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Industrial Real Estate - What is Eco-industrial zone?

In light of the necessity to build industrial parks while also protecting the environment, eco-industrial parks ("EIPs") have attracted a lot of attention recently. In this article, ATIM LAW FIRM will synthesize general knowledge about the EIP in Vietnam

With great advances in science and technology, EIPs have become a new model for industrial, economic, and social development in line with the global sustainable development process.

EIP model has appeared in developed countries since the 1990s and in high-income Asian countries such as Japan/Korea/Taiwan since 2000. The concept of EIP comes from two ideas: sustainability and industrial ecology. The United States Environmental Protection Agency (USEPA) defines EIP as “a community that produces and provides services to businesses seeking to increase economic and environmental performance by collaborating in the management of environmental issues and reuse, including energy, water, and materials”. In this way, the business community will get a collective benefit greater than the sum of individual benefits if each business optimizes its performance.

What is Eco-industrial park?

In Vietnam, the EIP model has been regulated from Decree No. 82/2018/ND-CP dated May 22, 2018, of the Government on management of industrial parks and economic zones (“Decree 82”). On May 28, 2022, the Government issued Decree No. 35/2022/ND-CP, replacing Decree 82 and taking effect from July 15, 2022 (“Decree 35”).

Accordingly, Article 2.5 Decree 35 defines the EIP as “…an industrial park in which enterprises located inside its perimeter get involved in cleaner production, make effective use of natural resources and enter into production linkage and cooperation for industrial symbiosis [1]”.

In fact, an EIP usually has the following basic characteristics [2]:

• Ensuring adequate essential infrastructure services and related services, supporting enterprises in industrial parks to implement industrial symbiosis;

• At least 20% of enterprises in industrial parks apply solutions to save materials, materials, water, energy, chemicals, waste and scrap and reduce emissions to the environment;

• Reserve at least 25% of the area for green works, including trees, traffic, shared service infrastructure... according to the standards of the Ministry of Construction;

• Implement at least 01 industrial symbiosis;

• Having a mechanism to monitor and manage environmental protection;

• There are solutions to ensure housing, service works, and public utilities for employees working in industrial parks.

An EIP can be understood as a "community" of manufacturing and service enterprises that are closely linked to the same interests: toward a high-quality social, economic and environmental activity, through cooperation in the management of environmental and resource issues.

Current status of eco-industrial parks in Vietnam

Vietnam currently has more than 400 industrial parks in operation, but very few projects focus on the industrial ecosystem. According to a report by HBA, Ho Chi Minh City does not have any true eco-industrial parks. Currently, there are only a few industrial parks and EPZs in the South operating and aiming to convert to the EIP model such as:

• Linh Trung I EPZ (HCMC) has a total area of ​​62 hectares and has been operating since 1995. All production facilities in the EPZ perform waste exchange with Sepzone Joint Venture Company or with collection facilities to purchase scrap, recycle, or treat waste outside the EPZ;

• Nhon Trach 2 Industrial Park (Dong Nai) was established in 1997 with an area of ​​347 ha. The industrial park forms a waste exchange network. Caton paper is used to produce cardboard boxes, and fabric materials and waste fibers are used to produce products such as rags, cotton dust, etc. Waste exchange outside the industrial park is established for recycling scraps such as plastic, paper, and cardboard… Solid waste and exhaust gas are treated, and wastewater is treated and reused.

Vietnam's development policy for EIP

Ms. Nguyen Thi Bich Ngoc, Deputy Minister of Planning and Investment, said that the Government committed by 2030 there will be 40%-50% of localities planning to convert existing IPs into EIPs and 8% -10% of localities have an orientation to building a new EIP from the stage of construction planning and orientation of industries and professions to attract investment.

In the coming time, the Government will continue to implement the project "Deploying eco-industrial parks in Vietnam according to the approach from the Global Eco-Industrial Park Program" with a total budget of 1,821,800 USD, at 05 provinces/cities including Ho Chi Minh City, Can Tho, Dong Nai, Da Nang, and Hai Phong.

The project aims to improve the economic, environmental, and social efficiency of the industry and integrate regulations to develop the eco-industrial park model in relevant mechanisms and policies.