This article focuses on the inner meaning of the green economic zone, the development experience of economic zones of different countries in the world, practical development of economic zones in Vietnam under the direction of green growth which proposed a number of policy recommendations for the effective implementation of this model in Vietnam in the up coming period.
JOURNAL OF SCIENCE OF HNUE Social Sci., 2016, Vol 61, No 12, pp 142-149 This paper is available online at http://stdb.hnue.edu.vn DOI: 10.18173/2354-1067.2016-0115 ECONOMIC ZONES DEVELOPMENT TOWARD GREEN GROWTH: INTERNATIONAL EXPERIENCE AND POLICY IMPLICATIONS FOR VIETNAM Vu Dinh Hoa Academy of Policy and Development, Ministry of Planning and Development Abstract Development of economic zones (EZ) in the direction of green growth is an important orientation in the innovation strategy of growth model in Vietnam up to 2030 With the target of finding out solutions for the EZ in Vietnam towards green growth, this article focuses on the inner meaning of the green economic zone, the development experience of economic zones of different countries in the world; practical development of economic zones in Vietnam under the direction of green growth which proposed a number of policy recommendations for the effective implementation of this model in Vietnam in the up coming period Keywords: Economic zone (EZ), green economic zone, green growth Introduction Climate change is being seen as a major development challenges Many countries have been increasingly aware that it is impossible to maintain the development model depending on fossil fuels and greenhouse gases Urgent demand of the world’s sustainable development is to drastically cut down global emissions to ensure that the global temperature rises below 20 C, and this can not be met without the full participation of all countries over the world With the policy of comprehensive and far-reaching international economic integration, Vietnam is gradually changing the development model from overheating, increasing to the model of sustainable green growth dealing with climate change In order to achieve the goal of sustainable growth, each industry and economic society sector must push up the development towards the goal of green growth In the field of economic territorial organization, EZ is considered as advantageous form of Vietnam based on the strength of the geographical location, human resources, natural resources and products consumer markets Over more than 20 years of construction and development, as reported by the Ministry of Planning and Investment, the EZ initially had positive contributions to economic - society growth of the locals and the country, promoting economic development and protecting national sovereignty [4] Received date: 21/5/2016, Published date:29/10/2016 Contact: Vu Dinh Hoa, e-mail: vudinhhoa@apd.edu.vn 142 Economic zones development toward green growth: international experience and However, due to the rapid growth in the number, management capacity of the management boards remains incomplete, leading to the selection of inappropriate industrial structure and the development of sectors using a lot of fossil fuels polluting the environment, having a greater CO2 emissions in many EZs Therefore, the demand of sustainable development in EZs towards green growth dealing with climate change in the coming years is extremely urgent 2.1 Content What is “green economic zone”? Starting from the free trade harbor area formed nearly 500 years ago, EZ with the role as independent sectors or identical geographical boundaries, favorable investment and business environment, which have many advantages for investors, have become very popular in practical development in many countries [6] Basically, there are different types of EZ, including: (i) Free Trade Zone: small and designated areas for duty-free imports, usually located at boundary borders; (ii) Export Processing Zones: Industrial Zones offers deals and special facilities for production and related activities, mainly export market; (iii) Special Economic Zone with variety of business activities; provide supportive policies and incentives to encourage business; (iv) Special Zone with certain economic activities, such as science and technology, petrochemical, logistics; (v) Single Zone EPZ with incentives for enterprises without caring of their location; (vi) Enterprise Zones with the intention of revitalizing the urban or rural poor areas through the support of tax incentives and financial subsidies [2] EZ development has generated more advantages of facilities and institutions by focusing on infrastructure and applying incentives for trade and financial policies to enhance the economic relationship between a country with the outside EZ has become very popular and created high economic - society efficiency for many countries around the world in recent years On the other hand, the development of EZ has also shown many environmental problems needed to be solved Consequently, environmental issues, coping with climate change in the EZ are increasingly concerned There has been a strong trend to develop more environmentally sustainable EZs over time, reflecting the private sector’s increasing awareness of and demands for environmental sustainability Lately, as climate change agenda adds more emphasis on the environmental dimension of EZs, similar terminologies, such as Pollution Control Zone, Environment Compliance Zone, Eco-industrial Zone (Park), Low-carbon Zone, Green Zone and others, are being used interchangeably without clear distinctions [11] The environment compliance zone or pollution control zone could be considered as an early stage form of zones in this spectrum Its main emphasis is on the implementation of effective measures for pollution control and environmental compliance, such as air pollution control, centralized services for sewage and wastewater treatment, hazardous waste collection and disposal, and environmental training programs for zone managers