Environmental Technologies Industries
||Environmental Technologies Industries
|Vietnam Environmental Export Market Plan|
|Chapter 3 - Legal and Regulatory Overview|
The Ministry of Science, Technology, and the Environment (MOSTE) is responsible for management of the environment throughout Vietnam. MOSTE coordinates environmental policies among ministries and between national and local governments and People's Committees. Within MOSTE, the National Environmental Agency (NEA) implements regulations set by MOSTE.
Figure 3.1 Institutional Structure of Environmental Regulation in Vietnam
At the provincial and city levels, the People's Committees are responsible for implementing MOSTE's regulations on environmental protection. Each local government has a department for monitoring environmental regulations - the Department of Science, Technology, and the Environment (DOSTE).
Ministry of Science, Technology, and Environment (MOSTE)
City People's Committees
Local Departments of Science, Technology, and Environment (DOSTE)
Environment Management Division
People's Committee of Districts
District Departments of Urban Management
DOSTEs in each locality are responsible for pollution control activities, EIA appraisals, issuing import permits, inspections of projects and establishments, imposing penalties, and presiding over dispute resolutions, along with the NEA, with regard to penalties for violating environmental regulations.
The People's Committees are permitted to promulgate environmental legislation at the city and provincial levels. If a local People's Committee sets its own environmental regulations that are stricter than those set by MOSTE, the local government's rules must be followed.
While the Ministry of Planning and Investment (MPI) mainly presides over issuing investment licenses, it does have an environmental unit called the Department of Science, Education, and Environment. This department evaluates environmental impact assessments that are a part of the investment license application.
Various other ministries have ancillary roles in the protection of the environment or in the implementation of environment-related projects. For example, the Ministry of Transport is responsible for inspecting any form of transport to see that it complies with environmental standards. The Ministry of Finance is partly responsible for setting the fees or charges for issuing and extending an environmental permit.
Figure 3.2 Organization Chart of Vietnamese Ministry of Science, Technology, and Environment
Chu Tuan Nha
Pham Khoi Nguyen
Bui Manh Hal
Hoang Van Uy
National Environment Agency (NEA):
Nguyen Ngoc Sinh
Planning, Research, and Development
Phan Thi Lien
Finance and Accounting
Natural and Social Sciences Management
Agricultural and Technology Management
Investment Project Assessment
Apart from MOSTE, there are approximately 20 other central government ministries or institutions that have some role to play in environment protection. For example, general responsibility for the prevention of marine pollution lies with the National Maritime Bureau, but responsibility for dealing with the discharge of pollution from ships falls to the Ministry of Transport.
Key Agencies for Procurement and Implementation
In addition to MOSTE, the National Environment Agency, and local DOSTEs, other ministries and agencies are either directly responsible for approving environment-related projects and procurement decisions or play a vital role in making recommendations to final decision makers.
Because Vietnam relies on consensus rather than centralized decision making, it is important to secure approvals from any office that might have a say in the decision-making process. Getting an official to sign off on a project or procurement decision, no matter how detached from a project they may seem to be, can often mean the difference between winning or losing a contract in Vietnam. While approval from the agencies described below may not guarantee a project's implementation or a procurement contract, disapproval will likely halt a project or procurement decision in its tracks.
Figure 3.3 Organization Chart of the Ho Chi Minh City Department of Science, Technology, and Environment
Dao Van Luong
Tran Dinh Phu
Planning & Finance Division
Nguyen Thi Nga
Science & Technology Management Division
Do Truong Trl
Industrial Property Management Division
Environmental Management Division
Doan Thi Tol
PC World Magazine
1 director, 2 deputy directors
Science & Technology Center
1 director, 3 deputy directors
Center for Scientific & Technological Information
1 director, 1 deputy director
HCMC Department for Standards, Quality, and Metrology
1 director, 1 deputy director
Center for Analytical Services & Experimentation
1 director, 2 deputy directors
City and District People's Committees
People's Committees are responsible for implementing all foreign-funded projects within their cities on behalf of the government of Vietnam. Vietnam's larger cities are divided into districts. District People's Committees (DPCs) implement the administrative orders of the City People's Committee. DPCs may share responsibilities with city agencies for operating and maintaining infrastructure under their jurisdiction, such as canals, drains, and bridges.
Agencies within DPCs are responsible for refuse collection, drainage, sewerage, and environmental protection within their jurisdiction. DPCs may also be responsible for appraising proposed small-scale (less than 2 billion dong) infrastructure projects in these areas. Once approved by the City People's Committee, the District People's Committees are then responsible for managing these projects.
Departments of Planning and Investment
The Ministry of Planning and Investment is responsible for disbursing central funds to all environmental projects. At a local level, Departments of Planning and Investment (DPIs) are key decision makers for preparing and budgeting development plans for cities, whether funded domestically or from external sources. One foreign sponsor of a major water-related project in Ho Chi Minh City said that a positive recommendation from the DPI for his project was essential to getting it approved by the Ho Chi Minh City People's Committee and the Ministry of Planning and Investment.
