DECENTRALIZING INCENTIVES AND COMPLIANCE PROMOTION IN VIETNAM

1990 National Sustainable Development Conference – Proposal to establish MONRE Ministry of Natural Resources and Environment 1993 Proposal to establish a Ministry of Environment and nati

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• Humid tropical climate area

• Coastal strip with Red river delta (North) and Mekong delta (South)

• Almost its entire area is a patchwork of rice paddies.

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.Geographical location: it is situated in the South of VN, at downstream section of the Dong Nai-Sai Gon river system

Main economic activities:

industry, commerce, services

24 districts (4 outer districts, 5 suburban districts (with very much rural characteristics of a farming & fishing land) occupy 78.97% of the total area 1.7 million people living in these districts ,accounting to 32% of the City population

Total length of canals and rivers: 795.5 km

HO CHI MINH CITY PROFILE

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HO CHI MINH CITY PROFILE

VỊ THẾ CHIẾN LƯỢC

Cửa ngỏ quốc tế lớn nhất của

Việt Nam

Đầu mối giao thông cho toàn

khu vực phía Nam

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Coastal zone length 11.3km, with over 33,000ha mangrove forest

in Can Gio district, which was certified as Biosphere areas by

UNESCO in 2000.

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MAJOR POLLUTION

SOURCES

IN HO CHI MINH CITY

Transportation of 2,200,000 motocycles and 230,000 4-wheel vehicles (2.300 buses only)

Residential areas without

adequate environmental

infrastructure

28,753 medium/small scale industries within residential zones

14 IPs and EPZs

Construction activities

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Key steps in development of environmental

1984 MOST Dept of Natural and Environment (in English) – 12 staff

1985 DNRE Five year national research program for environmental studies (20 projects).

1990 National Sustainable Development Conference – Proposal to establish MONRE

(Ministry of Natural Resources and Environment)

1993 Proposal to establish a Ministry of Environment and national environment council submitted to government

1994 MOSTE and National Environment Protection Agency (NEPA) established.

1995-8 DOSTEs established at provincial level

2002 MONRE established at (NEPA divided into three organization with MONRE)

2003-5 64 DONREs established – 90% with environment divisions.

2003-5 333 District NRE divisions established, and 10,000 communal NRE staff.

(NRE: Natural Resources and Environment)

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Legal instruments of Vietnam

•“Laws ” and “ Codes ” are passed by the National

Assembly;

•“ Resolutions ” and “ Ordinances ” are passed by the

Standing Committee of the National Assembly;

•“ Government Decrees ” are passed by the Prime Minister

or the Vice Prime Minister;

•“ Resolutions ”, “ Circulars ”, “ Directives ” and

“ Ordinances ” are passed by the relevant Minister; and

•“ Regulations ” are passed by local/provincial

governments.

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Institutional framework of environmental

management of Vietnam

Institutional arrangement

• In August 2002, the Government established a new Ministry in

charge of environmental issues - Ministry of Natural Resources and Environment (MONRE);

• People’s Committees (at city/provincial levels) implementing environmental management activities under the direction of

MONRE and other relating ministries, with the support of

Department of Natural Resources and Environment (DONRE);

• Ho Chi Minh city DONRE has Environmental Management

Division, Solid Waste Management Division are in charged for environmental protection activities; Environmental Protection

Agency (HEPA- WW Fee collection Division (8 staffs) is in

charge for wastewater fee collection duty

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Institutional framework of environmental

management of Vietnam

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Institutional framework of environmental management

of Vietnam – DONRE of Ho Chi Minh city

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Roles of DONRE

• Are agencies of the provincial PCs; Work with the MONRE.

•Support the provincial PCs in state management for issues related to land, water resources, minerals, environment,

hydrometeorology, and mapping in the province, and reporting administrative to the national government;

•The establishment of functional divisions within DONRE is

decided by the provincial PCs in consultation with MONRE.

•Submit to PCs any grants, extensions, and revocations of

environmental certificates.

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•Conduct environmental compliance inspections, setting

environmental related disputes, compliance and violations within its provincial jurisdiction.

•DONRE Environmental Inspectorate may conduct both announced

and unannounced inspections by itself or in cooperation with the

MONRE Environmental Inspectorate.

•Chief Environmental Inspectorate of DONRE is empowered to revoke the environmental certificate in case of detected violation.

