Know thy enemy

Vietnam needs a strong, independent watchdog and greater consumer awareness

A girl walks past shelves of groceries at a minimart in Hanoi March 18, 2011.

Corporate social responsibility, or CSR, has been in fashion for some time now. It has emerged as a response to growing consumer awareness in developed countries of sweatshops, unfair trade practices and environmentally harmful activities as well as a refusal to accept them.

While there have been rare instances of one man’s courage and conviction making a huge difference for consumers, most notably Ralph Nader, whose book, “Unsafe at any speed,” forced automakers to develop safer products and gave us the modern car, many of the later successes were widespread movements like product and brand boycotts.

It is important to remember this background to CSR, that it was not something that the corporate sector did of its own volition, but something that it did to offset, and later, pre-empt consumer-driven opposition and rejection. It is also a PR plank for the company, boosting its image and enhancing brand value.

The plethora of “returning to the community” projects that many companies implement has certainly done some good, but CSR is no substitute for consumer vigilance.

In Vietnam, we witnessed a shocking case of corporate social irresponsibility when Taiwanese monosodium glutamate maker Vedan Vietnam, which was bound to take environmental protection measures, was found to have been doing the opposite for more than 14 years. After the exposure, it denied the extent of its wrongdoing, and tried not to pay due compensation.

In fact, it was a consumer boycott led by supermarkets refusing to carry its products that finally pushed Vedan to pay farmers the compensation they and representative organizations had negotiated.

There have been many companies that have since been found polluting the environment against the law, but laws in Vietnam seem to lack sharp teeth. Most of the time, environmental polluters get away with puny fines.

What has been the response of Toyota Vietnam in light of the recent exposure of technical flaws in some of their models. Note that, in its Sustainability Report 2008 the company said that “Toyota came to Vietnam not only to achieve business objectives, but also to perform social responsibilities and obligations toward the community for a thriving and prosperous life.”

The carmaker has insisted that the flaws are minor, wouldn’t affect driver safety, and there is no need to recall around 8,830 defective cars as it has received no complaints from consumers so far.

If, as the whistle-blower engineer has claimed, the company tried to prevent the exposure and wanted the flaws not be exposed in the first place, how much trust can consumers place in Toyota Vietnam’s statements, not just about its noble aims, but about its own products?

Vietnamese consumers are still vulnerable. They need all watchdogs, from the press to government agencies responsible for checking product quality, to do their job well to make sure the products and services they buy are safe and priced fairly.

But given all the shortcomings that the watchdogs operate under, it is difficult to expect that they will get the job done by themselves.

The Vietnam Register, in charge of supervising vehicles’ technological soundness, told Thanh Nien that it only checked 30 percent of a car to make sure it’s generally safe.

“We can’t check every single thing on a car… The manufacturers are responsible for any safety problems with other parts,” said Do Huu Duc, deputy general director of the agency.

On July 1, the Consumer Protection Law will take effect. However, for it to really benefit consumers, professional agencies armed with appropriate knowledge, equipment and manpower need to be established. Consumers must be able to turn to a trustworthy, qualified agency when they are adversely affected.

Most of all, consumers themselves should be aware of their rights and responsibilities. CSR should be placed in the context of a self-regulatory effort designed to allay the customer, and at the same time, avoid tougher government regulations and other monitoring measures.

Companies will act responsibly if, and only if, their profit margins are threatened.

This is the bottom line.

By Thanh Nguyen 

Tightened credit hurts small firms: legislators

Vietnam aims to keep credit growth at less than 20 percent this year, but the move has hit small businesses hard

Small companies in Vietnam struggling with limited capital are facing difficulties in securing loans from banks due to the tight monetary policies implemented by the government, lawmakers say.

Cao Sy Kiem, chairman of the Association of Small- and Medium-Sized Enterprises, told other legislators at a National Assembly meeting on Saturday that capital is now a huge challenge for many local firms.

