(Luận văn thạc sĩ) public private partnership (ppp) in the environment sector and sustainable development issues

MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY DISSERTATION PUBLIC – PRIVATE PARTNERSHIP (PPP) IN SOLID WASTE MANAGEMENT IN JAPAN, LESSONS FOR VIETNAM Major: International Trade Policy and Law Full name: Nguyen Thi Hong Ly Ha Noi - 2017 Luan van MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY DISSERTATION PUBLIC – PRIVATE PARTNERSHIP (PPP) IN SOLID WASTE MANAGEMENT IN JAPAN, LESSONS FOR VIETNAM Major: International Trade Policy and Law Full Name: Nguyen Thi Hong Ly SUPERVISOR: Dr Vu Van Ngoc Ha Noi - 2017 Luan van DECLARATION I hereby declare that the dissertation entitled “Public – Private Partnership (PPP) in solid waste management in Japan, lessons for Vietnam” was written by myself and all information in this thesis has been studied and presented in accordance with academic rules and ethical conduct that I have fully cited and referenced in appropriate manner I further declare that the dissertation has not been submitted, in whole or in part, in any previous documents for a degree Student: Nguyen Thi Hong Ly i Luan van ACKNOWLEDGEMENT First of all, I would like to express my indebtedness to my Professor, Dr Vu Van Ngoc for his kind direction and proper guidance Without his supervision and instruction in every step, my dissertation could not be completed positively This is also a good chance to convey my sincere gratitude and especial thanks to all Professors and Lectures participating in the Master course of International Trade Policy and Law for their valuable lessons and useful knowledge that helped me a lot in practical works and life It is also my great pleasure to thank Faculty of Graduate Studies, Foreign Trade University for providing me such an opportunity to complete this Master course and for their continuous support in all my time taking part in the course Finally, my strong appreciation and attitude granted for my family, my colleagues, my bosses and friends for all of their enthusiastic support, encouragement and assistance during the period of this thesis’s preparation ii Luan van TABLE OF CONTENTS INTRODUCTION x CHAPTER OVERVIEW OF PPP IN SOLID WASTE MANAGEMENT 1 Definition, characteristics and types of PPP 1.1.1 Definition of PPP 1.1.2 Main characteristics of PPP 1.1.2.1 General characteristics of PPP 1.1.2.2 Advantages and Challenges of PPP 1.1.3 Types of PPP 1.2 Solid waste and role of solid waste management in the socio-economic development 12 1.2.1 Definition and overview of solid waste management 12 1.2.1.1 Definition 12 1.2.1.2 Overview of solid waste management 14 1.2.2 Role of solid waste management in the socio-economic development 16 1.2.2.1 Social aspects (Public health) 17 1.2.2.2 Economic aspects 18 1.2.2.3 Environmental protection aspects 19 1.2.3 Challenges of solid waste management in developing countries and in Vietnam 19 1.2.3.1 Technical Constraints 20 1.2.3.2 Financial Constraints .20 1.2.3.3 Institutional Constraints 21 1.2.3.4 Economic Constraints .21 1.2.3.5 Social Constraints 22 1.2.3.6 Vietnam 22 1.3 Necessity of PPP application in solid waste management 24 1.3.1 Reduction in management cost .25 1.3.2 More waste collection & treatment 25 iii Luan van 1.3.3 Awareness raising and better public participation in environmental protection activities 26 1.4 Factors influencing the success of a PPP project 26 1.4.1 Exogenous factors 27 1.4.1.1 Legal environment 27 1.4.1.2 Socio-economic environment 28 1.4.2 Endogenous factors 29 1.4.2.1 Market demand assessment .29 1.4.2.2 Quality of investors 29 1.4.2.3 Contract coherence 29 1.4.2.4 Management, supervision and support of investors by the public sector 30 CHAPTER 31 PPP IN SOLID WASTE MANAGEMENT IN JAPAN AND IN VIETNAM31 2.1 PPP in solid waste management in Japan 31 2.1.1 Overview of PPP in Japan 31 2.1.1.1 History of PPP 31 2.1.1.2 Differences between PPP projects and conventional projects 33 2.1.1.3 Classification of PPP .34 2.1.1.4 Project scheme of PPP 37 2.1.2 Legal and institutional framework of PPP in Japan .38 2.1.2.1 Outline of PPP Law 38 2.1.2.2 Implementation progress of