INSIDE THIS ISSUE

The White Book 2012p. 4

Intellectual Property Rights in Vietnam p. 7

EuroCham Events and Activities p.14

MUTRAP Project ends after 27 months p.16

The EU-ASEAN Business Council p.19

Corporate Social Responsibility in Vietnamp. 21

Stricter Control of Employment of Foreignersp. 23

Fourth Quarter 2011 Issue 22

Message from the Chairman

Dear Members,

I would like to take the opportunity and wish you all a happy, healthy and successful new year 2012! Over the past year, EuroCham can proudly look back on a large number of successful events and initiatives: As one highlight, I would like to mention the 2nd edition of our GreenBiz exhibition and conference in HCMC on 15th/16th September. Green-Biz 2011 has attracted well over 80 exhibitors, 12 sponsors and more than 3,000 specialized visitors. Nearly 50 experts from business, government

ChairAlain Cany, Jardine Matheson

Vice ChairsTomaso Andreatta, Intesa SanpaoloErdal Elver, Siemens Ltd. VietnamChristophe Hirtz, Sanofi-AventisPreben Hjortlund, HITCLe Duy Thanh, Shell Vietnam

TreasurerTom van der Lee, FrieslandCampina Vietnam

Committee MembersPeter Born, Commerzbank AGJean-Michel Caldagues, EADSKristof Claes, Brand PartnerElmar Dutt, Tanner VietnamOlivier Jacquet, Schneider ElectricWieger Otter, VC InvestCostantino Sambuy, Piaggio VietnamAndreas Stoffers, Deutsche Bank AGLouis Taylor, Standard Chartered Bank

Executive Director Dr. Matthias Dühn

The EuroCham newsletter is published quarterly by the European Chamber of Commerce in Vietnam with offices at: G/F, Sofitel Plaza Hanoi1 Thanh Nien Road, Ba Dinh DistrictHanoi, VietnamTel: (84-4) 3715 2228Fax: (84-4) 3715 2218 Email: info-hn@eurochamvn.org

and:

EuroCentre49 Mac Dinh Chi Street, District 1 Ho Chi Minh City, VietnamTel: (84-8) 3827 2715 Fax: (84-8) 3827 2743Email: info-hcm@eurochamvn.org

Hotline: (84-8) 3997 1263Website: www.eurochamvn.org

Editorial contactJan WiehlerCommunication and Services DirectorEuroCham (Ho Chi Minh City) Tel: (84-8) 3827 2715 Email: services@eurochamvn.org

and academia discussed the most pressing environmental challenges and suitable business solutions in the conference part over two days. Green-Biz 2011 initiated and intensified the awareness and environmental concerns and offered solutions to the challenges that lie ahead and how to address climate change and sustainable cities as the most pressing issues for Vietnam. On December 1st, EuroCham has issued the 4th edition of our WhiteBook of “Trade / Investment Issues and Recommendations 2012”. The WhiteBook 2012, bilingual on 283 pages, specifies the main business issues our member companies are facing in Vietnam. As in prior editions, the Whitebook 2012 offers practical policy recommendations for the Vietnamese government, to tackle the numerous challenges to doing business in Vietnam. With 3,500 copies distributed, the Whitebook 2012 will again be a useful reference tool for both the Vietnamese government and the business community in Vietnam. Furthermore, EuroCham has hosted in 2012 numerous high-level dialogues, for example our meeting with the new MPI Minister in December 2011. EuroCham made its submissions at the Vietnam Business Forum (VBF) in Mai and December 2012, and held additionally events with Vietnamese Chamber of Commerce and Industry (VCCI) under the umbrella of the Vietnam-EU Business Forum (VEUBF). For example, the Whitebook 2012 was presented as a VEUBF event to key-policy makers at a roundtable dialogue with key government representatives from Vietnamese ministries and agencies in Hanoi on November 30th 2011. EuroCham finally also completed successfully the project “Capacity Building on Trade Policy for Vietnamese Business Associations (VBAs)” under the EU-MUTRAP III project from September 2009 to November 2011. Throughout the two years of implementation of the project, EuroCham has successfully enhanced the capacity of VBAs to become an efficient consultation partner for the Vietnamese Government on trade policy and market access issues, and increased the ability of VBAs to provide efficient assistance to their members on EU related trade issues. We are pleased to say that we have received much positive feedback for our activities and results from the Vietnamese Business Associations and other stakeholders. A full report of activities available at the EuroCham offices and website. Finally, I would also like to thank all our members and partners for their continued support during the last year and we hope you will help us making 2012 another successful year for EuroCham.

With kind regards,

Alain Cany, Chairman

for Vietnam. Over the last year, EuroCham’s BCI has declined from 78 to 52 points, indicating a declining confidence in Vietnam as an investment destination. Coupled with the 28 percent drop in FDI through the first 9 months of 2011 and inflation rates of almost 20%, it is fair to say that European companies are increasingly concerned about the business and investment environment in Vietnam. At the same time, Vietnam has slipped eight places in the World Bank’s “Doing Business 2012” Report, to the 98th position out of 183 countries ranked.

What is the cause of this decline in business confidence over the past year? EuroCham believes it is a combination of slow progress on many of the issues that were addressed in last year’s Whitebook coupled with some new issues that are eroding confidence in the business environment in Vietnam. High rates of inflation coupled with difficult access to credit, lack of adequate infrastructure and administrative burdens continue. At the same time, a number of new “market access” issues, which significantly interfere with the importation of goods into Vietnam, have further harmed European perceptions of the business environment in Vietnam. This is particularly true in the case of Notice No. 197 on import procedures for alcohol, cosmetics and mobile phones into Vietnam, and the ongoing automatic import licensing requirement under Circular 24.

Vietnam’s ability to remain competitive and maintain sustainable economic growth over the long term depends on whether the Vietnamese government takes action now in several key areas. Let us focus on three areas of the WhiteBook 2012: Firstly, the protection of intellectual property rights (IPR). Secondly, the government should continue improving the quality of Vietnam’s labor force by promoting higher education and vocational training. The government should also allow foreign companies to employ both Vietnamese and foreigners alike at their own discretion. Third, tackling red-tape and corruption, and continuing to reduce and simplify administrative burdens on all levels.

EuroCham officially launched the fourth edition of its “White Book of Trade / Investment Issues & Recommendations” on December 1st in Hanoi. Like the prior editions, the Whitebook 2012 aims to summarize for the Vietnamese Government the key issues affecting the business climate for European businesses in Vietnam. The Whitebook 2011 covers the major industries that EuroCham’s more than 750 member companies operate in, like e. g. pharmaceuticals, fast-moving consumer goods, energy, telecom, automotive, tourism and banking. It contains additionally one position paper on medical devices, supplementing the important pharmaceuticals sector. On the occasion of the Whitebook 2012 launch, EuroCham hosted a roundtable dialogue with key government representatives from Vietnamese ministries and agencies in Hanoi the day before, jointly organized with the Vietnamese Chamber of Commerce and Industry (VCCI) under the umbrella of the Vietnam-EU Business Forum (VEUBF).

This year’s progress report shows fewer improvements for 2011, which was partly due to the long election period and macroeconomic turbulences, but also due to new regulatory burdens and restrictions to trade. EuroCham believes this it is due to a combination of slow progress on many of the issues that were addressed in last year’s Whitebook coupled with some new issues that are eroding confidence in the business environment in Vietnam. Whilst European companies have been patient and remain hopeful that the business environment in Vietnam will improve, their confidence has been steadily declining since the beginning of 2011, as is evidenced by the quarterly EuroCham Business Climate Index (BCI) survey for Vietnam. In particular, high rates of inflation coupled with difficult access to credit, lack of adequate infrastructure and administrative burdens continue. At the same time, a number of new “market access” issues, which significantly interfere with the importation of goods into Vietnam, have further harmed European perceptions of the business environment in Vietnam.

Whilst European companies have been patient and remain hopeful that the business environment in Vietnam will improve, their confidence has been steadily declining since the beginning of 2011, as is evidenced by the quarterly EuroCham Business Climate Index (BCI) survey

Increasing Urgency

I. Intellectual Property Rights (IPR) Protection

In the absence of robust and effective enforcement of IPR, foreign companies remain reluctant to transfer their valuable IPR and proprietary know-how which is necessary

The White Book 2012 Trade / Investment Issues and Recommendations

5

White book 2012to support “higher quality” value added manufacturing in Vietnam. Moreover, in order to be able to provide the labour force and other human resources necessary to support high technology manufacturing in this country, Vietnam must engender a “culture of innovation” and respect for intellectual property rights. Failure to effectively enforce IPR undermines these important goals by promoting a “culture of imitation” and lack of respect for IPR.

