Introduction

This Factsheet outlines the current progress in advancing Sustainable Public Procurement (SusPP) in Viet Nam based on a desk review. It applies an analytical framework of six Pillars (or "building blocks") of SusPP systems.

The Framework is designed to make clear that countries do not need to follow a linear step-by-step path to build effective SusPP systems. Rather it is important to examine local contexts and prioritize the Pillars with the most potential in the country. No matter where a country starts, a balanced approach to implementation calls for progress on all Pillars to some degree.

This Factsheet is organized as follows:

• "Country overview" section with an maturity rating and graphic, key achievements and remaining gaps, and timeline of key events.
• "State of Play & Forward Looking Analysis" section that summarizes the research findings from the desk review for each Pillar theme.
• "Key Stakeholders Driving the Agenda" explores opportunities for ADB teams to open discussions with country counterparts and add value to the work of partners.

The Factsheet is intended to be a living document that will be revised and improved as new information is uncovered and advances are made. It is designed to support the ADB training programs on SusPP.

Public procurement in Viet Nam accounts for 12.5% of GDP offering a powerful tool to drive the country's transformation to a green economy. The Government is the leading purchaser of goods and services in the country. Procurement is governed by the 2013 Law on Bidding. It allows procuring entities to look beyond price to consider the quality of products and services over the entire life of goods or works. However, sustainability is not explicitly promoted as a procurement principle or award criteria in the current Law. Procurement law reform is underway with plans to promote green public procurement, a reform motivated by the signing of the EU-Vietnam Free Trade Agreement in 2020.

The 2013 Law on Bidding allows for preferential treatment of domestic suppliers, especially from vulnerable groups and encourages foreign bidders to form bidding partnerships with local firms. This aligns with the country's goals to increase the private sector’s contribution to GDP from 43% in 2020 to 60%–65% by 2030, including by increasing the number of medium-sized enterprises. Currently, Viet Nam's private sector is predominantly represented by household businesses and micro and small enterprises. Women and ethnic minority groups face limited wage earnings and worker protection.

ADB's Country Partnership Strategy 2023-2026 for Vietnam aims to help promote inclusive, green and private sector-led development and achieve its goal of becoming an upper middle-income country by 2030. Integrating SusPP into ADB financed projects and technical assistance can help deliver on the nation's goals, especially to achieve net-zero emissions by 2050, transition to a green economy and clean energy, advance sustainable infrastructure and support Vietnamese private sector firms to integrate into global value chains.

>> Snapshot of Sustainable Procurement Maturity Level

Maturity Level:

Early-Intermediate

Key Achievements

• Clear policy commitment and implementation roadmap created for SPP
  
• Longstanding practice of domestic preferences for suppliers
  
• Focus on green buildings, energy efficiency and construction waste reduction and reuse
  
• Green products and services available from the local suppliers
  

Remaining Gaps

• Need for procurement law reform to explicitly promote sustainable procurement
  
• Lack of awareness, training and tools for public procurers
  

>> Timeline of Implementation of SusPP Policies and Activities

2009

2011

2012

2013

2014

2017

2018

2021

2022

Vietnam Green Label Program launched

Sustainable Development Strategy for 2011-2022 promotes green shopping & ecolabelling

Listing of energy efficiency equipment created

National Action Plan for the Imlementation of the 2030 Sustainable Development Agenda

Viet Nam sets ambition for net zero by 2050

National Green Growth Strategy 2021-2030

National Action Plan for Sustainable Production & Consumption 2021-2030

Law on Environmental Protection 2020 in effect

Decision on circular economy development adopted

Law on Bidding 2013 promotes preferences for domestic suppliers

Ministry of Natural Resources & Environment launches work on green public procurement and ecolabelling with UNEP support

Law on Support for Small & Medium Sized Enterprises adopted

National Green Growth Strategy 2012 calls for environmentally-friendly procurement

Pillar 1: Government Vision & Awareness of SusPP

Governments that establish a clear policy vision on SusPP can accelerate the shift from procurement as an adminstrative to strategic function, making clear how SusPP can deliver on important national social and environmental goals.

