Viet Nam is trying to reform administrative procedures to create more favourable conditions for clean development mechanism (CDM) projects, as the country lags behind other developing countries in their implementation.

The CDM, established in December 1997, is an arrangement under the Kyoto Protocol, allowing industrialised countries with a commitment to greenhouse gas reductions to invest in ventures that reduce emissions in developing countries as they are less expensive. Industrialised countries or their companies are able to earn emission credits through the mechanism while developing countries acquire technology and capital.

A circular aiming to simplify CDM project procedures was being drafted by the Ministry of Natural Resources and Environment (MONRE), said Nguyen Hung Quang, a member of the Advisory Council of Administrative Procedural Reform.

The ministry would also join with the Ministry of Finance to issue financial support polices for enterprises participating in CDM projects.

“The enterprises can benefit from preferential policies in terms of income and import taxes and land rental,” said Quang.

Since Viet Nam joined the CDM in 2002, only 26 projects have been approved by the International Executive Board - a disappointing figure compared to more than 2,200 projects approved in nearly 40 different countries.

At least half of the operational 26 projects are focused on the hydro-electricity sector.

“Complicated administrative procedures have made foreign investors hesitate when considering projects in Viet Nam,” said Quang.

In theory, it takes 75 days to apply for a CDM project in Viet Nam, about 10-15 days longer than in other countries. But in reality, the procedures often last from a minimum of six months to a year.

One of the reasons for this poor performance is that Viet Nam currently has an 18-member assessment committee with 14 different offices to approve projects, while China and India only need seven and nine offices respectively.

Many of the applicants had failed to understand the overly-complex procedures, which had made their applications more time-consuming than expected, said director of the Carbon Centre under the RCEE Energy and Environment Joint-stock Company Nguyen Tuan Anh.

To create better conditions for enterprises to attract foreign investors, the Advisory Council of Administrative Procedures Reform has submitted a proposal to the Prime Minister to reduce the number of the assessment council members.

“Officials from administrative offices which directly relate to CDM will join the council,” said Quang.

Some overlapping procedures would also be reduced.

One of Viet Nam’s most successful CDM projects has been conducted in the northern province of Hoa Binh.

Experts said in 14 years the project will create a turnover of US$1.3 billion, not to mention other benefits including job generation and environmental protection.

This project was recognised by the United Nations as the first successful CDM project in Viet Nam, and the second globally, after one of China, said Quang.

According to MONRE, in five years between 2008 and 2012, CDM projects could generate a net turnover of $250 million.

However, Anh said CDM projects in Viet Nam often had smaller capital than those in other countries, and the projects had failed to find ways to attract foreign investors.

For instance, a waste treatment project in Hai Phong City, a methane rubbish dump reclamation project in HCM City and a similar project in Nam Son in Ha Noi failed to calculate the exact amount of methane they had extracted, providing little information to entice potential foreign investors, he said.

Source: VNS