Vietnam, Asia’s ‘centre of excellence’ for trade

Vietnam is an easy place to do business. That probably comes as a surprise to a lot of people but it’s what we hear consistently from our customers who operate in the region.

It’s a point reiterated to me recently by Prakash Jhanwer, who is president, South East Asia & China, at Olam International, an ANZ client with a presence Vietnam. I spoke to Prakash during an ANZ executive committee delegation to the south-east Asian nation.

“I would say Vietnam is a relatively unknown place to many foreigners, so they feel it must be difficult,” he told me on podcast. “But in fact, it is one of the easiest places to start a business in Southeast Asia, we believe.

You can listen to our full conversation below.

Originally Nigerian but now based in Singapore, Olam is a multinational agribusiness which uses Vietnam as a “centre of excellence” for its Asian trade operations, a hub from which it imports commodities from all over the world, processes them and then redistributes products throughout the region.

Prakash said a big advantage was Vietnam’s absence of tariffs and its position as a “gateway” to ASEAN.

“We get a zero-tariff treatment wherever we export across ASEAN, as well as China,” he said. “But the icing on the cake is it's pretty easy to set up operations in Vietnam.”

“We get the fastest route to market we find across countries… and the qualities of people is fantastic. They get on with it, they are hungry and our people just do an amazing job.”

Fundamental

Prakash also spoke about the importance Olam places on operating sustainably. Like us at ANZ, he sees it as fundamental to Olam’s sense of purpose as a company.

“Growing responsibly is now a central motive of Olam,” he said. “We believe sustainability is not a catchword - it needs to be embedded in our day to day lives as individuals, as well as in our operations.”

“For sustained agri production in a consistent and sustainable way, we need to incorporate sustainability. The key challenge for us is how do we embedded it in a business idea and create value out of it? I think that is the idea that is really the Holy Grail for us.”

At ANZ, when we talk about sustainability, we mean all three elements of ESG - environmental, social and governance. Without them ANZ – or indeed any company – cannot hope to be truly sustainable. We couldn’t deliver consistent, future earnings for our shareholders; or a rewarding place to work for our employers; or support the communities in which we operate.

But we must ‘walk the talk’ by managing our own impact, promoting a culture of sustainability and, above all, working with customers to help and support them to be more sustainable too.

At ANZ, we’re making sure who we bank and what we finance is driving a just transition to a more sustainable future.

That can mean supporting our larger customers to invest in projects with positive environmental outcomes - for example by arranging the largest sustainable loan in the Asia Pacific and supporting Investa Commercial Property Fund build their low carbon commercial property portfolio.

Just as Olam is working with customers and suppliers, we are in active discussions with our largest corporate customers in carbon-intensive industries as they look at further ways to cut emissions and support the transition to a low-carbon economy.

The three outcomes of Olam’s purpose. Source: Olam

One of the really interesting things I found talking to Prakash and others from Olam is the company’s relationship with its growers – many of which are small family or community farmers.

As an outside observer, the company seems to have a very strong sense of custodianship with these communities - and takes that responsibility very seriously.

“We definitely believe the farmers, or the smallholders as we call them, are probably the ones who are struggling the most,” Prakash said when I put that to him. “Because they are open not only to a lot of natural vagaries but also the volatility in commodity prices. And they are the most vulnerable in this situation.”

Olam has spent 15 years supporting the capability of its smallholders to ensure their income streams are sustainable.

“Once their income goes up, their ability to invest in irrigation goes up and they are able to bring up their families in a far-more sustainable manner,” Prakash said. “I think that is very critical.”

He said Olam’s ultimate sustainability objective is to become carbon neutral and then at some point carbon positive.

“We definitely fully agree… that traceability and sustainability are becoming bigger trends in most developed markets like Australia, like Europe,” Prakash said. “But I think it will catch up very soon in emerging markets.”

Right time

I think there really are a lot of bright things in Vietnam's future and the timing seems right. At ANZ, we want to be very much part of that and help to connect Vietnam into the trade-and-capital opportunities around this region.

“It is a large population which is hungry to work,” Prakash said. “I think the [next 10 to 12 years] can be some of the most-transformative for Vietnam. I'm quite bullish about the prospects of Vietnam in the next decade.”

And so am I.

Shayne Elliott is CEO at ANZ