2025 is almost here. We are now just five years away from the 2030 targets set out in the Sustainable Development Goals and Vietnam’s Socio-Economic Development Strategy. By 2030, Vietnam aims to reach per capita GDP of $7,500, increase its forest coverage to 42 per cent, establish marine protected areas covering 3-5 per cent of its waters, ensure that 95 per cent of municipal wastewater is collected and treated, and reduce greenhouse gas emissions by 15.8 per cent.

These ambitious targets reflect Vietnam’s commitment to sustainable development and the well-being of its people. Achieving them will require focused, coordinated efforts over the next five years.

Yet, as Vietnam works toward these targets, it faces significant challenges. Hanoi was recently ranked the second-most polluted city in the world, with an Air Quality Index (AQI) of 210. A few months ago, Typhoon Yagi devastated northern cities and provinces, claiming lives and livelihoods and damaging infrastructure. Meanwhile, global geopolitical and trade tensions persist, and Vietnam must balance the goal of rapid development with the complexity of structural reforms.

From planning to action

The circular economy (CE) provides a powerful response to the sustainability challenges we face. At its core, the CE is built on the premise that materials can, by design, be reused and transformed almost infinitely. In fact, circular practices have long been integral to Vietnam’s journey, evolving from the traditional “garden-pond-cage” system to more advanced industrial symbiosis within industrial parks.

While the foundation has been laid and the policy framework established, it is now time to rapidly transition from planning to action. In this context, the United Nations Development Programme (UNDP), a longstanding advocate for the CE, has crafted a vision to support Vietnam in advancing a transformative agenda for a Low-Carbon and Inclusive Circular Economy.

Rooted in the revised Law on Environmental Protection (LEP), our vision aims to prepare Vietnamese businesses for the green transition, reshape consumption and production patterns, prioritize circular designs, enable financial flows, promote gender-responsive approaches, and ensure a just transition where no one is left behind.

How can we transition the CE from planning to action within the five-year timeframe set by the Vietnamese Government and international agreements? One key strategy is integration.

To make the CE a reality, it must be viewed not as a standalone topic but as an integrated approach. The UNDP proposes four key pathways for such integration to be effective, inclusive, and forward-looking.

Integrating design into policies; the foundation of a circular economy

At the policy level, which serves as the core umbrella for the circular transition, measures and incentives must be rapidly implemented. For instance, Extended Producer Responsibility (EPR) was first enacted in the LEP 2022 and has since been widely recognized as one of the most effective policy instruments driving recycling worldwide. Yet it still lacks essential guiding documents. Gaps include the absence of coefficient (FS) guidelines; unclear incentives for industries to contribute financially, engage in self-recycling, or utilize producer responsibility organizations (PROs); as well as no clear mechanism for disbursing funds of around VND1.4 trillion ($55.123 million) managed by the Vietnam Environment Protection Fund.

Additionally, Vietnam needs to adopt a roadmap or a law on eco-design, setting clear mandates for relevant ministries and sectors. Since up to 80 per cent of environmental impacts can be identified and reduced at the product design stage, such legislation could act as a catalyst for innovation in circular materials and services; critical components of the transformation. By rethinking design, businesses can also better align with evolving social expectations and regulatory requirements. This approach is most effective when coupled with policies on “green public procurement”, leveraging the purchasing power of local and central governments to stimulate sustainable consumption and production. A key next step would involve developing mandatory, quantitative eco-design requirements, governing indicators such as recycling rates, product lifespan, energy intensity, and recycled content, to align with EPR principles.

For reference, the EU has introduced the Eco-design for Sustainable Products Regulation (ESPR), which came into effect last July and serves as a key component of the bloc’s 2020 Circular Economy Action Plan. The regulation is designed to establish sustainable products as the standard across the EU market.

Integrating circular economy practices into priority sectors

As an outward-oriented country, Vietnam’s growth is closely tied to international trade and global connectivity. It has achieved the fastest export growth in the region, driven by key sectors such as electronics and textiles. Notably, the international market is increasingly favoring green products. Businesses that can adapt to meet global sustainability standards are already ahead of the curve.

The transition to a CE is not only an environmental and climate imperative; it also presents untapped business opportunities for Vietnamese enterprises.

Policies like the EU’s Carbon Border Adjustment Mechanism (CBAM) may seem distant but will have direct repercussions on various stakeholders in Vietnam. These include aquaculture farmers in the Mekong Delta, coffee producers in the central highlands, and women-led dragon fruit cooperatives in south-central Binh Thuan province. Why? Because these policies embed strict environmental standards within their application. Are these standards out of reach for the thousands of farmers and micro, small, and medium-sized enterprises (MSMEs) driving Vietnam’s economy? No. But are we fully prepared to uphold these standards? Unfortunately, the answer is also no. This is precisely where the transformative power of circular economy practices can make a difference. By adopting circular approaches, some sub-sectors can gain a competitive advantage compared to neighboring regions.

