Business Integrity – A Licence for international economic integration

– Dr. Vu Tien Loc – Former VCCI Chairman –

Viet Nam Business Integrity Index – VBII launched

Hanoi, 21 September 2022 – Viet Nam Business Integrity Index (VBII) was introduced for the first time by Viet Nam Chamber of Commerce and Industry (VCCI) and the United Nations Development Programme (UNDP) in Ha Noi today as a tool to assess the state of business integrity of companies (refer to a sumary introduction of VBII here).   The index is built on the seven essential elements to building and operating a company based on integrity, including Culture (commitment from the top, management, employees, training);  Code of conduct, Control, Communication, Conduct (emloyee and gender/ inclusion, community, social, environment and sustainable development); Compliance, and Certification. The VBII is intended for companies in Viet Nam of all sizes, ownership, sectors, and structure, listed, privately owned, local or foreign-owned, or State-owned, any company that is interested in business integrity and sees business integrity as a bedrock principle for their growth.   Transparency, accountability, and integrity are key elements that define good governance and the existence of a Fair Business Environment in any country. In the context of the COVID recovery, good governance has gained greater attention from investors and consumers. This is reflected, for example, in the drive by governments and stock exchanges for businesses to report on their non-financial performance.  An example of this trend is the EU Corporate Sustainability Due Diligence directive and related EU and EU members’ legislations.  Disclosure while important, will have to be trusted as true and fair.   For Viet Nam to continue attracting quality investments, low level of corruption and higher levels of transparency are very important.  Businesses conduct can be a good or bad contributor to the level of corruption in the country.   Viet Nam is one of the few countries that has shown incremental progress in the Transparency International’s Corruption Perception Index, going up by 26 places globally (from 113 in 2017 to 87 in 2021); and Rule of Law Index by the World Justice Project, as an exception among ASEAN countries in moving up in ranking at 88.   However, some sectors remain more vulnerable to corruption than others. For example, a joint business survey report published by VCCI and UNDP last June showed that at least 1 out of 3 businesses participating in public procurement recognized the need of informal payments for winning government contracts. Even more concerning is that the culture of commissions or informal payments is so embedded that businesses are willing to pay even when nobody asks for it.   “Viet Nam Business Integrity Index is a tool that if used by businesses in an honest and transparent manner, will contribute to improving the country’s standing and brand, building trust based on data and information, attracting investments, generating wealth and improving lives of citizens,” said UNDP Deputy Resident Representative Patrick Haverman in his opening remarks. “We cannot promote business integrity in isolation. It is an integral part of responsible business conduct.  Business integrity therefore requires a holistic approach.  For integrity to work, the environment, workers, supply chains, government agencies, consumers, the community as stakeholders have to be respected.  Businesses need to be profitable by enhancing the operating environment and by meeting minimum expectations of stakeholders.  In deciding on investment sites, global companies will consider the state of respect in the countries for responsible business conduct with good governance and the rule of law as critical factors”.   VBII has been supported by the FairBiz project, a UNDP regional initiative that is funded by the UK Government under ASEAN Economic Reform Programme to promote a fair business environment in six ASEAN countries (Indonesia, Malaysia, Myanmar, the Philippines, Thailand, and Viet Nam).   “The UK – VN relationship continues to go from strength to strength as we are going to mark 50 years of diplomatic relationship next year,” said Deputy Head of Mission, British Embassy Ha Noi, Marcus Winsley. “Together with Vietnamese and international partners, we stand ready to support Vietnam to achieve your ambition and deliver your commitment towards a fair business environment, an effective economic reform and in various other areas including climate change, education, healthcare and innovation”.    Companies’ disclosure, transparency, and corporate integrity policies have a direct impact on the level of business integrity more broadly in the market. In fact, businesses are increasingly realizing the value and benefits of business integrity. The experience of many businesses that have put business integrity first shows that they have benefited from the attention and appreciation of investors, suppliers, buyers, and customers. This is a clear, proven advantage for those companies wanting to access international markets and participate in global supply chains.   “Sustainable development is no longer a choice between ‘yes’ and ‘no’, but has become the survival, the only way for businesses to exist and develop at present and in the future. VCCI Vice Chairman Nguyen Quang Vinh emphasized. “Viet Nam Business Integrity Index developed and launched today by VCCI and UNDP is a new step to bringing Vietnamese businesses closer to international standards of transparency and integrity as well as helping businesses overcome difficulties in integrating integrity into their production and business activities”.   VBII is a tool that needs to be maintained and improved based on experience of working.  UNDP is committed to further working on business integrity and supporting VCCI in using and improving this tool. Promoting transparency and integrity continues to be a central point of the UNDP’s Country Programme Document for Viet Nam (2022-2026).