For projects valued under $500,000, the DPI plays the largest role in granting approval. The Ministry of Planning and Investment grants approval for projects valued over $500,000. However, even for these larger projects, the DPIs provide critical recommendations to the MPI as to the feasibility of proposed projects. All projects must be included in DPI plans before they are examined for appraisal by the MPI, City People's Committees, or national ministries. The DPI provides its recommendations on development needs, potential funding sources, and the addition or elimination of certain components to a project.
Because of the DPI's key role in approving and overseeing foreign-funded development projects, there is a plan to include the DPIs in project management units (PMUs). This would enable DPI officials to monitor overseas development assistance projects and ensure that PMUs fulfill donor requirements on bidding, work plans, and loan management.
Departments of Finance
The Ministry of Finance is involved in all decisions to allocate central funds to environment-related projects. At a local level, departments of finance provide input in appraising the contract rates for public services. Together with the DPI, the departments of finance prepare annual plans for fund utilization that are subject to approval by local People's Committees before being forwarded to the Ministry of Finance for approval. The local departments of finance serve as treasurer, disbursing funds and approving invoices submitted by public service companies.
Departments of Transport and Public Works
Local departments of transport and public works (DTPWs) are responsible for city infrastructure such as canals, drains, sewers, water supply, and solid waste management. While DOSTEs are responsible for monitoring and enforcing environmental standards, DTPWs are responsible for implementing environmental services through companies under their management. For example, urban drainage companies within DTPWs are responsible for drainage/sewerage implementation, including issuing permits to connect to city sewer networks. City environmental companies are responsible for collecting and transporting solid waste from collection points to transfer stations. Waste disposal companies are responsible for managing solid waste landfill sites. Water supply companies are responsible for distributing and maintaining pipe networks. These companies purchase environmental technologies (subject to DTPW approval) and have significant input on plans for the development of the cities' infrastructure.
Ministry of Construction
The Ministry of Construction (MoC) and its local affiliates, the departments of construction within individual cities, is responsible for construction quality and appraisal of civic and industrial projects using either domestic or foreign funding sources. In effect, the MoC has been given a broad mandate by the Vietnamese government to manage urban development in its cities.
The MoC has numerous companies under its management that are used as primary or sub-contractors on environmentally related infrastructure projects. The Vietnam Water Supply and Environmental Company (VIWASE) is the key company under the Ministry of Construction that participates in nearly all projects related to water-supply infrastructure. VIWASE often acts as a subcontractor on projects lead-managed by a foreign contractor. Two representatives from foreign companies that have bid successfully on water-related projects cited establishing good working relationships with VIWASE as helpful to their efforts to win contracts.
Legal Framework and Enforcement
In the early 1990s, Vietnam's leaders became aware that the country's tremendous economic growth was causing serious pollution problems. On December 27, 1993, the National Assembly passed the Law on Protection of the Environment.
The law has seven chapters and 55 articles, and broadly covers everything from requirements for environmental impact assessments to a list of prohibited activities and a system for addressing non-compliance. The most important article of the law is the Decree on Protection of the Environment.
The Decree on Protection of the Environment details: the duties of various government agencies and local organizations; the procedures for undertaking environmental impact assessments (EIAs); mechanisms such as standards and permits for preventing, combating, and rectifying environmental hazards, pollution, and degradation; the types of environmental standards; methods of financing activities to protect the environment; and establishing inspectorate and compliance systems.
In addition to passing the Law on Protection of the Environment, the government periodically issues incentives for companies investing in projects related to environmental protection. Most recently, the government issued Circular 1817 on October 21,1999, that outlined tax benefits given to investment projects involving environmental protection, pollution treatment, and waste treatment and processing.
MOSTE has delegated to local DOSTEs the power to verify that projects continue to comply with environmental standards. MOSTE has the overall responsibility for organizing environmental inspections and ensuring that actual inspections are executed according to the relevant environmental standards. The inspectors themselves are drawn from agencies such as NEA, MOSTE, the State General Department of Inspection, the People's Committees, and customs bodies.
Commercial and manufacturing establishments are required to make financial contributions for environmental protection, pay compensation for any damage they cause by their activities, and rectify any environmental degradation they cause. To improve enforcement of this principle - in this instance, for the mining sector - the government in October 1999 issued Circular 68CP/Article 15. The circular requires companies engaged in mining exploration or exploitation to contribute funds to an environment rehabilitation fund. The funds are put in an escrow account, to be used if the company's operations require environmental clean-ups. MOSTE must present any cases of serious environmental hazards to the prime minister and submit proposals for rectification of these problems for his approval.
Besides the penalties imposed for violations of the Law on the Environment, the government attempts to create other disincentives for polluting industries. The government has compiled a list of the country's worst polluters and has entered them into a "black book" which is distributed to provincial offices responsible for environmental protection. The government also uses the state-owned media to highlight environmental violations committed by these black book companies and foreign enterprises.
These efforts aside, overall enforcement of environmental guidelines remains weak, especially regarding domestic enterprises. One of the key problems with Vietnam's enforcement mechanism is that fines are so low that they do not provide an incentive for companies to invest in pollution-prevention technology. While the fines vary depending upon the degree to which standards have not been met, they usually fall in the range of 2 to 5 million dong ($150 to $400). These costs are minimal, when compared to the cost of installing primary and secondary waste treatment facilities.
