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.

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Viet kieu ‘shooting star’ wishes to share his luck 

Nguyen Quang, a Vietnamese-Swedish entrepreneur, with the Male Shooting Star certificate awarded by international auditing firm Ernst and Young in Sweden in November last year

In early February this year, a leading Swedish daily, Göteborgs-Posten, used up a huge portion of its cover page for a photograph of Nguyen Quang, a Vietnamese-Swedish businessman.

Inside were two pages telling readers the story of a very young boy who arrived in Sweden with his father 30 years ago, and has risen, by dint of sheer hard work, to become one of Sweden’s largest food importers from Southeast Asia.

The 35-year-old director of Saigon Food AB became well known among the Swedish population after he was honored as the Male Shooting Star at the awards ceremony for Entrepreneur of the Year held by UK-based auditing firm Ernst & Young in November last year.

“Nguyen Quang started literally empty-handed. Today, his company is the market leader in food imports from Southeast Asia,” said a jury. “With a heart that beats for both employees and customers, Nguyen Quang is a good example for other entrepreneurs.”

Quang was modest about his success. “We have been lucky,” he said.

I met Quang at the end of February when he’d come to Vietnam to source Vietnamese food products to be shipped to his company in Sweden, and to do some charity work. He spoke to me about his journey from being empty-handed to handing out charity.

Soon after their arrival in Sweden, his parents opened up a grocery store. After returning home from school, young Quang would assist his parents in selling food and household items. He also helped deliver purchases to customers living near his house.

He studied economics at the university before he took over his parents’ shop and in 2004, established the Saigon Food AB in Gothenburg to sell food products coming from Southeast Asia. Two years later, his company directly imported such products before distributing them to not only Gothenburg residents but also those living in other cities.

“In the beginning I was working probably 75-80 hours a week. I worked in the office during the day and went around and delivered in the evenings. Sometimes I slept in a sleeping bag in the office.” Later his siblings joined him.

Most of Saigon Food AB’s products are shipped from Thailand while the remainder comes from Vietnam, Philippines and Malaysia.

However, that could change in the future.

 “Through the numerous times I have returned to my native country, I have realized that the quality of Vietnamese food products has become better and better, and are not inferior to Thai products. Thus, this year and next year, I will focus on importing more Vietnamese products like Sa Giang shrimp crackers, banh trang (rice paper), and mi trung (egg noodles).

“Many Swedish people love Vietnamese food after traveling to Vietnam as tourists. When they return, they would like to enjoy Vietnamese food again. I will import more of it to satisfy their demand,” he said.

Saigon Food AB’s revenues for 2009 reached SEK142 million (US$23 million.) His company has posted an average annual sales growth of 25 percent since it was set up.

Not just business

Quang has not seen his business growth in purely economic terms. He has seen it as an opportunity to help needy people.

Because Vietnamese as well as others of Southeast Asian descent who are somewhat advanced in years find it hard to get work in Gothenburg, Quang has welcomed these people into his company.

Saigon Food AB now has around 25 staff of Vietnamese, Chinese, Malaysian and Thai origins. He also helps out other entrepreneurs. Many Thai women, for instance, who have started their own shops because they were unable to find jobs, are his clients. “We try to be generous with credit, remembering what it was like for us earlier,” he told the Swedish newspaper.

Quang said he plans to buy a 15,000-square-meter area in Gothenburg to expand his business, and generate more jobs for Vietnamese-Swedish finding it tough to find employment.

He said though there are not many Vietnamese people living in the city, the community always gathers together for sporting, camping and cultural activities together during Tet (Lunar New Year) and other festivals. Saigon Food AB is one of the main sponsors of the Vietnamese Cultural Society in Gothenburg, which organizes these get-togethers.

Quang said he is always looking for ways to help people in his native country as well. While reinvesting all the company’s profits, he takes out “the normal salary (for himself) and a dividend that I give to the poor in Vietnam,” he said.

Over the last five years, he and his parents have returned to Vietnam many times for charity work.

“Every year, I come back to Vietnam twice for charity purposes. This time [February this year], I spent VND500 million ($24,000) buying medicines and some essential products to give the poor, the old, and the orphaned living in Dong Nai.”

The award jury noted that the tremendous growth of his company was also marked by “his generosity and constant hunger to evolve on all levels.”

