Vietnam May Turn into ‘Pollution Heaven’ with Rising Unregulated FDI: Paper

Massive death of fish in Vietnam's central coastal region in April-June, 2016 due to polluted water with toxic waste discharged by Taiwanese Formosa steel plant

Massive death of fish in Vietnam’s central coastal region in April-June, 2016 due to polluted water with toxic waste discharged by Taiwanese Formosa steel plant

Vietnam is encountering the risks of worsening its pollution problem if it continues to welcome more foreign direct investment (FDI), especially on the heels of the successful conclusion of the Trans-Pacific Partnership (TPP) pact, into already highly-polluting sectors such as garment and textile, paper and steel production, said the Tien Phong (Pioneer) newspaper on Tuesday.

by KTT, July 22, 2016

Vietnam is encountering the risks of worsening its pollution problem if it continues to welcome more foreign direct investment (FDI), especially on the heels of the successful conclusion of the Trans-Pacific Partnership (TPP) pact, into already highly-polluting sectors such as garment and textile, paper and steel production, said the Tien Phong (Pioneer) newspaper on Tuesday.

The newspaper, which is the mouthpiece of the Ho Chi Minh Communist Youth Union, noted that the TPP pact, once implemented, could give rise to investment inflows from even non TPP members into Vietnam’s garment and steel industries.

Many Vietnamese economists have said that environmental regulations and wastewater treatment remain lax, leaving too much room for foreign-invested enterprises (FIEs) to exploit the loopholes.

The paper detailed a number of environmental violations found at FIEs working in the garment, paper mill, and steel sectors in Vietnam. Chinese and Taiwanese investors have poured multi-million dollars into Vietnam’s garment sector, which recorded about $3.5 billion of FDI in 2015.

Dr. Luu Bich Ho, former director of the Institute for Strategic Development under the Ministry of Planning and Investment, said Chinese companies have good technology but Vietnam still needs to monitor the technology transfer process closely to ensure that they are indeed not using old, backward equipment.

He pointed out one major difficulty in managing FDI projects and controlling environmental pollution caused by such firms is the weak capacity of local authorities as well as the lack of transparency in management. He called on the government to revise its policy in FDI attraction, detailing the requirements for technology and environment standards.

“The management of investment projects in Vietnam, especially into sectors at high risk of pollution, need to be tightened and in line with the regulations,” Mr. Ho said.

The non-governmental Vietnam Textile and Apparel Association recently proposed the government adjust the sector development plan in 2035-2040 by building more industrial parks specialized in fabrics production and yarn dyeing.

Economist Nguyen Duc Thanh, director of the government-run Vietnam Institute for Economic and Policy Research, noted (i) the high investment costs in waste treatment for textile and steel production and (ii) the strict control in developed countries over this matter as the main reasons why many foreign companies are keen on relocating to Vietnam.

Vietnamese people are increasingly worried about pollution following the massive fish deaths, caused by Formosa’s unregulated wastewater discharge, in the central region. Vietnamese Prime Minister Nguyen Xuan Phuc in a recent meeting with the Ministry of Industry and Trade demanded competent authorities to draw lessons from the Formosa case and to take responsibility before the State and people if another environment disaster occurs.