PPP projects in Japan 42 2.1.3 Overview of solid waste management in Japan .43 2.1.3.1 Legal system of waste management in Japan 43 2.1.3.2 Institutional framework 45 2.1.3.3 Municipal Solid Waste Management in Japan 47 2.1.4 PPP in solid waste management in Japan .50 2.1.4.1 Types of PPP applicable in solid waste management .50 2.1.4.2 Procedures of PPP in solid waste management in Japan 51 iv Luan van 2.1.4.3 Case studies .58 2.2 PPP in solid waste management in Vietnam 64 2.2.1 General socio-economic and legal background of Vietnam in application of PPP in solid waste management 64 2.2.1.1 Socio-economic environment 64 2.2.1.2 Legal and institutional environment 67 2.2.1.3 Overview of PPP application in Vietnam .74 2.2.2 Current status of PPP in solid waste management in Vietnam 78 2.2.2.1 Necessity for PPP application in solid waste management in Vietnam 78 2.2.2.2 Status of PPP implementation in solid waste management in Vietnam 81 2.2.2.3 Existing solid waste management related PPP Projects 88 CHAPTER 93 LESSONS LEARNT FROM JAPAN AND RECOMMENDATION FOR VIETNAM 93 3.1 Lessons learnt from Japan 93 3.1.1 Enhance and complete the legal framework for PPP application in solid waste management 93 3.1.2 Improve investment conditions with better transparency .95 3.1.3 Develop and strengthen the capacity of independent management authorities especially in solid waste management 97 3.1.4 Goodwill cooperation between public and private sectors .99 3.2 Recommendations for Vietnam 100 REFERENCES 107 v Luan van LIST OF FIGURES Figure 1: Process of operating and managing solid waste 14 Figure 2: Differences between PFI and PPP .33 Figure 3: Comparison of Public Works under Conventional Delivery Method and PFI .34 Figure 4: Three types of PPP Project in Japan 36 Figure 5: General Project Scheme of PPP 37 Figure 6: Organization of PFI governmental authorities 42 Figure 7: Implementation progress of PFI projects in Japan (as of 09/2013) 43 Figure 8: Concept of sound material-cycle society of Japan 44 Figure 9: Legal system for Establishing a "Sound Material-Cycle Society" 45 Figure 10: Outline of Waste Management and Public Cleansing Law .46 Figure 11 Municipal Waste Treatment Methods in Japan 49 Figure 12: Procedures for contractor selection 55 Figure 13: Organizational arrangement Ohdate BOO incineration 59 Figure 14: Organizational arrangement Narumi BTO incineration plant 62 Figure 15: State Budget for environmental protection activities (Unit: billion VND) 65 Figure 16: State Budget Deficit comparing to GDP 66 Figure 17: Procedures of PPP in Solid Waste Treatment Project .87 vi Luan van LIST OF TABLES Table 1: History of Law and Guidelines of PFI .32 Table 2: PFI Procedure of Solid Waste Treatment Facilities Development in Japan 52 Table 3: Example of Risk Allocation in a Solid Waste Treatment Facilities Project 100 Table 4: Results of Corruption Perceptions Index (CPI) in Vietnam .67 Table 5: PPP-related Laws and Decrees in Vietnam .68 Table 6: PPP-Related Decision and Circulars in Viet Nam 69 vii Luan van LIST OF ABRREVIATIONS ADB Asian Development Bank AFD Agence franỗaise de dộveloppement ASEAN Association of Southeast Asian Nations AUSAID Australian Agency for International Development BCC Business Cooperation Contract BOO Build - Own – Operate BOT Build - Operate - Transfer BT Build – Transfer BTO Build - Transfer - Operate CBO Community – based Organizations CPI Corruption Perceptions Index DBFO Design - Build - Finance – Operate DFID The Department for International Development EFW Energy from Waste EIA Environmental Impact Assessment FDI Foreign Direct Investment GDP Gross Domestic Product IDB Inter-American Development Bank IPSI Institute for Strategic Studies and Industrial Policy JBIC Japan Bank for International Cooperation JICA Japan International Cooperation Agency MARD Ministry of Agriculture and Rural Development MIC Ministry of Information and Communications MOC Ministry of Construction MOF Ministry of Finance viii Luan van CONCLUSION This thesis has studied and learned from the experiences of Japan in implementing PPP projects on municipal solid waste management Recognizing the current