Vietnam Sounds Alarm Bells on Polluting FDI Projects

Tuan Minh

16:04 05/09/2016

BizLIVE - Vietnamese government officials and experts have raised concerns over the pollution caused by foreign-invested manufacturing facilities and called for implementation of stricter regulations.

Vietnam Sounds Alarm Bells on Polluting FDI Projects

Taiwanese-invested Viet Phuoc Company fined for throwing dead pigs into the Saigon rivers. Photo: VnExpress

The Vietnamese government and experts have aired concerns over the damage foreign-invested production facilities have caused to the environment. They called for the adoption of stricter regulations, especially after the Formosa-linked fish die-off in four central coastal provinces.

Lengthy List of Polluting Facilities
The mass fish deaths caused by toxic discharge from Taiwanese conglomerate Formosa’s steel mill in the central province of Ha Tinh has driven huge attention domestically and overseas. The worst-ever incident in Vietnam has sounded alarm bells over the fact that Vietnam risks becoming a technology dump.
Since Vietnam opened up its economy to foreign investors some decades ago, local residents have been victims of contamination caused by sizable projects. On the notorious list are Taiwan’s monosodium glutamate (MSG) producer Vedan, steel maker Formosa, thermal power plant Vinh Tan 2 with Chinese technology and Hong Kong’s Lee&Man paper mill.
In anticipation of the Trans-Pacific Partnership (TPP) agreement, overseas companies, particularly those from China, have been massively pouring capital into fiber, textile projects, forming big textile hubs.
Meanwhile, Long An I, a coal-fired power plant invested South Korean constructor by Daewoo E&C in the southern province of Long An, has recently made local headlines.
The $2.7-billion power plant, located just 30 kilometers from Ho Chi Minh City, is a potential threat to locals’ health and some have even expressed concern it could become a second “Formosa” mill.   
Nguyen Le Ninh, a scientist from Ho Chi Minh City’s Fatherland Front, was quoted by the Thanh Nien newspaper as saying that a coal-fired power plant, despite using the cutting-edge technology, can be heavily harmful to the environment. “Has the local government fully assessed its environmental impact as well as its efficiency?” he asked.
Senior economist Pham Chi Lan called for a halt of the power plant as many countries have limited or shut down this kind of technology due to its environmental unfriendliness.  
“Pollution Haven
A survey conducted by the Hanoi-based Central Institute for Economic Management (CIEM) showed that an increasing number of foreign companies are investing in polluting industries such as textile, leather and footwear and chemicals.
Up to two thirds of foreign-invested enterprises (FIEs) in Vietnam are operating in low added value and energy-consuming sectors, and can be large sources of emission.
According to the Ministry of Science and Technology, just 5% of FIEs use high technologies, while 80% apply average ones and 14% use low technologies.
“With loose environmental standards, Vietnam seems to be successful in becoming a “haven” of contaminating projects,” said Do Thien Anh Tuan from the Fulbright Economics Teaching Program.
“No Trade of Environment for FDI
At a government teleconference on environmental protection on August 24, Minister of Natural Resources and Environment Tran Hong Ha said FIEs account for 70% of Vietnam’s export turnover and 59% of imports. They also contribute to 70% of the nation’s economic growth.
However, FIEs are moving to energy- and resources-intensive industries such as metallurgy, ship repair and maintenance, garment and textile, footwear, paper and chemicals production, Ha said.
Ha acknowledged that Vietnam tended to relax environmental protection criteria to compete with regional peers in a bid to attract foreign investment at all costs, leading to huge damage to the environment.
A number of overseas investors are taking advantage of Vietnamese shortcomings to bring in out-of-date, energy-consuming and labor and resources-intensive technologies to maximize their profits, Ha noted.
Speaking at the conference, Prime Minister Nguyen Xuan Phuc stressed that the current thorny pollution situation is the breakout of a long period of development.
“It is now time to change the mindset of development. [We] cannot trade the environment for economic benefits that affect the people’s peaceful life,” he noted.