Nestlé Vietnam raises commitment in faith of undiminished prospects

October 04, 2021 | 08:52
Braving the headwinds of the global pandemic, global food and beverage giant Nestlé is stepping up investment in Vietnam as a testament to its long-term vision in the market. Binu Jacob, managing director of Nestlé Vietnam, shared with VIR’s Thanh Van about the group’s inexorable belief in the resiliency and potential of the Vietnamese market.

Having been present in Vietnam for more than 25 years, Nestlé Vietnam has been a staunch pioneer of sustainable development. Why does Nestlé continue to invest in Vietnam?

Binu Jacob, managing director of Nestlé Vietnam
Binu Jacob, managing director of Nestlé Vietnam

Today Nestlé Vietnam has more than 2,200 employees with four factories and two distribution centres. Up to now, our total investment is around $730 million. This does not include around $700 million which we inject into the rural economy annually through the purchase of sustainable coffee. We are very proud that Nestlé Vietnam has been recognised as one of the leading foreign-invested companies contributing to the sustainable and inclusive growth of Vietnam.

We have continuously stepped up our investment here as Vietnam offers the potential for long-term sustainable growth. The country is one of the more politically stable countries in Southeast Asia, which is one factor that many companies like us look for. Apart from that, the government takes bold, decisive actions whenever required.

Another favourable indicator for foreign companies is the young, sizeable population. Vietnam is the 15th-most populous country in the world with almost 100 million people and a golden population structure. This demographic bonus provides the country a unique socioeconomic development opportunity.

In addition, Vietnam is accelerating regional and global economic integration. In recent years, the government has successfully boosted international economic integration through the participation in many free trade agreements and communities such as the World Trade Organization, the Eurasian Economic Union, the European Union, and the ASEAN Economic Community on top of that.

This, coupled with the prime location in the heart of Southeast Asia, makes Vietnam an ideal destination to gain access to the world’s major trade routes and facilitate export activities.

Despite the pandemic, Nestlé has announced investment in Vietnam worth more than $130 million over the next two years. Why did Nestlé decide to increase its investment at this time?

Since the onset of the pandemic, business has been tough for most companies. All aspects of our value chain have been impacted. More than 1,200 of our factory staff nationwide have made significant personal sacrifices while working with the stay-at-work model for nearly three months to ensure business continuity, and this has created significant challenges on their wellbeing and morale, as well as influenced production, supply, and costs. However, we have focused on protecting people, ensuring business continuity, and giving a helping hand to communities and also the Vietnamese government.

Despite all these challenges, we believe in the future of Vietnam as a global and regional manufacturing-hub and are increasing our sustainable investment. Today, the country is considered a global manufacturing hub for electronics and apparel. But we also want Vietnam to be a global manufacturing hub for packaged food.

With the availability of a skilled workforce and a great work ethic, Nestlé Vietnam’s manufacturing operations are among the most agile and efficient in the conglomerate. Therefore, Nestlé Group decided to invest $132 million in the next two years for a new coffee plant to double our export capacity and a new line for wet culinary products for export to Asia and Australia.

With the new investment, our coffee factory in the southern province of Dong Nai will become one of the largest coffee export factories in the world, and we will supply premium coffee to many developed markets in the world, including Japan, North America, and Europe.

What are Nestlé’s recommendations for the Vietnamese government to maintain production and business in Vietnam and esnuring safe reopening for all?

For the last 25 years, we have been on a journey to enhance Vietnamese lives and contribute to a healthier future for the nation. We have been doing this by aiming to be glocal company – combining the best of Nestlé’s global technologies and science with a deep understanding of what Vietnamese consumers really need.

On this journey, we would like to express our sincere gratitude to the Vietnamese government, particularly the regional management agencies in the provinces of Hung Yen, Dak Lak, and Dong Nai, and Ho Chi Minh City for their valuable support and cooperation in the last two and a half decades.

We fully support the government’s dual goals of pandemic prevention and economic recovery, but we should not miss out on the third goal: the wellbeing of the people. The lockdowns are taking a toll on the mental health of workers and even on people who are forced to stay indoors and work from home. We agree with the government’s strategic direction of living with the virus and would suggest reopening the economy and moving away from Directive 15 and 16 and avoiding to return to similar restrictive measures in the future.

Business and manufacturing need to be open, with a clear roadmap. The current business situation in Vietnam is watched closely by other foreign manufacturers. Thus, for Vietnam to maintain its regional and global competitiveness, we must act now.

We propose that businesses with proven track records and clear plans should be able to take on more responsibility for their operations and workers’ safety. The manufacturing bubble models have allowed continuity of operations during the pandemic and have proven to be extremely useful as an interim measure. But these models are not sustainable, especially for large, labour-intensive factories, such as those in footwear and textiles and garments.

Vaccines are the key to safe reopening and economic recovery. We are grateful that the government has prioritised Ho Chi Minh City and the southern economic region as a priority for its vaccination drive as these areas host several crucial production hubs for the entire economy.

At the same time, we would highlight that countrywide and inter-provincial coordination is critical in successfully tackling the pandemic and its ramifications. Different provinces have different policies and requirements on tests and frequencies, as well as on isolation and handling of infections, leading to significant production and supply chain disruptions. As we move toward a new normal, besides vaccinations, it will be important to have country-wide coordination of policies.

In that regard, we welcome the government’s support for businesses during the pandemic and the establishment of dedicated task forces led by Deputy Prime Minister Le Minh Khai to coordinate implementation.

In addition, we recommend Vietnam to engage other foreign-invested companies even more to contribute to communities in need. We believe that all companies have a responsibility to society and the communities they serve that goes beyond making money.

Ever since the pandemic began, Nestlé Vietnam has contributed nearly $2.89 million worth of products, cash, and medical equipment to hospitals, communities, and frontline forces.

We also responded to the government’s call to contribute to the vaccine fund. We will continue to partner with the government and other partners to support all in need.

One of most important factors for business success is the support from the Vietnamese government via proper policies and concrete actions that encourage the private sector’s development. As an overseas enterprise, we are very grateful for the government’s relentless efforts to speed up wider institutional reforms and further improve the business environment, as well as for its openness to listen to the concerns and recommendations from the private sector. We hope this openness and attitude of the government will continue to create a favourable environment for businesses so that they can resume operations soon.

By Thanh Van

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