implementation of PPP projects in the field of solid waste management in Vietnam has revealed the need to increase fund raising from the private sector in the form of PPP for sustainable development of environmental protection projects in Vietnam Currently, those projects employing PPP model have failed to be implemented or implemented poorly, especially there is almost no PPP project on municipal solid waste management Much of the troubles in PPP projects are mainly due to the failure to reach mutual understanding between the public sector and private sector The interaction between the two sides is very loose The State manages PPP programs in a sentimental fashion rather than seeking to understand the expectations of the private sector and taking proper actions Further, the State functions overlapping the market and dominates the private sector More importantly, the State has retained big subsidies for public services, failing to separate the state management and provision of public goods to society Meanwhile, the private sector, instead of actively demonstrating their capability to the State, decides to give up and look for more suitable opportunities As "it’s old for him but new for me," though PPP is very popular around the world it is quite unfamiliar in Vietnam with many potential challenges For effective application of PPPs, it is essential to carry out specific analyses and pilot projects for proper adjustments Especially, the privatization should be considered carefully depending on the maturity level of the economy as well as the government sustainable commitments through management mechanisms Moreover, attention should be given to the effective management and use of capitals Measures should be taken to strictly control the attraction and use of ODA loans for transparent project implementation The potential of PPP investments in the field of environmental protection in Vietnam is huge; however, the concept is so new that it takes time to perfect the investment environment and create favourable conditions for PPPs to “get off the ground” The success of this investment form depends greatly on the actions 105 Luan van of the Government, which is a type of capital-intensive investment with long payback period The Government without specific appealing incentives will hardly attract investors Therefore, the biggest challenge now is how to run the proper and effective application of PPPs, understanding the needs of the stakeholders and especially obtaining a win-win solution for the Government, the private sector and the community Despite much effort in research and study for clarification of the matter and provision of practical and worthy contents, due to limited time and knowledge, the thesis will inevitably suffer shortcomings The student wishes to receive valuable comments for deeper and more complete research I would like to express again my sincere thanks to Dr Vu Van Ngoc who has encouragingly guided and helped me during the process of collecting, understanding, analyzing and processing information to complete this thesis paper 106 Luan van REFERENCES English references Arvid Lindell, “Achievement of sustainable solid waste management in developing countries – A case study of waste management in the Kavango region, Namibia”, Master Dissertation, Lund University, 2012; ADB, “Assessment of Public–Private Partnerships in Viet Nam, Constraints and Opportunities”, July 2012; ASEAN Public Private Partnership Guidelines, 2014, Page 1; Economic Research Institute for ASEAN and East Asia (ERIA), “National Public – Private Partnership Frameworks in ASEAN member countries”, 2015; Government of Japan, Law of Private Finance Initiative, 2011, http://www8.cao.go.jp/pfi/e/english_pfi.pdf, visited on 11/10/2016; Government of Vietnam, Decision No 71/2010/QD-TTg dated November 2010 on pilot investment in the public private partnership form; Government of Vietnam, Decision No.31/2014/QD-TTg, 2014 on mechanisms to support the development of electricity generation projects using solid waste in Vietnam; Government of Vietnam, Decree No 38/2015/ND-CP dated 24 April 2015 on management of waste and discarded