SMEs crucial to Vietnam’s transition to circular economy

Small and medium-sized enterprises (SMEs), which make up 96% of all businesses in Vietnam, are believed to be the driving force hastening the transition to a circular economy in the country of 100 million people.

Circular economy offers an economic opportunity for Vietnamese businesses, Ramla Khalidi, UNDP Resident Representative in Vietnam, said in the context that SMEs employ 47% of the labor force and provide 36% of the country's value-added.   

Ramla Khalidi, UNDP Resident Representative in Vietnam, speaks at the event held in Hanoi on Dec 22. Photos: UNDP

"We need to ensure that businesses are provided with the technical and financial support needed to transform the production and consumption model, align with national policies on the circular economy, and reap the benefits of the trade agreements between Vietnam and other countries," she said at an event highlighting the role of SMEs in a national circular economy capacity-building program.

To promote the engagement of SMEs in circular economy, more than 100 businesses working in agriculture, construction, e-commerce, manufacturing, logistics, the environment, and waste treatment in 21 cities and provinces participated in the program over the past six months.

As a result, the businesses connected and analyzed challenges and solutions to apply this economic model effectively. The results were shown at the Harvest Day & CE Connect, which was organized by the UNDP in collaboration with the Embassy of the Netherlands, the Environmental Economic Policy Institute (EEPI), Thua Thien Hue Innovation Hub (HiHub), Vietnam-based Institute for Circular Economy Development (ICED), and Saxion University of Applied Sciences of the Netherlands.

The event was to highlight program's achievements, bring together businesses along the value chain to foster resource sharing and partnership formation, and showcase company products while sharing strategic business plans and practical circular models with other businesses to accelerate the transition to a circular economy.

According to Ramla Khalidi, circular economy is not simply about 'fixing' negative environmental externalities, it is an economic transition aiming to sustain and regenerate natural capital upon which people, communities, and the economy depend.

Indeed, research shows that the transition towards a circular economy offers US$4.5 trillion in economic opportunities globally by reducing waste, stimulating innovation, and creating employment, she added.

Ambassador of the Kingdom of the Netherlands to Vietnam Kees van Baar addresses the issues.

Ambassador of the Kingdom of the Netherlands to Vietnam Kees van Baar said the promotion and development of circular economy infrastructure have the ability to meet the needs of socio-economic development in Vietnam, for example, Responsible Business Conduct. “With enhancing government policies on the circular economy and raising awareness among businesses and the community, the Netherlands believes that Vietnam is set to become a partner in pursuing sustainable economic development," he noted.

Meanwhile, Mai The Toan, Deputy Director of the Institute for Strategy and Policy on Natural Resources and the Environment (ISPONRE), said ISPONRE, with the support of UNDP, the Netherlands Embassy, and other international organizations, has studied and incorporated the circular economy's principles into Vietnamese law.

He said regulations are necessary conditions for advancing the circular economy in Vietnam. To put these legal measures into effect, however, additional study is required to uncover and duplicate successful models of circular economy application within businesses.

At the event, businesses shared practical models and lessons learned, such as the environmentally friendly packaging model, the recirculating wastewater treatment model in Nam Cau Kien Eco-Industrial Park, the buying and selling of used fashion products, and the lessons learned from the food and beverage industry's transition to circularity.

Delegates and businesses also discussed the role of the ecosystem in supporting businesses and facilitating the acceleration of the transition to a circular economy.

Mai The Toan, Deputy Director of the Institute for Strategy and Policy on Natural Resources and the Environment (ISPONRE) at the event.