It’s necessary for the government to tighten monetary polices to control inflation, but strong measures have a significant impact on the production sector, especially small and medium enterprises, Kiem said.

More than 30 percent SMEs in the country cannot access bank loans, he noted.

Representative Dang Van Xuong of Long An said many companies in the southern province have had to cut back on production and operational costs are eating into their capital.

If this situation does not improve soon, many companies will have to declare bankruptcy, which will lead to other job-related social problems, he said.

“Interest rates need to be lowered at all costs, or else there will be no business for enterprises,” Xuong said.

The government aims to keep credit growth at less than 20 percent this year from an earlier target of 23 percent.

The central bank on March 8 increased its refinancing and discount rates to 12 percent each, matching the level of the repurchase rate. The bank has also ordered all lenders to limit credit to non-production businesses at 22 percent of total loans by June 30, and at 16 percent by the end of the year.

Reported by Bao Cam  

Stretching an hour into a year

Hanoi youth gathered at last year’s Earth Hour celebration. Millions of people are expected to switch off lights for an hour from 8:30 p.m. on March 26 to raise awareness about energy conservation during Earth Hour 2011.

La Thuy Diem Hang is sure that this year’s Earth Hour will witness record participation in Vietnam.

This week, volunteers and organizers have been busily arranging activities and preparing communities all over the country for the big event.

This Saturday, environmentally-conscious people and businesses all over the world will shut off their  electric lights from 8:30 p.m. to 9:30 p.m.

The main event in Vietnam is set to take place in the central province of Thua Thien-Hue.

“In 2010, the campaign was held in Ho Chi Minh City mainly by WWF Vietnam,” said the 23-year-old graduate from the HCMC University of Science. “This year, many local environmental clubs and organizations have gotten involved.”

Hang said that many young first-time participants in last year’s event in HCMC have joined this year’s campaign to mobilize others. “We have distributed leaflets and encouraged locals from seven neighborhoods in HCMC to join the campaign,” she told Thanh Nien Weekly. “Also, 60 cafés in the city have committed to turning off their lights during the event.”

As Vietnam faces down its growing energy needs, energy efficiency policies and programs are being looked to as the cheapest and most immediate solution to the nation’s power shortcomings.

Making strides

Manufacturing flourished as the nation’s economy soared, driving up the country’s power demands – and not always in the most efficient way.

In the past ten years, international development agencies have implemented a host of small scale programs to help Vietnam make its grid more efficient.

In 2003, for example, researchers discovered that Vietnam consumed 39,000 British Thermal Units (BTUs) for every dollar of its gross domestic product (GDP). That same year, Japan used about 5,000 BTUs per dollar of GDP.

From 2004-2009 Electricity of Vietnam (EVN) implemented a program to promote the installation of energy-saving compact fluorescent lamps (CFLs) in houses and buildings across Vietnam. 

“The program had a major impact, transforming the lighting market in Vietnam, and reducing peak demand by 300 MW,” said Peter du Pont, who worked as a consultant to EVN and the World Bank during the implementation of the program. “It also reduced emissions of carbon dioxide, by more than three million tons." 

At the moment, the Asian Development Bank is looking to fund the streamlining of seven heavy manufacturing sites, according to Felix Gooneratne, Asia Director, International Institute for Energy Conservation (IIEC).

“Investment grade audits conducted at seven sites (five cement and two steel) have identified significant potential for generating electricity from process waste heat that would supplement on-site electricity demand,” said Gooneratne. “Investment plans are currently being finalized.”

At the same time, the United Nations Development Program has targeted small and medium-sized manufacturers for efficiency projects.

Future energy needs remain a major issue in the country.

Last month, the government raised the costs of electricity roughly fifteen percent. Officials at the Ministry of Industry and Trade said they hoped that higher power prices would make the construction of large power projects more attractive to foreign investors.

In the meantime, Vietnam is looking to develop its own grassroots campaign to curb energy usage.

Beyond the hour

Earth Hour was initiated by the WWF – a non-governmental environmental advocate – to increase climate change awareness and induce mitigating responses.

