Nam Cau Kien eco-industrial park - A circular economy pioneer

Enterprises are encouraged to transform to the circular economy model, but they still face obstacles in accessing preferential policies. Procedures to receive credit packages from domestic and foreign organizations are complicated and have criteria that most businesses cannot meet, writes Pham Hong Diep, chairman of industrial real estate developer Shinec JSC.

The Nam Cau Kien Industrial Park has gained renown as a pioneer in applying the circular economy model in Vietnam, while its investor, Shinec Joint Stock Company, has become a lodestar for building a chain of eco-industrial parks and clusters across Vietnam.

Established in 2001, Shinec has achieved success in many fields, especially in development, operation and management of industrial real estate as also smart city services.

The company is oriented towards developing a chain of eco-industrial parks and clusters associated with circular economy development. Shinec has developed many projects across the country and Nam Cau Kien Eco-industrial Park in Hai Phong city is its first such project.

The project is part of the company’s “Plan for Developing Green Industrial Parks - Phase 1 until the end of 2024”. Formed in 2008, it was meant to be a “typical example of a green, environmentally friendly industrial park”.

After the government issued Decree 35/2022/ND-CP on “Regulations on management of industrial parks and economic zones” and the Law on Environmental Protection 2020, Nam Cau Kien has been identified more clearly and specifically with the circular economy model.

It has met all the criteria for an eco-industrial park stated in Decree 82 and updated in Decree 35/2022/ND-CP as well as the criteria set for circular economy development.

Over more than 14 years, Nam Cau Kien Industrial Park is proud to have become the first Vietnamese-invested eco-industrial park that has achieved many positive socio-economic and environmental outcomes. In addition, its initiatives have made it a bright spot in environmental management and circular economy development, promoting industrial development in harmony with environmental protection and guarantee of social security.

However, after three years of implementing the circular economy model, it has become apparent that many regulations do not match the reality of eco-industrial park development in Vietnam. This mismatch has not only failed to create favorable conditions for the development of eco-industrial parks in the country, but also created several difficulties. The concept is no longer strange in Vietnam, but realizing it a big question that managers are seeking answers to.

Even amidst many unpredictable fluctuations in the world economy, businesses have shown a strong will to transform towards sustainable development, but they are stuck when they cannot determine their directions. This is a question mark and an extremely difficult problem of macro and micro balance that can decide the “destiny” of businesses and the country.

On the open road towards sustainable and long-term development, Nam Cau Kien Industrial Park has actively studied and completed the eco-industrial park criteria mentioned in the government’s Decree 82/ND-CP and stepped up the research and development of a “set of pioneering standards for management of the Nam Cau Kien Eco-industrial Park associated with the circular economy development.” This is expected to set standards applicable to all eco-industrial parks in Vietnam.

It is evident that Nam Cau Kien Eco-industrial Park has contributed to economic growth while mitigating environmental impacts by improving resource use efficiency and minimizing waste.

As such, it has become a suitable model for developing green industry and taking it to international standards. It has also delivered great advantages to enterprises investing in the IP and reaped several benefits of circular economy development.

Following the direction of developing eco-industrial parks to regenerate resources and realize benefits of the circular economy, investment has been increased in the following:

+ Renewable energy - solar power systems to serve production and business needs of enterprises at low cost;

+ System of water recirculation to serve production activities, ensuring the flow and pressure at low cost;

+ System of parks and attached utilities to meet the needs of sightseeing, tourism and learning; and

+ Enhancing the position of industrial circular economy chain. The Nam Cau Kien Industrial Park has built a symbiotic linkage model bearing unique characteristics of Vietnam, completely implemented by Vietnamese people, meeting both practical and legal criteria.

This was a prerequisite for the IP to apply the circular economic model. The IP has used its experience to apply several methods to recycle wastewater, including quick and cost-effective waste collection and treatment. It has developed production technology processes for each industry and successfully established cyclic, symbiotic chains.

With rational project classification, the industrial park has easily “separated” each group of business and service units to come up with the most effective and appropriate method of managing environmental components.

This has helped both businesses and the industrial park to understand production activities better and come up with the most suitable solutions to save time and avoid wastefulness.

Controlling input and output in production and business activities of each enterprise plays an important role in efficient resource use and waste management. Nam Cau Kien Industrial Park has set up cyclic symbiotic chains for major industries including steel, plastic, electrical and electronic auxiliary industries, while forming new symbiotic chains in renewable energy and circulation of water resources.

