University of Idaho

Alexis Lpez

Inspiring Sustainable Development Through Small- to Medium-Sized Businesses in

Vietnam
Situational Analysis

February28,2016

General Overview
Human society is continuing to expand, with global population expected to reach nearly
10 billion by the year 2050 (1). As this population growth continues, the needs of society
are contributing to environmental degradation (primarily air, water, and soil pollution)
caused by human activities. At this point in time, one of the most pressing
environmental problems is that of global warming the trend of increasing temperatures
around the world due to the release of greenhouse gases from man-made sources.
Additional pollution resulting from inappropriate manufacturing practices and the
disposal or release of hazardous chemicals also degrades the natural environment.

Estimated total man-made emissions of contaminants to air, soil and water in developed
countries are shockingly high as reported from 2004, the most recent compendium of
environmental data (2). Air releases of pollution included 32 million metric tons of sulfur
oxides, 40 million metric tons of nitrogen oxides, 150 million metric tons of carbon
monoxide, 33 million metric tons of volatile organic compounds and over 14 trillion
metric tons of carbon dioxide equivalents. Many of these compounds are greenhouse
gases, known toxins and/or carcinogens, such as sulfur dioxide and nitrogen dioxide.
The release rate of some these compounds have generally decreased in the past
decade, but others have increased. In 2004, estimated releases of lead, cadmium, and
chromium into water are substantially higher than background levels. Data on global
levels of soil contamination are extremely difficult to quantify and have not been
presented in the literature. However, based on this limited information, it is apparent that
the natural environment is being exploited without sufficient controls on waste.

One way to address a number of these environmental problems is to create and enforce
a clear sustainable development rationale and program. Sustainable development can
be described as development that meets the needs of the present without
compromising the ability of future generations to meet their own needs (3). This
definition implies that natural resource depletion, through active use, waste and
pollution, is the greatest challenge to the future of the human race. Natural resources
can be defined for each nation as the following components: soil and other geology (e.g.
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mineral deposits, oil reserves, etc.); surface and underground water; and air. These
resources need to be protected and used efficiently to preserve them for future
generations.

Asia is the fastest growing region in the world, in terms of population, resource use and
business (1). Vietnam typifies the growth in Asia in many ways, with key global
competitiveness indices, such as market size and infrastructure, close to the average
values for the region (Figure 1, [4]). Vietnam has unique conditions and natural
resources, but the growth of Vietnam can generally be viewed as analogous to growth
in Southeast Asia and compared with growth in other developing countries across the
world. The entire eastern border of Vietnam abuts the South China Sea, and Vietnam
faces substantial impacts from climate change such as floods, droughts, increased
tropical storm activity and sea level rise (5). Therefore, it is extremely important to
establish sustainable development practices in this region.

Figure 1 Competetiveness of Vietnam vs. Developing Asia

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Background:
Around the world, human society relies on natural resources and uses them inefficiently.
The result of these practices include substantial amounts of waste and pollution. In the
U.S. alone, 243 million metric tons of waste were generated, and 131.9 million metric
tons were sent to landfills in 2009. These figures do not include hazardous materials
and chemicals (6). Such levels of waste show that non-renewable natural resources
such as plastics, metals, and glass are being used inefficiently and discarded en masse.
In addition, renewable resources such as paper, organic material, wood, rubber, leather
and textiles are also wasted in large quantities. While these resources are renewable, in
many cases the act of producing them requires natural resources and can further
contribute to waste and pollution.

Price Waterhouse Cooper reports that the GDP of Vietnam has grown over 7 percent
per year for the last 20 years (7). This reflects a pattern of continuing business growth
and increasing international trade. This economic development largely relies on natural
resources, and results in a growing middle class population. As the middle class and
their purchasing power has grown, natural resource use and development have
transitioned from more traditional, local and sustainable styles to those that reflect
Western ideals. As an example, while traditional houses are made of wood with openair designs to facilitate cooling, newer buildings (e.g. houses and businesses) are
created with baked bricks or concrete and require air conditioning. Displays of wealth
are important, and include opulent building styles and decorations along with a strong
culture of consumerism. In addition, environmental protection practices are developing
in Vietnam, but are not yet strong enough to deter illegal dumping and other types of
pollution. These factors, coupled with a predisposition for corruption in business, also
result in significant waste and environmental degradation as it is easy to buy your way
out of many environmental laws. Corruption is the second most problematic factor to
doing business in Vietnam (4).

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Previous Work:
Previous efforts to protect the environment include international projects and
government regulation. International projects, such as those funded by the World Bank
or United Nations (UN) Development Program, are generally focused on social issues
and sustainability. These programs are extremely successful and are making a positive
impact. The World Bank has provided over $20 billion in support to Vietnam for social
and development programs (8). As a result of international funding, some large
infrastructure projects are being performed in a sustainable manner, such as a project
to develop water and wastewater conveyance across the city of Danang.