The first event was held in Sydney in 2007 and has quickly spread around the globe.

Last year, hundreds of millions of people across the world, in 4,616 cities and 128 countries and territories, turned off their lights during the last weekend in March.

Tran Minh Hien, Vietnam Country Director of the WWF Greater Mekong Program, said that they plan to launch an extensive campaign that will last the whole year.

“The main event night is just a beginning,” she said. “Several activities have been launched for individuals, companies and organizations nationwide.”

WWF Vietnam has held talks with students from 16 universities and schools about climate change and Earth Hour.

Hien said that the first success of the campaign is that it has attracted more support from governmental agencies, organization and individuals.

In 2010, 20 cities and provinces as well as more than 300 companies and organizations participated in the event.

“This year, up to 30 cities and provinces and more than 4,800 companies and organizations have committed to participating,” Hien said.

Facing down energy demands

This January, the Law on Economical and Effective Use of Energy took effect. The law resolution sought to establish limits on the use of energy in homes and businesses-though actual regulations have yet to be established.

In the meantime, Vietnam is facing some very immediate problems in its energy needs.

According to the HCMC Energy Conservation Center (ECC) the city will face a shortfall of two million kWh of electricity every day during the remainder of the dry season—which ends in May.

Center Director Huynh Kim Tuoc said that the energy shortfall would not be a problem if local consumers became more conscious about their energy usage.

“If 1.8 million households in HCMC turned off their air conditioners for an extra 30 minutes, the city would save 900,000 kWh of electricity a day,” he told Tuoi Tre newspaper in an interview last week. “More efficient use of electricity in factories and offices would also solve the energy shortage.”

But local campaigners and public awareness campaigns are already taking hold.

Last March, the ECC and the HCMC Women’s Association launched a campaign to make 100,000 households energy efficient. As a result, many households have reduced their electricity bills between 10-50 percent during the previous year.

”We built a network of some 1,200 propagandists in all the city’s 24 districts,” Tuoc said. “Each was assigned to be in charge of around 100 families to offer energy saving consultations and encourage them to use electricity efficiently.”

Tuoc added that the ultimate goal is to change the community’s awareness in purchasing and using electricity.

“The result was great,” he said. “The participants later encouraged others to participate in the program.”

Reported by Giang An  

All smoke, no fire

Vietnam’s ban on smoking and its curbs on tobacco promotion are being observed comfortably in the breach

A man smokes tobacco in downtown Ho Chi Minh City. A public smoking ban that took effect almost one year ago has been ineffective, and tobacco companies are having a field day in Vietnam.

Nguyen Thanh Binh, a journalist based in Ho Chi Minh City, says with sense of irony that he is virtually unaware of any smoking ban.

“When the ban came into force a year ago, everyone kept talking about it. But since then we’ve seen no enforcement or sanction, so what’s the point of observing it?” said the 25-year-old scribe who smokes 15 cigarettes per day on average.

A Vietnamese government decree effective January 1 this year prohibits smoking indoors in public places. But little headway has been made since.

“We have to admit that enforcement and compliance are [still] poor,” said Pham Hoang Anh, Vietnam director of HealthBridge Canada, an international NGO which seeks to work with partners worldwide to improve health and health equity through research, policy and action.

“[It is] due to the weak level of sanctions, unclear enforcement mechanisms, low public awareness of the regulation and of the hazards of secondhand smoke, and high social acceptability of smoking.”

Expats are none the wiser about the ban.

“Australia banned smoking in bars while I was living in Vietnam. Moving back home and having to leave your drink with a security guard was very strange but it did inspire a kind of camaraderie amongst the smokers,” said an Aussie expat in Hanoi who declined to be named.

“Here [in Vietnam] that’s less necessary as most expats already know each other. I’ve never seen the smoking ban enforced. No one even knows there is one.”