Viet Nam's development vision, set out in Socio-Economic Development Strategy 2021-2030, is to become an upper middle-income country by 2030. The Strategy prioritizes the promotion of green industry and environmental protection. It calls for a shift to a green, low-carbon and circular economy that mitigates greenhouse gas (GHG) emissions.

The country first announced green ambitions in its Sustainable Development Strategy for 2011-2022, initially focusing on promoting green “shopping”, ecolabelling and an eco-product market. The National Green Growth Strategy 2012 set out the first requirement for public entities to purchase environmentally friendly products when spending from the state budget. It identified priority categories for greening: building materials; food and foodstuff; traffic and transportation; energy; computers and office machines; textiles; paper and printing; furniture; detergents; and medical devices. The National Action Plan for Sustainable Production & Consumption 2021-2030 further priorities the advancement of green and sustainable procurement.

At COP 26 in 2021, the Prime Minister announced Vietnam’s ambition to become a net zero country by 2050. Implementing policies have since been adopted that recognize SusPP as an important tool for achieving this goal.

• Decision No. 888/QD-TTg on tasks and solutions to implement the commitment in COP26 (2022) prioritizes the establishment of a legal framework for green public procurement; integrating green public procurement criteria for investor selection criteria; encouraging and promoting green consumption through e-commerce.
  
• The National Green Growth Strategy 2021-2030 aims to "step up green public procurement" to reach its target to "greenify people's lifestyle and promote sustainable consumption." Another key target is to "greenify economic sectors" by applying the circular economic model through efficient use of energy and resources.
  
• The National Action Plan for the Implementation of the 2030 Sustainable Development Agenda calls for regulations on green public procurement with standards on energy consumption, materials utilization, ecologically suitable designs, and consideration of climate change impacts.

The Government's circular economy plan is detailed in Decision 687 on the project of circular economy development adopted in 2022. An updated Law on Environmental Protection 2020 took effect the same year. All these policies make clear that environmental protection is a shared responsibility held by the Government, economic actors and every individual. Key environmental priorities that SusPP can contribute to include:

• Eliminate production and import of plastic bags and single-use plastics
  
• Improve municipal solid waste and wastewater collection and treatment
• Promote sustainable forest management certification
• Build smart cities and rural villages that can adapt to climates
• Advancing energy efficiency and renewable energies
• Promoting the local economy to green economic sectors
• Increase the use of clean energy buses and heavy equipment
• Improve compliance with air and water quality standards
• Promote the digital economy to achieve green growth
  

Pillar 2: Legal & Regulatory Framework

Procurement law reform can be key to clear obstacles to implementation by establishing "value for money", not "lowest price", as a core procurement objective, and authorizing procurement approaches suited to SusPP.

Public procurement in Vietnam is regulated by the Law on Bidding 2013 (PPL) (43/2013/QH13), with implementing Decree No 63/2014/ND-CP. Bids are to be awarded on the basis of lowest cost considering price and technical standards. Technical evaluation standards specified in bids can include operating and maintenance costs, sourcing costs, and quality considering the entire life of the goods or works (Article 39).

The PPL promotes the use of preferences for domestic suppliers, SMEs, contractors with 25% of more female employees, veterans, persons with disabilities in (Article 14). Procurers can either award additional technical points to preferred suppliers or add a surcharge to the bidding price of non-preferred suppliers. Prime Minister's Directive No. 13/CT-TTg of April 4, 2017 further encouraged the design of bid packages under state-funded projects to ensure maximum competitive conditions for domestic enterprises to win contracts and create jobs for domestic laborers. The Directive prohibited bid packages that allow employment of foreign workers or use of imported goods when domestic workers and goods are available that can meet the requirements, especially for manual jobs.

The PPL does not contains specific criteria or guidance on green procurement, other than requirements to comply with minimum environmental standards for goods and construction works. However, procurement law reform is underway with the latest draft of the PPL (October 2022) proposing preferential treatment to bidders offering environmentally friendly products and services as an evaluation criteria.

