VZCZCXRO0911
RR RUEHAST RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM RUEHTRO
DE RUEHHI #0119/01 0440356
ZNR UUUUU ZZH
R 130356Z FEB 09
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 9135
INFO RUEHHM/AMCONSUL HO CHI MINH 5570
RUEHBK/AMEMBASSY BANGKOK 6593
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RHMFIUU/HQ EPA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC

UNCLAS SECTION 01 OF 03 HANOI 000119 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/MLS, OES AND INL 
DEPT PASS USAID TO LAC/RSD, LAC/SAM, G/ENV, PPC/ENV 
JUSTICE FOR ENVIRONMENT AND NATURAL RESOURCES (JWEBB) 
EPA FOR INTERNATIONAL (MKASMAN) 
COMMERCE FOR ITA/MAC/HONG-PHONG PHO 
 
E.O. 12958: N/A 
TAGS: SENV TBIO ECON SOCI VM
SUBJECT: ENVIRONMENTAL IMPACTS OF VIETNAM'S CRAFT VILLAGES 
 
REF: 08 HANOI 981 
 
HANOI 00000119  001.2 OF 003 
 
 
¶1. (U) Summary:  Vietnamese craft villages play an important 
economic role, particularly in the country's north and employ 14 
million people.  However, older, less-efficient technologies with 
limited pollution control equipment in these villages discharge 
massive amounts of waste directly into the surrounding areas, 
damaging the environment and the health of local residents.  Limited 
attempts to address environmental issues have not proven successful 
as existing technology does not seem to fit the scale of craft 
village production and emissions.  End Summary. 
 
What Are Craft Villages? 
------------------------ 
 
¶2. (U) Vietnamese craft villages comprise more than local gatherings 
of artisans manufacturing traditional products.  Instead, the term 
refers to a much broader grouping of small and medium sized 
industries, centered in a village specializing in one particular 
product or service.  Per the Ministry of Labor, at least 30-35 
percent of all households in village must do business in the craft 
and earnings from those households must be 50 percent of total 
earnings of village.  The scope of craft villages is quite varied, 
and includes villages specializing in handicrafts (goods for daily 
use, such as leather), arts (furniture, lacquer, jewelry, 
embroidery), service and trade (plastic and paper recycling), 
industrial products (steel, paper), food processing (liquor, animal 
slaughtering, essential oils), and material supply and processing 
(example). 
 
¶3. (U) Craft villages play a surprisingly important role in 
Vietnam's economy, particularly in the north, the location of most 
craft villages (Note: southern Vietnam relies more heavily upon 
industrial zones and export processing zones, reftel).  14 million 
people, or over 30 percent of Vietnam's labor force, find employment 
in 1,451 craft villages, covering 46 different crafts.  The Center 
for Science Technology and the Environment (COSTE), the 
quasi-governmental organization created in 2004 to promote 
productivity and environmental management at craft villages, 
estimates that craft villages make up 25 percent of GDP and produced 
exports valued at over USD 500 million annually.  A craft village 
may include hundreds of small firms and employee thousands of 
workers. In many localities, craft villages bring about half of the 
localities' total revenues and create jobs for a large number of 
young people in rural areas.  For example, environmental officials 
in northern Bac Ninh province stated that the province's 62 craft 
villages comprised 70 to 80 percent of provincial economic 
production, with each craft village employing 3,000 to 7,000 
laborers.  Bac Ninh's craft villages largely focused on wood 
furniture, construction materials, steel, paper and foods, primarily 
for domestic consumption. 
 
Environmental Impacts 
--------------------- 
 
¶4. (SBU) Due to limited capital and exposure to international 
practices, many craft villages adopt older technologies or modify 
equipment to fit the smaller scale of production or 
less-sophisticated production techniques. Reliant on these 
inefficient technologies and unable to afford pollution control 
equipment, many craft villages release substantial pollutants 
directly into the environment through air and water emissions and 
the production of toxic, solid wastes.  According to COSTE, 100 
percent of craft villages do not meet environmental standards. Bac 
Ninh environmental officials frankly admitted that craft villages 
cause most of the province's environmental problems, which continue 
to worsen as craft villages grow.   Higher levels of output and 
income have, in turn, resulted in increased waste generation, both 
domestic and industrial. 
 