The Global Adult Tobacco Survey 2010, the international standard for systematically monitoring adult tobacco use and tracking key tobacco control indicators, shows that currently around 15.3 million people actively smoke in Vietnam and an estimated 46.8 million are exposed to secondhand smoke.

“[These facts] provide strong evidence that the tobacco epidemic continues throughout the country,” said Jorge Alday, a spokesperson for New York-based NGO World Lung Foundation.

Smoking caused around 40,000 deaths in Vietnam in 2007, the World Health Organization (WHO) estimates. This figure could surge to 70,000 by the end of 2030 if drastic measures are not taken, the UN agency warns.

Internationally, second-hand tobacco smoke kills upward of 600,000 people every year, nearly a third of them children, according to the first-ever global assessment published last month in the British medical journal The Lancet.

Big brother

It is not just the ban that has been ineffective.

Anti-tobacco groups have criticized tobacco companies for capitalizing on legal loopholes in Vietnamese laws to launch aggressive marketing campaigns to promote the habit and the product.

Vietnam ratified in 2005 the WHO Framework Convention on Tobacco Control, an international treaty which requires countries to restrict tobacco publicity. Vietnamese laws also ban direct and indirect advertising, sponsorship and promotions, even at sales outlets.

Under the regulations, cigarette companies are not supposed to display more than one pack of a cigarette brand at any sales point. But companies and retailers have circumvented this rule by displaying different varieties of the same brand like menthol, lights or regular, anti-tobacco groups say.

They add that this strategy will lead to brands creating a variety of flavors or types so that, as in Vietnam, certain brands can dominate a large section of the display, while using just one pack of each kind.

As for indirect promotions, Alday of the World Lung Foundation says, “In Vietnam as in many other places, direct advertising has been replaced by more subtle promotional techniques such as corporate social responsibility projects. Examples include funding education or youth projects across the country or even providing disaster relief.”

Anh of HealthBridge Canada adds, “The aim of these activities is to manipulate the public’s attitude toward their reputation and send the message that they are looking out for the public’s best interest.”

Vietnam’s amended Trade Law 2005 bans all forms of sponsorship by tobacco companies. But the law stopped short of completely prohibiting sponsorship of philanthropic activities.

So far this year, British American Tobacco–Vinataba (BATVJ), a joint venture between the London-based British American Tobacco company and the Vietnam National Tobacco Corporation, has been in the news for providing five Vietnamese provinces with 22.5 million seedlings totaling VND1 billion ($51,300). BATVJ is also being investigated for cooking its books between 2006 and 2008, police in the southern province of Dong Nai, where the joint venture is based, said in October.

The Vietnam National Tobacco Corporation (Vinataba) had also, through media channels, announced pledges of VND5 billion to support poverty alleviation efforts in Bac Ai District in the south-central province of Ninh Thuan.

But the Bac Ai District government said in a recent report that they had received nothing from Vinataba and asked the state-owned tobacco giant to honor its “corporate social responsibility.”

Anti-tobacco groups have urged Vietnamese legislators to clearly define advertisement to prevent any circumventing ploys by the tobacco industry.

The government has been drafting a comprehensive tobacco control law since 2008 but the bill is set to be submitted to the National Assembly, Vietnam’s legislature, for reviewing and passing early next year.

“There are plenty of gaps that can be filled in this issue… Vietnam should follow the WHO guidelines on the protection of public health policies from commercial and other vested interests belonging to tobacco industry,” said Anh.

Vietnam plans to impose heavy environment taxes on tobacco from 2012 onwards. Currently, cigarettes are taxed at 32 percent. With a tax increase of 20 percent, retail prices would increase by about 10 percent and government tax revenues will go up by VND1.9 trillion, the WHO estimates.

“The tobacco epidemic has had severe health and economic consequences for individuals and the society,” said Nguyen Thi Xuyen, deputy minister of Health. “To protect Vietnamese from tobacco use’s related burdens, the Ministry of Health has strongly supported policies for implementing the Framework Convention on Tobacco Control.”

