At a recent seminar in Hanoi focusing on building green economy, economist Pham Chi Lan said that in the race to attract more FDI local authorities have become less stringent in their standards for approving FDI projects.
This, according to Lan, has resulted in a situation where many of the projects use outdated or inefficient technology, increasing waste and substandard products. "It is a waste of both investment and the resources of the nation," she said.
She said that recently, several foreign investors in HCM City have suddenly left, leaving behind large unsettled debts, including unpaid wages along with their outdated equipment. This , she said, should be a lesson for designing a better FDI approval process in the future.
“A number of Vietnamese firms are also to blame for buying inefficient or substandard equipment because it was cheap. In the end this costs more in terms of high energy use and low productivity," she said.
She added that state-owned enterprises (SOEs) are among the most environmentally unfriendly businesses, consuming large amounts of energy and natural resources, while at the same time consistently reporting losses or falling profits. She recommended the hastening of the SOE restructuring plan, better management and more transparency in this sector.
Desperate role of green economy
Lan said that the fostering of a green economy should be among Vietnam's top priorities, adding that although economic growth has brought advantages, some of the side effects have been a squandering of natural resources and widespread pollution.
“It's essential for our nation to focus on the development of a green economy and to enforce environmentally-friendly criteria while developing our economy. Economic development must done with saving energy and natural resources in mind. Not only must all industries be more responsible for these issues, but each individual holds a responsibility as well," she stated.
Recent studies have found that Vietnamese enterprises of all industries have very high production costs in comparison with many other countries, especially in terms of energy and input material costs. She recommended that enterprises review their production processes and switch over to greener, more efficient technologies.
Some of the difficulties facing businesses who wish to make such a shift include educating their staff and customers on the long-term benefits. There may also be some resistance because it takes a higher initial investment, she said, but the long-term benefits will pay off.
“The Government should put in place more policies that create incentives for efficiency in the use of energy, raw materials and cost-saving in order to protect the environment. Strict punishments should be applied to businesses that harm the environment and squander energy and natural resources," she added.