A basic two-prong approach to dealing with this serious problem would be recommended: First, the Vietnamese government should increase efforts to raise public awareness about the value of IPR protection. In so doing, it should first be explained to the Vietnamese public that it is in every Vietnamese citizen’s interest to respect IPR and refrain from producing, trading and/or purchasing products that infringe the IPR of Vietnamese and foreign owners of trademarks and other IPR. Second, the Vietnamese government should instruct the relevant authorities at all levels to enhance administrative and judicial enforcement of IPR so that companies and persons who violate the IPR are deterred from engaging in such misconduct. This means regularly imposing higher administrative fines and making it easier for owners of IPR to take advantage of all available judicial remedies including injunctive relief and monetary damages.

II. Work Permits and HR Development

III. Corruption and Administrative Reform

There is growing concern about some provisions of Decree No. 46/2011/ND-CP (Decree 46) - issued by the Government on 17th June 2011 - making a number of major changes to Decree 34/2008/NĐ-CP dated 25 March 2008 on Employment and Administration of Foreigners Working in Vietnam. Particularly, under the new Decree 46, in order to extend the work permit for a foreign employee, a company must now enter into an apprenticeship contract with a Vietnamese employee expected to substitute the relevant foreign employee. We believe that this is in fact a prohibition of hiring experienced and capable foreign employees where a company does not sign apprenticeship contracts with Vietnamese employees. Decree 46 may also constitute a violation of Vietnam’s WTO Schedule of Specific Commitments in Services, in particular of Article XVI (1) and XVI (2) (d) of the General Agreement on Trade in Services. EuroCham member companies have always put the development of the Vietnamese staff as our highest priority, because it will be much better for our European businesses in the long run. We have consistently done that in the past and future without any law requiring us to do so. The foreign business community is concerned that the new Decree 46 will discourage investment in Vietnam, and EuroCham strongly recommends that employers should be allowed to select the right candidate based on their own discretion and internal processes. Accordingly, the requirement for an apprenticeship contract to be signed on the occasion of an extension of a work permit should be removed. Allowing the right person to get the

position based on expertise and business needs, companies should only be required to ensure they have a training program to train Vietnamese staff in place and can verify the training has taken place to the authorities.

Bribery and corruption are damaging to democratic institutions, corporate governance and the smooth and efficient operation of businesses. Bribery and corruption also discourage investment and undermine the competitiveness of business in Vietnam (both foreign and domestic) by “rewarding” unethical (and often less capable) businesses and their owners/managers while “punishing” ethical businesses which often have the capability of being competitive, growing, employing Vietnamese gainfully, and contributing to the country’s tax base. Transparency International’s 2010 Corruption Perceptions Index shows that nearly three quarters of the 178 countries in the index score below five, on a scale from 10 (highly clean) to 0 (highly corrupt). Unfortunately, Vietnam is still deemed one of the more corrupt countries in the world, ranking 116 out of 178 countries on the 2010 Index (2.7 index score).

It is therefore not surprising that European companies are growing increasingly frustrated and fatigued with corruption in Vietnam, which remains rampant and pervasive and continues to negatively affect the business environment in Vietnam. European companies expected the situation to improve significantly after Vietnam ratified the United Nations Convention against Corruption (“UNCAC”) in June 2009, the only global initiative that provides a framework for putting an end to corruption. However, European and other foreign companies continue to face problems of corruption in connection with obtaining an investment certificate, regulatory approvals, importing goods into Vietnam, as well as protecting and enforcing their intellectual property rights and other legal rights. EuroCham therefore encourages the Vietnamese government to take prompt and effective action to meaningfully implement the UNCAC in Vietnam.

At the same time, much has been achieved now that Project 30 to simplify Administrative Procedures in Vietnam has been officially completed: The government

White Book 2012 roundtable dialogue with key government representatives from Vietnamese ministries and agencies held in Hanoi on 30. November 2011.

has issued 25 resolutions, simplifying almost 5000 APs under 24 different ministries and agencies. Further, a new agency for controlling APs, the “Administrative Procedure Control Agency” (APCA) has been created. But EuroCham also believes that the real impact of Project 30 is yet to be seen: It will be key to Vietnam’s administrative reform efforts that no unnecessary new APs are created, whilst still simplifying the old APs. We note that European investors are still massively affected by too much bureaucracy and administrative burdens. There are high hopes that the APCA will be a strong agency in supporting the implementation of simplified APs, and to strictly control the issuance of new APs.

The WhiteBook 2012 clearly outlines that to attract more and better-quality foreign investment, Vietnam needs imminent economical, financial and educational reforms if Vietnam wants to apply an internationally competitive and sustainable economic growth model, rather than quick fixes and patching the existing economical structure. On a broader scale, once a future Vietnam - EU Free Trade Agreement (FTA) is in place, EU FDI will further increase

The White Book 2012 in the Press

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both in quantity and in quality: EU enterprises will increasingly perceive Vietnam as their ASEAN hub or even headquarters, from which they can service efficiently both ASEAN markets and neighboring countries, like Japan, China and India. EuroCham therefore believes that after over 20 months since the first talks between the EU and Vietnam, now is the time to officially kick off official negotiations to conclude a Vietnam – EU FTA.

EuroCham works hard to promote Vietnam as a trade and investment destination for both European and Vietnamese enterprises, and we look forward to working with the Government of Vietnam and all our members and partners, both Vietnamese and European, to maximize their success in an ever more vibrant Vietnam!

EuroCham members can follow all the issues in depth and read the comprehensive bi-lingual 283-page Whitebook 2012 online at www.eurochamvn.org

White book 2012

7

As 2011 draws to a close, Vietnam is at a crossroads. In 2012, at a time of continuing global financial and economic uncertainty, Vietnam will continue to find itself competing for foreign direct investment with its ASEAN neighbours and other developing sector countries. In this situation, as European companies and other potential foreign investors consider where to invest in order to expand into the growing Asian markets, they must ask themselves the question: "Why Vietnam?"

European companies remain hopeful that the investment and business environment in Vietnam will improve, but 2011 saw a significant drop in the confidence of European companies according to the EuroCham Business Climate Index, one measure by which the confidence of European companies in the business and investment environment in Vietnam is measured. In its annual dialogue with the Vietnamese government earlier this month following the issuance of EuroCham’s annual ”Whitebook” for 2012 , representatives of the European business community in Vietnam identified a number of problems and issues that need fixing if the investment environment in Vietnam is going to remain attractive to European and other foreign investors. One of the key areas which require significant improvement is protection and enforcement of intellectual property rights. Nearly five years ago, Vietnam joined the World Trade Organization (“WTO”). At the same time, Vietnam undertook to immediately and unconditionally abide by the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs), the international agreement which set internationally respected standards of protection and enforcement of intellectual property rights.

While Vietnam’s substantive legal framework for protecting and enforcing intellectual property rights (though not without shortcomings) is generally considered to meet the standards of TRIPS, significant problems remain in the application and enforcement of Vietnam’s intellectual property laws. European and other foreign investors face ongoing problems and uncertainty in connection with obtaining protection for and enforcing their intellectual property and related proprietary rights in Vietnam. In the view of many European companies, the situation is getting worse, not better. From the handling of trademark applications, opposition and cancellation proceedings by the National Office of Intellectual Property, to having their intellectual property rights effectively enforced by the relevant Vietnamese authorities, European owners of intellectual property rights, proprietary knowhow and related rights face significant problems which have caused them to seriously question whether such rights can really be effectively protected in Vietnam. This, in turn, has made European companies and others reticent to transfer their best technology and proprietary knowhow to Vietnam.

Why Vietnam needs to better protect and enforce Intellectual Property Rights

The Stakes for Vietnam

Protection for intellectual property rights is too often characterized as an “issue for foreigners.” Surveys have shown that some Vietnamese consumers and business person see counterfeiting as a harmless wrong. This public mindset, which may even be shared by some Vietnamese government officials, fails to see the “bigger picture.” For example, not only does counterfeiting result in the sale of low quality and in some cases dangerous products to Vietnamese consumers, it engenders a “culture of imitation” which does not bode well for the competitiveness of the Vietnamese economy now or over the long term.

For the better part of the last 20 years, Vietnam has largely been a destination for foreign investors seeking to avail themselves of low cost labour in the manufacture of such products as garments, food products, or the simple assembly of other products from imported components, each of which requires relatively little in the way of advanced technology. In early 2011, the Vietnamese government announced that it would be emphasizing “quality over quantity” where foreign direct investment is concerned. At the same time, the Vietnamese government, acknowledging the need to better educate and train the country’s human resources, has been challenging foreign investors to transfer its best technology to train Vietnamese workers in advanced manufacturing methods and otherwise contribute to “capacity building” in Vietnam.

8

As EuroCham has communicated to the Vietnamese government repeatedly over the past several years, Vietnam needs to do its part if this is to happen. EuroCham has told the Vietnamese government that in order for European companies to feel comfortable transferring their best technology to their business operations in Vietnam and training Vietnamese workers with the most advanced know how and manufacturing methods, Vietnam must significantly improve the way intellectual property rights are enforced in this country. At the same time, the Vietnamese government must endeavour to create a “public mind set” which respects, encourages and values intellectual property rights and other “products of the human mind.”

