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Investment in environmental protection: International experiences and current situation in Vietnam

The economic growth in Vietnam has not been without cost as the natural environment - forests, biodiversity and coastal zones-came under additional pressure. To address the situation with the aim of proactive prevention, the Prime Minister issued the Directive No. 25/CT-TTg, dated 31/8/2016, on some urgent missions and solutions to protect environment. In Article 3, item (c) of the Directive, the Prime Minister requested MPI “to study and regulate a specific level of environmental expenditures in total amount of investments for investment projects”. Our review of international experiences shows that the proportion of Pollution Abatement Capital Expenditures to total firms’ capital expenditures in U.S. is about 3,5 - 5,1%. The industries requiring higher levels of environmental capital expenditures include: (1) Petroleum and coal products, (2) Primary metal industries; (3) Paper and allied products, and (4) Chemicals and allied products. In Vietnam, the level of investment in environmental protection is relatively low. Some surveys of enterprises in Vietnam show that less than 2% of all surveyed enterprises indicated the purpose of their investment to meet environmental requirements. With the lessons from international experiences, requirements on the rate (3-5%) of investment for the environment in the total investment of investment projects can be identified as one of the criteria for appraisal and approval of EIA reports of investment projects in Vietnam. | Investment in environmental protection: International experiences and current situation in Vietnam