Restricting scrap import can affect many businesses

The Ministry of Natural Resources and Environment is collecting comments on the draft Decree amending and supplementing a number of articles of Decree 08/2022/ND detailing a number of articles of the Law on Environmental Protection. VCCI commented that, basically, the Draft had added many regulations to reform administrative procedures, reduce procedures or clarify the scope of subjects that must be implemented, and decentralize procedures.

However, based on comments from businesses, VCCI has raised a number of concerns that need to be considered, including regulations related to restricting the import of scrap and plastic scrap as production materials. VCCI assessed that these regulations were not consistent with the Law on Environmental Protection, because this Law did not assign the Government to regulate a roadmap to limit  the import of raw materials or conditions for output products of businesses.

Officials at the Cai Mep Port Border Gate Customs Branch inspect imported scrap goods. Photo: N.H

In addition, regarding scrap as raw production materials in general, the Draft stipulates that establishments using imported scrap can only import a maximum of 80% of their usage needs, and the rest must use domestically collected scrap from January 1, 2025. According to VCCI, this regulation may affect the operations of many businesses.

According to businesses, if imported scrap is used properly, it will be recycled into raw materials to produce industrial products to serve the economy, saving costs and reducing raw material exploitation. In many cases, importing scrap also helps businesses reduce difficulties in finding input materials due to tensions from the supply of raw minerals.

VCCI said that this regulation might be idea of the drafting agency that wanted to promote businesses to recycle domestic scrap.

However, this required businesses to form a domestic scrap collection chain, while in reality, an official collection chain had not been formed in Vietnam. At the same time, there were no regulations binding the responsibilities of subjects generating waste.

Thus, VCCI assessed that manufacturing enterprises would have difficulty establishing a domestic scrap collection chain and it might take many years for this chain to operate effectively, while the source of raw materials for production is limit ed.

Similarly, regarding importing plastic scrap as raw materials for production, the Draft stipulates that businesses are not allowed to import plastic scrap as raw materials to produce recycled plastic pellets from December 31, 2024. VCCI also assessed that the regulations are not consistent with the actual operations of the plastic industry.

Recycled plastic pellets and finished plastic products are an upstream and downstream value chain that depend and complement each other, but are two different fields with different production processes and technological know-how. Recycling businesses have no experience in producing finished plastic products, and conversely, businesses producing finished products also have no experience in producing recycled plastic pellets.

In the current context, the plastic industry's raw material sources mainly rely on imported raw materials, so businesses reflect that this regulation will have an immediate impact on the value chain of the plastic industry, causing businesses producing finished products must become increasingly dependent on imported plastic pellets, thereby reducing competitiveness and making it difficult to take advantage of tariff incentives in free trade agreements, or they may lose many export orders because of meeting recycled plastic rate as required by importers in developed countries.

From the above issues, VCCI recommended that restricting scrap import should be considered for the development of the industry with a full consultation process and a long-term conversion roadmap along with the development of the domestic collecting and recycling system, and VCCI proposed removing these regulations.