Vietnam is building a closed-loop “circular economy” ecosystem, with the industrial sector driving the most drastic, sweeping and transformative change.

Inside Bach Dang shipbuilding factory.

The transition comes as the global economy is grappling with intensifying pressures from resource depletion, climate change, environmental pollution and the constraints of the traditional linear growth model.

An inevitable path towards green, sustainable growth

The circular economy is no longer just a policy choice. It has become an inevitable trend for delivering sustainable and green growth, sharpening competitiveness at home and abroad, and meeting Vietnam’s net-zero emissions target by 2050.

It is now a prerequisite to sustain long-term economic expansion, particularly in industrial production and supporting industries.

Since the early 2020s, the Vietnamese Party and State have shown steady commitment to the approach.

Core principles include aligning the development of a circular economy with broader renewal of the growth model, placing businesses at the centre while the State plays a supporting role, blending market mechanisms with regulatory policies, and accelerating innovation and sci-tech adoption.

Chu Viet Cuong, Director of the Industrial Development Support Centre under the Ministry of Industry and Trade (MoIT), said these policies have been formalised through the 2020 Law on Environmental Protection and a series of related decrees and decisions.

This marks a fundamental shift in governance, moving from pollution control and post-impact mitigation towards full lifecycle management of products, spanning resource extraction, production, consumption and waste treatment.

The circular economy now serves as the backbone of a modern, cross-sectoral policy framework covering environment, finance, industry, trade and investment.

In recent years, numerous green production models based on circular principles have emerged, highlighting the adaptability of domestic enterprises. Ecosystems developed by Vingroup, Gamuda and DoGreen have pioneered waste-to-energy gasification technologies, effectively harnessing renewable energy sources and achieving negative carbon emissions in some cases.

Still, most companies are pursuing green transition largely within their own operations. Fully integrated, closed-loop value chains that capture the true essence of a circular economy remain limited.

Strategic opportunities for global integration, competitiveness

Pham Van Quan, Deputy Director of the MoIT’s Industrial Agency, noted that enterprises face multiple hurdles, including high upfront investment costs, shortages of skilled labour, difficulties in policy enforcement, and uncertainties in technology and partnership selection.

While enterprises are central to the circular economy, the State’s role in providing direction, regulations, and resource allocation remains critical.

According to the Industrial Agency, the circular economy requires tailored policies to help firms overhaul production models, develop eco-industrial parks, deploy advanced technologies, and strengthen both domestic and foreign linkages to build competitive ecosystems.

Assoc. Prof. Dr. Bui Quang Tuan, Vice President of the Vietnam Economic Science Association, affirmed that the circular economy is an irreversible trend for Vietnam.

Digital technology serves as a core driver and a gateway to strategic opportunities for global integration and competition.

Comparing different models from the European Union’s institutional framework-led approach, China’s state management-driven model, to renewed governance and innovation-led of Apple and IKEA, he suggested that Vietnam should adopt a hybrid model combining all three.

The 2025–2030 period is set to become a pivotal phase, presenting Vietnam’s industrial sector with a strategic window to shift from a linear economy to a circular economy. This shift will enable manufacturers to join green supply chains, accelerate recycling industry, and invest in new materials and advanced technologies to replace conventional ones.

To achieve this, Vietnam must perfect and launch three strategic pillars, including institutional framework, technology, and financial mechanisms, he said, adding that investment in quality workforce, international cooperation in technological application, and public awareness campaigns will be essential.

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