“If you share the money and experience, it gives you extra energy and motivation,” he said.

Ready to face the consequences 

 

Engineer who exposed flaws in cars produced by the Toyota Vietnam says he would do it again, if needed


A Toyota Innova, a popular model in the country used widely by many taxi companies, runs on a street in Ho Chi Minh City. Toyota Motor Vietnam announced last week that it plans to recall nearly 9,000 Innova cars to repair flaws exposed by one of its employees.

Just one year ago Le Van Tach built a three-story, 80 square-meter house in Vinh Phuc Province to the north of Hanoi.

It took him almost seven years of hard work and saving every penny possible to afford the house.

But he has readied himself to sell it at short notice.

“Of course, I would never have thought of selling my house just a year after it was built,” said Tach, an assembly engineer at Toyota Motor Vietnam, which is based in Vinh Phuc. “But if I cannot live here anymore, I would have to sell it as a last resort.”

“I have been prepared to quit my job and move to somewhere else, if I have to.”

Tach, a 35-year-old ordinary looking man of slight build, has been in the national spotlight since late last month when he lodged a complaint with the Vietnam Register, a quality control agency, saying there were three major problems with the Innova and Fortuner models produced by his employer.

Tach alleged that the cars made in Vietnam had balance issues since some screws were not tightened in accordance with directives issued by the Japanese parent company. He also said the brake systems and seats do not meet Toyota’s safety standards.

In the wake of a public outcry that followed Tach’s whistle blowing, Toyota said last week that it plans to recall nearly 9,000 Innova cars, its bestselling seven-seater vehicle in Vietnam, to repair the three flaws including a faulty pressure cylinder for their rear wheel brakes.

Heroes vs. Villains

Before sending letters about the technical flaws in the car to the general director of Toyota Motor Vietnam (TMV) three times between December 2010 and this February, Tach, still a TMV employee, said he’d been telling company managers about the problems for years but his concerns fell on deaf ears.

Back in 2006 and 2009, Tach had also reported to his Vietnamese superiors some technical problems that could cause “grave consequences,” but these were not taken seriously.

“On March 1, I sent my bosses the ‘ultimatum’ to let them know that I would have to report the problems to the media if no immediate action is taken. I hoped this would make them change their mind,” Tach said. “But I heard nothing from them, and after four weeks, I felt I had no choice but to expose the case to the public.”

Tach’s action has made him a hero – a whistleblower who dared to challenge the giant automaker to protect consumers – for many people across the nation.

“Tach has set an exemplary model for younger generations in Vietnam to follow,” reader Phung Thi Ngan wrote to the Tuoi Tre newspaper. “Before getting to know Tach, I had assumed that a courageous person like him doesn’t exist in our society.”

But back in Vinh Phuc Province, where he lives and works, Tach is not a hero for colleagues who blame him for training an unflattering spotlight on them.

“A colleague of mine has just asked me why I still come to work everyday after all the damage I have done to the company,” Tach said. “I just tell him that I didn’t do anything wrong.”

Vu Huu Phuong, a colleague, declined to comment on his acts. “I’m not authorized to speak to the media on this issue. Any press inquiry in this manner must be handled by Toyota’s top management.”

An ex-colleague, who spoke on condition of anonymity, was also reluctant to discuss the ethics of Tach’s actions, but wanted to comment on the technical aspects.

“The way Tach exposed the issue is likely to make consumers think that the technical flaws stem from a systematic fault of the parent company, but in fact they were just caused by several individuals at Toyota Vietnam,” he said.

“But at the end of the day, it’s obvious that auto consumers will benefit a lot (from Tach’s actions).”

Tach said ever since the story about the flaws broke out, his wife and parents have not stopped worrying about his safety. He said several people had contacted another family member (whose identity he declined to reveal) to indirectly harass him.

“I think the message from them is clear: stop blowing the whistle,” Tach said.

‘My son is right’

However, no matter what people say, he believes in what he did, Tach said.

“If people think what I have done is just a PR job for myself, I see no need to convince them otherwise. I believe that as a human being, everyone has a conscience that asks us to do the right things by society.”

“My actions will be vindicated, sooner or later.”

