Confusion about the spending mechanism of the Environmental Protection Fund for recycling and waste treatment

It is necessary to have clear criteria to avoid the "ask-give" mechanism in the process of fund management and use.

Confused about the purpose of using the fund

According to the provisions of the Law on Environmental Protection 2020, enterprises manufacturing and importing products and packaging are responsible for recycling and waste treatment. Regarding the recycling responsibility, they must recycle products and packages that they manufactured or import by themselves. If not, they must make financial contributions to support recycling activities. For waste treatment responsibility, enterprises are responsible for making financial contributions to support waste treatment.

Phan Tuan Hung, Director of Legal Department, Ministry of Natural Resources and Environment – Leader of the drafting team of the Circular promulgating the Regulation on management and use of financial contributions of manufacturers and importers to the Vietnam Environmental Protection Fund to support recycling and waste treatment, said that financial sources contributed from manufacturers and importers to the Vietnam Environmental Protection Fund will support activities of product recycling, packaging, or waste treatment.

The support will comply with the principle of management. It will be used transparently, effectively, and for the right purpose, absolutely not used for purposes other than recycling and waste treatment.

“This financial source will make an important contribution to promoting the recycling industry in Vietnam and solving the problem of domestic waste collection and treatment, especially in areas with difficult economic and social conditions," said Hung.

Hung also said that up to now, manufacturers and importers have contributed about VND500 billion to the Fund and this amount will be disbursed immediately after the Circular is issued to support recycling and waste treatment activities.

However, Nguyen Quoc Dung, Vice President and General Secretary of the Association of Vietnam Plant Protection Enterprises and Traders, said that the draft Circular stipulates the cost of management and operation of the EPR Vietnam office, including 11 types of costs, of which only one type is used to support recycling and waste treatment.

The remaining 10 types including property purchases, communication, transactions, external relations, seminars, conferences, and support for party committees, mass organizations are used from corporate donations for product recycling, packaging, and waste treatment. This means that the financial contributions of enterprises are used for purposes not directly related to recycling and waste treatment. Meanwhile, according to the Law on Environmental Protection, this financial contribution is only used for product and packaging recycling and not for other purposes.

Therefore, Dung said that the Draft Circular allowing the use of business contributions to support the recycling of products and packaging for other purposes as above is completely against the principle and is inconsistent with the provisions of the Law on Environmental Protection.

Dung added that this content was proposed by 12 industry associations to the Minister of Natural Resources and Environment in October 2022, but so far, it has not been received and edited.

Need a monitoring mechanism

Ly Kim Chi, Chairman of the Food Association of HCM City questioned that Decree 08/2022/ND-CP guiding the Law on Environmental Protection stipulates that the assisting office for the EPR Council works on a part-time basis and according to Decree 204/2004/ND-CP, the concurrent allowance is equal to 10% of the current salary plus the allowance for leadership positions.

However, the Draft Circular stipulates that the national EPR office is a public non-business unit. It is autonomous in terms of staffing and finance, salary, and bonus will be given like those on the payroll. According to Chi, the provisions of the Draft Circular are not appropriate.

Businesses are also wondering about the organizational structure, powers, and responsibilities of the EPR Office since the Draft Circular only has some provisions on the assisting office of the EPR Council while there are no specific regulations on the EPR Council.

This will make it difficult to monitor usage. Specifically, Dung suggested that the composition of the EPR Council should have at least one representative of domestic business associations for each key industry and one representative of foreign business associations because these are the two main sources of financial contribution. There is also one representative of the recycling unit, one representative of the waste treatment unit, and one representative of VCCI as a social organization to comply with Decree 08/2022/ND-CP.

Dung is also concerned about the provisions in the Draft Circular on the management and use of businesses’ contributions. Specifically, the support is all under the ask-give mechanism, while the criteria for approval and support are not clearly defined and there is no time limit for disbursing enterprise contributions for product recycling and waste treatment.

Accordingly, Dung suggested that it is necessary to regulate the process of applying for support and approving the online support level on the national public service system, localities do not have to go to Hanoi to submit documents. A representative of the American Chamber of Commerce (AmCham) in Vietnam suggested that the Draft Circular should stipulate more specifically the selection criteria, the approval, and disbursement process to ensure transparency and fairness for the beneficiaries, avoiding the "ask-give" mechanism in the future implementation process.

According to enterprises, many types of packaging, products, and waste can be reused and be profitable. The market for recycling packaging, products, and waste treatment is very active with many companies participating.

Some types that are difficult to recycle and process, as well as being unprofitable, require government support and business contributions. The Ministry of Natural Resources and Environment should focus on policies to promote development for this market to operate effectively, at the same time establish a control mechanism with the participation of key industry associations to ensure that enterprises' contributions are used clearly, transparently, and for the right purposes as stated in the Law on Environmental Protection.