Specifically, Vietnam needs to needs to effectively enforce intellectual property rights by punishing infringers in a manner that will deter them from infringing the intellectual property rights of others and send a message to would-be infringers that

infringers of intellectual property rights do so at their own peril. This means that Vietnam must robustly and transparently impose maximum penalties on infringers of intellectual property rights of foreigners and Vietnamese alike, and at the same time criminally prosecute those who engage in counterfeiting and intellectual property infringement on a commercial scale. In addition, Vietnam should train its judges in intellectual property matters and, better yet, establish specialized judicial tribunals to handle intellectual property cases so that owners of intellectual property rights, both Vietnamese and foreign, will be able to effectively obtain injunctive relief, monetary damage and other remedies available to them under Vietnamese law. Enforcement of intellectual property rights at Vietnam’s airports, seaports and border crossings must be upgraded to stop the large volumes of counterfeit products that enter the Vietnamese market from China. Meanwhile, Vietnam should also provide better training to NOIP examiners and other officials so that more reasonable decisions are issued on the issue of confusingly similarity of trademarks, and Vietnamese and foreign companies are not permitted to closely imitate the trademarks of others. Decisions in opposition and cancellation proceedings should be issued in a more timely manner and decided on their merits, not on the basis of whether or not a particular agent has a good “relationship” with the NOIP.

At the same time, Vietnam must take concrete steps to educate the Vietnamese population at large on the importance of intellectual property rights to Vietnam’s continued economic development. Specifically, in order for Vietnam to evolve from an economy based on low technology, low cost labour to an economy driven by high-technology value-added manufacturing that can help raise the technical skills of Vietnamese workers, increase their productivity and lead to higher wages, Vietnam must respect and enforce intellectual property of both foreign and Vietnamese owners. This should also unleash the creative potential of the Vietnamese population and inspire them to create and innovate rather than imitate, thereby becoming an additional engine to drive the growth and competitiveness of the Vietnamese economy.

At a time when European companies are carefully considering where best to invest in the Asia region, Vietnam has a unique opportunity to distinguish itself from other potential investment destinations by robustly enforcing intellectual property rights. EuroCham hopes to see a noticeable improvement in the administrative, judicial and criminal enforcement of intellectual property rights in 2012 and beyond. This will not only make Vietnam more attractive to foreign investors who, in turn, will be more inclined to transfer their more advanced technology to Vietnam, it will engender respect for intellectual property rights among the Vietnamese population and inspire creativity and innovation by Vietnamese themselves.

In 2012, EuroCham will continue to monitor the situation in respect of intellectual property rights enforcement and other issues that affect the investment and business environment in Vietnam. EuroCham members are invited to keep EuroCham, as well as their respective diplomatic missions (at both the national and European Union level) informed of their experience (negative as well as positive) with the enforcement of their intellectual property rights in Vietnam. Only then, can improvements in this area be effectively measured.

Gregory F. Buhyoff,Hogan Lovells, Hanoi

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Business Update

FAVORABLE DYNAMICS OF PAST YEARS

THE CURRENT REALITY

Market Attractiveness

In 2009, retail sector effectively appeared as having a huge potential and unlimited perspective. This year Vietnam reached the rank of the 6th most attractive country for retail worldwide, third in Asia behind China and India (source: AT Kearney). In the same year, retail recorded a growth of 21%. Moreover, with its undeniable USD by 2012. Such encouraging figures shows that retail in Vietnam, though still small, appeared very promising rapid expansion, the sector, which totaled US$64.8 billion in 2009, is expected to surpass 90 billion.

Indeed traditional trade still strongly dominates retail with 87% of the market against only 13% for modern trade, far behind Indonesia (43%) Thailand (46%), or China (64%). With over 900 stores in 2011 and 625,000sqm of retail space, modern trade sector in Vietnam is clearly one of the least developed in the region. As an illustration, HCMC, with 0.09sqm of modern trade retail space per inhabitant, is far behind Bangkok (0.78), Kuala Lumpur (0.64) or Jakarta (0.38) - Savills, 2011.

Emerging Middle Class

In 6 years (2005-2011), the GDP per capita in Vietnam doubled. Urban monthly income (Hanoi, HCMC, Da Nang, Can Tho) in the range of 6.5 to 13.5 million Vnd amazingly surged from 5% in 1999 to 46% in 2011 with 7.4 million people (source: TNS Vietcycle 2011). Vietnam’s young demographic, emerging middle class and main purchasing power has been widely praised for the last 3 years. With new expectations and needs, those new generations were to redefine the Vietnamese model of consumption and induce new consumer behavior. Indeed, consumption has become a mode of expression as a vector of social and economic development. Product diversification and the fast paced modern lifestyle have led to new demands. Very sensitive to branding, the young population shows a preference for quality products and a desire for international integration. The new consumers are also increasingly concerned with hygiene and shopping convenience. According to the Nielsen, Vietnam benefits as well from one of the highest consumer confidence worldwide. It ranked 11th in the global consumer confidence index for 2010, steady in 2011.

As we enter in 2012, the enthusiasm of previous years has somehow been mitigated by hard realities. The trends are not as favorable as forecasted and retail market attractiveness has slid further in the GDRI rank to reach

With two third of the share of the country GDP generated by household consumption (ranking 3rd after US and South Korea), there is no doubt of the effect of a drop in consumer spend would have on the country economic dynamism.

The Challenges of Retail in VietnamThe domestic market for the last 3 years was presented as one of the pillar of the strategy to resist to lo global and local economic turmoil. What is the situation today of the so promising retail sector and what is to be expected in coming years?

the 23rd position in 2011, a slide of 11 places since 2010 and 6 more since 2009 and 6 more since 2008 (2nd) (source: AT Kearney). In Vietnam, domestic rather than external factors predominate. The tightening of monetary policy, stubbornly high inflation, and rising concern about macroeconomic stability has slowed retail sales volume growth in most sectors.

Rising consumer concerns

The Vietnamese Consumer Confidence Index aims to stabilise at a fairly positive level for 2012. However, continuous price increase on essential products and utilities will keep consumers and businesses in Vietnam cautious about spending. Vietnamese households have recently developed new concerns, among which 1) health, 2) increasing food prices and 3) increasing utility bills (electricity, water, gas) are at the top. Consequently, overall spending is expected to decline in coming 12 months and FMCG sector has already seen a growth of only 13% in 2011 against 21% in 2010 and it may slow down further in 2012.

Nielsen consumer surveys showed that in 2011 more than 80% of people are cutting expenses on “unnecessary” items (entertainment, eating out, electronics, etc.) while maintaining current spent on family and children related expenses (education, healthcare, personal care, household utilities, …). In addition, both TNS and Nielsen share insight related to the new consumer behavior and attractiveness of promotions. As the future becomes blur, discounted prices are the preferred promotions. In the mean time, household savings are increasing steadily with an approximate 20% of earnings as compared to 10% in 2008. Vietnamese consumers seem to be preparing for rainy days.

Space availabilityBesides the cooling down of domestic demand, retail players encounter major development roadblocks, among which is the difficulty for market players to find more space at affordable price.According to a Savills benchmark, prime location rental price in HCMC or Hanoi are comparable to those in Jakarta, Kuala Lumpur, or even to Seoul.And when it is to find large surfaces for supermarkets or hypermarkets, all players, foreign or local, will tell you that it remains one of their top expansion limiting factor. Even though the real estate sector is currently facing intense deceleration, good location rental prices remain high, making large commercial spaces unaffordable and lengthen the return on investment time. Given the population density and infancy stage of urban planning, introducing the supermarkets format in urban areas still proves a complicated task as it involves the painful task of compensation and relocation of numerous inhabitants.Entry constraints for foreign playersIf quantitative restrictions and non-tariff measures no longer apply since 2009, the liberalization is still incomplete and will be implemented progressively by rounds and phase-ins. Currently the “one try” policy concerning foreign investors limits their venture to a single store. A market-need analysis and additional validation procedures are then required to expand foreign retail activities further. This “Economic Needs Test” (normally banned by the General Agreement on Trade in Services) is based on three cristeria: (1) number of existing service establishments in the geographic area, (2) stability of the market, and (3) geographic scope. ENTs undoubtedly lengthen and complicates the registration process. As criteria remain, for certain aspects, rather subjective, it dissimulates what some would call “cautious” market openness. This contrasting attitude is based on a valid assumption: local retailers would have difficulty to compete against the sophisticated marketing of operationally more efficient foreign actors. Despite recent signs of some easing for licensing, retail is still a well guarded activity when it comes to foreign direct participation.

