Investment projects under environmental criteria in Vietnam

Currently, the need for business investment is increasingly growing, leading to the appearance of many investment projects in many different fields, industries, and locations. Investment projects are classified according to many different criteria such as duration, capital source, level and scale, and investment field,… One of them is based on environmental criteria. In the article below, Viet An Law Firm will provide clients with some information about investment projects under environmental criteria in Vietnam.

Environmental criteria for project classification

According to Clause 1, Article 28 of Environmental Protection Law 2020, environmental criteria for investment project classification include:

Classify foreign projects according to environmental criteria

According to Article 28 of Environmental Protection Law 2020, investment projects based on environmental criteria are classified into 4 groups with classification criteria that gradually reduce the level of environmental pollution. The remaining projects that are not in Groups I, II, and III will be in Group IV (a group of projects with no risk of adverse impact on the environment). The specific criteria are as follows:

What are the environmentally sensitive factors?

Criteria for projects with environmentally sensitive factors are determined according to Decree 08/2022/ND-CP guiding Environmental Protection Law 2020 (EP Law) based on the following factors:

How to determine the scale of an investment project?

Public investment projects

The scale of investment projects is classified according to the criteria specified in Public Investment Law 2019, including:

• Projects of national importance;
• Group A,
• Group B;
• Group C;

Land area

The scale of land use area and land with water surface of the project shall be classified into 03 types:

• Large;
• Medium;
• Small;

Sea area

The scale of the project shall be classified into 02 groups according to the power to issue licenses:

• Ocean dumping;
• Sea area assignment and assignment of sea area for land reclamation;

The exploitation of natural resources

The scale of the exploitation of natural resources shall be classified into 02 groups according to the power to issue licenses:

• Mineral mining,
• Extraction and use of water resources.

List of types of production, business, or services that are likely to cause environmental pollution

The list of types of production, business, and services that are likely to cause environmental pollution is specified in Appendix II issued with Decree 08/2022/ND-CP, and classified into level I, level II, and level III with large, small, or medium-capacity.

Specifically, some types are as follows:

Level I

• Enrichment and processing of toxic minerals and metallic minerals; mineral processing using toxic chemicals;
• Iron and steel production, metallurgy;
• Pulp and paper production from recycled materials or biomass;
• Production of basic inorganic chemicals and chemical fertilizers;
• Producing fabric, yarn, textiles;
• Leather production (with tanning process); leather tanning;
• Exploitation of crude oil and natural gas;
• Oil refinery;

Level 2

Level 3

• Processing rubber latex
• Production of beer and carbonated beverages
• Producing batteries and accumulators
• Raising livestock and poultry on an industrial scale
• Production of sugar from sugar cane
• Manufacture of components, electrical and electronic equipment

List of projects in Group I

The detailed list of investment projects in Groups I, II, and III is specified in Appendix III, Appendix IV, and Appendix V issued with Decree 08/2022/ND-CP. Projects with a risk of adverse impact on the environment (group I projects) include:

Obligation to assess project environmental impact

Environmental impact assessment is the process of analyzing, evaluating, identifying, and predicting the environmental impact of investment projects and providing measures to minimize negative impacts on the environment.

According to Article 30 of Environmental Protection Law 2019, projects subject to environmental impact assessment include: Group I and Group II investment projects, except for two cases:

• Medium-scale and capacity projects involved in types of production, business,  and services that are likely to cause environmental pollution;
• Small-scale and capacity projects involved in types of production, business, and services that are likely to cause environmental pollution with environmentally sensitive factors; medium-scale and capacity projects not involved in types of production, business, and services with environmentally sensitive factors that are likely to cause environmental pollution;

Note, if these subjects belong to urgent public investment projects according to the regulations of public investment law, environmental impact assessment is not required.

Meaning of classifying projects according to environmental criteria

• Classifying investment projects under environmental criteria in Vietnam can prevent some limitations of old investment project classifications such as missing many investment projects with private capital that are not subject to approval investment policy, having a major impact on the environment but not requiring a preliminary environmental impact assessment for screening during the project preparation stage.
• Many public investment, investment, and PPP projects have no or only minimal impact on the environment when implemented but still require a preliminary environmental impact assessment, causing additional time and costs, and wasting social resources.
• On this basis, the State has issued regulations on environmental criteria to classify investment projects and guide organizations and individuals to implement them.
• Classification of investment projects is the process of evaluating the project’s impacts on the environment and providing measures to minimize and manage environmental impacts to meet the requirements for an environmental dossier.

Clients who have related questions or need legal support regarding investment projects under environmental criteria in Vietnam, please contact Viet An Law Firm for the best support!