When To Conduct Report On Environment Impact Assessment

Sustainable development is a fundamental objective in the development policies of Vietnam. However, how to harmonize the above objective with the policy of attracting investment capital is a complicated issue. Regulations on obligation of the investors to conduct the Report on Environment Impact Assessment ("EIA Report") when implementing an investment project is a typical example.

We will study a particular case as follows: Company A is a Korean enterprise which plans to implement an investment project in the area of manufacturing ceramic tiles in Vietnam. Expected capacity of the plant is about 700,000 square meters per year and the location of the project is suitable with local area’s plan.

In accordance with Clause 1 of Article 12 and Annex II of Decree No. 18/2015/ND-CP dated 14/02/2015 of the Government on Environmental protection planning, strategic environmental assessment, environmental impact assessment and environmental protection plan ("Decree 18/2015/ND-CP"), the investment project of Company A is subject to the EIA Report. However, the question is when Company A must conduct the EIA Report?

Clause 2 of Article 19 of Law on Environment Protection No. 55/2014/QH13 ("Law on Environment Protection 2014”) provides that the environment impact assessment of the project must be carried out in the stage of “project preparation”. At the same time, the decision on approval of the EIA Report will be considered as a basis for competent authorities to grant the Investment Certificates (or Investment Registration Certificate as regulated in Law on Investment 2014) ("IRC").

Meanwhile, under Article 37 of Law on Investment No. 67/2014/QH13 ("Law on Investment 2014") the IRC application dossier does not include the decision on approval of EIA Report. Law on Investment 2014 even does not have any definition on the term of "project preparation".

This is a conflict between the provisions of Law on Investment 2014 and Law on Environment Protection 2014 which makes the investors confused in determining what time they must carry out the EIA Report. Specifically, the investors shall conduct the EIA Report before or after the issuance of the IRC?

In our opinion, the conduct of the EIA Report after the IRC has been issued will help the investors to save time, and as a result, create favorable conditions to attract investment capital. Conversely, in the case that the EIA Report must be carried out before the investors are granted the IRC, despite negatively affecting attraction on the investment capital,  consequences resulting from lose state administration in the area of environmental protection can be avoided and environmental problems can be minimized. How to balance economic development while ensuring sustainable development objectives is a headache question that requires answer from the competent authorities.

                                                                                                                                    By Dinh Do Trong

                                                                                                                                       SMiC Law Firm