Understanding the important role of sustainable greendevelopment, Nam Cau Kien has formed the Eco Nam Cau Kien Entrepreneur Club. The club aims to promote the strength of each enterprise in reaping common economic and environmental benefits, cooperating for mutual development in the direction of circular economy and joining hands to successfully advance the Nam CauKien Eco-industrial Park model.

Thanks to the joint efforts by all members, circular chains have been strengthened and expanded, proving their important role in the development of each business. The IP has grouped raw materials that are likely to affect the environment so as to have effective management measures based on orientations, objectives, planning scale, medium and long-term plans and investment situation.

These have boosted the IP’s management efficiency. Areas have been zoned off for the use of raw materials and fuel. They have also been divided into groups of clean industries and those with risk of causing pollution.

The IP has a system to collect, transport and treat all wastewater up to regulated environmental standards before discharging it into the environment. In doing this, it has combined the “partial circulation” and “comprehensive circulation” models.

Each business in the IP designs its processes to ensure maximum reuse so that “partial circulation” takes place at the enterprise level. The remaining amount of wastewater generated by the enterprise is collected and treated by the industrial park to meet the standards of recirculation and serve production needs of the enterprise itself.

This helps reduce pollution and waste of resources. One of the most prominent features at Nam Cau Kien are strong sectoral and inter-sectoral business connections, making enterprises each other’s potential customer and supplier, thus forming double circular chains and generating greater benefits.

To make this happen, each “customer” business is provided withraw materials and fuel, and has its waste treated by “suppliers” in the IP. At the same time, this “customer” also becomes a “supplier” for another group of “customers” in the industrial park. So businesses exchange products with each other and this continuous supply and demand generate key economic intersections and deliver multi-dimensional benefits.

This system forms a chain wherein the links strengthen each other. A parallel highlight is that investor Shinec is also an important link connecting the linkage chains of businesses and directly participating in the formation of symbiotic relationships in terms of resource and renewable energy savings, particularly in the circulation of water resources and solar power throughout the industrial park.

The industrial park is using a technological process to classify normal industrial waste and hazardous waste under the circular economy model. It uses advanced technology to meet the waste collection and treatment needs for all investors in the industrial park in a fast, circular system.

The IP’s cyclic symbiotic chain in waste treatment is also capable of serving other industrial zones and major partners in the city and neighboring areas such as LG and Samsung, helping to optimize the investor’s collection time and costs.

Currently, the industrial park has three large-scale waste treatment plants, meeting the needs of all enterprises in the IP quickly and promptly. In addition to waste treatment, Nam Cau Kien Industrial Park has used renewable electricity generated from its entire roof area, bringing a large amount of clean electricity to businesses, thus contributing to mitigating the current energy crisis as well as climate change impacts.

Sustained efforts to raise awareness

At Nam Cau Kien, activities are organized throughout the year to raise awareness of environmental protection and carry sustainable development values to the future. For example, the IP’s environmental communication center welcomes all-level student delegations and business managers who come to learn about different models and survey applications for their projects.

Contests on environmental protection initiatives and green enterprises, World Environment Day commemoration, annual tree planting and seminars on various environment-related topics are held regularly. In addition, ecological works connecting culture and history and promoting community tourism have been implemented to show the importance and value of land in the industrial zone. These include the Garden of General Vo Nguyen Giap’s Memorabilia, the sand table featuring Dien Bien Phu Campaign, the Japanese Garden and the wastewater treatment plant campus.

In recognition of its approach and work, Nam Cau Kien Industrial Park has been selected by the Japanese Ministry of the Environment as a participant in the program on “Promoting eco-industrial parks towards carbon neutrality in Hai Phong city”.

This is a cooperation program between Japan’s Kitakyushu city and Hai Phong city, with the goal of supporting and providing incentives that will make Nam Cau Kien an emission-neutral eco-industrial park by 2030.

Difficulties, obstacles

Despite successful implementation of the circular economy model, the project has also encountered many difficulties and barriers, greatly affecting its progress. Along with the studies and assessments on the current industrial park development situation in Vietnam, it is necessary to quickly remove obstacles in terms of procedures and policies to help businesses better understand and successfully implement the model.

