By Steve Jacob*

In anticipation of the United Nations Climate Change Conference in Copenhagen, Vietnam's Prime Minister issued Decision 129 on the development of a "structure for the encouragement of investment in the area of environmental protection." The decision, which enters effect December 20, 2009, outlines Vietnam's intent to build and perfect a comprehensive framework- including financing, investment, human resources, science, and industry- to protect the environment.

The decision is divided into two major sections: a discussion of specific policies and a division of labor between enterprises and various governmental agencies to accomplish those policies.  As part of implementation the government will incentivize green investment and reserve funds to lure matching amounts from international organizations. Below are a few illustrations of contemplated policies.

1.       Reservation of a fixed proportion of land for public environmental works in new urban areas.

2.       Expansion of taxable areas, types of fees, and tax rates in manufacturing activities that cause harmful effects or pollute natural resources and the environment.

3.       Allowance for enterprises to use gross profits to invest in treatment of waste from manufacturing.

4.       Support of small and recently organized enterprises and trade villages to implement treatment procedures through preferential credit investment by the government.

5.       Encouragement of enterprises to research and apply advanced technology and industry in the treatment of environmental problems and improvement of efficiency of manufacturing.

Much in the decision is admirable though implementation remains uncertain. It is a set of guidelines for goal-making and if implemented before the appointed deadline-the next five year plan-expires then Vietnam may count itself among those progressive countries who took decisive action to preserve the environment. Despite the yet ephemeral nature of the decision, Vietnam has strong motivation for its successful implementation.

In a report issued by the World Bank in 2007, Vietnam was ranked among the most "at risk" countries for sea level rising (the increase in ocean levels caused by polar icecap melting). The report estimated that as much as 16% of Vietnam's land area could be negatively impacted within the next century; that everything south and west of Ho Chi Minh City, could be inundated; and that as much as 35% of Vietnam's population could be forced to relocate or be otherwise affected.

Unfortunately, the primary cause of this disaster-in-waiting does not lie within Vietnam's capability to cure. Most carbon emissions come from larger countries like the United States and China, both better positioned to cope with sea level rising. Despite this disconnect between cause and effect suffered, Vietnam intends to give its all to stave disaster.

Recent initiatives have lowered annual energy consumption in Ho Chi Minh City, determined that the current bus fleet is one of the largest sources of emissions in urban areas, and targeted clean energies for government investment. It is also in the midst of its first major disciplinary action against Vedan for alleged pollution of the Thi Vai River. Implementation of Decision 129 will only add to these already laudable steps. Now, how to convince twenty million people to buy electric motorbikes?

(*) Please contact the author at jacob.steve@indochinecounsel.com or our partners if you wish to have more information or specific advice for the topic of this article.