Connecting rural areasThe United Nations foresee an urbanisation ratio of 35% in 2020 for Vietnam (as compared to 30% today). Thus, retailers have to address a strategic and supply chain question to fully exploit Vietnamese market potential on the long run: How to reach rural population?In 2010, according to Nielsen, 71% of investors expected rural Vietnam to have an increased impact on their company’s growth. With 40% of Vietnam’s FMCG sales, the rural market has an even greater potential than the already urbanized areas. Indeed, the development of rural Vietnam would pioneer a new market of 63 million consumers. To capture this possible growth a strong understanding of the present situation is required. The investors must prioritize to target a small well-defined area of this vast potential, choosing the right location and shopper type. But the retail market cannot size such opportunities if geographic isolation persists. Good strategies are useless without access to the targeted area. And so, it is effectively road infrastructures that yield the future of the Vietnamese countryside. Vietnam offers countless opportunities for the retail sector, with numerous emerging markets still to conquer. Indeed, it is now for investors to shape Vietnam towards its ideal future.While the new purchasing power of young Vietnamese consumers craves for expansion, the limited number of modern retail actors greatly favors investments. However heavy registration procedures, lack of affordable retail space, impeding supply base fragmentation, and constrained logistics weigh heavily on market reach and return on investment. More than ever, the golden future of the retail sector in Vietnam relies on legal, supply chain, and infrastructure foundations. 2012 is the year of the Dragon, a deliverer of good fortune and a master of authority. Will it be enough to help Vietnamese consumers to sustainably contribute to their country economic development?

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Business Update

Julien BrunGeneral DirectorCEL Consultingwww.cel-consulting.com

The Vietnam Supply Chain Congress 2011

The Vietnam Supply Chain community with over 9000 followers, successfully held the biggest event of its history in HCMC in October. Over 3 days, 550 delegates from Asia, Europe, US and Australia gathered around 3 main topics: Sourcing,

Manufacturing and Retail & Distribution. With a mix of industry speeches, panels of discussions and networking opportunities, the Vietnam Supply Chain Congress brought opportunities to discuss market trends, current challenges and best practices to industry leaders and influencers. For more information, please visit www.vietnamsupplychain.com

In Focus

Human ResourcesEuropean enterprises are 4th in term of FDI capital in Dong Nai, recruiting 20,500 employees. The province population is 2.6 million with over 1.64 million is at labor rate and 67% of labor force is under 35. To develop and improve human resource, the province has been building more qualified universities, vocational schools, training centers. Currently, it has 4 universities, 8 colleges and over 100 vocational schools with a total of 58,000 fresh graduates entering the labor market each year. Infrastructure Being at the crossroads of national roads and railway lines, Dong Nai is conveniently located in terms of transportation. The most significant infrastructure project is Long Thanh International Airport which will serve as HCMCs main airport and replace Tan Son Nhat in the future. Dong Nai has a developed port system which for ships up to 60,000 DWT including Dong Nai Port, Phuoc An seaport, Phu Huu Port. Electricity supply in Dong Nai consists of Tri An hydroelectric plant with a capacity of 400MW and 2 gas electric plants with capacity of 1,200 MW. Some IZs have their own electricity substation (Amata, Nhon Trach) ensure a stable supply.

LocationDong Nai is located in the Southern Key Economic Zone, at the eastern entrance and 30km to

HCMC. The province, together with Binh Duong and HCMC- are the three powerhouse industrial provinces of the North Southeast, which alone account for a quarter of the non-oil gross domestic

product of Vietnam. Development

In 2011, Dong Nai export’s turn-over reaches $2.8 billion, increases 30.3% comparing to 2010. The import turn-over is $10.6 billion, up 15.9% comparing to last year. Mainly exports including

garments, footwear, wooden products, plastic products, computers, electronic components, rubber and so on. Many modern, well facilitated IZs are calling for investment in different

districts like Bien Hoa, Long Thanh, Nhon Trach and Trang Bom. Already being one of the biggest industrial development centers in Vietnam. Dong Nai has 30 licensed industrial zones, 21 of which have begun production and or trading activities with an average

occupancy rate of more than 60 percent. Growth

The average GDP growth rate of Dong nai in the period of 2006-2010 was 13.2% while the GPD per capita in 2010 was $1,630 (National GDP per capital was $1,200). Currently, Dong Nai has 13,000 operational domestic enterprises. There are 978 FDI projects from 25 countries/ territories with the total capital of $19.4 billion. Most of them are

from Taiwan, Korea, Japan, ASEAN, EU, USA, and China.

13.2% (’06-’10)

5,907 Km² 2.600.000

1.600.000

9,573 ha30

Nestle, Philips, Robert Bosch,

Bayer, Akzo Nobel, Metro, Fujitsu,

Sanyo, Hyundai

$ 19.4 Bn in 988Projects

Area:

Population (ppl.): Total workforce:

Industrial Land: Industrial Zones:

GDP growth:

Investors include:

Foreign investment:

In Focus: Đồng Nai

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EuroCham Delegation visits Dong NaiOn Friday the 4th November, a Delegation from EuroCham visited Dong Nai province. The delegation held an information session and open dialogue with the People's Committee of Dong Nai and later visited the Amata industruial zone and the Clipsal (Schneider Electric) and Robert Bosch Group factories in the province. During the visit, EuroCham members had the chance to exchange ideas with the Don Nai People’s Committee chairman and various department heads and hold a dialogue about future European investment in the province. EuroCham would like to thank the People's Committee of Dong Nai, Amata Industruial Zone, Clipsal (Schneider Electric) and Robert Bosch Group for their kind hosting during the delegation visit.

Share expertise and experience is one of our missions. That is why the CCIFV organized several events with the participation of experts in different sectors. Among the last topics: “Environmental issues and their implications for companies in Vietnam?”; “Corruption within companies: how to prevent it? How to punish it?”; “Can financial markets be regulated?”

Networking Events: In HCMC, the CCIFV organizes a networking event every last Thursday of the month. In October our “European” networking event gathered more than 120 participants. In Hanoi, the CCIFV organizes in collaboration with BBGV and Cancham a networking every 2nd Thursday of the month, often co-hosted by the Eurocham and other chambers.

Team Building Bowling: for this end of the year the CCIFV offered to its members a Bowling Challenge. Nine teams of CCIFV members and a CCIFV team competed during this fun evening. Everybody could enjoy the game together, strengthening the team spirit. The winning team “Rostaing” got the first price, a dinner for ten people at Sofitel Plaza. This event was a real success, and the CCIFV is already planning a second one at the beginning of 2012.

Upcoming Events

HCMC, from 8th to 10th January:New training! This is a widely shared statement: the training of assistants and receptionists is not always satisfying in Vietnam. That’s why, the CCIFV offers a new exclusive training.

◄ On 19th Oct, Beluxcham welcomed Belgian Embassador H.E. Bruno Angelet at the Eurocham offices for a meeting with about 25 members. Each member got 5 minutes to present themselves and their company’s activities in Vietnam. This led to some interesting discussions about doing business in Vietnam, the amount of Belgian investment in Vietnam.

On 9th November during the visit of the official delegation from Luxemburg and his majesty the Grand Duke Henri, Beluxcham organized a visit of CMIT container terminal on the Cai Mep River. The visitors were received by the CEO and CFO of CMIT/Maersk terminal and had a presentation of this new and impressive terminal followed by a visit of the site.

To guarantee that a nice tradition was kept alive, ► Beluxcham hosted a brunch for all Belgians on Sunday 20th November at Flow restaurant, centre of Dist 1. BeluxCham members and their families enjoyed this for free, a way for Beluxcham to say “thank you” for members’ support in 2011. all 37 Belgians present enjoyed a nice early afternoon, including the Consul in Ho Chi Minh City.

On Friday 18 November the Dutch Business Association Vietnam (DBAV) organized the 3rd edition of the Dutch Open golf tournament which was held this year in Long Thanh. It was a beautiful day for golf and the 100 participants enjoyed the full afternoon with sport, pleasure, networking and thanks to our sponsors were all provided with bags, shirts, balls, towels etc.

An excellent evening program followed with dinner, drinks and prices that were won by those who played best and worst handed out by the Consul General of The Netherlands. We look forward to Dutch Open 2012!

For further events and information please check our website www.dbavietnam.net

www.dbavietnam.net

Dutch Open Golf Tournament

For 3 mornings, the participants will learn, in English, how to write emails, answer the phone and welcome guests. Our trainer is a highly experienced and top level manager from the hospitality industry. For more information, please contact info.hcm@ccifv.org.

Recent events:

07th November: GBA Business Meeting, This Monthly Business Meeting was a remarkable welcoming His Excellency Ambassador Claus Wunderlich, the new German Ambassador to Vietnam. More than 100 GBA members enjoyed the meeting and had chance to network and meet the Ambassador.

