Vietnam’s air quality if not curbed could be catastrophic, said Professor Bob Baulch from The Business School at RMIT Vietnam.

The latest World Air Quality Report, which provides information on air quality in 131 countries and 7,323 cities in the world updated to 2022, raises serious concerns about rising air pollution in Vietnam and especially in its capital city, Hanoi.

Overall, based on the concentration of small particulate matter (PM2.5) in the air, Vietnam now ranks as the 30th most polluted country in the world, just below Lao PDR, and four and five positions below Indonesia and China, respectively. In 2022, Vietnam’s air quality exceeded the World Health Organisation (WHO)’s recommended safe levels by between five and seven times.

Furthermore, with an air quality index of 40.1, Hanoi’s air quality is seven to ten times higher than the WHO’s guidelines. Worldwide poor-quality air is estimated to account for six million deaths and 93 billion days of lives with illness each year.

“What is surprising is the large gap between air quality between Hanoi, Ho Chi Minh City and Danang,” Professor Baulch said.

He stated that most people would expect pollution to be worse in Ho Chi Minh City given its dominance in terms of industrial production and its larger population, “yet, in 2022, the city had an air quality index of 21.2, almost half of Hanoi’s”.

“Its air quality is still, however, three to five times higher than safe levels established by the WHO’s guidelines,” he said. “Danang’s air quality is also three to five times the recommended levels.”

Professor Baulch said that this ranking appears to be the result of three main factors.

Professor Bob Baulch from The Business School, RMIT University in Vietnam

First, the greater concentration of heavy industry, such as chemicals, steel and machinery, in northern Vietnam. In contrast, southern and central Vietnam have focused more on light industrial and high-technology products.

Second, the power generation mix in northern Vietnam is much more reliant on coal than in southern and central Vietnam, where wind and solar power are abundant.

And third, the climate and geography of northern Vietnam traps more particulate matter (PM) than that in central or southern. It is cold rather than hot air that traps PM, especially in locations such as the Red River delta where wind is less strong than regions close to the coast or mountains. So, air quality is worse during the winter months in the North.

To support the improvement of the country’s air quality, Professor Baulch suggested the share of power generated by coal, which is over 30%, needs to be curtailed.

“Much of Vietnam’s air pollution problem is due to its heavy reliance on electricity generated by coal,” he said.

“While ‘clean coal’ is not probably a realistic option, the retrofitting of coal fired power station and other heavy industrial plans could reduce their carbon footprints substantially.”

Progress toward more generation of renewable energy also needs to be speeded-up, said Professor Baulch. “While Vietnam’s commitment to achieve net zero by 2050 is commendable and now enshrined in law, its actions now need to match its commitments.”

“Even though the draft eighth Power Development Plan has scaled up the share of energy to be generated by renewables by 2030, feed-in-tariffs for solar power have been halted, tariffs for on-shore wind-generation cut, and heavy reliance is still placed on gas-fired power stations in the medium term.

Professor Baulch said Vietnam’s demand for energy, which is currently growing at 10% to 12% per annum, needs to be moderated.

“More energy efficient buildings and cleaner production processes, greater use of electric vehicles and urban public transit systems, improving the transmission network, investing in clean storage technologies, smart planning of cities, and urban greening, all have important roles to play here.”

Professor Baulch emphasised: “The costs of greening Vietnam’s growth will not be small. Last year, the World Bank estimated that 6.8% of GDP would be needed to decarbonise Vietnam’s future growth while making it resilient to climate change. For the sake of our children’s health and future climate security, this is a price tag that is well-worth paying”.

Central Bank Digital Currency could help countries achieve financial stability by offering more resilience, greater availability, faster payment processing, and lower transaction costs than private forms of digital money.

CBDC’s popularity has been surging

Central Bank Digital Currency (CBDC) is a digital token issued and regulated by a central bank in a particular country.

Dr Vu Thi Hong Nhung, Economics lecturer at The Business School (formerly School of Business & Management), RMIT Vietnam explained: “It has some similar characteristics to cryptocurrency and value pegged to the country’s fiat currency. However, CBDC may differ from other cryptocurrencies because of its non-anonymised transactions due to the centralised form of currency.”

