Introduction 14 a

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DECENTRALIZING INCENTIVES AND COMPLIANCE
PROMOTION IN VIETNAM Bali, Indonesia, 25
November, 2008
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GENENRAL INFORMATION

• AT A GLANCE VIET NAM
• Capital Hanoi
• Total Area 337,114 km2
• Population 83 million (urban 25, rural 75).
• Density 240 habitant/km2
• 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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HO CHI MINH CITY PROFILE
.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.

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HO CHI MINH CITY PROFILE
Area 2.093,7 km2 Population 6.239.938 (2005)
70 under 35 year old
V? TH? CHI?N LU?C
C?a ng? qu?c t? l?n nh?t c?a Vi?t Nam Ð?u m?i
giao thông cho toàn khu v?c phía Nam
Tp Ho Chi Minh
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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

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Key steps in development of environmental
institutions in Vietnam
1970s State Committee for Science and Technology
with Department of baseline survey and
studies. 1983 Ministry of Science and Technology
(MOSTE) with Dept. of environmental baseline
studies. 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)
• Peoples 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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Roles of DONRE

• Evaluate environmental impact assessment
  submitted by regulated establishment.
• Collect fees for environmental protection
  including those for wastewater.
• 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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Legal and Institutional framework of
environmental policy in Vietnam

• 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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Legal and Institutional framework of
environmental policy in Vietnam

• 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 Peoples 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 Peoples 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 establishments
• Granting certificates of environmental standards
  to production establishments and businesses, or
  withdrawing them
• Cooperating with institutions as the central
  level in supervising, inspecting and handling
  violations of the Law of Environmental Protection
  (LEP) in the locality
• 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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Legal and Institutional framework of
environmental policy in Vietnam

• Policy enforcement
• Decree 81/2006/ND-CP on fines on administrative
  violations
• Maximum fine imposed on breaches of
  environmental regulations could reach to 70
  million VND (4,500 USD)
• With regards to WW and pollutants discharge into
  water resources are fixed from 100 to 70 million
  VND ( 7 4,500 USD) depending on the pollution
  level or whether containing hazardous and
  radioactive substances.
• (Decree 81 is under revised at this present to
  increase the fine up to 500 mill.)

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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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Environmental protection charges for wastewater
Decree No. 67/2003/ND-CP

• 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 Decree No. 67/2003/ND-CP

• 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 8th, 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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Environmental protection charges for wastewater
Decree No. 67/2003/ND-CP

• The main goal
• To limit the environmental pollution cause by
  wastewater
• To use economically clean water
• 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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Environmental protection charges for wastewater
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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Environmental protection charges for wastewater
Decree No. 67/2003/ND-CP

• The target groups

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Environmental protection charges for wastewater
Decree No. 67/2003/ND-CP
The rates of wastewater fee
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Industrial Wastewater Fee Collection Process in
HCMC
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Environmental protection charges for wastewater
Decree No. 67/2003/ND-CP

• 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

• BENEFITS
• The basic framework for compliance, enforcement,
  pollution control, national monitoring and
  reporting are set in place.
• Raise a sense of initiative of the local
  authorities (it depends on the qualifications,
  experiences, capacity, technical instruments of
  district Natural resources and environment
  division) ( differentiate between inner
  districts rural districts)
• 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 HCMCs PC to get
  instruction to district PCs? allocate budget for
  district NRE division 2009!

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Strategies to decentralized use of incentives

• Adjust fees rate to be suitable. Industrial WW
  charge now is too low, not enough for expenses of
  solving environmental standard.
• Continue the awareness raising activities.

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Thank you for your attention !