Just How Bad Is It? 
------------------- 
 
¶5. (U) Where homes and workshops are intermingled, open drains that 
carried storm water and domestic wastewater into adjacent rice 
fields may now carry grease and oil from equipment, acids and heavy 
metals from plating liquors, organic wastes from food processing, as 
well as pig manure and household wastewater. For example, wastewater 
from noodle and vermicelli production contains bio-organisms 
significantly above permissible limits; leather processing has led 
 
HANOI 00000119  002.2 OF 003 
 
 
to contamination in wastewater and in groundwater spreading 
pollution to neighboring villages; recycling plastics and metals 
causes air, solid waste and wastewater pollution -- all 
significantly above government standards;  battery recycling leads 
to exposure to hazardous chemicals; textiles, dyeing wastewater 
contains pollutants (BOD, COD) many times higher than government 
standards resulting in fish and shrimp kills in common water 
sources, and solid waste and dust from construction materials and 
tile, often produced in densely populated areas with no treatment 
for air emissions, kill nearby plant life kills nearby plant life. 
In Bac Ninh, paper craft villages discharge 4,500 to 6,000 cubic 
meters of waste water per day into the public waste water system, 
generate 50 tons of solid waste (plastic, coal waste) daily, and 
have air emission levels for some pollutants up to ten times GVN 
standards.  15,000 cubic meter of wastewater from Bac Ninh's 100 
small steel smelters is discharged without any treatment.  Organic 
solvents and paint residues from wood furniture villages similarly 
are discharged directly into the environment. 
 
Visits to Craft Villages 
Highlight Pollution Problems 
---------------------------- 
 
¶6. (U) During visits to an animal slaughtering craft village and a 
paper recycling village, ESTH Officer witnessed few environmental 
protections.  At the animal slaughtering village, all local and 
village officials and craft village residents readily admitted that 
the craft village has no environmental protection or worker safety 
measures at all.  Workers piled fresh animal skins directly on the 
ground in household compounds and dumped bones from freshly 
slaughtered animals into a pond which served as the town's emergency 
reservoir in case of draught. A mechanical bone grinder processed up 
to four tons of bones per day without any protection for workers who 
stood for hours in clouds of bone dust.  Blood and viscera from 
slaughtering areas ran through street side gutters into a collecting 
pond adjacent to the local elementary school in which local women 
harvested water plants for consumption.  Though no studies have been 
performed on the health impacts of this pollution, residents report 
lowered agricultural yields due to salinization from runoff from 
salting and drying of hides and note discolored drinking water taken 
from local wells. 
 
¶7. (U) The Viet Nhat Paper Joint Stock Cooperative, located in Bac 
Giang province, together with several smaller paper recycling 
factories, produces over 10,000 tons of photocopy and notebook paper 
each year, largely made from paper pulp and waste paper imported 
from the United States.  Though employees receive basic safety and 
environmental training, the facility has no central wastewater 
treatment system and the cooperative's manager acknowledged that 
several rice fields surrounding the village can no longer be used 
due to water pollution. Despite attempts to filter and recycle 
wastewater prior to discharging, ESTH Officer witnessed discolored 
water piped out of the facility into common drainage ditches. 
Cooperative employees noted that the facility uses several chemicals 
in the production process and discharges 40 cubic meters of 
wastewater per day. 
 
Health Impacts 
-------------- 
 
¶8. (U) The health impacts of craft villages on local residents are 
long-standing.  Residences and production sites in craft villages 
are intermixed, leading to close and constant exposures to toxic 
pollutants resulting in serious health impacts.  Due to the 
sensitivity of the issue and limited resources, the central 
government and provincial authorities release few statistics on the 
health impacts of craft village production.  However, as early as 
1996, a health survey of 233 residents of the Bat Trang ceramics 
village (total population of approximately 6,000) found 76 persons 
with respiratory ailments and 23 with tuberculosis. In 1995, 23 
persons from the village died of lung cancer. Bat Trang residents 
comprised 70 percent of the lung cancer patients in Hanoi hospitals 
in 1996.  In 2005, at the bronze casting and lead smelting craft 
village of Dong Mai, an international NGO reported that smelting 
left 500 people with chronic illnesses and 25 children with brain 
damage.  Many households built furnaces adjacent to their houses. 
According to local health officers, 80 percent of the village's 
population is subject to such diseases as pneumonia, encephalitis, 
and cancers. 
 
