More than ever, the circularity business model has now become a consequential issue for all stakeholders, especially enterprises that want to improve business efficiency, enhance brand equity, win partner and customer confidence, and expand market share.
In economic development, Vietnam has faced the mounting challenge of environmental pollution alongside the shortage of resources, including energy, and has struggled in looking for ways to address such issues without compromising economic growth.
Over the past decades, enterprises active in Vietnam have largely embraced the linear economy, following the traditional cycle of tapping natural resources, manufacturing, and emissions, which has led to depletion of resources and environmental pollution. Waste discharged in Vietnam has reached alarming levels, at some 75,000 tons daily, with more than a half in urban areas, while traditional methods of incineration and landfill will no longer be viable in the foreseeable future.
Plastic waste alone has also surged, as plastic consumption in Vietnam increased by 15 times over three decades, from around four kilograms in 1990 to nearly 60 kilograms in 2020, according to a report by the Vietnam Plastics Association.
Vietnam ranked fourth in the world in terms of plastic waste discharge with 1.83 million tons a year in 2020, behind only China, Indonesia and the Philippines, while data from the Ministry of Natural Resources and Environment put Vietnam’s plastic waste at 3.27 million tons in 2022. The proportion of plastic waste being recycled remained low, at some 9%, and the World Bank said Vietnam wasted around US$3 billion a year due to failure to recycle all plastic waste.
Early birds
The remedial measure rests with the model of circular economy, and luckily, many enterprises have jumped onto this bandwagon to pursue sustainability.
The term circular economy was first introduced in 1990 based on the concept that waste could be used as an input for a production cycle, and ever since, the model has seen positive responses worldwide. Circular economy comprises three key components, namely Reduction of discharge and emissions into the environment via efficient use of materials and energy, Reuse of products, and Recycle waste into new inputs.
The model, however, does not solely aim to treat and recycle waste discharged from the production process, but it targets to redesign the entire production process to optimize efficiency in using resources so that waste can be reused. As such, the circular economy helps enhance competitiveness by efficiently utilizing resources for development, while cutting the cost of environmental protection.
In reality, the circular economy is increasingly being introduced in Vietnam, in chains, in groups, and in individual enterprises.
At Hiep Phuoc Industrial Park in HCMC’s Nha Be District, the circular economy is being gradually applied in the form of a chain, when waste from one manufacturer is used as input materials for another. Hot steam from the edible oil distillation process at Cai Lan Factory, for example, is used for drying materials at Meizan Factory, while waste from a mould manufacturing facility is used for manufacturing unbaked bricks and other materials for another facility.
Many sustainability-minded enterprises have sought to club together to collaborate with one another in applying the circular economy. PRO Vietnam, a coalition of leading companies with a commitment to make Vietnam green and clean via the circular business model, has seen its membership expand rapidly. On August 13, 2024, PRO Vietnam admitted the brewery SABECO and seven other enterprises to expand its membership to 30, with a common goal of promoting collecting and recycling packaging items.
For individual businesses, many have successfully applied the circular economy model.
Ajinomoto Vietnam, a member of PRO Vietnam, has sought to reduce water use by investing over VND100 billion to treat wastewater and reuse this resource, especially for cooling its production chain.
Similarly, the denim manufacturer Saitex International in Dong Nai Province has installed a new wastewater system at a cost of US$1.5 million, allowing the company to reuse 99% of its input water, the remaining 1% being evaporated in the production process.
HEINEKEN Vietnam has sought to apply the circularity model throughout its businesses. It has used 100% of renewable energy in five out of six breweries, collected for recycling and reusing all beer bottles and cans, while 100% of carton paper and 40% of aluminum utilized at the company are recycled materials. By promoting biomass energy, the company in 2019 purchased 40,000 tons of rice husk and other agricultural products, generating total revenue of VND52.6 billion for local farmers, according to VnEconomy.
The beverage maker Suntory PepsiCo Vietnam has cut a deal with Duy Tan Recycling on strategic cooperation, under which the latter will supply recycled plastic materials for Suntory PepsiCo in the 2022-2026 period.
By applying the circular economy model, these early birds have contributed greatly to environmental protection on one hand, and creation of new business markets and new jobs for the economy on the other hand. The circular economic model ushers in new technologies, helping these enterprises cut costs, achieve sustainability, expand supply chains, and benefit the economy as a whole.
Circular economy as the norm
As Vietnam is integrating itself deeper into the global economy, sustainable development in general and environmental protection in particular have become the norm.
Take the country’s foreign trade for example.
Nguyen Hong Hanh, first secretary of the Vietnamese Trade Office in Belgium and the EU, said that while Vietnam’s exports to the European Union have increased sharply over the past four years since the EU-Vietnam Free Trade Agreement took effect in August 2000, stringent greening requirements have increasingly applied.
Vietnamese firms must adapt to the EU’s evolving green standards to maintain trade growth momentum, as the EU has required companies to demonstrate that their goods are produced in an environmentally friendly manner, particularly regarding sustainability standards.
Given the important role of sustainable development in economic growth, authorities have called for greater efforts to apply circular economy. The 2020 Law on Environmental Protection, Decree 08/2022/ND-CP of the Government, and Decision 687/QĐ-TTg dated June 7, 2022 of the Prime Minister all call for stronger commitment to circular economy to achieve sustainability.
However, all such legal regulations aim to encourage circularity via incentives such as tax breaks or credit, instead of making the approach compulsory.
Given the strong benefits from circular economy for businesses, society and the economy, it is high time to make sustainable development imperative, if not compulsory.
There need to be new regulations to raise awareness, such as a law on circular economy; there needs to be a new strategy to change the business landscape towards this goal; and there needs to be a strong political commitment to ensure that the State will play the enabling role, facilitating the adoption of the circular economy among all businesses and the people.
