased. Currently, such incentives for eco-IPs and conventional IZs are not much different, while investment costs for eco-IPs are 25-30 per cent higher.

The rapid industrialisation in Vietnam has been posing many environmental challenges. Trang Bui, general director of Cushman & Wakefield Vietnam, realised that in industrial production, investors must pay attention to planning to be able to reduce emissions and ensure a good working environment for all.

“The potential and right planning would be a good foundation for Vietnam to rise to the top in the region. Therefore, there is a great demand for supporting policies to increase the green space among projects,” said Bui. “Before granting the right to use public land, in addition to assessing the investor’s capacity, localities need to further evaluate the ability to contribute to the beauty and architecture of the urban areas.”

Dr. Jason Lee, country representative at Global Green Growth Institute (GGGI) said, “Vietnam is on its way to becoming a global manufacturing hub.”

In 2020, the sector accounted for over 58 per cent of the total foreign investment into the country and remains a driving force for the economy.

“Given the growing position of Vietnam in the global manufacturing sector and networks, without Vietnam achieving net zero emissions, it will be challenging to deliver on global targets even if other countries achieved their emission targets,” Lee said. “At this time, a number of countries are using strategic agenda such as the European Green Deal to jolt their economies into recovery. The significance of such strategies is not limited to the strengthening of environmental policies, but more importantly, an economic recovery initiative.”

The Green Growth Index (see chart), developed by GGGI, measures the performance of 115 countries in four green growth dimensions: efficient and sustainable resource use, natural resource protection, green economic opportunities, and social inclusion. The index and its dimensions are highly relevant metrics for tracking the implementation of the Sustainable Development Goals, the Paris

Climate Change Agreement, and the Aichi Biodiversity Targets.

According to the index, Vietnam is on par with other Southeast Asian nations and performs better than other lower middle-income countries, in areas such as efficient and sustainable energy (EE), efficient and sustainable water use (EW), and social inclusion. On the other hand, the results also reveal certain areas that Vietnam can improve and perform better in such as green trade (GT), green employment (GJ), and green innovation (GN).

“To achieve carbon neutrality, one of the most efficient policy tools being implemented in many countries is a domestic carbon market or emissions trading scheme. It is encouraging news that Vietnam recently announced a pilot programme for 2025, with the official full launch scheduled for 2028,” Lee recommended.

“Vietnam moves in the right direction as the market is essentially an incentive system benefitting those who could reduce emissions at the lowest cost. The establishment of the carbon market will incentivise and open cost-effective ways for domestic market participants, especially those of the industrial sector, to decarbonise and achieve carbon neutrality,” he added.

By Nguyen Hoang

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