In the meantime, several national laws and policies contain requirements for procuring agencies to adopt green procurement:

• The Law on Economical and Efficient Use of Energy 2010, Article 30, required state budget-funded agencies to implement plans for efficient energy use in office buildings and construction works under their management. Decision 68/2011 created a list of energy efficient equipment for purchase by state-owned enterprises.
  
• The National Green Growth Strategy 2012, Article 64, required public entities to purchase environmentally friendly products when spending from the state budget. It identified priority sectors for green puchasing, specifically building materials; food and foodstuff; traffic and transportation; energy; computers and office machines; textiles; paper and printing; furniture; detergents; and medical devices.
  
• The Law on Environmental Protection (LEP) 2014, Article 44 assigns public entities the responsibility to prefer eco-friendly products and services certified with the Vietnam Green Label. This requirement was retained in the updated LEP 2022, Article 146.
• In 2020, the Government began scoping strategies to ensure all wood products used by the public sector are verified legal timber.

Other laws and regulations have set minimum environmental standards and processes for ecolabeling and energy efficiency certifications:

• Circular No. 02/2022/TT-BTNMT sets out the assessment process for products and services that meet the Vietnam ecolabel criteria, along with standards for pollution, waste and recycling.
  
• Technical Regulation 109/2021/BGTVT adopted the Euro 5 standard for light-duty vehicles.
• Decision 24/2018/QD-TTg stipulates the list of low-energy efficient equipment to be banned from use and import into Viet Nam.

Pillar 3: Institutions & Capacity

Institutional Arrangement

The Ministry of Planning and Investment (MPI) is the main agency in charge of public procurement and achieving the country's green growth plans. Its responsibilities related to SusPP include:

• build and refine public procurement institutions and policies and integrate procurement criteria into the process of selecting bidders;
  
• formulate specific incentives for enterprises that participate in the provision of green products and services;
  
• refine institutions and policies involving ecological industrial parks, further applying the principles of the circular economy in the construction and management of industrial parks and economic zones;
  
• formulate and deploy programs to promote innovation ecosystems and support enterprises take an orientation towards greenness.
  

The MPI is responsible for establishing an inter-ministerial National Steering Committee to coordinate activities on green growth. Other key ministries that contribute to SusPP implementation include:

• Ministry of Natural Resources and Environment: Managing the Vietnam Green Label Program and promote environmental protection.
  
• Ministry of Finance: Guide the implementation of the PPL and auditing of procurement activities.
  

• Ministry of Industry and Trade: Managing the Vietnam Energy Efficiency Label Program and and advancing best technological and environmental solutions in industries.
  
• Ministry of Construction: Formulate standards and quotas for green materials, green and energy-efficienct constructions and foster smart cities in urban areas
  
• Ministry of Transport: Promote environmentally friendly vahicles and public transport systems, including electric vehicle
  
• Ministry of Agriculture: Promote sustainable agricultural practices and build ecological and smart villages resilient to climate change. Working on legality indicators to be adopted for timber products puchased through public procurement process.
  

Capacity Building

The Public Procurement Agency within the MPI is responsible for delivering training on public procurement. However a 2021 GIZ study concluded that "there is no training on environmentally-friendly product procurement", training is available only on general rules of procurement. It is expected that once the new procurement law reform is complete, training on GPP will become a priority.

A workshop was held in Hanoi in April 2018 to exchange experiences on green public procurement between Korea, Thiland and Viet Nam.

Pillar 4: Market Practices & Sustainable Supply Chain

Market dialogue throughout the procurement process helps procuring entities to choose realistic sustainability criteria and ensure suppliers succeed in delivering on sustainability commitments over the contract duration.

The Government of Vietnam economy is currently primarily driven by state-owned enterprises. However, the country aims to develop a supportive environment to increase the private sector’s contribution to GDP from 43% in 2020 to 60%–65% by 2030 (ADB CPS at p. 7). Decree No 80/2021/ND-CP, which implements the 2018 Law on Support for Small and Medium Enterprises (SME), creates several incentives for SMEs including license exemptions, financial support and free online lectures from the MPI and local people committees.