21st November: Charity Gala - Dinner with former Chancellor of the Federal Republic of Germany Gerhard Schröder

www.nordchamhn.org.vnNordic Chamber of Commerce in Vietnam (Hanoi Branch)

October 6th, with AIESEC organization, co-hosted HR Networking Event for HR Managers and Alumni who studied abroad.October 13th, with Cancham, CCIFV and BBGV, co-hosted the Business Networking event “Banking, Finance & Insurance”.October 17th, ICHAM co-hosted, with AusCham, a Business Briefing Luncheon “ADB working with Vietnam in the water sector”. Guest Speaker: Mr Jelle Van Gijn – Urban Water Supply and Sanitation Adviser, ADB Vietnam Resident Mission.October 19th, with the Unido Vietnam Agency, Icham co-hosted the Workshop "SME Cluster Development".November 9th, ICHAM organized the seminar “International Debt Recovery” with the support of the Italian Embassy, Bross & Partners and Sooklin & Book LLP - held at the Residence of the Italian Ambassador - Guest Speaker, Advocate Federico Vasoli (dMTV), Advocate Tran Anh Hung (Bross & Partners), a representative from Ministry of Justice, and advocate David Chan (Sooklin & Book LLP).November 14th, co-hosted the Business luncheon “Does business have a role in science research, organized by Auscham.

◄ December 1st, Icham end of the year cocktail party to thank and greet all Icham members 2011.December 8th, Icham joined the Business networking “Human resources education and training”, organized by Cancham, CCIFV and BBGV and in collaboration with Auscham, Eurocham. December 9th, Elis Workshop: The Association Centro ELIS and the Hanoi Tourism and Commercial College have signed a cooperation agreement in order to realize a program to fight against unemployment, thus contributing to the Vietnam economic and social renewal process. December 11th, in the framework of Y-Viet and on the occasion of the 150th anniversary of

November 22nd, Nordcham Hanoi organized a presentation with the Managing Director of Niels Brock Copenhagen Business College, Anya Eskildsen. The presentation focused on Niels Brock’s initiatives in Vietnam, most notably its collaboration with Hanoi Foreign Trade University, and how companies can play an active role in the training and recruitment of graduates.

For an update on coming events in October and November, please visit the Nordcham Hanoi website: www.nordchamhn.org.vn

GBA and SBA in cooperation with Ringier were proud to host a Charity Gala - Dinner Event with his Excellency Gerhard Schröder, former Chancellor of the Federal Republic of Germany on Monday 21.11.2011, at the Intercontinental Asiana Hotel Saigon. This event was by invitation only for 100 Swiss and German CEO’s and GM’s in Vietnam who are members of SBA and GBA. It included also special distinguished guests including high representatives of the German and Swiss Diplomatic Corps. Aside of Gerhard Schroeder as key-note speaker, GBA and SBA welcomed Mr. Lito Camacho, Vice Chairman for Asia Pacific of Credit Suisse AG and Michael Ringier, President of the Ringier Holding AG - a Swiss global leading media corporation, to hold a speech at the Gala - Dinner. All profits from event were donated to the Dariu-Foundation in Vietnam.

the unification of Italy, the Embassy of Italy in Vietnam, with the sponsorship of DDP, has presented “Dialektos”, a jazz concert performed by the famous Duo Maria Pia De Vito and Huw Warren, designed to give an insight on jazz Italian culture.

that tax incentives need to have a clear approval and application process or investors will walk away.

Hanoi 11th October - “East Sea: From disputed waters to the ocean of opportunities”

HCMC 21st October - Signing of MOU with HCMC Union of Business Associations

HCMC 28th October - Rise of the Industrial Market, Vietnam’s Current/Future Outlook

The East Sea, encompassing an area of about 3.5 million km² is the gateway between the Indian Ocean and the Pacific Ocean. Groups of islands located within the East Sea, are subject to a complex territorial dispute involving the surrounding countries. The interests of the countries involved in the sovereignty dispute include acquiring fishing areas, the exploitation of crude oil and natural gas beneath in the area, and the strategic control of the East Sea. EuroCham invited H.E. Ambassador Nguyen Duy Chien, Chairman of Joint Viet Nam - China Land Border Commission to join a luncheon to share an inside view on the East Sea Dispute as well as whether business communities should be worried on the issue.

The HCMC Union of Business Associations (HUBA) and EuroCham signed a memorandum of understanding in HCMC. The memorandum outlines that the two organizations will 'work as a bridge' between HCMC, other provinces businesses and the European business community. Both sides coordinate to organize regular economic, cultural, trade and tourism meetings, workshops and events and to participate in business delegations to promote mutual trade and investment.

At this luncheon, members received an update on the Vietnam national industrial market, focusing on Vietnam’s rise into the global spotlight as a cost-effective manufacturing location in the region. As the cost of doing business in China continues to rise and regional instability in markets such as Thailand and Japan continues, the business luncheon addressed whether Vietnam as a “China + 1” actually happening. Mr. Greg Ohan - National Head of Industrial & Logistics Services and Mr. Hieu Le - Manager, Industrial and Logistics at CB Richard Ellis (Vietnam) shared their insights on rising wages in China and outlined examples of businesses moving their production to Vietnam. They stated that Vietnam has a real change to become the "workbench of the world" but warned

HCMC 1st November - Business Luncheon on ’Energy Efficiency’

HCMC 9th November - Special Dialogue with HCMC Customs Authorities

Mr. Peter Popovics, Global Business Field Manager - Energy Efficiency and Carbon Services, TÜV Rheinland Group outlined a long-term Government program called the National Program on Energy Efficiency and Conservation. Within the program, companies are required to focus more on implementing energy efficiency. Mr. Popovics provided updated information on the topics Energy management systems - ISO 50001 / EN 16001, Energy Audit and Corporate Carbon Footprint.

As this event provided members with the rare chance to raise their questions and concerns directly to customs officials, there was a large turnout in the conference room at the Sheraton Saigon Hotel. The representatives of the Customs Department of HCMC including the director and several heads of divisions clarified and updated EuroCham members on the regulatory changes and interacted with the audiences on specific issues including customs clearance efficiency, regional application of customs rules,

electronic data interchange (EDI) and pre-arrival customs clearance, ie. how to change from physical to documentary control. EuroCham members had the chance to get direct explanations and answers by customs officials and a lively discussion followed. EuroCham puts efforts in organizing such dialogues for our members.

HCMC 18th November - EuroCham welcomes incoming EU AmbassadorEuroCham chairman Alain Cany and members of the executive committee welcomed the incoming EU Ambassador and Head of Delegation to Vietnam Dr. Franz Jessen for a breakfast meeting at the EuroCentre in HCMC. The EuroCham representatives updated Dr. Jessen about the role and activities of the European Chamber of Commerce in Vietnam and wider issues of the European Business community here. Both sides pledged to continue and intensify the already close cooperation that has marked the relationship between the Delegation and the Chamber for many years. Dr. Jessen, a Danish citizen and formerly the head of division for China at the European External Action Service (EEAS) in Brussels, has a Ph.D. in Economics and comes to Vietnam with extensive experience in the Asian region.

The Roundtable marked the launch of the fourth edition of Whitebook 2012 of Trade/Investment Issues and Recommendations (see page 4-6) . With participation of almost all Vietnam’s Ministries including MPI, MoF, MoH, MoNRE, MoST, MoC, MoLISA, MoET, MoJ, MoT and the SBV, the roundtable is a unique advocacy event and an open discussion on key issues affecting the business climate for European businesses in Vietnam as well as a rare opportunity to exchange some issued raised in the Whitebook 2012 and ideas about further improvement for the business climate in Vietnam between EuroCham delegates, Vietnamese Vice Ministers and leaders from Vietnamese ministries and agencies.

EuroCham invited incoming Minister of Planning and Investment H.E. Mr. Bui Quang Vinh to join a special business briefing with members about the possible changes in the investment environment in Vietnam in order to increase attractiveness to both domestic and foreign investors and the Vietnam - EU trade and investment relationship. This event provided a unique chance for members to interact with one of the nation’s key decision makers as well as to have more information about Vietnam’s plan to attract foreign investment into the high value-added segments/production and move away from labour intensive low cost products. The MPI will introduce new measures on public investment and possible changes in the decentralization of budget allocation and execution as well as in the planning process of the key sectors in the future.

Since the sovereign debt crisis in Europe began attracting attention in global financial circles, the crisis has grown into the biggest challenge the European Union has faced since the adoption of the euro as its single currency 12 years ago. Greece, Portugal and Ireland are on life support. Italy and Spain are exhibiting worrying symptoms. Germany and France, the healthy ones, are suffering from a global economic malaise. As the situation appears to be coming to a

Hanoi 18th and HCMC 24th November - “The EU Debt Crisis: Impact on Investment and Trade”

Hanoi 30th November - Roundtable with the Government on improving the business climate in Vietnam 2012

Hanoi 12th December - Business Briefing “Investment in Vietnam in the years ahead: New horizons?”

head, again, how can we tackle the crisis, and will the Euro be saved? At this EuroCham luncheon held in Hanoi and HCMC, Mr. Sanjay Kalra, the IMF Resident Representative for Vietnam and Laos and Mr. Sumit Dutta, CEO of HSBC Bank (Vietnam) offered their insights on the crisis and it's implications for Vietnam and global trade in general. During the Hanoi event, Standard Chartered Bank’s CEO for Vietnam, Cambodia & Laos Mr. Louis Taylor shared his insights with EuroCham members and guests on the causes and possible cures to the crisis.