The government of Vietnam (GVN) issued Agenda 21 Vietnam in 2004, according to the
UN framework. The GVN has also been increasing its use of the term sustainable in
planning for the future, inspired by the requirements of international funding sources. In
2014, the Prime Minister approved the National Action Plan on Green Growth in
Vietnam from 2014 2020 which includes setting up institutions and formulating action
plans, reducing greenhouse gas emissions and promoting use of clean energy,
greening production, developing sustainable infrastructure and promoting a green life
style (9).

International projects working toward sustainable have primarily focused on large

sustainability projects, such as installing waste water collection and treatment systems.
These projects have been very successful, reduced environmental degradation and
helped to improve the quality of life for Vietnamese citizens (10).

Government activities regarding sustainable development are relatively new, and have
not yet shown significant progress. The first environmental regulation in Vietnam, the
Law on Environmental Protection, went into effect in 1994 (5). The Ministry of Natural
Resources and the Environment (MONRE) is in charge of establishing and enforcing
environmental regulations and requiring projects to perform environmental impact
assessments. These efforts have resulted in better environmental protection regulation
and enforcement than in many developing countries. However, enforcement of
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environmental regulations is still relatively lax and environmental protection is generally

considered secondary to economic growth (4).

Scope and Urgency:

Incorporating sustainability into Vietnamese society is important, given the continuing
rapid development of the country. In order for Vietnam to meet its 2035 economic goals,
it will need to continue growing GDP by 7 percent every year, a goal unprecedented in
Vietnam and, indeed, anywhere else in the world (11). Such ambitious growth goals
have the potential to add environmental stress and further degrade natural resources,
thereby increasing the need for sustainability to be incorporated into future development
and environmental protection measures. Vietnam is an indicator country for the region
and successes in sustainable development can be adapted and applied in other Asian
and international developing countries.

Climate change, resource depletion and environmental degradation affect not only local
populations, but the global population as a whole. Nevertheless, these factors need to
be addressed with appropriate strategies tailored to each country or region. If
sustainable development is not made a priority in Vietnam, consumption and waste will
continue to grow in this rapidly developing country with effects ranging from
deforestation to erosion and reduction in arable land to soil to groundwater and surface
water pollution. Inefficient use and waste of natural resources is already affecting
Vietnam and the international community. Of course, Vietnam cannot change the global
situation. Without national and international action, Vietnam will be severely impacted
by the negative impacts of climate change, primarily due to the geography of the
country.

Vietnam has unique opportunities due to geography, climate, current rapid

development, access to international support and recent exposure to sustainable
development ideas. The geography and climate provide substantial amounts of sun and
wind, which need to be considered as a part of virtually all sustainable development.
Continuing population growth, increasing tourism and growing middle and upper classes
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will spur even further development of cities and rural areas. The GVN has signed a
number of international environmental treaties, such as the Stockholm and Basel
Conventions, and has also drafted an official decision by the Prime Minister to create a
Green Growth Action Plan (9). Also, since the majority of the population is young and
open to new ideas, this large and important demographic that can be effectively
targeted.

Future development efforts in Vietnam need to ensure that local natural resources are
used efficiently, and that planning and design incorporates low-energy, cost-effective,
environmentally-friendly materials and methods. Vietnam is prime for sustainable
development due a number of important factors, including international and government
support. As Vietnam is a very typical fast-growing Asian country, addressing the
development problems in Vietnam may also inform development efforts in other
developing Asian counties which is important in the fastest developing area in the world
(UN Wall chart).

Target population data:

Large businesses generally rely on government or international private funding. The
large size and high revenue of these businesses, plus a lack of regulation, results in a
higher likelihood of engaging in corrupt business practices (12). Thus, it may be that the
best target for sustainable development outreach and capacity building is small- to
medium-sized businesses in Vietnam. The GVN defines small- and medium businesses
as registered companies with <10 up to 300 employees, and offers financial and other
support for these businesses to grow (13). Small- to medium businesses bridge the gap
between citizens and the larger market. Many such businesses may even be run out of
an individuals home.

Demographics:
The population of Vietnam is 93.5 million people as of 2015 (1), of which 67 percent are
between the ages of 15 and 60 and at least 60percent are under 25 (7). Vietnamese
citizens are very well connected, with 75.3 million active internet and 35 million social
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media users. The young population is interested in trying new things and are loyal and
interested consumers. There is a strong emerging middle class with disposable income
(4, 14), and an associated drive toward higher quality goods and experiences.
Therefore, the effective small- to medium business will target young Vietnamese
citizens who have disposable income with high quality goods and experiences.

