Vietnam urged to remove legal barriers for eco-industrial park development

The development of eco-industrial parks is proving tough as there are many obstacles in terms of mechanisms, determination, and participation of enterprises, experts have said.

An eco-industrial park is defined as a community of businesses that produce and provide goods and services, while also developing and protecting the environment at the same time.

The stricter standards needed for an eco-industrial park require enterprises to invest a large amount of money to meet regulations and comply with a raft of laws to protect the environment and the rights of workers while ensuring basic services.

In addition to clean production methods and efficient use of resources, a minimum of 25% of the land needs to be allocated to green buildings. Eco-industrial parks must have a mechanism to monitor and effectively manage inputs, outputs and emissions.

Great benefits

Truong An Dương, general manager of North Industrial & Residential of Frasers Property Vietnam, said eco-industrial parks can bring great benefits, but investing in them incurs many costs.

He said global industrial real estate development will require more stringent requirements related to green certificates in the future.

Investment costs for eco-industrial parks are high, which impacts selling and rental prices. However, green standards bring the park developers a competitive advantage in the market, because foreign investors, especially investors from the US and Japan, are very interested in green development, he told local media.

In addition to increasing the firms' competitiveness, the development of eco-industrial parks also brings many economic and environmental benefits.

Nha Vinh Julien Nguyễn, country head of WHA Vietnam – an investor of WHA IZ 1 Industrial Park in the central province of Nghe An, also told the online newspaper that developing eco-industrial parks is a good direction as secondary investors, manufacturers, and consumers are demanding more sustainable supply chains.

Meanwhile, Giang Ngoc Phuong, deputy general director of Hiep Phuoc Industrial Park JSC, said the conversion from traditional industrial parks to ecological industrial parks has reduced the use of energy, clean water and environmental emissions, which has helped businesses slash production costs.

According to the Ministry of Planning and Investment (MPI) and the United Nations Industrial Development Organisation (UNIDO), the conversion of existing industrial parks to eco-industrial parks contributed to savings of nearly VND70 billion ($2.8 million) annually in Vietnam from 2020-24.

A total of 603 projects were implemented in industrial parks across the country to make existing facilities greener and more resource-efficient during the period, which helped reduce CO2 emissions by 8,910 tonnes per year.

Le Thanh Quan, head of the ministry's economic zone management department, said: "Initial conversion to the eco-industrial zone model has brought economic, social and environmental benefits while mobilising large resources from the private sector for green industrial solutions, ensuring energy security, sustainable development, and climate change adaptation."

By 2030, 40-50% of localities will have plans to convert existing industrial parks to eco-industrial parks and up to 10$ of localities have orientations to build new eco-industrial parks to attract investment, according to a summary report on the development of industrial parks and economic zones over the past three decades released by the MPI, which has been approved by the government.

Problems in development

Despite these advantages, there are many difficulties in the development of eco-industrial parks, experts have said.

To be recognised as an ecological industrial park, businesses operating in this park need to participate in cleaner production activities, effectively use resources, and cooperate in industrial symbiosis, but this process is not easy, they said.

According to Phuong, one of the main difficulties is encouraging businesses in the industrial park to participate in the model because most of them have almost no experience and do not understand the transformation process.

Meanwhile, there is still no specific incentive mechanism, especially with regards to corporate income tax and tax policies, for developing eco-industrial parks, Phương said, adding that overlapping legal documents between ministries and branches in managing the reuse of industrial waste creates headaches for companies.

Nguyen Kim Lien, a chemical and environmental expert, said there remains huge potential for industrial symbiosis in industrial parks. However, legal and policy issues can be major barriers, she said.

Duong from Frasers Property Vietnam suggested the state draw up more incentive policies to encourage green development, compensating costs for developers.