Strengthening the capacity of Vietnamese Business Associations A review of EuroCham and the MUTRAP III ProjectAs part of the Multiateral Trade Assisstant Project EU – Vietnam Mutrap III (MUTRAP III), EuroCham has been assigned by the European Union a project on “Capacity building on Trade policy for Vietnamese Business Associations“. The objective of this project was to strengthen the capacity of Vietnamese Business Associations (VBA’s) to become efficient consultation partners for the Vietnamese Government on trade policy and market access issues. A focus was also to Increase the ability of VBAs to provide efficient assistance to their members on European Union (EU) related trade issues. The project lasted for 27 months and was successfully completed in early November 2011. To re-cap the project, let us look back on the numerous activities of the last 27 months. The Project had 9 specific outcomes that are outlined below.

Based on the results of a Training Needs Assessment carried out with all project partners, the contents and focus of training manuals for 6 courses were identified and developed by experts and lecturers. By May of 2011, 6 training courses (4 courses in HCM City and 2 courses in Hanoi) covering 4 different topics had been organized focusing on “Strengthening the Capacity of Business Associations in Policy Advocacy and Member Consultation” and “Strategic Management of Business Associations” further courses on “Strengthening service provision capacity of Vietnamese Business Association”; and “Soft skills for Vietnamese Business Associations - Communication and Proposals writing techniques” were held in Hanoi and HCMC and other provinces. The total number of participants of these workshops were more than 1,000 people, averaging about 100 participants in each workshop.

Eurocham’s project partners for Mutrap III were:

Hanoi SME Association (HASMEA) Viet Nam Leather and Footwear Association (LEFASO) Vietnam Textile and Apparel Association (VITAS) Handicraft and Wood Industry Association (HAWA) Can Tho Business Association (CBA) VCCI (HCMC) Young Business People of Association of HCMC (YBA) Vietnam Association of Seafood Exporters & Producers (VASEP) Dong Nai Exporters and Importers Club.

Outcome 1: Transfer of knowledge and best practice to VBAs and their members - Enabling VBAs to provide information and training to their members regarding management and trade related issues.

Many training courses were held in the EuroCentre in HCMC and other venues throughout Vietnam.

Mr. Sanjay Kalra, IMF Resident Representative for Vietnam and Laos speaking at the MUTRAP closing workshop in HCMC.

The objective of prodiving update information on trade-related maket information and improving the VBAs’ capacity. Many representatives from EuroCham member companies and others participated in these seminars as speakers, offering their expertise on the topic. Amongst the speakers were experts from the Delegation of the European Union to Vietnam and high level experts of the Vietnamese Government. Vietnamese Government representation included the former Vice Chairman of the committee of the foreign relation office of the National Assembly, Madame Ton Nu Thi Ninh; former Vice Minister of Ministry of Commerce, Mr. Phan The Rue, Former Minister of Commerce Ministry, Mr. Truong Dinh Tuyen and speakers from the IMF, CIEM, STAMEQ, VCCI and FPT. Participating EuroCham member companies included: DHL Express, Highlands Coffee, Schneider Electric, Bureau Veritas, ELCA Information Technology (Vietnam) Ltd, TUV Rheinland Vietnam Co., Ltd., Investconsult Group, TNS Vietnam, BASF South East Asia Pte Ltd, Market-Edge Asia (Vietnam) Ltd and Fidal Franceskinj Chazard & Partners Co. Ltd. We would like to thank everyone who committed time and energy to assist in these seminars and workshops!

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Based on EuroCham’s experiences in writing the White Book on “Trade/Investment Issues and Recommendations” since 2008. EuroCham has also transferred its experience in collecting recommendations and writing position papers to the 9 Vietnamese associations. The book aims to summarize the key issues affecting the business climate for Vietnamese businesses for the Vietnamese Government. The book covers the major issues that member companies of VBAs pay the most attention to, like e. g. tax, import and export, intellectual property rights, environmental issues, infrastructure and issuance of legal documents. Besides, the book comments on operations of business associations to improve the voice of Vietnamese Business Associations in the business community.

One of the outcomes of the project was to establish a EU - Trade Information Centre (ETIC) in HCMC. The centre serves as an access point for Vietnamese SMEs to access information and advice about EU market entry requirements and other trade related issues. After one year in operation, the European Trade Information Centre has drawn considerable attention from Vietnamese enterprises, both for the centre and the webpage. The centre has welcomed many visitors, with different purposes, ranging from collecting information on the EU market, asking for advice, introducing companies and business activities, etc. The centre comes together with an interactive online trade portal (www.eticvietnam.org) that has seen over 14,000 page views so far.

ETIC boasts exclusive and updated documents and publications on the EU, provided by reliable various sources namely MUTRAP III, Central Institute for Economic Management (CIEM), Ministry of Industry and Trade (MOIT), CBI (Center for the Promotion of Imports from developing countries), EU Delegation, EU Institutions, etc.

The ETIC includes around 100 publications (in soft and/or hard copies, in English and/or Vietnamese). These are offered free of charge to visitors interested. Some of the documents were translated into Vietnamese to provide better access for Vietnamese enterprises.

OutlookEuroCham looks forward to continuing and expanding the close relationship with all Vietnamese project partners forged during the 27 months of the project. Not only did we work together on capacity building and trade information, but staff and leadership of the associations also got to know each other well, paving the way for good cooperation in the future. As committed within the MUTRAP framework, EuroCham to seeks to finance sustainable future operation of the ETIC after the end of the project. We hope the ETIC and its web-portal will support Vietnamese Business Associations and their members to get ready for doing business with the EU and bringing EU markets and Vietnam closer together.For more information, personal consultation or any remarks and comments, we would like to invite you to visit the EITC in HCMC or contact us at:European Trade Information CentreAddress: G/F, 49 Mac Dinh Chi Street, Da Kao Ward, District 1, Ho Chi Minh CityEmail: info@eticvietnam.orgWebsite: www.eticvietnam.orgFor further information, please contact Ms. Mai Thi Thanh Huong at 84-4 3715 2228, or email programme@eurochamvn.org.

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Outcome 2: Improving the capacity of VBAs to provide policy and regulatory recommendations for the MOIT with the publication of a White Book.

Outcome 3: Establishing a sustainable and accessible source of information about EU market information and access in southern Vietnam in the form of an information and documentation centre in HCMC.

The ETIC in HCMC

Visit the interactive online trade portal: www.eticvietnam.org

Whereas, the ETIC webpage not only includes downloadable publications/materials from different sources, but also tools to help Vietnamese enterprises explore the EU market and gain statistics, noticeably Export Helpdesk for Developing Countries, Eur-Lex, European Customs Info Portal, European Chemical Agency, Eurostat, IPR Helpdesk, International Trade Centre, Market Access Database, etc. Reliable contact points for Euro Chambers in each European country are also available.

Over the last decade, the Association of Southeast Asian Nations (ASEAN) has become one of fastest growing regions in the world and is as such a valuable trading and investment partner of European businesses.

Many European investors have turned their attention to this part of Asia, which has continuously lowered its trade and investment barriers and attracted in 2010 EUR 10 billion worth of European investments and totalling about EUR 150 billion in trade between the EU and ASEAN, making the EU its largest trading partner.

Introducing the EU-ASEAN Business CouncilEU-ASEANBusiness Council

asean

The network of ASEAN EBOs is composed of the European Chamber of Commerce in Indonesia, the EU-Malaysia Chamber of Commerce and Industry, the European Chamber of Commerce of the Philippines, the European Chamber of Commerce-Singapore, the Thai-European Business Association and the European Chamber of Commerce in Vietnam. Each of these EBOs nominates their Council Members that will have the following additional benefits:

The Council allows its members to engage in high-level meetings with policy-makers as it acts as an interface, both for institutions in the European Union and in ASEAN to engage in a dialogue with businesses, including in the framework of the EU ASEAN Business Summits and other regional meetings.

The Council acts as an interface for public-private dialogue amongst the EU and ASEAN regions. Council Members will benefit from a strong regional network of business partners. Council Members get priority access to special meetings with EU and ASEAN government officials.

The Council provides a platform for its members to advocate European business interests in ASEAN and can act as an interface for institutions in the EU and ASEAN to engage in a dialogue with EU businesses in the region, including in the framework of the EU ASEAN Business Summits.

In its aim to promote the European business community in ASEAN, in collaboration with EU- and ASEAN-based partners and institutions, the Council provides a pan-ASEAN framework to share knowledge, resources and events with all stakeholders, including through sectoral working groups. Council Members have access to regional strategy and policy papers.

Further activities will be offered at local level by each individual EBO as well as at regional level coordinated among EBOs. Each ASEAN EBO leads any activities and services that concern its respective country.

