Vietnam Keen to Ensure Small Production Facilities Meet Environmental Standards

HCMC has taken steps to support small production facilities in relocating to safer locations due to the potential hazards they pose within residential areas. The prevalent practice of combining accommodation with business or production facilities in suburban areas has led to various operations like scrap trading, aluminum-stainless steel door welding, fabric dyeing, and wood processing being established near each other without proper fire prevention or environmental protection measures. This situation has resulted in a heightened risk of explosions, fires, and pollution.

To address these risks and create a safer and cleaner environment for residents, it has become essential to encourage the relocation of these hazardous companies away from residential areas. By doing so, not only will the risk be reduced, but the companies can also stabilize their operations and pursue sustainable growth.

Support policies introduced

HCMC has introduced support policies aimed at assisting small production facilities with high fire, explosion, and pollution risks to move to more suitable locations.

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The Management Board of HCMC Export Processing and Industrial Zones (HEPZA) offers preferential land rent rates, assistance with administrative procedures related to land use, investment registration, construction, and environmental protection methods for companies relocating to industrial parks.

These small companies can also benefit from using existing water and common sewage processing systems in the new locations.

To further facilitate the relocation process, the HCMC Department of Natural Resources and Environment is working to collaborate with other departments and agencies to develop an investment attraction plan for approved industrial clusters with proper infrastructure. This approach aims to provide long-term stability for needy production facilities and address pollution issues effectively.

In addition, the city is actively tightening monitoring and inspection of environmental protection compliance among all production facilities, especially those with multiple complaints from local residents. The HCMC Department of Natural Resources and Environment is also working in conjunction with relevant state agencies to assist companies in upgrading their production technologies and machinery to minimize pollution.

Experts in the field suggest that HCMC needs to consider the relocation of polluted production facilities out of residential areas as a priority, despite the financial challenges involved. The city should focus on developing master plans for industrial clusters and cottage industrial zones while providing appropriate support policies such as land rent rates and loan packages to incentivize small production facilities to move to these designated areas. However, any relocation efforts should not be enforced unless the new locations are adequately prepared for accommodating these facilities.

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Moreover, it is crucial for HCMC to update and classify the list of current production facilities situated in residential areas, particularly those causing pollution. Industrial clusters must ensure that they have the necessary infrastructure and utilities to accommodate the relocated facilities without causing additional problems. Proper planning and resource allocation are essential to prevent the issue of moving polluted companies to temporary places, which is inefficient and wasteful.

The city must also engage in dialogue with the affected production facilities to understand their preferences for the new locations. While addressing pollution concerns, it is vital to acknowledge the contributions these companies have made to HCMC’s economic growth. For facilities that prefer not to relocate, support should be provided to upgrade their production technologies and machines while ensuring compliance with applicable laws. A comprehensive and synchronized approach to these measures will yield long-term benefits for both HCMC and the companies involved.

Such moves will become increasingly important for the export-oriented Southeast Asian nation as key regional markets like the European Union introduce green legislation and sustainability due diligence parameters.

Environmental due diligence when sourcing from Vietnam

Environmental due diligence is crucial when foreign companies engage with Vietnam SME suppliers to ensure responsible and sustainable business practices. Here are some environmental due diligence measures to consider:

• Environmental compliance: Verify that the SME suppliers adhere to all applicable environmental laws and regulations in Vietnam, including waste disposal, emissions, and pollution control. Request copies of permits and certifications related to environmental compliance.
• Pollution prevention: Evaluate the SME suppliers’ efforts to prevent pollution and minimize their environmental impact. Inquire about their pollution control measures, waste management practices, and initiatives to reduce energy consumption.
• Environmental management system: Assess whether the SME suppliers have an established environmental management system (EMS) in place. An EMS helps companies identify, monitor, and manage their environmental aspects and impacts effectively.
• Hazardous substances: Enquire about the use and handling of hazardous substances by SME suppliers. Ensure they have proper storage, handling, and disposal protocols for such materials.
• Water and energy conservation: Evaluate the SME suppliers’ efforts to conserve water and energy. Inquire about their initiatives to optimize resource usage and reduce water and energy consumption.
• Emissions and air quality: Investigate the SME suppliers’ emissions and air quality management practices. Check if they monitor and control air emissions to comply with environmental standards.
• Waste management: Assess how SME suppliers manage and dispose of waste generated during their operations. Verify whether they follow environmentally responsible waste management practices, such as recycling and waste reduction.
• Environmental training and awareness: Inquire about the environmental training and awareness programs provided to employees. A well-informed workforce can contribute significantly to sustainable practices.
• Environmental performance history: Request information on any past environmental incidents or violations related to the SME suppliers. Understand how they addressed and rectified these issues.
• Sustainability initiatives: Determine if the SME suppliers have implemented sustainability initiatives, such as adopting eco-friendly materials, promoting green practices, or engaging in community environmental projects.
• Environmental reporting: Check whether the SME suppliers regularly report on their environmental performance. Transparent reporting demonstrates their commitment to environmental responsibility.
• Environmental audits: Consider conducting or requesting third-party environmental audits of the SME suppliers’ facilities to validate their environmental performance and identify potential areas for improvement.
• Green certifications: Inquire whether the SME suppliers hold any green certifications or eco-labels that validate their commitment to environmental sustainability.
• Environmental contingency plans: Discuss the SME suppliers’ contingency plans for environmental emergencies or unexpected incidents that may impact their operations and the environment.

Based on an assessment of the above, the foreign company may be persuaded to seek alternate suppliers or make investments in the business relationship to provide institutional and technical support to meet key environmental standards and implement best practices.

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