Manufacturers could face annual recycling costs exceeding $259 million

Manufacturers could face annual recycling costs exceeding $259 million

Dau Anh Tuan, the deputy secretary general of the Vietnam Chamber of Commerce and Industry (VCCI), addressed the issue of recycling costs and extended liabilities in Vietnam during a meeting on July 28. Tuan emphasized the importance of establishing proper recycling cost norms for manufacturers and importers to fulfill their responsibilities efficiently. The draft proposal on recycling cost norms, based on Article 54 of the 2020 Law on Environmental Protection and put forth by the National Extended Producer Responsibility (EPR) Council, aims to support the implementation of product and packaging recycling responsibilities, waste collection, and treatment by specifying the norms for recycling costs per unit volume of product, packaging, and administrative management expenses.

Phan Tuan Hung, the director of the Legal Department under the Ministry of Natural Resources and Environment and a permanent member of the National EPR Council, highlighted that overseeing recycling duties and extended responsibilities for manufacturers and exporters would incentivize enterprises to produce and export higher-quality products, reduce single-use material emissions, and fulfill the government’s commitments to minimize emissions.

Concerns have been raised by the Vietnam Beer, Wine, and Beverage Association, the Vietnam Plastic Association (VPA), and the Food and Foodstuff Association Ho Chi Minh City regarding the recycling cost coefficient in their respective industries. They argue that the draft proposal is excessive and unreasonable, with coefficients higher than those in Western European countries, particularly for aluminum (1.26 times higher) and glass (2.12 times higher).

According to calculations by these associations, businesses would be required to pay an estimated $259 million per year in recycling fees, excluding fees for the primary packaging categories of paper, plastic, and metal. This significant expense would pose challenges for businesses and potentially lead to increased product prices, especially considering the current economic climate.

Huynh Thi My, the general secretary of the VPA, expressed concerns about Vietnam’s plastic recycling industry, which is still in its early stages and faces numerous challenges. In 2022, Vietnam consumed 9.2 million tonnes of plastic materials, with 38% used for packaging. My pointed out that the plastic packaging industry operates on basic and straightforward technology, resulting in a very low profit margin of approximately 5%. She stated that under the proposed recycling cost standards, recycling contributions would account for nearly 40% of a company’s profits, which, combined with low interest rates, would negatively impact the plastics industry.

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