•The DONREs have no direct authority for pollution regulation with

industrial parks

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Legal and Institutional framework of environmental policy in Vietnam

•Law on Environmental Protection 2005

(1993: first general Law on Environmental Protection)

•National Strategy for environmental protection until 2010 with vision toward 2020 – signed by Prime Minister on 02/12/2003

•Directive 41/CT-TW of the Politburo of Vietnam Communist Party 2005

•Decree 67/2003/ND-CP on wastewater charge

• Law of Water Resources 1999

• Enforcement policies

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National Strategy on Environmental Protection (NSEP) to 2010 with vision toward 2020

 The strategy has emphasized the significance of development of

an appropriate legislation on water resources management and

management of river basins.

 Other technical measures such as rehabilitation and embankment

of rivers have also been indicated by the Strategy to improve water environment.

 NSEP promotes the use of economic instruments (EI) to

environmental management as an explicit mean to implement the

various objectives stated in the Strategy: EI are solutions to macro level-environmental management in a market economy, typically used along with administrative and educational and propaganda measures for the same purpose of improving legislative

enforcement in the environment sector

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Directive 41/CT-TW of the Politburo of Vietnam Communist Party 2005.

From 2006 to allocate at least 1% of the state budget

expenditure (~3,500 billion VND) for environmental protection This directive has been applied with the Decision No

34/2005/QD-TTg by the Prime Minister

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Decentralization to provincial and city level

Provincial People’s Committees (PPCs)

The government commitment to decentralization:

•Changes in central government to focus on macro economic management and broad policy

•Delegated management responsibilities to agencies, provincial department and SOEs

•More discretion over local budgets and planning by the local Peoples Committees

•Clearer distinction between government and enterprise

responsibilities

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Decentralization to provincial and city level

Provincial People’s Committees (PPCs)’s roles and responsibilities:

•Issuing document within their legal powers on environmental protection in their

locality.

•Directing and inspecting the implementation of the environmental effects of

protection regulations of the State and their locality;

•Checking evaluation reports on the environmental effects of projects and

•Urging all organizations and individuals to observe the LEP;

•Receiving and setting disputes, complaints, denunciations on environmental

protection within their powers, or submitting them to the authorized institutions for settlement.

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Environmental protection charges for wastewater

Decree No 67/2003/ND-CP

 With the adoption of Decree No 67/2003/ND-CP on environmental Protection charges for wastewater

(henceforth Decree 67) on June 13, 2003.

 And the accompanying Inter-Ministerial Joint

Circular No 125/2003/TTLT-BTC-BTNMT (hence

Circular 125) providing guidelines for the

implementation of Decree 67, the Government went for legislated principles to action: as of Jan 2004,

both domestic and industrial sectors must pay a fee for discharging wastewater in the environment;

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 Domestic WW fee is collected by the clean water supply company

For industrial WW , enterprises will do self-declaration to

DONRE ; DONRE will appraise and announce the fee

amount, then the enterprises to pay fee to the provincial State Treasury.

The decree also assigns the Ministry of Finance (MOF) in cooperation with MONRE to stipulate the fees rates in

order to be suitable for each kind of receiving

environment

MONRE and MOF are responsible to specify objects that pay this charge.

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Environmental protection charges for industrial WW

Industrial WW charge

This fee applies directly to the discharge (load) of 7

pollutants: BOD, COD, TSS, Mercury, Lead, Arsenic, and Cadmium.

The pollution level, from its side depends on the quantity and toxicity of pollutants contained in the WW.

 Replaced Decree 67 later on by Decree 04 from Jan 8 th ,

2007 with 3 minor changes: (1) remove BOD parameter, (2) change the use of fee collected, and (3) establish

emission coefficients for different industrial sectors

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 The main goal

(1) To limit the environmental pollution cause by wastewater (2) To use economically clean water

(3) To create fund for environmental activities

 The calculation

Total fee paid (VND) = Volume of discharged wastewater

(m3) x amount of pollutants in wastewater (mg/L) x charge rate for industrial wastewater discharged into respective receiving environment (VND/kg)/1000

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The circular No 125/2003/TTLT-BTC-BTNMT

In order to timely guide implementation of the Decree 67, the MONRE in cooperation with MOF have drafted and issued the joint circular The guiding circular makes clear the objects:

•Who bear the fees or pay fees;

•The specific rate for industrial WW applied to each type

of receiving environment;

•Give specific introductions about the way to calculate

and declare fee, process of appraisement, announcement

of paying fees and perform of paying fees to State

Treasury.

