Turning Challenges into Opportunities: Investing in Waste Disposal Management in Vietnam

Posted by Written by Nhi Nguyen Reading Time: 6 minutes

In line with the rapid economic development of Vietnam, the volume of waste produced on a daily basis has increased too. This presents a number of waste management challenges for the country but also produces a wealth of opportunities for foreign investors and sustainable development entrepreneurs.

Vietnam’s rapid urbanization and industrial growth have brought forth a significant challenge in the management and disposal of increasing amounts of waste. However, this challenge also presents a golden opportunity for investors looking to make a positive impact on the environment while tapping into a burgeoning sector. With a growing demand for sustainable waste management solutions, Vietnam offers a promising landscape for investment in waste disposal.

Current status of waste disposal management in Vietnam

The current status of waste management in Vietnam presents significant challenges due to the huge amount of waste generated daily. According to data from the Ministry of Natural Resources and Environment (MoNRE), Vietnam produces approximately 60,000 tons of household waste each day. Notably, the urban areas of Hanoi and Ho Chi Minh City alone account for a significant portion, generating 7,000 to 9,000 tons of trash each. This amount is projected to increase by 10-16 percent by 2025.

Despite the staggering volume of waste generated, waste treatment in Vietnam is largely ineffective. Currently, most of the waste is taken to landfill but only 20 percent of those landfill sites meet national sanitary requirements, according to MoNRE’s National Environmental Status Report in 2021. While landfilling may be a simple and straightforward approach, it is expensive and outdated. Moreover, if not properly managed, the process of decomposing garbage in landfills can lead to the pollution of land, air, and underground water sources, exacerbating environmental concerns.

The consequences of substantial waste generation and inadequate treatment methods are evident in the polluted surroundings of landfills, which greatly impact the daily lives of nearby residents. A notable example is the Nam Son landfill in Hanoi, which is one of the largest landfill sites in the city. The local community is forced to endure towering mounds of waste emitting foul odors, creating an unpleasant living environment. In fact, there have been instances where residents living near the Nam Son landfill resorted to blocking incoming garbage trucks due to their inability to tolerate the overwhelming stench and pollution.

Waste management challenges

Complex permitting process

Obtaining the necessary permits and licenses for waste disposal projects can be a complex and time-consuming process. Investors must navigate multiple government agencies and comply with various regulations, such as environmental impact assessments, environmental management, and monitoring programs, or meeting technical requirements for systems and equipment. The conditions become even more complex and stringent for enterprises dealing with hazardous wastes. In accordance with Decree 38/2015/ND-CP on waste management when handling hazardous waste, firms must complete a number of extra forms and comply with a number of additional requirements.

The process not only involves significant paperwork and complicated procedures but also includes the need to coordinate with different authorities. Hong Son Pham, Director of the Department of Environmental Protection in the Central and Central Highlands, highlighted in an article in the SGGP Online newspaper that there is a lack of synchronization and overlapping of legal documents on environmental protection. There are also unclear management responsibilities between different levels of government. These factors create difficulties for investors seeking to participate in this field.

Waste collection and separation

The establishment of an effective waste collection and sorting system is crucial for the successful management of waste. This can be observed in countries that excel in waste treatment, where significant attention is given to issues concerning proper disposal and waste classification. For instance, in S. Korea, the government has enforced a law mandating the use of separate bags for different types of waste. In Japan, littering is considered “illegal dumping” and is punishable by up to five years in prison or a fine of JPY 10 million (equivalent to more than US$95,900).

However, in Vietnam, the implementation of a comprehensive waste collection system continues to face numerous challenges. Particularly, there is a lack of awareness among the population regarding waste classification. It is not uncommon to witness large and small garbage bags strewn across Vietnamese streets that have not been sorted by individuals before being loaded onto garbage trucks and transported to collection sites.

The absence of waste sorting at the source poses significant hurdles to effective waste management in Vietnam. Without proper waste classification, the potential for recycling and reusing valuable materials is greatly diminished. Therefore, this complicates the process of subsequent treatment and increases the strain on existing waste management infrastructure.

Infrastructure and technology

Vietnam’s waste management infrastructure is still in the process of development, particularly in rural areas. This presents challenges for investors due to limited access to proper waste collection, treatment facilities, and recycling infrastructure. To address this issue, substantial investment may be required to upgrade existing infrastructure or establish new facilities and implement advanced waste disposal technologies.

