Low-carbon engine needs to kick into gear

Extra carrots are needed to attract more low-carbon investment

According to the World Investment Report 2010, released by United Nations Conference on Trade and Development (Unctad), transnational corporations can be a key factor contributing to the fight against climate change.

Unctad estimates that in 2009, foreign direct investment (FDI) flows into key low-carbon business areas, including renewable, recycling and low-carbon technology, alone amount to roughly $90 billion globally. But taking into account embedded low-carbon investments in other industries and various transnational corporations  non-equity activities, the actual total investment is larger.

As one of the most vulnerable countries to climate change and an attractive place for FDI, Vietnam could attract investments from transnational corporations  to boost contributions towards low-carbon economic growth, said Masataka Fujita, chief investment trends and data section division on investment and enterprises of Unctad.

“Transnational corporations  are major carbon emitters, but they are also low-carbon investors. Certainly, countries like Vietnam need low-carbon investments from them,” said Fujita.

The Unctad report shows that transnational corporations can contribute to reducing emissions by improving production processes in their operations and along their value chains, and by producing and marketing cleaner goods and services.

However, Fujita said Vietnam had yet to formulate suitable regulations to encourage transnational corporations  to bring low-carbon investment to the country. As a result, the lack of suitable regulations would let transnational corporations  be carbon emitters in Vietnam because they just invested in the country with low manufacturing technologies.

“I haven’t seen any specific regulations to encourage low-carbon investment in Vietnam. It is a big shortcoming towards a low-carbon economic growth,” said Fujita.

In fact, Vietnam is now facing environmental pollution in southern provinces such as Dong Nai and Ba Ria-Vung Tau, which received lots of FDI.

The Ministry of Planning and Investment’s Foreign Investment Agency director Do Nhat Hoang admitted the current investment policy was not attractive enough to encourage transnational corporations  to bring low-carbon manufacturing technologies to Vietnam while a lack of strict legal framework was major reason for recently detected environment pollution cases at foreign invested enterprises.