His mother Nguyen Thi Thanh, who lives in a village in the northern province of Nam Dinh is also confident in the rightness of his actions, even as she worries about his crusading tendencies.

“This has caused me a lot of stress; I can’t sleep well,” said 57-year-old Thanh. “My husband and I are just farmers and we have virtually no idea about what our son has been doing. But we have taught him to be an honest person since he was a child.

“I only hope the authorities will protect my son because his safety is now my highest concern.”

Tach said he was prepared to quit TMV and work for any company which offers to hire him. He did not rule out the possibility of returning to his hometown in Nam Dinh to run an auto repair service of his own.

No matter what happens next, Tach said, he would not hesitate to expose any other wrongdoing because “that’s just the right thing to do.”

His mother thinks that is not likely to happen again, any time soon.

“I know my son is right. But I doubt if someone else will give him another chance (to do the right thing).”

Oil from unknown origin curdles along central coast 

Da Nang workers collect oil spill from the city coast

Oil curdling on the water appeared along the Da Nang coastline on Sunday, though its origin is still in dispute, Dan Tri reported Monday.

The oil particles are as big as the head of a chopstick, spreading over one kilometer from My Khe to T.18 beaches, both major tourist spots in the central region city, said Phan Minh Hai, deputy manager of Da Nang beaches.

Hai said he has asked the river and sea environment company at Da Nang Department of Natural Resources and Environment to clean up the oil. “It might take several days.”

Nguyen Thi Ngot, a worker of the company, said the oil particles was first spotted Saturday afternoon.

The workers said they couldn’t estimate the number of particles as they cleaned the oil together with the garbage.

But the oil has spread to a larger area, the workers said.

There were suggestions that the oil came from tar kilns in the south of Hai Van Pass, but Hai said the oil from there should have arrived first at Xuan Thieu and Thanh Khe beaches.

Some people are also concerned that the oil came from the Hoang Son South that sank off near Quang Ngai Province December 12.

Rescuers then managed to transfer 40 tons of diesel oil from the boat but there was still around 180 tons of oil that couldn’t be transferred due to strong waves.

Hai has not made any conclusion but said the oil spill has not come from any boats anchored along the city coastline.

He said the oil must have been spilled somewhere offshore many days ago and was now curdling due to a dip in temperatures.

Truong Vinh Duc, a worker of the city environment company, said the oil resulted from fishermen washing their boats offshore.

If the condition got worse, Hai said he would ask concerned agencies from the central government to help.

Vinashin’s debt troubles to hurt Vietnam banks’ credit quality, S&P says 

 

Vietnam Shipbuilding Industry Group’s potential failure to make debt payments is likely to undermine the credit quality and profitability of Vietnam’s banks, according to Standard & Poor’s.

The state-run company, known as Vinashin, may default on foreign-currency debt due in “in the near term,” highlighting the need for lenders to assess the creditworthiness of each government-controlled entity, S&P said in a statement Monday.

Vinashin may represent as much as 3 percent of the individual loan portfolios of some state-owned Vietnamese banks, according to Moody’s Investors Service. Banks that had counted on government bailouts in the event of problems in lending to state-run firms may post larger-than-expected credit losses, S&P said Monday.

“Vinashin is the first signal that state-owned banks have more doubtful loans than appeared to be the case in the past,” Alain Cany, the Ho Chi Minh City-based chairman of the European Chamber of Commerce in Vietnam, said by telephone on Monday. “This may reduce the valuations of state-owned banks, but the problem is that not many people know the extent of it yet.”

Vinashin had debt of about VND86 trillion ($4.4 billion) as of June, the government said in August. The shipbuilder may delay a $60 million payment on a $600 million loan, Moody’s said last month in a note.

One-year delay

“All eyes are now on an impending syndicated loan repayment that the company must make,” Vietnam Holding Ltd., a UK-listed fund, said in a note posted on its website Monday. “Vinashin’s management is seeking a one-year delay in the timing of the payment, for want of sufficient cash.”

Nguyen Ngoc Su, chairman of Vinashin, didn’t immediately respond to telephone calls, while Chief Executive Office Truong Van Tuyen wasn’t immediately available on his mobile phone.

“Vinashin’s woes highlight the lack of transparency, weak accountability and poor corporate governance in Vietnam,” Ivan Tan, a credit analyst at S&P, said in the note Monday. “A wide disconnect exists between industry-reported non-performing loan ratios and the true state of the system’s asset quality.”