Having established chambers of commerce and business associations in the major economies of ASEAN, the business now has taken the next step and works towards regional cooperation through the establishment of the EU-ASEAN Business Council, an initiative supported by the EU Trade Commissioner as well as ASEAN Economic Ministers. The EU-ASEAN Business Council has been established as a pan-ASEAN platform for European businesses to advocate their trade and investment interests in South-East Asia and to further engage with the ASEAN Governments on a regional basis. The importance and strength of EU-ASEAN trade and investment is a reflection of the timeliness of the establishment of the Council.

EU-ASEAN Business Council members in the region

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◄ The creation of the Council and its role to act as an interface for public-private dialogue amongst the two regions was presented as one of seven business recommendations to the ASEAN Economic Ministers and formally endorsed by EU Trade Commissioner Karel De Gucht and several of the ASEAN Ministers at the 1st

ASEAN-EU Business Summit in Jakarta on 5th of May 2011. Following the founding of the Council, EU Trade Commissioner met with EU-ASEAN Business Council members and stated: “I see this initiative as a step forward to enhancing the business dialogue between

Regional Update

both regions and contributing to advocate European business interests in the ASEAN region.” Since its founding the Council has participated in some high level meetings in the region, and is targeting to be a key dialogue partner with ASEAN, as well as individual Governments in the region and the EU. Recent Activities:Thus far the Council has met with Singaporean Trade & Industry Minister Lim Hong Kiang Indonesian Trade Minister Mari Pangestu (on the invitation of the ASEAN Economic Ministers Chair). The EU-ASEAN Business Council also participated in the ASEAN Economic Ministers recent summit in Manado, Indonesia and in Bali Indonesia. In Bali, high level meeting were held with ASEAN Economic Ministers Chair/Indonesian Minister of Trade, Gita Wirjawan and incoming ASEAN Economic Ministers Chair/Cambodian Minister of Commerce, Cham Prasidh.Taking place at the margins of the ASEAN and East Asia Summits of Heads of State, it gave the EU-ASEAN Business Council the opportunity to engage in private side-meetings with ASEAN leaders.

In the meeting with the EU-ASEAN Business Council, H.E. Gita Wirjawan, Minister of Trade, Indonesia, took stock of progress under Indonesia’s ASEAN Presidency 2011 towards the ASEAN Economic Community 2015. He highlighted in particular the need to advance on “connectivity” issues, both at regional and national level, to improve the flow of goods, people and information and encouraged European companies to continue to tap Indonesia’s and ASEAN’s market potential.

H.E. Cham Prasidh, Minister of Commerce of the Kingdom of Cambodia shared with the EU-ASEAN Business his vision for Cambodia’s ASEAN Presidency 2012 and gave an update on the preparations.

A milestone event will be the 2nd ASEAN-EU Business Summit that the Cambodian Presidency will host in 2012. He invited the EU-ASEAN Business Council to be the key business partner and to jointly develop recommendations on how to further business opportunities to the ASEAN Economic Ministers at the summit.

For more information about the EU-ASEAN Business Council, please contact: exec-director@eurochamvn.org

EU-ASEAN Business Council meets H.E. Gita Wirjawan, Minister of Trade, Indonesia, 16 Nov 2011

EU-ASEAN Business Council meets H.E. Cham Prasidh, Minister of Commerce of the Kingdom of Cambodia, 16 Nov 2011

Jakob Sorensen, Chairman of the EU-ASEAN Business Council, withH.E. Gita Wirjawan

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“You should never cut down more trees in the woods than trees are growing if you don’t want to run out of trees one day!” This simple but true definition of sustainable thinking has to be considered when you think about the future of world economy – from the simple farmer up to the Big Players. Using just your common sense – which widely has to be rediscovered – it becomes obvious that this basic rule of sustainable thinking does not apply exclusively to the use of resources:

If you want skilled and motivated workers – treat them well and with respect.If you want satisfied and regular clients – meet their needs and take their concerns serious.If you want to grow in your community – engage with it actively.If you want a future for your kids – keep the environment clean.If you want your ideas respected – respect the ones from others.And finally if you want to have sustainable economic success just follow this basic and thousands of years old way of thinking. CSR is nothing new – it’s just another name of knowledge our successful grandfathers already had.

CSR becomes RCS – The Return of Common Sense

In the case of Vietnam there is another important driver to speed up the process of proactive CSR implementation: For long years Vietnam has been a “low cost producer”. But now it is shifting towards a mid income country. In other words low prices will not longer be the killer-argument to sell – other issues will gain more importance such as environmental impact, product safety, social compliance, legal compliance, community engagement, etc.

The increasing number of regulations and standards already reflects these topics. SA8000, ISO14001, OHSAS18001, BSCI, WRAP are probably the best known ones in Vietnam beside the large number of buyers requirements (often called Code of Conduct) and technical regulations such as REACH, RoHs, GS, etc. This, especially for SMEs, unmanageable variety of requirements is today’s

Corporate Social Responsibility in VietnamSustainability is the goal – CSR is the tool

Project Update

major obstacle for companies to work actively on their CSR performance. Late 2010 ISO published the Guideline for Social Responsibility ISO 26000. This will bring an end to that patchwork and will deliver a practicable framework even for small enterprises how to get a strategic CSR approach.

To facilitate a step-by-step CSR implementation our current EU-funded project is providing substantial assistance to SMEs throughout the next years. The close cooperation mainly between UNIDO and VCCI allows a great outreach to all relevant stakeholders. In particular the program is in line with the national agenda of VCCI’s department SDforB (Sustainable Development for Business) and allows generating valuable synergies. Through our project partner EUROCHAM and an extensive networking we are engaging with European buyers in order to set-up new co-operations or to improve existing ones.

The main obstacles for SMEs to adopt CSR

Here are the two most common obstacles we hear when it comes to CSR implementation: “We have no money for this!” and “We have no time to do it!”. The lack of money is mainly a result of too aggressive pricing policy, inefficient use of resources and problems with the quality (both product and staff). The lack of time is frequently a consequence of the financial pressure – running behind new contracts, too tight timelines, insufficient planning, unreliable suppliers, etc. All this leads to a company that cannot breath anymore. “Reacting” becomes the common way of day-by-day business, sometimes it appears as an inevitable vicious cycle. In order to break this cycle a company has to invest time and just little money.

For a long period low price was the one and only credo in order to be successful - mainly as an exporter. But today international buyers are demanding more social and environmental compliance from their producers. They start already to ask for active community engagement, for anti-corruption mechanisms, for data-protection, etc. In order to meet these requirements in future a company will have to deal with all these topics. Not to deal with it as a “nice to have” - they have to deal with as a business case. So the benefit for those enterprises is a significant improvement of their competitiveness.

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Think globally – Act locallyLate last year the Chinese Prime minister said that in order to maintain the economy growing it is inevitable to improve significantly research, innovation and brand-building. All these three topics require a new sight on how to do business. One has to have a look at the so-called “soft facts” and “soft skills”: trust, credibility, creativity, team-spirit, image, workplace ambient, work-life-balance, etc. So a holistic CSR integration will play an important role.

Today the requirements for export are the driver to invest in CSR – but tomorrow the demand will come from the really huge domestic Asian markets. Local consumers will be the new number one driver. And who is not starting to think about CSR in time will miss an opportunity or even loose his business.

Firefighting Exercise at Hai Nam Textile Company in Gia Lam, Hanoi showcasing a win-win situation for company and local community

For more information please do not hesitate to contact us either through our webpage www.csr-vietnam.eu or directly with the UNIDO Chief Technical Advisor on CSR Mr. Florian Beranek, f.beranek@unido.org

CSR is not an over-night change of technology, it is a continuous process. This process just has to be initiated by the first self-reflection. This is probably the most difficult step … and this step does not cost any money just some creativity and time. So Corporate Social Responsibility should rather be seen as Corporate Social Opportunity.

What is needed are time, willingness and a basic capacity to analyze the current situation. We should try our best to get companies from “have to” towards “want to”. In order to obtain this goal, supporting and encouraging activities from Government, financial institutions, international organizations as well as in particular from international buyers are necessary. CSR is a process of small steps. And if an entrepreneur sees the result it will encourage him to proceed to the next step.

An example for a successful approach are activities related to work-place organization like the 5-S System. The time invested pays back in higher productivity, less accidents, higher quality and less losses. Interventions like 5-S can bee an example where active support from the buyers can lead to a Win-Win-Situation as quality as well as productivity is increasing.

The national legal situationIn general there are high quality laws and regulation in place when it comes to labour and environment. However the awareness and compliance amongst especially the SMEs are still quite low. We consider strengthening the role of the domestic consumer of high importance as well as the consideration of the principles of sustainable consumption and production in public procurement. So the role of the lawmaker is not only focused on direct intervention but also on creating and supporting new demands on the domestic market. This also will avoid the business sector from being divided into the “good” exporters and the “bad” domestic producers.

