Environmental review before implementing an FDI project is no longer a “formality”: under the Environmental Protection Law 2020 and the environmental licensing system, a project can be suspended or denied operation simply because its environmental dossier is incomplete. Especially for manufacturing projects, environmental review must begin at site selection, before signing any investment commitment. This article systematizes the layers of environmental obligations FDI investors must meet.
Environmental Impact Assessment (EIA) or Environmental Registration?
The Environmental Protection Law 2020 (No. 72/2020/QH15) classifies projects by impact level: projects at high risk of adverse impacts must conduct an environmental impact assessment and have the EIA report approved; lower-impact projects conduct environmental registration. Classification criteria are based on type, scale, capacity and environmentally sensitive factors (proximity to water sources, residential areas, conservation zones). Wrong procedure identification — registering when an EIA is required — is the mistake forcing projects to restart, losing 6–12 months.
Environmental License: the “Passport” to Operation
Before putting a project into official operation, regulated project owners must hold an environmental license issued by the competent authority, integrating: wastewater discharge, air emissions and hazardous waste management. Licenses are term-limited (7 or 10 years depending on project group) and must be extended and adjusted when capacity or technology changes. Operating without an environmental license is a serious violation, subject to suspension.
Review at Site Selection and Project M&A
At site selection, check: whether the area is restricted for polluting industrial development; the ability to connect to centralized wastewater treatment infrastructure; environmental safety distances from residential areas. When acquiring a project or buying an operating factory, the transferor’s entire environmental dossier must be reviewed: whether the EIA/license is still valid, whether violations are being handled, whether land has legacy contamination — because remediation obligations can “follow” the project to the new owner.
Obligations during Operation
During operation, companies must: operate committed environmental protection works correctly and fully; conduct periodic monitoring (wastewater, air emissions, surrounding environment) and transmit data as prescribed; prepare annual environmental protection reports; manage solid and hazardous waste per proper procedures (contracts with licensed units, complete documentation). Violations are penalized under Decree 45/2022/ND-CP with high fines and possible additional penalties such as suspension.
Integration with Fire Safety and Chemical Safety
For factories using chemicals, beyond the environment they must also comply with chemical safety regulations and fire prevention for factories — these three systems share much technical data (layouts, capacity, chemical inventories), so they should be implemented synchronously from the design stage to avoid rework.
Frequently Asked Questions
Do projects in industrial zones need an EIA?
It depends on the project group. Many projects in industrial zones only need environmental registration, but high-impact-risk projects still require an EIA — there is no rule that “inside a zone means automatic exemption”.
What environmental checks are needed when acquiring an operating factory?
Check EIA/environmental license validity, violation and penalty history, legacy soil/water contamination, and environmental obligation transfer clauses in the transfer contract.
What if a project operates without an environmental license?
It may face heavy penalties and suspension until procedures are completed — losses from production stoppage are usually far greater than the cost of doing it right from the start.
FLAT LAW FIRM advises on environment for FDI projects: determining EIA — registration — environmental license procedures, environmental due diligence in M&A and violation handling. If you are preparing to implement a manufacturing project, please contact FLAT LAW FIRM.