Procurement offers another tool for SME promotion. The PPL, Article 14, encourages preferential treatment for local bidders and encourages foreign companies to form bidding partnerships with local firms (at least 25% of work value) to allow for knowledge and technology transfer. In procurements reserved for domestic bidding, preferences can be applied to SMEs and bidders with at least 25% female, disabled or invalid laborers.

The Ministry of Industry and Trade (MOIT) is actively supporting Vietnamese industries to adopt environmentally-friendly practices through its Cleaner Production (CP) and Energy Efficiency Program (Switch Asia at p. 47). Program achievements include: 20 technical guidelines on CP for different industries developed; three databases for cleaner production in industry launched; rapid audits conducted for 419 enterprises and detailed audits for 102 enterprises to identify opportunities to apply CP and EE, along with various training opportunities.

Green products and services can be purchased by procuring entities but mainly sourced from foreign suppliers. The PPL encourages foreign bidders to partner with domestic firms. "Business Matchmaking" initiatives are in place to support companies from the EU, Switzerland and Japan to access to the Vietnamese market including public procurement contracts. The intention is to build up partnerships with Vietnamese suppliers to jointly bid for contracts, ensuring local involvement and knowledge transfer between firms.

The Viet Nam Circular Economy Hub was launched in 2021 as a public-private partnership to enhance dialogue, generate know-how through the curation and diffusion of evidence-based research and best practices, and mobilise collective action towards the transition to a circular economy in Viet Nam. An online website features the latest circular technologies and innovations in the country.

A Green Economy Forum and Exhibition was held in November 2022 to feature European innovations and sustainable solutions for the Vietnamese market. The Forum provides a way for public procurers to gain awareness of green suppliers and for Vietnamese companies to build foreign partnerships.

Pillar 5: Procurement Operations

Various tools and procurement approaches can be employed to help procurers more easily identify environmentally friendly goods and services and attract a competitive market response.

Procuring entities in Viet Nam are increasingly designing bids with preferences for domestic firms, SMEs and enterprises employing women and disabled workers. However, green procurements remain limited. Several tools exist to support procuring entities to identify green products and services, including ecolabels, energy efficiency labels, green building codes, guides and incentives.

Ecolabels

Currently several certification programs are available for procurers to identify energy efficient and eco-friendly products and services:

• Vietnam Green Label Program is the national ecolabel managed by the Vietnam Environment Administration. 17 sets of Green Label Criteria have been developed and 112 types of products have been certified. The Program aims to certify an additional 300 products by 2030.
  
• Vietnam Energy Star Label is awarded to products on the basis of tests on quality, durability and energy efficiency in accordance with the national standard TVCN 7896:2008.
  
• Vietnam Comparative Energy Efficiency Label provides a comparison of a product’s energy consumption level in comparison to a group of similar products. The level of energy efficiency is illustrated by the number of stars on the label, with more stars indicating higher energy efficiency.

Green Buildings

The Ministry of Construction is working on the development of a Green Building Code. According to the International Finance Corporation (IFC), the country’s green buildings sector is almost a US$80 billion investment opportunity. Green

building certifications are growing in Vietnam - with 201 certified green buildings present in the country by September 2021. The Vietnamese Green Building Council has developed a national green building rating system named LOTUS.

Procuring entities can source technical requirements on building energy efficiency from the National Technical Regulation on Energy Efficiency Buildings (2017). The Regulation sets out minimum efficiency standards for the building envelope, ventilation and air conditioning, lighting and other electrical equipment. The Construction Materials Development Strategy of Vietnam in 2021 – 2030 offers additional specifications to improve the sustainability of cement production, minimize and reuse waste from mining operations, and select more sustainable alternatives and re-use purposes for ceramic tiles, paving stones, sanitary ware, construction glass, industrial lime, fired clay bricks, unburnt construction materials, roofing materials, sand, stone, and concrete.