Based on data from CBDC Tracker in December 2022, 114 countries, representing more than 95% of global GDP, have explored diverse proposals for CBDC design, access, and infrastructure. Compared to May 2020, only 35 countries considered a CBDC.

Currently, 60 countries have achieved advanced phases of development, pilot and launch CBDCs. Eleven countries, including the Bahamas, Nigeria, and countries in Eastern Caribbean Currency Union, have fully launched a digital currency.

From December 2022, all G7 economies have transferred from the research stage to the development stage of a CBDC. Eighteen out of G20 countries are in the advanced stage of CBDC development, showing considerable progress and new resource investment.

In 2023, over 20 countries will take significant steps towards continuing or starting to pilot a CBDC, including Australia, Thailand, Brazil, India, South Korea, and Russia. Countries testing CBDCs in pilot projects include Sweden, China, Jamaica, and Ukraine.

“China’s CBDC pilot has reached 260 million people and is planned to expand to most countries in 2023”, Dr Nhung shared.

Implications of CBDC in Vietnam

The Vietnamese government recently announced that it would work with its central bank to develop a pilot program for CBDC implementation. This crucial step shows that the government is committed to developing this innovative technology and successfully implementing it on a scale.

RMIT Economics lecturer Dr Bui Duy Tung said: “CBDC, based on blockchain technology, contributes to the modernisation of the payment system by facilitating financial institutions and fintech companies in applying and testing modern technologies, thereby promoting the digital economy in Vietnam.

“CBDC improves payment system reliability, safety, and risk reduction through transparency, verification, and security. CBDC is also a platform that assists the Vietnamese banking system in successfully implementing the digital transformation roadmap.”

Dr Vu Thi Hong Nhung (pictured left) and Dr Bui Duy Tung (pictured right).

CBDC would promote financial inclusion in Vietnam by allowing more people to access financial services, especially those without bank accounts in remote areas. In addition, CBDC can be used in areas that do not have Internet connections, enabling people to conduct financial transactions at low cost using simple, widely available electronic devices.

CBDC provides an efficient and effective tool for implementing monetary policy in Vietnam. Issuing CBDCs allows the State Bank of Vietnam to control the money supply accurately. As a result, the policy lags would be reduced further, thus improving the efficiency and effectiveness of monetary regulation.

However, Dr Tung anticipated that some essential questions must be answered before this happens. First, it would require significant regulatory reform to allow the government to issue the digital currency – and even then, they would need to verify that they were doing so correctly before getting approval from international bodies such as the International Monetary Fund and World Bank.

Secondly, the country needs to upgrade its national digital infrastructure to be compatible with the issuance of CBDCs in Vietnam. Learning experiences from other countries which have pilots and launched CBDCs are especially useful for Vietnam to minimise difficulties and problems in the research stage and the development stage of our CBDCs.

RMIT drives digital transformation

CBDC and its implications was an intriguing topic presented at the RMIT Fintech-Blockchain Conference taking place in December 2022. This inaugural academic conference attracted academics and researchers from all around the world to share ideas on the digital economy, financial technology, blockchain, CBDCs, new types of digital Web3 businesses and related areas.

It also helped strengthen RMIT’s leading role in the world in frontier digital technologies in business, finance, and economics.

Since Semester 3 2022, RMIT Vietnam has offered the Blockchain Enabled Business major, which is one of the first multidisciplinary business-focused blockchain majors in the world. RMIT Senior Program Manager of Blockchain Enabled Business and Fintech-Crypto Hub coordinator Dr Nguyen Thanh Binh commented: “Graduates from this major will transform traditional industries and create new Web3 products and services for the digital economy and society.”

RMIT was ranked as the second-best university in the world in Blockchain and Cryptofinance in 2021 by CoinDesk in conjunction with Stanford University. In addition, within the program of World Blockchain Summit MARVELS HCMC 2022 taking place in Vietnam last December, RMIT was also honoured as Pioneer University in Blockchain Training & Education at the Vietnam Blockchain Awards (VNBA).

By Dung Pham

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Source: Vietnam Insider