Business Integrity Toolkit for Young Entrepreneurs

In recent years, the issue of business integrity has come to the forefront of public and private agendas. With government and corporate scandals all around, it is not surprising the public is pushing back. Corruption and fraud misdirect public funds away from the people they are supposed to support. The reality is that the Sustainable Development Goals, which are a broadly recognized series of targets for governments and society to achieve by 2030, are unlikely to be attained without also achieving SDG Target 16.5 – to “substantially reduce corruption and bribery in all their forms”. Another important priority of the SDGs is youth employment, and in particular, decent jobs for youth, whereby young women and men have access to decent, productive work, everyone benefits, and our future is more prosperous. To achieve this, it is critical for young entrepreneurs, setting up their businesses for the first time, to get started on the right foot. This Business Integrity Toolkit is very much a joint effort. Conceived as part of a training programme organized by UNDP for the Youth Co:Lab, our community of social entrepreneurs in ASEAN countries, it is an example of “collective action” – a concept in the fight against corruption which you can read more about in the Toolkit. See detail here.

Strengthen implementation of ethical practices and business integrity

In recent years, a number of free trade agreements (FTAs) have been negotiated and signed, facilitate business to deepen international integration, creating many new cooperation opportunities. Therefore, this requires businesses to ensure transparency and adopt ethical business practices. In fact, businesses  with proactive implementation of business integrity are highly appreciated by potential investors, customers and business partners… especially this is an important advantage to join global supply chains. On past November 26th, the Vietnam Chamber of Commerce and Industry (VCCI), UNDP Vietnam coordinated with the Vietnam Textile and Apparel Association (VITAS) to organize an online training workshop titled“Guidelines for ethical business practices and professional conduct”. According to Mrs. Dinh Thi Bich Xuan, Deputy Director General of Office for Business Sustainable Dvelopment,VCCI, the training is a key activity aimed to build the capacity of businesses in promoting business integrity and helping to minimize fraud and business risks towards good corporate governance. At the program, Mr. Truong Van Cam, Vice President of VITAS, the co-organizer of the workshop highlighted the importance of an appropriate code of conduct and professional conducts contributing to form a fair and transparent business environment. Through presentations of speakers and vigourous discusiion, businesses have better understood about the essential role of risk management and ethics regarding to business development in the garment industry. As a result, businesses are able to effectively apply step by step the code of conduct to resolve ethical dilemmas in business operations. The training course was provided by experienced experts from PWC Vietnam. The representatives from British Embassy in Hanoi, UNDP, VCCI  attended with 70 participants from businesses in the garment industry, middle level managers, human resources, legal officers, internal audit, account-finance officers…  

Enhance application of environmental, social and governance criteria in business

Currently, Environmental, Social and Governance (ESG) criteria have become the deciding factor for the  world’s top investors. Therefore, business investment decisions are highly dependent on the outcome of assessing how businesses address issues related to ESG. This criteria requires investors and invested companies to redefine risks in terms of traditional business models as well as opportunities to create sustainable added value in the future. Through the gereous support of the UK Prosperity Fund to ASEAN under the Economic Reform Programme within the UNDP Regional Project “Promoting a Fair Business Environment in ASEAN”, the Vietnam Chamber of Commerce and Industry (VCCI), UNDP Vietnam in collaboration with Vietnam Association of Consumer Goods Development (VACOD) co-organized an online training workshop titled “Incorporation of Environmental, Social and Governance criteria in business” on November 24th in Hanoi. At the program, Mrs. Diana Torres, Assistant Resident Representative of UNDP Vietnam emphasized in the opening speech that ethical business practices and responsibility to the community, environment, society are increasingly important to improve transparent corporate governance and legal compliance. Following this, Mrs. Dinh Thi Bich Xuan, Deputy Director General of Office for Business Sustainable Development, VCCI also highlighted that the training course aimed to support businesses to promote business integrity in general and futhermore raise better awareness of appropriate approach to ESG advanced practices. The training course was delivered by experienced experts from PwC Vietnam who have deep knowledge in risk management, internal control and international finance. The course was successfully organized with active participation of 200 delegates including representatives from British Embassy in Hanoi, UNDP Vietnam, VCCI and participants from businesses, middle  level managers, legal officers, human resources, internal audit, account-finance officers…The majority of businesses evaluated that the training content is practical, provided fundamental knowledge on methods of assessing business situations in relation to sustainable development and guided businesses to meet ESG reporting requirements and information disclosure.