 
HANOI 00000119  003.2 OF 003 
 
 
Attempts to Address Environmental Concerns 
------------------------------------------ 
 
¶9. (U) With support from the Japan International Cooperation Agency 
(JICA), COSTE has initiated several projects designed to improve 
environmental practices at craft villages, with a particular focus 
on improving production technologies and practices.  COSTE has 
attempted to create a sustainable development strategy through 
raising environmental awareness in craft villages, looking for 
suitable technologies to treat wastewater and air emissions from 
craft village and developing management software for environmental 
protection at craft villages and cooperatives, working with 
cooperatives in a few provinces to develop cleaner technologies, and 
developing food safety programs.  Similarly, the Bac Ninh DONRE is 
attempting to address craft village pollution concerns through 
increasing public awareness and attempts to remove industries from 
the villages and into areas or "focal" industrial parks with better 
infrastructure and environmental controls, including 
pre-construction environmental impact assessments.  The villages 
remain, but solely for residence, not for production or industry. 
The GVN has also created the 
Vietnam Environment Protection Fund with an annual budget of 
approximately USD 12 million to provide preferential loans to help 
industrial zones and craft villages process wastes.  Supported by 
funds from the collection of various environmental fees and fines 
and from the exchange of quotas for carbon dioxide emissions, VEPF 
has already assisted a number of craft villages to build waste 
processing facilities. 
 
Environmental Solutions Face Many Hurdles 
----------------------------------------- 
 
¶10. (U) Attempts to address environmental impacts at craft villages 
face several significant obstacles.  At this time, appropriately 
scaled pollution abatement technology for most small and 
medium-sized facilities in Vietnam does not exist.  Nearly all 
environmental interventions have to be re-engineered for small, 
family-run workshops that cannot afford end-of-pipe treatment 
methods commonly used in larger production facilities.  According to 
Michael DiGregorio of the Ford Foundation, who has studied craft 
villages for over a decade, many for-profit firms find it difficult 
to produce this type of equipment and protect their intellectual 
property.  Such solutions include better housekeeping, higher 
smokestacks, improved pumps, better regulation of heat, improved 
sediment and oil traps, and chemical neutralization of acids and 
toxic substances. GVN officials stated that many production units 
are incapable of any expenditure on waste processing, estimated at 
25 percent of the total production cost.  Many of Vietnam's 
environmental, health, safety and labor laws do not reflect the 
particular conditions of family enterprises.  Craft villages compete 
in the market through greater flexibility associated with lower 
fixed capital costs, lower labor costs, and lower administrative 
costs.  Imposition of regulations appropriate to larger firms with 
different cost structures will likely only raise the level of 
underground payments owners are forced to make.  Finally, most major 
polluters are the residents themselves.  Stricter enforcement would 
endanger their livelihoods. No workshop owner is willing to 
introduce environmental and safety features that raise costs and 
reduce competition with others who produce similar products. 
 
¶11. (U) GVN efforts to address environmental issues have not proven 
effective.  COSTE acknowledges that it does not have adequate 
information to form base lines from which to track environmental 
progress and continues to seek support for a nationwide survey of 
environmental conditions in and impacts from craft villages.  On 
several occasions, the GVN moved a number of household 
micro-enterprises into light industrial areas to remove pollution 
from residential neighborhoods.  However, subsequently, other 
micro-enterprising manufacturers immediately filled these vacant 
houses.  The process has repeated itself every time the GVN attempts 
to consolidate, relocate and manage these polluting small-scale 
producers, which creates a bigger problem as more villagers get 
involved in producing the craft. 
 
MICHALAK