and company operations Implementation of environmental management tools such as International Organization for Standardization (ISO) 14001 Environmental Management 143 Vu Dinh Hoa System (EMS) may be one of the systematic programs to consider in these zones Eco-industrial zones (parks) goes beyond simple environmental management to reduce the negative impact of pollution This is a more advanced concept in terms of environmental sustainability Its purpose is to manage the whole resource, energy, and environmental impact in an integrated manner The Eco-industrial Park Handbook [3] developed by the Asian Development Bank states that “[a]n Eco-Industrial Park is a community of manufacturing and service businesses located together on a common property Members seek enhanced environmental, economic, and social performance through collaboration in managing environmental and resource issues” Therefore, ecoindustrial zones reuse and recycle resources within industrial zones and clustered or chained industries, so that resources will circulate fully in the local production system Also known as industrial symbiosis, zone networks are established between companies in the zone to exchange waste from one company to another to be reused in another production process Green EZs is the most comprehensive and advanced concept in terms of environmental sustainability Green EZs can be defined as EZs that are designed, developed, and operated in a low-carbon, green, sustainable way, and hence they reduce the carbon footprint and effectively address climate change mitigation in the process of their economic and industrial activities in the EZ [11] Some of the main attributes of green EZs include: (i) an area with border and specific location, special incentives to attract investment to the environmentally friendly manufacturing sectors, energy supply in part using renewable energy sources; energy-efficiency measures, including use of energy-efficient production methods for industries creating less CO2 ; (ii) construction of buildings and factories using “green building codes”; (iii) waste-reuse and recycling systems inside and outside the zone; (iv) promotion of climate-friendly investment into the zone and clean technology R&D and deployment; (v) and carbon finance mechanisms that can be utilized to build the zone and many [9, 11] The development of green EZ or EZ towards green growth has many great benefits The most important is to create a low-carbon production due to the structure of the industry is environmentally friendly, fossil fuels are limitedly used, energy resources are used economically and efficiently On the other side, the development of green EZ can maximize the effectiveness of infrastructure use since enterprises used the common production infrastructure Recycle materials and energy of the others will help to lower production costs and enhance competitiveness of products in the markets 2.2 International experience on development of economic zone towards green growth The EZs has played an important role in promoting industrial development, attracting FDI, and creating jobs in developing countries in the last 30 years [6, 11] However, serious challenges of climate change require the Governments and enterprises quickly organize production activities in the EZs towards green growth to help improve 144 Economic zones development toward green growth: international experience and economic efficiency, and also to ensure environmental sustainability and reduction of greenhouse gas emissions 2.2.1 Experience from European countries Since the 60s, in Europe there was a development of the model of eco-economic zone, especially in the two countries Denmark and Sweden [3] One of the most successful cases were Kalundborg eco-industrial park Denmark developed an industrial symbiotic system through the exchange of energy and materials between companies The establishment of symbiotic network using excess products of the others helped companies here save about 15 million USD per year, with the return on total capital of 75 million USD in 18 projects established until late 1998; so the average payback period for all the projects dropped by at least years [1] According to statistics, in this area for 15 years from 1982 to 1997, the amount of resource consumption of this industrial zone reduced by 19,000 tons of oil, 30,000 tons of coal, 600.000 m3 of water , and 130,000 tons of carbon dioxide emissions [3] 2.2.2 Experience from Asian countries In Asia, the Governments of countries such as China, India, Korea, Japan have promulgated policies to develop EZ towards green growth In fact, the development of this kind has significantly reduced greenhouse gas emissions caused by the production, consumption of energy and operation works in the EZ For many decades, China has built a lot of market-oriented EZ However, most of them caused environmental pollution, which leads the Chinese leaders are working hard towards the goal of sustainable development In the 5-year plan (2011-2015), the Chinese government established a number of EZ in 13 provinces and cities to build pilot models for cutting CO2 emissions intensity down to 50% in 2020 [9, 11] To accomplish this goal, the Chinese government decided to implement 03 measures for activities in the EZ: (i) Restructuring of the industry by reducing the proportion of heavy industry and other sectors creating a lot of CO2 , at the same time with increasing the service sector; (ii) replacing high-carbon energy sources (such as coal) with clean energy sources such as hydropower, nuclear energy, solar energy and wind energy; (iii) encouraging the technical innovation for transition into efficient technologies for energy In India, the Government is also quite active in implementing initiatives in green EZ India’s Ministry of Commerce enacts guidelines for energy conservation in the EZ in May 2010, which includes a series of measures to push up efficiency of using energy, renewable energy and environmental management Korea is