Another current challenge is the lack of localities’ ability to identify suitable technology options for waste management. With the growing availability of waste technology choices presented by investors, localities may face confusion in determining the most suitable technology for their specific circumstances.

“Currently, foreign waste treatment technology is not suitable for Vietnamese waste such as German, Japanese, European technology… [these] technologies reveal many technological weaknesses due to the complex and specific nature of unclassified waste in Vietnam,” according to Dr. Trong Dinh Nguyen, Chairman of T-Tech Vietnam Technology Group a leader in waste disposal technology in Vietnam.

Collaboration and coordination among government agencies, experts, and stakeholders is therefore, necessary for the efficient evaluation and selection of suitable waste disposal technologies, which can result in a time-consuming and complex decision-making process.

Opportunities in waste management

Growing waste generation

Vietnam is currently undergoing rapid urbanization and industrialization, resulting in a significant increase in waste generation. As reported by Mordor Intelligence, the waste management market in Vietnam is projected to reach a size of US$5.12 billion in 2023, with further growth expected to reach US$7.54 billion by 2028. This surge in waste production presents numerous opportunities for investors to provide suitable and effective waste disposal solutions to meet the escalating demand for waste management services across the country.

David Duong, often referred to as the “King of Garbage” in Vietnam, is optimistic about the future of waste disposal and recognizes the potential of the waste management industry.

As the General Director of California Waste Solutions Company, he has been investing in waste treatment in Ho Chi Minh City since 2005, and he firmly believes that both Ho Chi Minh City and Vietnam as a whole possess substantial potential in this field.

Being a developing country, Vietnam generates a significant amount of daily waste, highlighting the ongoing demand for innovative waste management solutions, he told Investment Magazine.

With the market size of the waste management industry projected to grow steadily, coupled with the endorsement of industry experts like Duong, it is evident that Vietnam presents a promising landscape for investors seeking to contribute to waste disposal and management solutions. The need for efficient waste disposal technologies, along with collaboration and coordination among government agencies, experts, and stakeholders discussed earlier, is therefore crucial to harnessing the potential of this growing industry and addressing the waste management challenges faced by the country.

Government initiatives

The Vietnamese government has recognized the significance of proper waste management and has taken steps to enhance and implement policies and regulations that promote sustainable waste disposal practices. Several notable initiatives have been introduced to support these efforts:

Sustainable strategies

Firstly, the National Strategy on Integrated Solid Waste Management has been developed with a long-term vision extending until 2050. The strategy aims to ensure that all types of solid waste are collected and reused in a manner that aligns with the specific conditions and requirements of each locality.

Additionally, the Circular Economy Development Strategy has been adopted. This strategy promotes a closed-loop model that seeks to minimize the creation of waste in the environment. One key aspect of this approach involves considering waste as a renewable resource. The goal is for Vietnam to achieve a 100 percent rate of solid waste collection and treatment that meets national standards and regulations by 2050, while simultaneously reducing the reliance on landfilling for solid, organic, and recyclable waste.

To realize these initiatives, the government is actively working towards creating a more favorable investment environment and providing incentives for waste management projects. These measures might attract and encourage investors to participate in the development and implementation of sustainable waste disposal solutions.

Partnerships between the public and private sectors

The Vietnamese government has also tried to implement policies that encourage cooperation through public-private partnerships (PPPs). This approach is recognized as a promising direction for waste management development. PPPs enable investors to collaborate with government entities or local authorities to establish waste management infrastructure projects.

By engaging in PPPs, investors can benefit from long-term contracts that provide stability and predictability. This allows for more efficient planning and implementation of waste management projects. Moreover, these partnerships often provide access to government resources, such as land or funding support, which can further facilitate the implementation of waste management initiatives.

Waste management in Vietnam moving forward

While the waste disposal sector in Vietnam faces some challenges, it is also abundant with opportunities. Investors can capitalize on the rising waste generation and favorable government policies to establish profitable waste disposal businesses. Furthermore, by making the right investment decisions, firms could potentially see long-term, sustainable revenue streams develop.

For more support in understanding Vietnam and its waste disposal market, get in touch with the business intelligence experts at Dezan Shira and Associates.

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