‘What will be, will be’

Journalist Binh said he is not afraid of any health consequences of tobacco. This gung ho attitude towards smoking impacts worries anti-tobacco groups the most. They say that as long as there is little awareness of the health dangers, smoking will remain socially acceptable.

According to the Global Adult Tobacco Survey 2010, 47.4 percent of Vietnamese men currently smoke. At a conference in HCMC last week, the Tumor Hospital filed a report pointing out that the southern economic hub records around 6,000 new cancer cases every year. So far this year, the hospital has admitted over 14,000 cancer patients compared with 13,200 last year. Lung and liver cancer accounted for the highest percentage among the male patients, the hospital report said.

But Binh said he saw no reason to worry. “What will be, will be. I have been smoking in all the places that I used to smoke.

“The ‘ban’ here is [almost] nothing. As far as I can see, changes are too subtle to be noticed.”

Reported by An Dien 

Vietnam official rejects WTO violation accusation

Milk prices in Vietnam are much higher than neighboring countries, but foreign companies are crying foul at stabilization measures.

Vietnam does not violate its World Trade Organization commitments in taking measures to keep prices stable, Deputy Finance Minister Tran Xuan Ha has said.

He said it was necessary to issue Circular 122, which allows local authorities to impose stabilization measures when a company abuses its monopolistic position or when prices rise faster than production costs.

After the circular was issued in August, the Ministry of Finance also named 150 companies that had to register their prices with the authorities, including major foreign-owned dairy firms.

Ha said the goal of these measures was to protect both local consumers and the reputation of producers. He said the ministry welcomes any feedback from businesses concerning the circular.

The deputy minister’s comment was made during the Vietnam Business Forum in Hanoi on Thursday where foreign business leaders accused Vietnam of violating its WTO commitments with the price control measures.

They said the price registration regulation seems to be aimed at foreign companies and that this discrimination was a WTO violation.

“We believe that price controls do not work and are counterproductive to future growth,” Hank Tomlinson, chairman of the American Chamber of Commerce (AmCham), told the Vietnam Business Forum.

“We are also concerned that implementation of the new law has focused primarily on imports by foreign companies – a clear violation of the letter and spirit of Vietnam’s WTO commitments.”

This was not the first time there have been complaints about Vietnam’s price control efforts.

In September, foreign firms and the ambassadors of Australia, Canada, New Zealand, the US and the EU had raised concerns about the plan to have dairy producers disclose their production costs.

They said it would affect Vietnam’s commitments as a WTO member and warned that it could also hinder foreign investment.

According to a study conducted by the Ministry of Industry and Trade’s consumer protection agency prior to Circular 122, dairy prices in Vietnam were 2-3 times higher than those in regional countries.

A number of foreign companies have been accused by consumers and other market watchdogs of taking advantage of legal loopholes to foist high prices on Vietnamese consumers. 

Reported by Mai Ha (with input from AFP) 

Look before you leap

It is not rocket science, really.

If we don’t think things through, carry out careful, thorough studies, and implement plans properly, we will end up wasting a fortune.

Worse still, we will lose opportunities that may never come again.

Last year, Ho Chi Minh City spent nearly VND2.7 billion (US$139,000) on a program promoting its tourism sector. Named “100 Excitements,” the program aimed to list the top tens in each of ten categories: hotels, restaurants, souvenirs, entertainment venues, shopping, must-taste dishes, city attractions, coffee shops, city tours and cultural events.

The list was chosen through votes cast by local and foreign tourists over a three-month period starting last October. It was also overseen by a jury comprising officials from the Department of Culture, Sports and Tourism, the Department of Industry and Trade, and tourism reporters.

Program initiators planned to promote “100 excitements” by cooperating with international airlines and playing video clips introducing the top tens on flights to HCMC. They also planned to play the clips, three and half minutes long each, on TV screens at the Tan Son Nhat International Airport and many sightseeing spots across the city.