being known as the leading country in the region with development initiatives on EIP and green EZ, low carbon EZ The Korean government has promulgated and implemented the Decree "Government Decree on the Establishment and Operation of the Presidential Commission on Green Growth", established the Presidential Committee on Green Growth (2010), consolidated legal and institutional basic effectively and systematically In addition, the Government has promulgated and implemented the "Frame Lawof low Carbon, green growth" (2010) For example, at the Incheon free EZ, 145 Vu Dinh Hoa Government and the Management Board have set a development roadmap toward green growth with the goal of reducing 30% carbon emissions by 2020 In Japan, the development of the EZ towards green growth is also being emphasized Through the construction of the synchronous infrastructure, issuing strict management mechanism of waste into the environment, enterprises in the EZ has saved production costs, efficiently used of energy resources and of materials to create sustainable development 2.3 Economic zone’s current situation and policy implications in Vietnam 2.3.1 Economic zone’s current situation In Vietnam, the policy of building a number of economic areas, which generate growth poles in order to promote economic development and regional links, has been sparked since 1975 The first special economic zone model in Vietnam, which was Vung Tau - Con Dao special economic zone, was founded in 1979, followed by the creation of industrial parks and export processing zones in the 90s of the XX century and coastal economic zones, border gate economic zones since the early 2000s Up to September, 2016, Vietnam has had 324 economic zones, export processing areas with a total area is 91.8 thousand hectares Industrial land for lease is 61.7 thousand hectares (67%) 220 industrial zones are in operation (59.6 thousand ha), 94 industrial zones have been in clearance Occupancy rate of industrial parks in operation was 73% Total capital investment in infrastructure registered of industrial zones was 313 trillion VND, with capital in circulation of about 43% Regarding to economic zones: (i) 16 coastal economic zones have been established with the total area was approximately 815 thousand hectares, the area for leasing projects in these economic zones was over 30 thousand hectares; (ii) border gate economic zones: the country has formed 28 border gate economic zones with the total area of over 600,000 hectares [8] Economic zone development in our country initially has brought about encouraging results: (1) mobilization for economic zone investment has attracted large amounts of investment capital So far, economic zones and export processing areas have attracted 6,810 projects (108.1 billion US dollars), with an investment of approximately 61%, 6,381 domestic projects and (694,5 trillion VND), operating capital of about 49,9%; coastal economic zones have attracted 342 projects (41 billion US dollars), the investment capital of about 49%, 1,053 domestic projects (798 trillion VND), operating capital was 43.4%; border gate economic zones have attracted nearly 70 projects with foreign direct investment capital with the total capital of over 700 million US dollars and approximately 500 domestic investment projects with the total capital of nearly 40,000 billion VND In terms of production and business results, up to 2015, the total industrial production value of the industrial zones and economic zones reached 107 billion VND (accounting for 36% of the industrial production value of the whole country) The export turnover of enterprises reached 77 billion US dollars (45% of export value of the country) Regarding to the state budget contributions, the industrial zones and economic zones contributed more than 77 trillion VND and created 2.6 million jobs [8] 146 Economic zones development toward green growth: international experience and In addition to achievements, the economic zone current situation in our country still reveal many limitations, obstacles, especially the green growth - oriented development, that is: (i) export processing zones’ environmental protection has not met the requirements: most used energy is fossil energy which disposed a large amount of CO2 and large waste water (approximately 550.000 m3 per day and night), solid waste generated nearly million tones (of which nearly 500,000 tones of hazardous hydro) [7]; (ii) the issue of housing, social welfare and people’s lives in the economic zones has not been significantly improved; (iii) planning development of human resources associated with investment attracting sectors is weak; (iv) the mobilization of investment capital for infrastructure building remains difficult; and (v) the current policies still have some obstacles which are not favorable for economic development investment 2.3.2 Policy recommendations for the economic zone development towards green growth for Vietnam Stemmed from the rationale for green growth, the development experience of the world economic zones in the direction of growth of countries and regions in the world as well as practical development of Vietnam, to develop economic zones towards green growth in Vietnam, the author recommend the following solutions: Firstly, issuing uniform frame on green growth for EZ from the central to local level; on the basis of the development frame on green growth of Vietnam, the Management Board of EZ creatively adapts to the peculiarities of each area to take full advantage of development resources at the same time with the target to ensure green growth objective of the country; Secondly, It is necessary for structural adjustment of economic sectors in the EZ towards greening Specifically, Vietnam need to remove environmental pollution sectors or switch to using high technology to minimize CO2 emissions and environmental pollutants Besides, attracting modern industries (optimized use of resources and energy; reducing the environmental impact from production by