Private developers are leading the way in green construction in Viet Nam, including Vingroup, Phuc Khang, Gamuda Land, and Sun Group. High profile green construction projects include the Mui Dinh Ecopark in Ninh Thuan and Feliz En Vista 35-story skyscraper in Ho Chi Minh City. The latter achieved a 50% reduction in HVAC energy consumption and 70% savings in lighting energy use, while increasing building cost by 2% with a payback period of 1.5 years

Procurement Guide

A Guide for Integrating Sustainability Criteria for LEDs into Public Procurement Procedures was released in 2017. While specific to LEDS, the guidance offers step-by-step instructions on the green procurement process that may be useful in the purchase of other green products and services.

Fiscal and tax incentives

Decree No. 19/2015/ND-CP created total exemption of export tax for eco-friendly products named in the Export Tariff and with a certificate of Vietnam Green Label. Meanwhile, products from operating activities that involve recycling and treatment of wastes named in the Export Tariffs as certified by competent state agencies are granted a 50% reduction of export tax.

Pillar 6: Monitoring & Impact Measurement

Monitoring systems are essential to gather the information needed to keep SusPP implementation on course and communicate on the benefits achieved for the country.

The Public Procurement Agency (PPA) has the responsibility of coordinating the reporting procedure on procurement activities of all agencies at the national level. Annually, an Official Letter is sent by the PPA to all the ministries, central agencies and people committees to request that they submit reports which include a monitoring section. However, this reporting does not cover GPP aspects.

The National Action Plan for the Implementation of the 2030 Sustainable Development Agenda calls on the Ministry of Finance to periodically consolidate information on, evaluate the implementation of sustainable public procurement and relevant mechanisms and policies.

With the support of the ADB, Viet Nam has made significant progress in making information on projects and tenders available on a central website and on developing e-procurement as the most important way of managing public procurement. These tools may be leveraged to conduct monitoring of SusPP.

Projects Supported by ADB

Other Initiatives supported by National/International Agencies

With support from UNEP, work on SusPP launched in 2014 under the Stimulating Demand and Supply of Sustainable Products through Sustainable Public Procurement and Ecolabelling (SPPEL) project (2014-2017). The Vietnam Environment Administration (VEA) as the country counterpart producing several documents including a status assessment, legal review, prioritization report and SusPP action plan.

With support from the European Union, Vietnam participates in the Switch-Asia project (2018-2022) and GREENERG-PRO and GOOSE programs (2021-2024). The Switch Asia project supported the development of policies on sustainable production and consumption (SCP) and circular economy in Viet Nam, as well as regional exchanges on SusPP. The GREENERG-PRO ands GOOSE programs supports modernization of pubnlic procurement to EU standards and helps develop green business through public procurement.

UNDP supports various related programs in Viet Nam including the launch of the "Viet Nam Circular Economy Hub" (2021), promotion of responsible business practices of foreign and domestic firms (2022), and the green energy transition (2023).

Vietnam also participates in the Asia Pacific Green Public Procurement (GPP) Network project, funded by and co-led with Korea Environmental Industry & Technology Institute.

Resources

GIZ, 2021. Analysis Study: National Green Public Procurement and Environmental Labels in Cambodia, Lao PDR, Myanmar, Vietnam and Bhutan.

Presentation on "Vietnam Ecolabels and Green Public Procurement" by the Ministry of Natural Resources and Environment (MONRE), Department of Environmental Quality Management.

OECD, 2021. SME and Entrepreneurship Policy in Viet Nam.

King, P., Mao, C., Pham, N., Nguyen, L., Nguyen, T., Zhou, X., and Moinuddin, M.. 2020. Development of the National Action Plan on Sustainable Consumption and Production (2021- 2030) in Vietnam: An assessment of the progress in 2016 – 2020 and recommendations for 2021 - 2030. Bangkok: SWITCH-Asia Programme.

UNEP, 2015. Assessment Report Sustainable Public Procurement Status in Vietnam.

UNEP, 2015. Vietnam - Sustainable Public Procurement Prioritization Report.

UNEP, 2015. Vietnam - Sustainable Public Procurement Market Readiness Assessment.

UNEP. 2017. Vietnam - Sustainable Public Procurement Action Plan.

UNEP, 2017. Integrating Sustainability Criteria for LEDs into Public Procurement Procedures.

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