Vietnam is entering a period of a sea change when it comes to environmental law, including its implementation of several international trade agreements that have strong new environmental commitments, as well as domestic decrees on planning, investment, energy, and most of all its centre piece Environmental Protection Law itself. The pending changes in this area merit attention, mostly because of the unexpected consequences that can arise when new implementing rules based on well-intentioned law backfire or are taken advantage of for the wrong reasons.
The National Assembly of Vietnam recently adopted the new Law on Environmental Protection following the proposal of the Ministry of Natural Resources and Environment of Vietnam (MONRE). It will take effect on 1 January 2022 and will replace the current 2014 Law on Environmental Protection. Compared to other laws, the new law is relatively detailed, but for those involved in trade and investment in Vietnam, the key issues will now be played out at the level of implementing decrees.
The new law proposes the following important legal changes:
A new master license will replace a number of environmental permits, as well as a new procedure for environmental registration, with the goal of downsizing administrative procedures by 40%. If this well-intended streamlining actually results in less, not more red tape and “informal payments”, then it would be a very welcome development.
Second, a narrower range of projects may be subject to the environmental impact assessment report (EIAR). On the other hand, investors will be subject to higher standards of responsibility to supplement, complete and comply with the environmental requirements of their EIARs.
A wider range of wastes and environmentally harmful products/goods may be subject to environmental protection taxes as opposed to current regulations; this is likely to include some categories of industrial wastewater. Businesses will also be subject to recycling or monetary compensation obligations with regard to certain products and packaging.
Finally, the introduction of a new and concrete policy on an emissions trading system and carbon tax. In theory, businesses would be allocated their own emissions quota that can be sold, gifted or transferred on a marketbased trading system.
An overarching objective of the New Law is to implement the various treaty commitments Vietnam has undertaken in the free trade agreements it has recently acceded to, including especially the Comprehensive and Progressive Trans-Pacific Partnership, the Regional Comprehensive Economic Partnership and the European Union – Vietnam Free Trade Agreement among others.
Investors need to keep their eyes open for the draft implementing decrees and assess realistically how they will impact their businesses. If there are ways to achieve the same regulatory objective that impose less administrative cost and opportunities for “informal payments”, then businesses should raise their concerns through their business chambers and the Vietnam Business Forum. If this is done in a timely manner, missteps can be avoided and the New Law may actually achieve its stated objectives. [C]