reducing waste and managing effectively); the industries using environmentally friendly technologies and industries providing environmental services are also important Prioritizing the development of the service sectors towards reducing greenhouse gas emissions, ensuring social welfare objectives and poverty reduction; Vietnam need to initially complete mechanisms and policies to encourage investment in the projects of recycling and reuse of waste in agriculture - forestry, industry, etc, in the EZ Specifically, we should consider the domestic waste is a resource, then towards minimizing the amount of waste to be processes by burial Moreover, we should develop the modern recycling industry which is environmentally friendly and doing research to put this sector into planning of environmental industry Thirdly, improving the operation mechanism and organizing management apparatus in the Economic Zone on the basis of clearly define the functions, powers of the Management Board with the authorities Forming an executive committee resolving the issues in EZ such as Board of organization and human resources management; General Economics Committee; Infrastructure Development Board; Board of Environment 147 Vu Dinh Hoa Resources; Culture and Social Policy Committee; Board of Testing - Legislation; Centre for Public Administration services and Board of Investment Promotion; Fourthly, centralizing policy mechanisms to mobilize resources for the development of EZ towards green growth: strengthening resources in the country and abroad; resources from all sectors of society (especially from the enterprises); Fifthly, strengthening the application of economic instruments in environmental management and response to climate change in the EZ: environmental tax, environmental charges, the carbon finance mechanism through clean development machenism (CDM) and reduced emission from deforestation and forest degradation (REDD), subsidies for research and development (R & D) in order to reduce CO2 emissions, proceed to apply the carbon tax in the industries; tightly controlling production having CO2 emissions and waste causing greenhouse effect The next one, innovation of planning towards synchronized planning of production space and services on the basis of energy saving, strengthening waste treatment, reuse resources of enterprises in the EZ; enhancing integration of adaptation to climate change, green growth objective into the development planning of EZ Besides, developing a mechanism for granting environmental label for the products in the EZ to: Raise awareness, couple with providing reliable information and guide for consumers in choosing the products having less impact on the environment, creating market incentives for manufacturers to supply these environmentally friendly products, reducing the adverse effects on the environment caused by the production, use, consumption and waste removal; improving the quality of the environment and encouraging the sustainable management of natural resources Lastly, focusing on propaganda, education of awareness-oriented changes of the Governments, the Management Board of EZ, the manufacturing enterprises on the interests of the shifting from brown economy to the green one to create a high consensus in society from leaders to citizens and enterprises Conclusion Developing EZ is considered as one of the important territorial organization measures aimed at promoting the local economy, creating strong diffusion to the adjacent territories in Vietnam in the Economic-Society Development Strategy by 2020 In order for the EZ to promote strategic role in the national economic-society development Strategy, the authorities, enterprises and communities need to have drastic changes in line with greening goal; put the contents of green growth into policies, strategies and key projects in the EZ to proceed to EZ model for low carbon emissions and good resilience to the impacts of climate change REFERENCES [1] D Sakr, Baas L, El-Haggar S, Huisingh D 2011 Critical success and limiting factors for eco-industrial parks: global trends and Egyptian context Journal of Cleaner 148 Economic zones development toward green growth: international experience and Production 19 (11):1158-1169 [2] Huynh The Du, 2015 From economic zone to development and regional links: Generating policy breakthrough Fullbright economic teaching program [3] Lowe, E A 2001 Eco-industrial Park Handbook for Asian Developing Countries A Report to Asian Development Bank Oakland, CA: Environment Department, Indigo Development [4] Ministry of Planning and Investment, 2012 Proceedings of 20 years of construction and development of IPs, EPZs, EZ in Vietnam (1991-2011) Hanoi [5] Nguyen Quang Thai (chief author) 2010 Development of open modern economic zones of coastal regions in Vietnam National Economic University Publisher [6] Tran Thị Hien Hanh, 2016 Report “Environmental management in industrial zones and economic zones” [7] Vu Quoc Huy, 2016 Report “Current situation, orientation, policy for industrial zones in Vietnam” [8] World Bank 2014 Low - carbon zones a practitioner’s handbook Washington DC: WB [9] World Bank, FIAS 2008 Special Economic Zones, performance, lessons learned and implications for zone development Washington DC: WB [10] World Bank, Thomas Farole, GokhanAkinci (editors) 2011 Special Economic Zones Progress, Emerging Challenges, and Future Directions WB 149 ... EZs towards green growth to help improve 144 Economic zones development toward green growth: international experience and economic efficiency, and also to ensure environmental sustainability and. .. industrial zones and economic zones contributed more than 77 trillion VND and created 2.6 million jobs [8] 146 Economic zones development toward green growth: international experience and In addition... recommendations for the economic zone development towards green growth for Vietnam Stemmed from the rationale for green growth, the development experience of the world economic zones in the direction