Motivators:
Small- to medium-sized business can be especially motivated by the potential cost
savings that can result from sustainable development, during both construction and
operations. These businesses are also less prone to corruption due to their smaller size,
lower revenue and limited interaction with the government (12). Delivering on a modern,
sustainable aesthetic and using social media to show off desirable examples of
sustainable development, both in Vietnam and outside the country, can draw
consumers in.

Potential barriers:
Barriers to adopting sustainable development practices primarily include corruption and
a lack of flexibility. Corruption can stop a business from building or operating as they
desire by extortion (e.g. holding up a projects license until the design/contractor is
changed and/or the extortionist is paid). The risk of corruption in Vietnam is ever
present. Corruption is still a part of doing business in this country, and such corruption
acts as a significant barrier to change. In addition, a lack of flexibility in the perceptions
and cultural expectations of consumers or business owners (e.g. differing perceptions of
appropriate displays of wealth, as well as quality) can discourage some people from
participating in sustainable practices.

Target:
The GVN is incorporating sustainability into decrees and it is expected that this will
result in regulation. However, governance is a slow process in Vietnam. Large
businesses are funded by government-run companies or private, international investors
who may not be interested in investing in the higher up-front costs of sustainable
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development and are more susceptible to corruption. In addition, the members of the
general population may not have enough disposable income to invest in sustainable
development efforts (e.g. while building a house), and may be resistant to doing so until
sustainability is better understood and ingrained in the local culture. On the other hand,
small- to medium-sized businesses have development capital, interface directly with
consumers, can ask for support from the government to cover up-front costs, and are
appropriately positioned in the market to promote sustainability among a larger
audience.

Available resources:

Mass Media:
Vietnamese citizens use generally use newspapers, television, radio and the internet for
information, making them effective means of outreach (15). Important details from radio
news broadcasts are played in the streets at 6 a.m. and 5 p.m. Fifty percent of the
population uses the internet, and the average citizen watches TV for 1.5 hours per day
(15). However, Vietnam is a communist country and has been known to censor mass
media. Also, word of mouth and observing action on key issues is extremely important
in business (16, 17). For example, if the government says it is devoted to sustainable
development but does not show it through sustainable projects, citizens and business
owners will doubt the original claim and maintain the status quo.

Trust:
In Vietnam, consumers trust word-of-mouth recommendations from people they know;
traditional advertising like television, magazines and newspapers; with growing levels of
trust in online formats such as social media (16). As a result of Vietnamese trust in
television sources, celebrities who appear in television advertisements, and government
officials who are often conveyed on the news are well respected. These figures are
trusted when providing new information and should be targeted for outreach activities.

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Social media:
Social media is extremely important for outreach. Vietnam has 35 million social media
users, 37 percent of the population, many of whom actively use their smartphones to
access social media outlets. Nearly every age demographic uses social media, with the
heaviest users comprised of 13 to 39 year olds (18).

Funding sources:
Potential funding sources for sustainable development work at the small- to mid-size
business level include international grant programs (e.g. UN small grant program), local
government grants, or specific large-scale international projects (such as micro-loans
for entrepreneurship included in a large, World Bank infrastructure project). However, to
date limited funding has been used or proposed to build local capacity for sustainable
development or other outreach.

Alliances:
This campaign is allied with other UN projects, United States Agency for International
Development (USAID) projects, French Development Agency Projects, the 100
Resilient Cities project, and with the Institute for Social and Environmental Transition
(19) and the Asia-Pacific Economic Cooperation (20). Co-hosting workshops and
working alongside allied projects to incorporate local capacity building into current and
future projects can optimize these alliances.

In addition, advertising and outreach through local construction companies, sustainable

product producers, and the Heritage Preservation Group would extend the reach of the
program. The Heritage Preservation group can consult with builders, presenting design
cues from traditional structures in more sustainable building types that utilize local and
renewable resources. It may also be effective to sponsor guest lectures or classes on
sustainable development at local universities and business schools.

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Summary
In targeting small- to medium-sized businesses for sustainable development outreach, it
is important to consider how to effectively inspire and influence the owners of these
businesses. Working with local business organizations, such as the Vietnam Chamber
of Commerce and Industry, can help to target appropriately sized businesses.
Interestingly, social media can also be an extremely effective method of spreading basic
information and creating desire for sustainable development methods, as nearly every
demographic uses social media, including small- to medium business owners. Outreach
to the local Chamber of Commerce and Social media marketing would need to be
strategically placed around more formal, in-depth training or workshops. Training will
give participants a more nuanced understanding of the issues, and social media
messages can be used to extend learning and maintain motivation. It would also be
valuable to have support from international agencies already working in Vietnam. These
international agencies are performing sustainable development projects, slowly
familiarizing the government and citizens to the principles and ideas of sustainability.
News media is also important, with most citizens watching TV and listening to the radio.
Therefore, using news media to drive up consumer demand could be an effective
strategy. Corruption is prevalent in Vietnam, and small- to medium businesses should
also be trained to avoid corruption as they grow in size and value. In addition,
environmental awareness needs to be strengthened and brought to the forefront of this
outreach in order to present a cohesive program.