The promotion was expected to include pamphlets, postcards, websites and guidebooks. They even wanted to copy the list together with their descriptions into 2,000 USBs and send them to travel companies at major markets for Vietnamese tourism.

However, since the list was announced in February, it has slipped into oblivion as the promotion plans couldn’t be carried out.

For example, representatives of international airlines in Vietnam said it was impossible to play the clips on their flights to HCMC, because it depends on their companies overseas. The planned cooperation didn’t even work out with state-owned carrier Vietnam Airlines.

In the meantime, the program’s website at http://www.hcmc100e.info remains plain and unattractive.

Moreover, the list itself provoked controversy among travel companies who said the voting wasn’t scientific and impartial.

Foreign tourists coming to HCMC usually stay for two nights before leaving for other places or countries like Cambodia, so they don’t have enough experience to evaluate the best transport companies, hotels and other establishments. It’s obvious that they will vote for the hotels where they stayed and restaurants where they ate, the companies argued.

Tourism is recovering well after the global economic crisis, and people are travelling again.

But our ineptitude means that at this very opportune moment, we have wasted the chance to market our tourism attractions, not to mention thrown away VND2.7 billion from the city budget plus a large amount of fees contributed by local businesses to the program.

By N.Tran Tam 

Companies eye more affordable Tet gifts

Figures from several supermarkets show that purchases for Tet account for up to 30 percent of their revenues in the months leading up to the holiday.

Companies are trying to squeeze Tet gifts out of their budgets despite the economic downturn as the nation’s biggest holiday approaches in January.

Nguyen Thanh Hung, marketing director of Dai Dong Tien Plastic Joint Stock Company in Ho Chi Minh City, said the gifts are a means to show their respect and appreciation for business partners following a year of hard work.

Figures from several supermarkets show that purchases for Tet account for up to 30 percent of their revenues in the months leading up to the holiday. For food companies, that number could reach 50 percent.

Hung said his company would prefer to reduce the number of business partners on its gift list, but not the quality of the gifts.

“With VND500,000 (US$29) you can’t buy a gift hamper as large as you did last year,” Hung said. “This year we must give priority to our close and strategic partners.”

Bui Quang Thinh, deputy general director of HCMC Tan Tien Plastic Bags Joint Stock Company, said the company has been cutting back on marketing and other costs associated with mid-year festivals like the Mid-Autumn.

For banking, securities and insurance companies – who have been hit particularly hard by the economic turmoil – sending their business partners Tet gifts is essential.

“In case we don’t have enough money to spend on Tet gifts, we can even reduce some of our staff Tet bonuses,” Tran Minh Toan, general director of Sen Vang Stock Company in HCMC, said.

No, thanks

But some companies have said they will follow a policy of “not giving, not receiving.”

Nguyen Minh Hien, director of Thien An Company, which deals in fine art products, said his company has even written to its partners about this policy and got some positive responses.

“We’ve received thank-you letters from our importers in Europe and North America and they say they are not worried about not receiving Tet gifts,” Hien said.

As a result of the belt-tightening by some companies, imported wines, high-priced food products and some other items could see a fall in sales from last year.

Nguyen Van Thang, director of wine distributor Minh Anh Company Ltd, said his company has imported fewer expensive wines and more of those priced below VND1 million ($59) from countries like Chile, Portugal and Thailand.

The recent melamine scare from Chinese products might make local confectionary products more appealing this year.

Hoang Nhan Nam, deputy marketing director of Bibica Joint Stock Company, said his company plans to distribute around 5 million chocolate and confectionary boxes and expects sales to hit VND180 billion ($10.6 million).

Duong Thi Quynh Trang, public relations director for Big C Supermarket chain, said her supermarkets would offer free delivery and discounts on Tet gifts.

Online electronics retailer Golmart has sent out catalogues to customers, focusing this year on gifts priced VND500,000 to VND1 million.

Le Thi Duy Linh, Golmart sales director, said, “Golmart wants to help customers find more affordable gifts but still maintain the Tet tradition of giving gifts.”

Source: TBKTSG