Vietnam’s National Action Plan for Circular Economy by 2035: Key policies and business opportunities

Vietnam has unveiled its National Action Plan for Circular Economy (NAPCE) until 2035, approved under Decision No. 222/QĐ-TTg on January 23, 2025. The plan aims to shift the country toward sustainable production and consumption models, optimizing natural resource use, reducing waste, and enhancing environmental protection. It outlines strategies for integrating circular economy (CE) principles into industries such as agriculture, energy, manufacturing, construction, and waste management.

As Vietnam’s GDP reached US$506 billion in 2025, with a 6.1 percent annual growth rate, the country faces mounting environmental challenges. Rapid industrialization and urbanization have driven up energy demand and waste generation, necessitating urgent policy interventions. The NAPCE aligns with global sustainability trends, positioning Vietnam as a leader in green growth within the ASEAN Economic Community (AEC).

Strategic objectives of the National Action Plan for Circular Economy

The plan prioritizes resource efficiency, waste reduction, innovation, and green job creation. By 2035, it aims to:

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• Establish a sustainable production and consumption system;
• Increase the share of renewable energy to 47 percent of total primary energy;
• Cut national energy consumption by eight to ten percent;
• Ensure 95 percent of urban solid waste and 80 percent of rural waste is collected and treated;
• Reduce direct landfill disposal to below 50 percent;
• Expand biomass and solid waste-based power plants to 2,270 MW capacity;
• Improve recycling rates for industrial and household waste; and
• Develop green industrial zones integrating circular economy models.

The plan envisions Vietnam as a hub for innovation and investment in circular economy technologies by 2035. It also focuses on increasing the use of secondary raw materials, reducing dependence on virgin resources, and enhancing the efficiency of industrial symbiosis models.

Key industries and sectors covered under the action plan

Vietnam’s NAPCE targets multiple industries and sectors, emphasizing circular economy integration across value chains. The following table outlines key industries and their CE focus areas:

Circular economy opportunities in Vietnam’s key industries

Agriculture, forestry, and fisheries

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Vietnam aims to integrate circular economy practices into agriculture by promoting sustainable farming techniques, regenerative forestry, and responsible aquaculture. The plan highlights the importance of reducing greenhouse gas emissions in crop cultivation and livestock production, while forestry projects will focus on enhancing carbon absorption. Agricultural by-products will be repurposed for bioenergy production, organic fertilizers, and alternative animal feed sources.

The use of precision agriculture techniques, including AI-driven monitoring systems and drone-assisted planting, will further improve resource efficiency in food production. The government is also encouraging intercropping and soil restoration techniques to boost agricultural sustainability.

Energy sector reforms

Vietnam is set to become a regional leader in renewable energy by implementing policies that encourage a 50 percent renewable energy target by 2045. The plan aims to phase out reliance on fossil fuels by expanding biomass, solar, wind, and waste-to-energy plants.

The government is introducing tax exemptions on clean energy investments, along with mechanisms to support the development of a carbon credit market that incentivizes companies to lower their emissions. There is a strong push toward smart grid development, ensuring that energy distribution is optimized and integrated with decentralized renewable sources.

Industrial transformation

The NAPCE mandates a transition to sustainable manufacturing and construction by introducing circular supply chains that emphasize recycling, reuse, and eco-design principles. Industrial parks will be required to adopt zero-waste policies, and companies will be encouraged to integrate closed-loop production models that minimize reliance on non-renewable raw materials.

To support industrial transformation, Vietnam will establish industrial symbiosis networks where waste from one sector serves as raw material for another. This model has already been successfully implemented in pilot programs in the textile and automotive industries.

Waste management and recycling

Vietnam generates 60,000 metric tons of waste daily, with 55 percent sent to unsanitary landfills. The action plan focuses on:

• Expanding waste sorting and collection systems to improve recycling efficiency;
• Scaling up waste-to-energy projects to generate electricity from non-recyclable waste;
• Enforcing Extended Producer Responsibility (EPR) policies to make manufacturers accountable for product lifecycle management;
• Developing circular business models that repurpose industrial and consumer waste into raw materials for new production cycles; and
• Encouraging innovation in biodegradable materials to replace plastic packaging in supply chains.

Regulatory framework and policy measures

The implementation of NAPCE involves multiple government agencies working together to ensure a smooth transition to a circular economy. Key authorities responsible for overseeing and enforcing the plan include:

• Ministry of Natural Resources and Environment (MONRE) – The lead agency that monitors progress, establishes waste management standards, and ensures adherence to environmental laws;
• Ministry of Industry and Trade (MOIT) – Responsible for integrating circular economy principles into industrial policies, supply chains, and energy efficiency initiatives;
• Ministry of Agriculture and Rural Development (MARD) – Focuses on sustainable agricultural practices, bio-based solutions, and regenerative forestry policies;
• Ministry of Construction (MOC) – Creates green building standards, advocates for the use of circular construction materials, and manages demolition waste;
• Ministry of Finance (MOF) – Offers financial incentives, tax exemptions, and funding strategies for investments in the circular economy; and
• Vietnam Chamber of Commerce and Industry (VCCI) – Collaborates with the private sector, encourages business involvement in circular supply chains, and promotes best practices.

Challenges in implementing the National Action Plan

Vietnam faces infrastructure deficiencies in waste processing, recycling, and energy recovery, making large-scale circular economy implementation difficult. High capital costs deter private sector investment, and fragmented regulations create uncertainty for long-term CE project financing. To address these issues, the government is introducing green financing options, public-private partnerships (PPPs), and foreign direct investment (FDI) incentives to attract capital into circular economy initiatives.

Another challenge is the fragmented adoption of circular economy models across industries. The government is working to strengthen compliance mechanisms, expand tax incentives for green technologies, and promote digital tracking systems to ensure circular economy performance aligns with national targets.

Opportunities for businesses and investors

Vietnam’s NAPCE is creating new investment opportunities in circular business models, renewable energy, and waste-to-resource innovations. Key areas include:

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• Green finance: Expansion of green bonds, sustainable lending schemes, and preferential tax rates for businesses adopting CE technologies.
• Renewable energy and recycling: Growth in solar, wind, biomass energy, and waste valorization supported by government incentives and tax exemptions.
• Sustainable supply chains: Strengthening circular supply chains to reduce material dependency, improve waste valorization, and enhance global ESG compliance.

Road Ahead

Vietnam’s NAPCE by 2035 represents a transformational shift toward sustainable resource use, renewable energy adoption, and responsible production. With clear regulatory policies, financial incentives, and sector-specific implementation strategies, Vietnam is positioning itself as a leader in green growth within Southeast Asia.

For businesses and investors, the plan offers new avenues for innovation, investment, and collaboration in waste-to-energy projects, green financing, and circular supply chain development. As the country builds its circular economy infrastructure, proactive industry participation will be essential in achieving long-term environmental and economic benefits.

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