Businesses urge flexibility in Viet Nam’s EPR implementation

According to Ms. Le Thi Hong Nhi, representative of BritCham Viet Nam, the Extended Producer Responsibility (EPR) policy is considered an environmental approach that promotes the circular economy in plastic waste management. It encourages a comprehensive process from waste segregation at source, collection, and recycling to converting waste into new, usable products.

However, to enhance flexibility and autonomy for enterprises, Ms. Nhi proposed that the EPR policy should be revised to allow companies to combine two implementation methods simultaneously, self-organized recycling and financial contributions to the Viet Nam Environmental Protection Fund. Furthermore, companies that have not fully met their recycling obligations should be allowed to contribute to the Fund for the remaining volume instead of facing penalties. Such adjustments, she noted, would reduce the pressure of sanctions while motivating businesses to prioritise direct recycling.

She also emphasized that financial contributions should be adjusted in proportion to the environmental friendliness of products and packaging, thereby encouraging the development of eco-friendly materials.

Ms. Nhi added that EPR-related expenses should be recognised as legitimate business costs for tax deduction purposes. Under the Draft Decree on Corporate Income Tax (dated July 8, 2025), the Ministry of Finance has proposed allowing companies to deduct contributions to the Fund when determining taxable income. Similarly, expenses incurred in organising recycling activities should qualify for equivalent tax incentives.

In addition, she recommended establishing a mechanism to use EPR financial contributions to invest in and upgrade waste collection and recycling infrastructure, an urgent need in Vietnam. The role of local authorities should also be clarified and strengthened, as post-consumer waste management falls within their jurisdiction.

Enhancing the involvement of local governments, Ms. Nhi noted, would help link corporate responsibilities with existing waste management systems and support enterprises in collection, public communication, and community engagement.

The EPR mechanism was officially introduced under the Law on Environmental Protection 2020 and detailed in Decree 08/2022/ND-CP, which specifies obligations for producers and importers of packaging, electrical and electronic equipment, tyres, and lubricants. Beginning in 2024, these producers and importers are required either to self-organise recycling or contribute financially to the Fund managed by the Ministry of Natural Resources and Environment (MONRE) now Ministry of Agriculture and Environment (MAE). The recycling targets are to be gradually increased every three years to ensure steady progress toward national circular economy goals.

Vietnam’s EPR framework draws on international models from countries such as Japan and South Korea but is being tailored to domestic conditions. The country’s recycling rate remains low compared to regional peers, with roughly 30% of plastic waste collected for recycling and most recyclers operating on a small or informal scale. Analysts say that an effective EPR system could help formalise this sector, improve efficiency, and generate thousands of green jobs if properly implemented.

However, challenges remain. Many small and medium-sized enterprises have yet to fully understand their obligations or develop appropriate reporting systems. Infrastructure for waste sorting and recycling remains limited, especially outside major urban areas. Experts also note that the informal waste sector currently collects and processes more than 90% of recyclables nationwide. Integrating these workers into formal systems, through partnerships, training, or cooperatives, will be crucial for ensuring the success of EPR.

Environmental economists have also called for transparency in the management and disbursement of funds collected through EPR contributions. The Viet Nam Environmental Protection Fund is expected to play a central role, but businesses stress the importance of clear reporting and equitable use of resources to improve waste collection infrastructure rather than administrative overhead.

According to PwC Viet Nam, the EPR framework represents not just a compliance requirement but also a strategic opportunity for companies. By redesigning packaging, partnering with recyclers, and using recycled or biodegradable materials, firms can enhance brand reputation and meet the growing demand from global consumers for sustainable products. This is particularly relevant as major export markets such as the EU are tightening rules on green supply chains and recycled content in packaging.

Industry observers suggest that the recommendations from BritCham align with Vietnam’s broader circular economy targets, as outlined in the National Action Plan on Circular Economy to 2035, approved earlier this year. The plan sets ambitious goals for reducing plastic waste by 75% by 2030, increasing recycling capacity, and cutting landfill disposal rates.

Ultimately, the proposal to allow companies to combine both EPR methods reflects the need for balance, ensuring environmental accountability while maintaining business viability. By creating a more flexible and transparent system, policymakers could encourage higher compliance rates and attract more private investment into the recycling industry.