According to an official at the DOSTE office in Ho Chi Minh City, domestic enterprises are generally aware that they cannot meet environmental standards set in the law. Lacking the financial ability to minimize or treat waste, companies simply try to keep their emissions as close to the standards as possible in order to keep the fines at a manageable level.
The administrative structure for managing inspections and levying fines complicates enforcement. In Ho Chi Minh City, for example, DOSTE used to have an autonomous division responsible for enforcing standards called ENCO. The division had its own "seal and signature," according to one DOSTE official, which gave it the mandate to inspect and impose fines. In 1999, however, this division was folded back into DOSTE, weakening its clout. The division now must go through the DOSTE bureaucracy before performing its role as enforcer.
In practice, organized, and sometimes heated, protests by local citizens are the strongest incentive for local companies to install waste treatment systems. Citizens who believe that a company is discharging harmful pollutants will take their complaints to the local company. For example, in the Xuan Truong area of Thu Duc district, a heavily industrialized area outside of Ho Chi Minh City, citizens have organized and brought complaints to polluting companies. If this does not produce results, complaints are lodged with local authorities, provincial authorities, and in some cases the National Assembly in Hanoi. There have been isolated cases of citizens taking action themselves, such as blocking discharge pipes. Depending upon the success of the lobbying efforts, the district officials, People's Committee officials, etc. will then contact the company directly. According to some Vietnamese environmental experts, polluting companies will only take action once forced to do so by these government offices, not by DOSTE officials.
Environmental Impact Assessments
All projects implemented within Vietnam are subject to environmental standards issued by MOSTE, of which there are currently over 100.
MOSTE requires environmental impact assessments (EIAs) from two types of investment projects. Group I investment projects are those that can potentially cause wide-scale environmental pollution, easily cause environmental pollution, or are difficult to control and for which it is difficult to determine environmental standards. In practice, these are the only projects that require detailed EIAs.
Group II investment projects are all the remaining projects, and the applicant must prepare and analyze its own EIA reports in order to receive a certificate of "registration of satisfaction of environmental standards." In practice, these assessments are very general and are not scrutinized by government agencies.
For companies located in industrial zones, the industrial zone authority submits the EIAs for tenants.
When applying to the Ministry of Planning and Investment for an investment license, the application must contain a summary of the potential environmental impact of the particular project. The application must include information about the proposed site, a summary of the production technology, any sources of pollution, all measures to minimize that pollution, the environmental supervision program, and all undertakings to satisfy environmental standards. At this point, MOSTE decides whether the project falls into Group I or Group II.
After the investment license has been issued and the project site determined, an application file containing environmental impact documentation must be submitted. (In the case of petroleum projects, the EIA report must also include plans for controlling oil spills.)
According to Circular 490, issued by the prime minister, Group I projects include some of the following:
- Projects situated within or close to environmentally sensitive areas, such as natural parks, tourist sites, cultural vestiges of international and national interest;
- Projects developing a master plan for (a) a whole region (b) a whole sector (c) a city (d) IP or export processing zone;
- Projects on oil and gas: (a)exploitation, (b)processing, (c)transportation,and (d) warehousing (greater than 20,000 cubic meters);
- Steel and metallurgy (greater than 100,000 tons per year);
- Tanneries (greater than 10,000 tons/year);
- Textiles (greater than 20 million meters/year);
- Paints (greater than 1000 tons/year);
- Rubber processing (greater than 10,000 tons/year);
- Sugar (greater than 10,000 tons of sugar cane/year);
- Food processing (greater than 1,000 tons/year);
- Ice and Freezing (greater than 1,000 tons/year);
- Thermo electricity (greater than 200 megawatts);
- Pulp and paper (greater than 40,000 tons of pulp/year);
- Cement (greater than 1 million tons/year);
- Tourism and entertainment zone (greater than 100 hectares);
- Ports (for vessels greater than 10,000DWT);
- Railways, highways, roadways longer than 50 km;
- Hydroelectric plants (with reservoir greater than 100 million cubic meters);
- Irrigation systems (servicing areas greater than 10,000 hectares);
- Ore exploitation (total ore,earth,stone volume greater than 100,000 cubic meters/year);
- Forestry (all kinds of wood exploitation);
- Aquaculture (areas greater than 200 hectares);
- Hazardous chemicals production and warehousing (all kinds);
- Nuclear reactors (all kinds).
A number of state agencies may judge the EIAs to determine whether the project will be approved. MOSTE, the local People's Committee where the project is being undertaken, the local DOSTE, the National Environmental Agency, or the supervising ministry under which the project may fall can all theoretically approve, disapprove, or make recommendations concerning a project based on the EIA.
In practice, the effectiveness of EIAs is weak. Companies are able to submit plans for installing waste treatment facilities and receive an investment license, but then never follow up on installing the plant as promised. In some cases, companies have won investment licenses without submitting EIAs.
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