In this context, the UNDP recommends prioritizing sectors with greater potential, such as agriculture, electronics, plastics, and textiles. In these areas, we have identified best practices and low-hanging fruit opportunities that can be leveraged, provided the enabling conditions are quickly established. For example: (i) reusing agricultural by-products to reduce agri-waste and ultimately lower greenhouse gas emissions through pilot projects implemented by the UNDP and the Ministry of Agriculture and Rural Development in the coffee, rice, and dragon fruit value chains; (ii) promoting the reuse of industrial wastewater, to cut down both wastewater discharge and the demand for freshwater supplies; and (iii) enhancing waste collection and sorting at the city and provincial level to boost recycling, illustrated by a Norway-funded project implemented by the UNDP in collaboration with Quy Nhon city in south-central Binh Dinh province.

Vietnam is already home to 26,000 Social Impact Businesses, but to foster future growth, technological advancements must be prioritized through increased investment in higher education, research, and innovation, generating spillover effects for building national capabilities in the circular economy.

Nesting the circular economy transition within current institutional reforms

As recently highlighted by Party General Secretary To Lam at the 8th session of the 15th National Assembly, institutions remain “the bottleneck of all bottlenecks”, hampering the country’s sustainable development. Profound reforms are critical for fostering innovation and driving change. So, how do these relate to the circular economy?

The concept of a circular economy may offer a framework for government-led innovation. It embodies a systemic approach to envisioning development that encourages experimentation, supports startups, and attracts investment in research and development, all of which form the backbone of a circular transition. Let’s look at some examples.

Although Article 74 of Decree No. 08/2022/ND-CP, guiding the implementation of the LEP, discussed the reuse of treated wastewater, it remains a challenging process for companies because obtaining an environmental license is time-consuming, and authorities often hesitate to grant it due to the involvement of multiple government agencies, such as those overseeing environmental pollution control, water resource management, and industrial safety. This complexity and potential liability may discourage authorities from supporting the reuse of treated wastewater.

Similarly, in the plastic industry, the cost disparity between virgin and recycled plastic remains a major barrier to increasing the use of recycled content in packaging. To overcome this, a coordinated and cross-ministerial effort is required to create effective incentives for companies to use higher levels of recycled materials. This would involve the Ministry of Finance (introducing tax incentives or subsidies), the Ministry of Industry and Trade (promoting sustainable production and consumption through grants or policies under Decision No. 889), and the Ministry of Natural Resources and Environment (strengthening the EPR by mandating minimum recycled content). However, the division of responsibilities among these ministries often leads to delays and inefficiencies, making it difficult for businesses to receive the comprehensive and timely support necessary for transitioning to a circular economy.

By improving governance frameworks, streamlining regulatory processes, and removing bureaucratic barriers, Vietnam can foster an environment where innovation for the circular economy thrives. A more agile and responsive institutional framework empowers businesses, researchers, and individuals to lead transformative solutions that tackle societal challenges, from air pollution to environmental degradation.

Integrating people and the private sector for a just and inclusive transition deploying innovative partnerships

Linear practices also affect public health. Globally, air pollution causes about 7 million deaths a year. In 2023, Vietnam was ranked the second-most polluted country in the ASEAN region. While everyone is affected, vulnerable groups such as children, the elderly, and those living near the open burning of waste are the most at risk.

Vietnam must therefore continue to place “people” and considerations of social equity at the center of its circular transition, to ensure it is just and inclusive. This moral imperative is reflected, for example, in the recently adopted Just Energy Transition Partnership.

There are signs of hope. In recent years, we have seen inspiring efforts by students, cooperatives, and cities and provinces, all working to circulate materials and resources for as long as possible. This effort reduces environmental pressure in two ways: by slowing the rate at which we extract resources such as soil, sand, and limestone from ecosystems, and by dramatically reducing the release of pollutants into the air, maritime zones, watersheds, and land. The UNDP is actively building the capacity of youth, who represent 25 per cent of the population and our future workforce. Through the activities of the Youth Policy Working Group under the Youth4Climate Initiative, we are equipping young people to play a leadership role in this transition.

Moreover, closer collaboration is needed between government agencies, businesses, and universities to strengthen links between policy, research, and market opportunities. We cannot overstate the importance of partnerships. The UNDP is honored to co-host the Vietnam Circular Economy Hub with the Ministry of Natural Resources and Environment, which boasts over 100 members and 4,000 unique monthly viewers. We are also proud to support sectoral initiatives: the National Plastic Action Partnership (NPAP) and the Food System Transformation Partnerships. They all present unprecedented opportunities to transform the collective vision for the circular economy transition outlined in Vietnamese policies into tangible actions delivered by actors working together toward a shared goal.

The UNDP is ready to support Vietnam in prioritizing reforms that create a supportive ecosystem for transformation. We aim to be a driving force in support of the country’s shift to a greener, circular, and low-carbon economy, delivering multiple co-benefits, such as protecting human and ecosystem health, advancing climate goals, and fostering economic growth.

The time for action is now.