It will be able to treat 55 tonnes of solid waste daily.

Nguyen Van Dung, vice chairman of the Hoi An City People's Committee, said the plant would significantly reduce the amount of rubbish accumulating in a natural landfill about 3km f-rom the town centre.

Rubbish collected f-rom households, hotels and restaurants in the town was previously dumped in the natural landfill, which is already full and contaminating the environment.

Dung said the landfill was opened in 1993 to satisfy the town's disposal needs. At the time it was more than a kilometre f-rom residential areas. Now the nearest houses are a mere 200 metres away as demand for accommodation and farming land has increased significantly in Cam Ha Commune, he said.

Local resident Phan Thi Phuong said she and her family had to buy bottled water to drink because well water stank.

Nguyen Nhu Muoi, chairman of the Cam Ha Commune People's Committee, said the landfill was seriously affecting the health of about 1,000 of the commune's 1,600 households and that it had been responsible for outbreaks of petechial fever and cholera.

At the new plant, rubbish will be classified into two main categories – organic and inorganic. Biodegradable rubbish will be composted to serve agriculture, while inorganic waste will be recycled. The remainder, if non-polluting, will be dumped in the landfill.

Another plant for hospital waste will open at the end of this year. Meanwhile, another solid waste treatment facility and a network to collect rubbish will be completed in 2012.

Raphael Nguyen, director of Vinci Construction Grands Projects, said the plants would improve the quality of life for the people of Hoi An and protect the ecological environment.

About 82 tonnes of rubbish are disc-harged daily by households, hotels and restaurants in Hoi An, according to the Natural Resources and Environment Bureau.

Only between 60-65 per cent of the rubbish currently goes in the landfill, the rest is recycled by families and used as fertiliser.

According to the Hoi An Trade and Tourism Bureau, tourism and related activities accounted for more than 70 per cent of the city's gross domestic product last year. The total number of visitors to Hoi An was about 3.5 million – an average year-on-year increase of 11 per cent between 2006-10.

Australian tourist Andrew Alason said the Hoai River was badly polluted and emitted a bad smell.

"The city authority really needs to do something to save the river," he said.