The new European CSR frameworkOn October 25th 2011 the European Commission published an updated strategy paper on Corporate Social Responsibility and defines CSR as “The responsibility of enterprises for their impacts on society”. This new approach and definition is evidence that formerly called soft-facts are increasingly seen as hard-facts. The paper stresses the multidimensional nature of CSR and its role as part of a company’s core strategy. In order to define the outlines of this multidimensional approach the Commission is referring to mainly 5 internationally recognized documents: The UN Global Compact, the ILO-Tri-Partite-Declaration, the United Nations Guiding Principles on Business and Human Rights, the OECD Guidelines for Multi National Enterprises and finally the ISO 26000.

Our project decided already last year to consider the scope of ISO26000 as the base of our interventions. This allows us today to deliver assistance to national and international enterprises covering the seven core subjects of CSR: Organizational Governance, Human Rights, Labour Practices, Fair Operation, Environment, Consumer Issues and Community Engagement in an integrative way.

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Earlier this year, the amendment of certain provisions of Decree 34/2008/ND-CP dated 25 March 2008 on the recruitment and management of foreigners working in Vietnam ("Decree 34") by Decree 46/2011/ND-CP ("Decree 46"), effective on 1 August 2011, raised critical comments from the foreign business community in Vietnam. Important changes resulting from the application of Decree 46 have been further detailed in the recently adopted Circular 31/2011/TT-BLDTBXH dated 3 November 2011 ("Circular 31"), effective on 18 December 2011.

Stricter Control of Employment of ForeignersWhile some of the changes set out in Decree 46 and Circular 31 are welcomed, a greater number would appear to complicate the process for employing foreigners in Vietnam.

Business Update

While some of the changes set out in Decree 46 and Circular 31 are welcomed, a greater number would appear to complicate the process for employing foreigners in Vietnam.

New exemptions to the requirement for a work permitDecree 46 extends the list of foreigners exempted from the requirement to obtain a work permit to include:

Internal transferees within an enterprise operating in Vietnam in one of the eleven services sectors covered by the Vietnam WTO Commitments on Services (business services (including services in accounting/auditing, architecture, urban planning, engineering, advertising, management consulting, etc.), services in communication, construction, distribution, education, environment, finance, medical, tourism, culture and entertainment, and transportation).Non-Governmental Organisation (NGO) representatives who are head of the NGO's representative or project office or who act as representative of an NGO's operations in Vietnam.Experts providing expert and technical consultancy services or undertaking other tasks servicing research, formulation, evaluation, monitoring and assessment, management or implementation of a program or project using official development aid (ODA) in accordance with provisions or agreements in an international treaty on ODA to which Vietnam is a party.1Journalists issued with a professional license by the Ministry of Foreign Affairs.

These exemptions are in addition to those existing under Decree 34, including foreigners working in Vietnam for a period of less than three months, foreigners who are a member or owner of a limited liability company or a member of the board of management of a joint stock company, foreigners entering Vietnam to offer services or foreign lawyers to whom the Ministry of Justice has issued a certificate.

The "internal transferee" exception has been the most well received as it is expected to facilitate operations of multinationals in Vietnam. The main condition is that the transferee must have been working for the transferring enterprise at least 12 months prior to being transferred to Vietnam. As the implementation of this exemption is still subject to guidance by the Ministry of Industry and Trade (MOIT), it is however difficult, at the current stage to anticipate its practical application.

New conditions to the extension of an existing work permitThe most hotly debated change brought about by Decree 46 is the new requirement to include a copy of an apprenticeship contract, signed between the employer in Vietnam and a Vietnamese "apprentice" designated to replace the foreign employee once the extension of the work permit has expired, in the application file for an extension of a work permit. An extension for a work permit may currently be for a maximum period of 3 years, following which, on the face of Decree 46, the position must be filled by the Vietnamese "apprentice".

This requirement is a serious concern for those companies employing foreigners with special qualifications or skills that cannot readily be obtained through on-the-job apprentice-style training. It is also not clear what would happen in the case the "apprentice" leaves the employer within the 3 year extension period.

The later implementing Circular 31 may have softened this new requirement by providing an alternative to the apprenticeship contract. Under Circular 31, an employer has two options: (i) provide a copy of an actual apprenticeship contract; or (ii) provide documents evidencing that it has implemented a plan to train local employees to replace foreign employees as required by the Labour Code. The content of the plan should include the number of Vietnamese employees to be trained to replace the foreign employees for each position, the duration and location of employment and the form, organisation and result of the envisaged training.

1. This exemption previously existed by operation of international treaties, but has now been formalised in domestic legislation.

The alternative approach, although welcomed, still leaves considerable uncertainty in terms of how it may be applied in practice.

Note that internal transferees (not yet exempted from a work permit) may apply for a work permit extension simply by providing proof of a decision from their foreign employer of their appointment to the Vietnam entity, without needing to complete a full application file.

Recruitment of foreign employees

The significant concerns raised by foreign businesses with respect to this more onerous requirement have been partially addressed in Circular 31, according to which an employer who has already published its employment requirements in at least two central and two local newspapers but was not successful in finding a candidate, may recruit foreign employees without additional advertising, provided the recruitment occurs within 36 months of the last publication.

New timing for the execution of an employment contract

Under Decree 34 the employer and the foreign employee were required to sign an employment contract after the foreign employee was issued with a work permit only, it being understood that a foreign employee could begin work while the application process was underway. Decree 46 now requires the execution of an employment contract between an employer and a foreign employee before the foreign employee starts work. Consequently, the starting date of a foreign employee must be pushed back if the issuance of his or her work permit is delayed.

Tender documents/foreign contractors

Decree 46 stipulates that invitations to tender must set out staffing requirements giving priority to employing Vietnamese and must require tenderers to provide a plan on employment of foreigners.

A foreign contractor must provide a written report of its plan to employ Vietnamese employees to the chairman of the People's Committee where the project is executed. The report is required to indicate the required positions, number of employees, level of expertise, experience and duration of employment. If the People's Committee fails to supply the requested staff within 30 days (for the recruitment of fewer than 500 Vietnamese employees) or 60 days (for recruitment of 500 or more Vietnamese employees), the foreign contractor may recruit foreign employees to fill vacant positions.

The Vietnamese investor or project owner must guide and check the implementation of regulations relating to the recruitment and employment of foreigners by the foreign contractors and must provide quarterly reports on these issues to the local Department of Labour.

Decree 46 has introduced a more severe approach to existing policies and rules applicable to the local recruitment of foreign employees in Vietnam.

Advertising jobs locally

Previously, Decree 34 only required an employer to advertise its employment needs in a central or local newspaper at least 30 days before recruiting a foreign employee. Decree 46 now provides that the notice/advert must be published in at least one central and one local newspaper in written, oral, pictorial or electronic form, specifying precisely the number of employee(s) to be recruited, the working position, specialist qualifications required, salary and other entitlements, working conditions and other necessary items which the employer stipulates.

Ms. Nguyen Tinh Tam and Mr. Antoine ToussaintGide Loyrette Nouelhttp://www.gide.com

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Business Update

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New Members

We have offices and meeting roomsavailable in Hanoi and HCMC

Located right in the heart of Hanoi and Ho Chi Minh City, the European Chamber of Commerce in Vietnam offers newly designed office and meeting facilities embedded into our EuroCentre and EuroCham offices. Additional services include business support. This is an excellent choice for any business, either small or large to be located at the heart of the European business community in Vietnam.

For further inquiries, please contact Ms. Thuy at o.mgr@eurochamvn.org or call (08) 3827 2715

Welcome to our new Corporate Members

Advertise in 2012 Membership Directory!The new 2012 EuroCham Membership Directory with all member company profiles and contacts will be published shortly. Advertising opportunities in our new 2012 Membership Directory are still open — Please contact Ms. Thuy at o.mgr@eurochamvn.org for details.

The Bui Gallery

Lys Events NABEGA Niteco Vietnam Ltd Phoenix Commodities PVC. Ltd. Rep. Office

FLS Vietnam Ltd. Rep. Office Green Land Co., Ltd.

The Rep. Office of Peter Cremer (Singapore) GmbH in HCMC

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HCMC

Your banner in the new weekly EuroCham e-bulletin

HCMC 14th and Hanoi 15th December - Member Year-End Party 2011

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The EuroCham Annual General Meeting will take place Thursday 7th March 2012 at Sofitel Plaza Hanoi and HCMC simultaneously

To our direct members: To ensure you will be included in the upcoming EuroCham Membership Directory 2012, please renew your membership with EuroCham and submit your updated profile by January 30. 2012. to Ms. Nguyen Hong Ngoc ngoc@eurochamvn.org. If your membership renewal invoice is not settled by January 30., we can not guarantee your profile will be included in this edition.

Please note that the EuroCham offices in Hanoi and HCMC will be closed from January 23. - January 27th. 2012 for Tet.

The staff at EuroCham would like to wish our members and friends a safe and happy festive season!

For more information, please contact marketing@eurochamvn.org

Feature in our weekly e-newsletter sent to all members in Vietnam.

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