materials, several terms related to waste; Government of Vietnam, Decree No 15/2015/ND-CP on Public-Private Partnership Investment Form; Government of Vietnam, Decree No 30/2015/ND-CP guiding the implementation of a number of articles on investor selection of the Law on Bidding; Hisashi Ogawa, “Sustainable Solid Waste Management in Developing Countries”, 7th ISWA International Congress and Exhibition, Parallel Session 7, "International Perspective", http://www.gdrc.org/uem/waste/swm-fogawa1.htm,visited 107 Luan van on 10/10/2016; JICA Expert Team, “Recommendations for Encouragement of Investment in Construction and Management of Solid Waste Management Facilities in Vietnam”, Project for Capacity Development on Integrated Management of Solid Waste Management in Vietnam, 2016; Law Business Research Ltd, “The public – private partnership Law review”, third edition, published in March 2017, edited by Bruno Werneck and Mario Saadi; National Assembly, Government of Vietnam, Environmental Protection Law of Vietnam (2014); National Assembly, Government of Vietnam, Law on Bidding No 43/2013/QH13, 2013; National Assembly, Government of Vietnam, Law on Construction No 50/2014/QH13, 2014; National Assembly, Government of Vietnam, Law on Investment No 67/2014/QH13, 2014; National Assembly, Government of Vietnam, Law on State Budget No 83/2015/QH13 2015; Public Private Partnership Handbook, 2008, Asian Development Bank (Page 1); Public-Private Partnerships Reference Guide version 2.0, 2014 of World Bank (WB), the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB) (Page 14); Takuji Matsumoto, “Risk Management and Governance for PFI Project: Technology Policy Lessons from the Case of Japan”, Master Dissertation, Massachusetts Institute of Technology, 2012; White Paper on Land, Infrastructure, Transport and Tourism in Japan, 2014, Chapter 2, Section 2, Page 72; 108 Luan van Vietnamese references Bài thuyết trình, Hiện trạng chất thải rắn thành phố Hồ Chí Minh, http://www.slideshare.net/hungktmt4/bi-bo-co-cht-thi-rn, visited on 29/10/2016; Bùi Viết Sang, Kinh nghiệm hợp tác công tư lĩnh vực sở hạ tầng Singapore học cho Việt Nam, Khóa luận tốt nghiệp, Trường Đại học Ngoại Thương, Hà Nội, 2012; Dương Thanh An, “Báo cáo tổng hợp Nghiên cứu sở khoa học thực tiễn đề xuất chế đối tác bảo vệ môi trường-Áp dụng thí điểm cho lĩnh vực quản lý chất thải nguy hại”, Đề tài Khoa học Công nghệ cấp bộ, Bộ Tài nguyên Môi trường, 2015; Dương Thanh An, Phạm Ánh Huyền, “Sự cần thiết hình thức đối tác Nhà nước - tư nhân lĩnh vực quản lý chất thải”, Tạp chí Mơi trường, số chun đề khoa học công nghệ, 2014; Ngô Thị Thu Hằng, Mô hình hợp tác cơng tư (PPP) Việt Nam, Luận văn Thạc sỹ luật học, Trường Đại học Quốc Gia Hà Nội, 2015; Nguyễn Thế Chinh, Tính tốn kinh tế quản lý chất thải, https://voer.edu.vn/attachment/m/27591, visited on 4/11/2016; Nguyễn Thu Thủy, “Kinh nghiệm quốc tế đối tác công - tư học Việt Nam”http://tcnn.vn/Plus.aspx/vi/News/125/0/1010073/0/33842/Kinh_nghiem_quoc _te_ve_doi_tac_cong_tu_va_bai_hoc_o_Viet_Nam, visited on 12/09/2016; Nguyễn Văn Lâm, “Tình hình quản lý chất thải rắn Việt Nam, đề xuất giải pháp tăng cường hiệu công tác quản lý chất thải rắn”, Bài trình bầy Hội nghị Mơi trường tồn quốc lần thứ 4, 2015; Nguyễn Văn Phước, Giáo trình quản lý xử lý chất thải rắn, 2008; Ủy ban Kinh tế Quốc hội UNDP Việt Nam, “Báo cáo nghiên cứu Phương thức đối tác công tư (PPP): Kinh nghiệm quốc tế khuôn khổ thể chế Việt nam”, 2013; 109 Luan van Luan van Luan van Luan van Luan van Luan van Luan van Luan van Luan van Luan van Luan van ... of introducing PPP is to utilize the advantages and the strength of the State and the private sector, which is beneficial for both the State, the private sector and the users of the services and. .. between the government and the private sector in the provision of public services In Japan, the concept of Private Finance Initiative (PFI) is used with the mean of PPP both in legal documents and in. .. determined in each specific case, depending on the accessibility, risk control and handling of the public partner or the private partner The most significant principle of risk allocation in publicprivate