Government-controlled companies in the nation account for 30 percent to 40 percent of loan books at state-run banks, S&P said.

While Vietnam’s government is “restructuring Vinashin’s projects” to help the company operate profitably, the shipbuilder should make its $60 million debt payment on its own, Minister of Planning and Investment Vo Hong Phuc said Dec. 8.

Company’s credit quality

The government’s stance on Vinashin indicates that it expects creditors to lend to government-related entities based on each company’s credit quality, “without an expectation of timely extraordinary government support when required,” S&P said.

The government is coping with a budget deficit and doesn’t want to come to Vinashin’s rescue, Vietnam Holding said.

“Until now, commercial banks — both foreign and local alike — have tended to regard loans made to large state-owned corporations as having an implied government guarantee,” said Vietnam Holding. “It now looks like Vinashin will serve as the acid test for this perception.”

Vinashin’s problems are also unlikely to stop capital injections into state-owned lenders in Vietnam, it said, citing the banks’ systemic importance, and the government’s majority ownership and history of providing support.

Poor farmers given diseased cows as welfare support 

An animal health official checks a cow in Quang Ngai Province

Many poor households in the central region’s Quang Ngai Province have discovered the cows they were given as poverty support are infected with the foot-and-mouth disease, VnExpress said Monday.

 

Animal health officials in Tinh Hoa Commune, Son Tinh District have been busy in recent days instructing the residents to sterilize their breeding area and quarantine the sick cows.

 

Dang Ngoc Hop, a commune animal health official, said the foot-and-mouth disease has spread quickly among animals in the commune, starting from the cows that provincial officials gave farmers in a poverty alleviation project.

 

The commune now has 21 sick cows and nine of them were from the project.

 

“When the cows were handed over, several residents had found that the animals were not as healthy as they were told. The cows fell sick after two days,” Hop said.

 

Dang Tuong Cong, a local farmer, said his own cows were strong until they were tended to along with cows from the project. “My wife and I have been worried for days. If all the cows die, we’ll be empty-handed.”

 

The cattle supplier, Tai Nguyen Company, has given each affected household VND500,000 (US$26) to treat the cows, but it has also maintained that the animals had been tested by the province’s animal health officials before being handed over to the residents.

 

Quang Ngai agriculture officials had bought 42 cows at VND6 million ($308) each from the company, to deliver to 84 poor households, some in Binh Son District.

 

Do Van Tu, another project beneficiary, said the province and the company were blaming each other leaving “the farmers to suffer all.”

 

Vietnam minister says Vinashin should make its own debt payment 

 

A Vietnamese minister said state-owned Vietnam Shipbuilding Industry Group, known as Vinashin, should make a US$60 million debt payment on its own as the government offers to help the company become profitable.

“They will have to pay on their own,” Planning and Investment Minister Vo Hong Phuc told journalists in Hanoi Wednesday. “We will restructure Vinashin’s projects and we will help Vinashin operate profitably so it can pay debts by itself.”

Vinashin may default on foreign-currency liabilities within the next 30 days, Standard & Poor’s said Dec. 6. Moody’s Investors Service last month cited the company as saying on Nov. 19 that it may delay the $60 million principal payment on a $600 million loan. The company invested in non-core activities, falsified financial reports and is on the verge of default, the World Bank said in October.

“I think the government will find a way to help them,” Ayumi Konishi, the Hanoi-based country director for the Asian Development Bank, said in response to Phuc’s comments. “At the same time, they want to make it clear that debts are the responsibility of Vinashin as a corporate entity.”

Standard & Poor’s suspended its confidential solicited rating on Vinashin on Oct. 18 because of a “lack of information regarding the company’s liquidity position and restructuring plans, and due to our concerns on the accuracy, timeliness and completeness of Vinashin’s financial statements.”

The shipbuilder last month won government approval for a turnaround that includes paring debt 38 percent and transferring units to other state-owned companies. The company had accumulated debt of about US86 trillion ($4.41 billion) as of June, the government said in August.

Vinashin’s debts will fall to VND53 trillion under the plan, which ministries will work on through 2013, the government said in a Nov. 19 statement on its website.