First, Decree 82/ND-CP/2018 and the Law on Environmental Protection 2020 are the first legal documents in Vietnam that have laid the foundation for the transformation of conventional industrial zones into eco-industrial parks and the development of circular economy.

On May 28, 2022, the government issued Decree No.35/2022/ND-CP on “Management of Industrial Parks and Economic Zones” to replace Decree 82, effective from July 15, 2022, an update aiming to take the eco-industrial park in Vietnam to a higher level.

In order to increase the awareness and investment interest of domestic and foreign enterprises and investors in the circular economy model, thereby concretizing the goal of reducing greenhouse gas emissions towards net zero emissions by 2050, the Prime Minister issued Decision 687/QD-TTg on June 7, 2022.

While the documents issued thus far have identified a main development direction for the Vietnamese economy in the first half of the 21st century and set clear goals, businesses still face many difficulties in understanding and accessing them.

There are no guiding circulars and legal documents that businesses can use. Enterprises are encouraged to transform but they still face obstacles in accessing preferential policies. Procedures to receive credit packages from domestic and foreign organizations are complicated and have criteria that most businesses cannot meet.

Second, financial stability and strength is crucial for transforming and building a circular economy, but market fluctuations and the impact of epidemics and natural disasters have landed many Vietnamese businesses in financial crises.

In particular, Vietnamese businesses are mainly small, young and most vulnerable to global instability. Many businesses have gone bankrupt, unable to withstand economic turbulences. Recovery and re-establishment of their position is very difficult, making businesses hesitant and not ready for circular economy development.

Third, there are many challenges facing authorities and businesses in ensuring sufficient power supply to boost economic recovery. The fuel crisis and global fluctuations in the recent past time have made “power hunger” a big threat. Low-carbon alternatives may be the future, but it will be very difficult to apply them, because the amount of fossil fuel needed for production accounts for too large a proportion, while renewable energy sources are developing in a scattered way and on a small scale.

The Vietnamese government encourages renewable energy projects, but inadequate regulations have rendered several investment projects idle, and it costs businesses a lot to maintain their operations.

Fourth, more attention should be paid to waste treatment projects. Waste treatment projects need to be planned well for areas with large amounts of waste such as industrial parks and clusters. A huge amount of domestic and production waste is generated everyday. The main solutions are to use recyclable materials and deal effectively with waste generated from non-biodegradable materials; as also treat pollution at landfills.

For production waste, it is necessary to optimize the stages of collection, transport and treatment to quickly process large volumes and save transportation and treatment costs for businesses.

Fifth, it is necessary to develop a core youth population that cares about the environment and society, and will become individuals who acquire and inherit knowledge to promote and implement long-term plans.

Sixth, special attention should be paid to building a multi-dimensional connected economy, especially the Internet economy and cloud computing because they will be channels for storing multi-utility resources and for sharing and connecting individuals and organizations quickly on global issues and crises.

Seventh, to ensure the sustainable, long-term and effective development of the circular economy model, it is necessary to quickly respond and adapt to the trends of the times while expanding it with more projects that:

- Implement the circular economy in all activities;

- Build a roadmap and database on circular economy that businesses can use effectively;- Prepare for a shift in demand for resources when implementing the circular economy; and

- Implement the circular economy in association with technological developments including the digital economy and Industrial 4.0.

It is imperative to resolve energy problems; ensure stable supply and demand; implement circular economy step by step; and facilitate transportation, import and export procedures and market expansion.

Eighth, it is necessary to evaluate and recognize eco-industrial parks and the circular economy, as well as issue preferential policies for IPs that have pioneered and met set criteria so that the model can be replicated in future projects and serve as an example for other businesses to transform and apply it.

Droughts in China and European countries, the highest temperature spike in the past 60 years, historic floods in Pakistan, ice melting, sea level rise and earthquakes are indications that nature is responding to what humans have done.

This highlights the urgent need to correct mistakes and work together for ensuring stable, sustainable growth. Let’s take small steps to create a big movement for a strong and comprehensive transformation.

Acting on practical and comprehensive evaluations of global experiences in eco-industrial park development as also economic and technological issues as well as organizational capacity in Vietnam, Nam Cau Kien Industrial Park has transformed itself to become an exemplary eco-industrial park model that can be replicated in other industrial zones nationwide. It also exemplifies an inclusive eco-industrial model from which common criteria can be developed on the circular economy, contributing to wider, sustainable application of the model.