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 The target groups

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The rates of wastewater fee:

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Industrial Wastewater Fee Collection Process in HCMC

HEPA, HEPZA DISTRICT PC’S HTP

Enterprises

HEPA

Enterprises Inventory

Fee Declaration (quarter/year)

Self-Inspection, Analysis, Fee Appraisal

Fee Notice

Fee Payment (quarter)

Fee Colleciton

Final Balance-sheet (year)

HEPA District

PC’s HEPZA

DoF/Tax Bureau

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Results:

+ The whole country

2004: 80 billion VND

+ Ho Chi Minh city:

- Fee collected in 2007: 6 billion (VND); 1,116 registered enterprises

-From Jan up to Oct 2008: 5.8 billion (plan: 5 billion)

- Expected fee collected in 2008: >7 billion (sending fee notices to

1,780 enterprises with the fee calculated is 8.3 billion)

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Advantages and disadvantages of WW charge

collection

ADVANTAGES

•Create a greater awareness in individuals, households,

enterprises and other institution as to their

responsibilities for environmental protection.

•Reduce wastewater generation.

•Provide a straightforward incentive to process industrial

effluent and reduce its pollutant charge.

•Yield considerable additional funds for local budgets

earmarked for environmental protection activities, new investments, drainage,…

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Advantages and disadvantages WW charge

collection

 Partly funded with the revenue from the WW charge, the

Vietnamese Environmental Protection Fund (VEPF) has

provided loans at concessional interest rates and sponsored investment projects in environmental protection

Up to now: > 200 billion VND has been collected, transferred

to VEF and allocate for DONREs for WW improvement

projects in provinces

 2004-2006: VEPF provided concessional loans to 13

projects with an approved capital in excess of 35 million VND disbursed to a variety of activities

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Advantages and disadvantages of WW charge collection

DISADVANTAGES

Government implementation

• Delay the application of the WW charge of some localities.

• Capacity challenges in WW collection: limited technical and

administrative capacities; weak cooperation among the

stakeholders.

•The amount of fees collected lower than estimated.

Enterprises perception

• Low awareness of enterprises

• Not sufficiently clear and detailed.

• Not fair among the business (why some should pay but others

not?)

• WW charge calculation is not accurate.

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Strategies to meet obligations and objectives for

incentives and compliance promotion

•Take into consideration the total amount of pollutants , or else we may create a perverse incentive to dilute emissions and thus waste

resources (the WW charge for industrial effluents avoids this perverse incentive);

•Where environmental pricing instruments are to be imposed on the

discharge of pollutants, the instrument should not only apply to emission

in excess of certain threshold values or environmental standards , as this counteracts the economic incentive and partly renders the instrument a measure of command-and-control regulation (the current WW charge for industrial effluents avoids this shortcoming);

•In a situation of high inflation, the environmental incentives arising from price-based instruments can be significantly compromised While this may be counteracted to a limited extent only, indexing the instrument to inflation rates can help reduce the said effect.

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Benefits and challenges of decentralization in environmental compliance and enforcement

•Better in pollution control at local level.

• Save time in setting environmental disputes, complaints.

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Benefits and challenges of decentralization in environmental compliance and enforcement

CHALLENGES

• Lack of clear distinction in responsibilities and difficulties in

coordination (no cooperative mechanism among state agencies working

at all levels has been created > create overlap, limit the outcomes);

• The policy, legislative and institutional expansion and innovation

moved well beyond the capacities of staff, budgets and structures to

manage effectively (fixed rate of budget for state administrative

agencies!)

• The environmental background and capacity of staff is limited;

Natural Resources and Environment divisions in districts are set up; but overall districts have found the task difficult given the low level of

existing capacity and budgets.

(Ex: HCMC DONRE send letter to Dept of Finance => DoF submit letter to HCMC’s

PC to get instruction to district PCs allocate budget for district NRE division 2009!

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Strategies to decentralized use of incentives

too low, not enough for expenses of solving environmental standard

•Continue the awareness raising activities

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Thank you for your

attention !

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