The enactment of the Law on Environmental Protection 2020 marked a paradigm shift in Vietnam’s approach to waste management: transitioning from a linear model to a “Circular Economy.”
Central to this shift is the Extended Producer Responsibility (EPR) mechanism. It is no longer a voluntary Corporate Social Responsibility (CSR) initiative but a strict statutory obligation. Manufacturers and Importers are now financially and physically responsible for the end-of-life stage of their products.
Below is an analysis of the regulatory framework governed by Decree 08/2022/ND-CP, as amended and supplemented by Decree 05/2025/ND-CP, and the subsequent financial implications for enterprises.
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1. Legal Basis and Scope of Application
The Regulatory Framework
The EPR regime is currently governed by:
- Law on Environmental Protection 2020.
- Decree 08/2022/ND-CP: The foundational regulation detailing the implementation of the Law.
- Decree 05/2025/ND-CP: The latest amendment introducing adjustments to the recycling roadmap and administrative procedures.
Regulated Entities
The obligation applies strictly to:
- Manufacturers: Enterprises producing goods domestically for the Vietnamese market.
- Importers: Enterprises importing goods (or goods contained in packaging) into Vietnam.
- Exemption: Exports are generally exempt from Vietnam’s domestic EPR fees (subject to the destination country’s regulations).
Subject Matters & Implementation Roadmap
Under the amended regulations, the timeline for mandatory recycling is structured as follows:
- Packaging (Effective from Jan 1, 2024): Applies to commercial packaging made of rigid plastic, soft plastic, paper, metal, and glass (for food, cosmetics, pharmaceuticals, etc.).
- Products:
- Group 1 (Effective Jan 1, 2024): Batteries, accumulators, lubricating oils, tires.
- Group 2 (Effective Jan 1, 2025): Electrical and Electronic Equipment (EEE) – Note: Decree 05/2025/ND-CP may have refined the specific list of EEE codes subject to immediate compliance.
- Group 3 (Effective Jan 1, 2027): Vehicles (Motorbikes, Automobiles).
2. Compliance Mechanisms: The Two Options
Enterprises have the statutory discretion to choose one of two methods to fulfill their EPR obligations. This decision is a critical financial strategy calculation.
Option A: Self-Organization of Recycling
The enterprise actively participates in the recycling process. This can be achieved via:
- Self-recycling: Utilizing the enterprise’s own facilities (must meet environmental technical standards).
- Hiring a Recycling Unit: Contracting with a licensed third-party recycler.
- Authorizing a PRO: Joining a Producer Responsibility Organization (PRO) authorized by the Ministry of Natural Resources and Environment (MONRE). The PRO acts as an intermediary, collecting fees from members to organize recycling on their behalf.
Option B: Financial Contribution to the Vietnam Environment Protection Fund (VEPF)
If an enterprise opts out of organizing the recycling physically, it must discharge its obligation by making a financial contribution to the VEPF.
- Nature: This functions as a “green levy,” where the State assumes the recycling responsibility using the contributed capital.
- Procedure: Enterprises declare and pay this amount annually via the National EPR Portal.
3. Financial Impact: The Cost Formula
For businesses, EPR introduces a new variable into the Cost of Goods Sold (COGS). The financial liability is calculated as follows:
F = R x V x Fs
- F: Total amount payable to the VEPF.
- R: Mandatory Recycling Rate (A fixed percentage set by the Government for each material type, e.g., 22% for paper packaging).
- V: Volume of products/packaging introduced to the market in the preceding year.
- Fs: Reasonable Recycling Cost Factor. This is the unit cost to collect and recycle 1kg of material.
Impact of Decree 05/2025/ND-CP: Enterprises must verify if the Fs factor has been adjusted in the 2025 amendment. A higher Fs for “hard-to-recycle” materials (e.g., multi-layered plastics) creates a direct financial incentive for Eco-Design changes.
4. Administrative Sanctions and Risks
Non-compliance with EPR regulations carries severe penalties under the decree on administrative sanctions in the environmental sector:
- Monetary Fines: Up to VND 2 billion (approx. USD 80,000) for failure to register, declare, or pay the recycling contributions.
- Remedial Measures: Forced payment of the outstanding amount plus calculated interest.
- Audit Risk: The Ministry has intensified post-clearance audits to verify the volume ($V$) declared by Importers against Customs data.
5. Strategic Recommendations for Enterprises
To ensure compliance and optimize operational costs, Legal and Compliance departments should execute the following:
- Regulatory Gap Analysis: Conduct a review of Decree 05/2025/ND-CP against the internal compliance protocols established under Decree 08/2022 to identify any new reporting deadlines or adjusted rates.
- Data Integrity Audit: Implement a system to accurately track the weight and material specifications of all packaging/products. Discrepancies between Import Declarations and EPR filings are a primary trigger for tax and environmental inspections.
- Cost-Benefit Analysis (PRO vs. VEPF): Evaluate the cost-efficiency of joining a PRO versus paying the VEPF contribution. For high-volume manufacturers, the PRO route is often more cost-effective.
- Eco-Design Strategy: Re-evaluate packaging specifications. Transitioning from composite materials to mono-materials can significantly reduce the Fs coefficient and, consequently, the annual compliance fee.
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Nguyen Hien Mai