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References:
1 United Nations, Department of Economic and Social Affairs, Population Division
(2015). World Population Prospects: The 2015 Revision, World Population 2015
Wallchart. ST/ESA/SER.A/378. Retrieved from
http://esa.un.org/unpd/wpp/Publications/Files/World_Population_2015_Wallchart.
pdf
2 OECD. (2005), OECD Environmental Data: Compendium 2004, OECD Publishing,
Paris.
Retrieved from: http://dx.doi.org/10.1787/env_data-2004-en-fr
3 GH, Brundtland, and World Commission on Environment and Development (1987).
Our Common Future: Report of the World Commission On Environment and
Development. Oxford University.
4 Schwab, Klaus; Sala i Martin, Xavier; World Economic Forum (2014). The Global
Competitiveness Report 2014-2015. World Economic Forum
Retrieved from: http://reports.weforum.org/global-competitiveness-report-20142015/
5 Nguyen Huu Ninh (2014) Policy for Environmentally Sustainable Development:
Perspectives from Vietnam. Environmental Policies in Asia, Perspectives from
Seven Asian Countries. World Scientific Publishing Co.
6 U.S. Environmental Protection Agency (2010). Municipal Solid Waste in the United
States. 2009 Facts and Figures. EPA530-R-10-012
Retrieved from: http://www.epa.gov/waste/nonhaz/municipal/pubs/msw2009fs.pdf
7 Price Waterhouse Cooper (2015). Doing Business in Vietnam 2015.
Retrieved from:
http://www.pwc.com/vn/en/publications/2015/doing_business_guide_20151007.p
df
8 The World Bank, Retrieved from:
http://www.worldbank.org/en/country/vietnam/projects
9 The Socialist Republic of Vietnam (2014). Decision 403/QD-TTg On Approval of the
National Action Plan on Green growth in Vietnam for the Period of 2014-2020.
10 United Nations Development Program (2008), Support to the Preparation of National
Millennium Development Goals Reports 2008 and 2010. Retrieved from:
http://www.vn.undp.org/content/vietnam/en/home/operations/projects/closedprojects/poverty-reduction/Support-to-the-Preparation-of-NationalMillennium.html
11 The World Bank and the Ministry of Planning and Investment of Vietnam (2016).
Vietnam 2035: Toward Prosperity, Creativity, Equity, and Democracy
Retrieved from:
https://openknowledge.worldbank.org/bitstream/handle/10986/23724/VN2035En
glish.pdf?sequence=3&isAllowed=y
12 Rand, J. & F. Tarp (2010). Firm-Level Corruption In Vietnam. WIDER Working
Paper 2010/016. Helsinki: UNU-WIDER. Retrieved from:
https://www.wider.unu.edu/sites/default/files/wp2010-16.pdf
13 Socialist Republic of Vietnam (2009). Decree No: 56/2009/ND-CP. Policies and
Management Support State Assistance for Development of Small and Medium
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Enterprises.
14 Bui, T., & others. (2013). Facebook Marketing towards Vietnamese consumers.
Retrieved from https://theseus32-kk.lib.helsinki.fi/handle/10024/75671
15 Broadcasting Board of Governors and Gallup (2013). Media Use in Vietnam 2013.
Retrieved from: http://www.bbg.gov/wp-content/media/2013/12/Vietnamresearch-brief-final1.pdf
16 Nielsen (2015) Word-Of-Mouth Recommendations Remain the Most Credible. Global
Survey of Trust in Advertising. Retrieved from:
http://www.nielsen.com/id/en/press-room/2015/WORD-OF-MOUTHRECOMMENDATIONS-REMAIN-THE-MOST-CREDIBLE.html
17 Nguyen, Pham Tranh Anh (2015), Developing Advertising Strategy by
Understanding Consumer Behavior, Retrieved from:
http://www.theseus.fi/bitstream/handle/10024/90559/Nguyen_Anh.pdf?sequence
=1
18 We Are Social (2016). Digital in 2016. Retrieved from:
http://wearesocial.sg/tag/sdmw/
19 Tran, T. Tran, P. (2015). Building Urban Climate Resilience: The Economics of Alternative
Development Pathways Case Study of Da Nang, Vietnam.Boulder, CO: Institute for
Social and Environmental Transition-International.

20 Nang, D. (2014). Policy Review for Low-Carbon Town Development Project in Da

Nang, Viet Nam. Retrieved from
http://aperc.ieej.or.jp/publications/reports/lcmt/LCMT_Phase_3_Da_Nang_Viet_N
am_Policy_Review_Report_Final.pdf

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