CSR CASE STUDY - AMATA VIETNAM

CORPORATE SOCIAL RESPONSIBILITY

Submitted by: Romerico A. Alvarez Submitted to: Dr. Chona Cayabat

1. IN WHAT WAYS DOES AMATA’S CSR APPROACH HELP ITS MARKETING?

Amata’s approach to CSR has become a major selling point especially with high-end customers as
world class companies, like the Japanese, want quality and predictability. These companies don’t
want surprises and don’t want to be embarrassed by problems with regulators or the community.
They have learned that they can be assured of no surprises and no embarrassment.
New clients are often brought to them by existing clients satisfied with the services provided by
Amata. Amata conveys this message – “you select a good site and focus only on getting production
started so that you can concentrate on what you do best”
Amata’s policy of providing services and infrastructures that are reliable and both socially and
environmentally responsible has given the estate a strong reputation. As a consulting company that
assists American companies expand business opportunities in Asia says, after inspecting several
estates in Vietnam – “Amata’s facility is known in Vietnam as being one of the top locations for
placing a factory and travelling throughout the industrial park, you immediately see why. Roads and
infrastructure are built to quality levels much higher than similar parks in Vietnam and the close
proximity of Bien Hoa City means ease in locating trained workers and ensures proper housing and
other support. Soil conditions are better than other parks that require extensive piling work.
Further, well-cared for grounds and reliable utilities are a hallmark of the facility.”
Amata’s primary CSR focus has been on environmental protection, and the company has used its
superior environmental services as a key part of its marketing strategy.

2. HOW WELL DOES THE “PERFECT CITY” FIT WITH GOOD CSR?
It pursues a long-term strategy built around corporate social responsibility (CSR} and the concept of
the ‘perfect city’ which provides a full package of facilities and services that allows investors to
focus on their core business while Amata deals with all other issues. Amata’s primary CSR focus has
been on environmental protection, and the company has used its superior environmental services
as a key part of its marketing strategy as well as an important factor in winning the trust of the local
and national governments. This trust has given Amata an advantage in servicing existing clients and
in winning new projects that require government approval.
Amata’s vision is not just building more factory sites and selling more industrial land. Their plan for
their industrial estates is one where it becomes a complete and balanced communities, where
business, people and nature can thrive together. The Perfect City provides business with high
quality services and facilities in prime locations, giving the people working in the estates
restaurants, shopping, recreation, housing and schools and even a world-class golf course and club.
For nature, it means sound environmental practices – ISO 14001 certification and zero-discharge
waste management.
In Thailand, where Amata’s head office is located and is home, as well, for its founder, Vikrom, the
Perfect City concept has led to the development of the full mix of industrial, commercial,
 educational, housing and recreational facilities. These include Satit Kaset multilingual school, the
Suankularb School, the Thai-German Institute for technical training, a YWCA fitness and community
center, the Amata Mansion condominiums, shopping plazas and the Amata Spring Country Club, a
world-class golf course. Amata Thailand has also sponsored the “Amata Green Award”- a
competition for the most beautiful garden spot at any of Amata’s factories.
In Vietnam so far, the focus has been on quality infrastructure and effective waste management.
Even though Amata was set up in Vietnam well before environmental laws and enforcement were
in place, Amata sought to meet high standards of waste treatment. Of particular importance was
the large volumes of waste water generated by 117 companies in the estate and the need to
maintain the water quality of the stream that runs through the estate and empties into the Dong
Nai River.
Every year, Amata issues its environmental policy to all staff, suppliers and contractors. It clarifies
the focus of the company in regards to good environmental practice, emphasizing the following
points:
- Strict implementation of environmental laws and regulations
- Prevention of problems rather than solving problems
- Recycling system according to the policy of zero-discharge
- Efficient use of natural resources and energy
- Maintenance of waste treatment plants and systems for maximum efficiency
- ‘Green and Clean’ mind and attitude among staff
- More efficient traffic management to ensure road safety with the estate

3. ARE AMATA’S EXPENSES FOR ENVIRONMENTAL PROTECTION WORTHWHILE IN FINANCIAL TERMS?

Yes, Amata’s strong and reliable CSR policies and its ‘Perfect City’ concept have paved the way for a
new project, the Amata Commercial Complex. This will take up 19.06 hectares and include a large
shopping center together with office buildings, villas, high rise apartments and lifestyle facilities to
meet the growing demand of Bien Hoa City and the Amata estate. Development is already under
way with construction five-story office building, called the Amata Service Center. The development
will help complete the infrastructure of Amata Industrial Park, satisfy demand from Bien Hoa City
investors and citizens for additional services and facilities as well as contribute to the socio-
economic development in the province.
The new project also brings Vietnam closer to the Perfect City concept developed in Thailand.
Amata said that by developing the new commercial complex, a new city quarter where
infrastructure, utilities, facilities, amenities and living environment in high quality standards will be
fully provided and soon realized. With this, the company will complete the development of an
industrial city, comprising mainly of an industrial estate and a commercial complex. As the industrial
development progresses, Amata will move to the high tech industries.
Amata’s policy of providing services and infrastructure that are reliable and both socially and
environmentally responsible has given the estate a strong reputation. This reputation has enabled
Amata Vietnam to make steadily increasing profits from 2001 – 2010, except for 2009 when the
company showed a lower profit level due to a change in accounting methods. Amata expects all
 land in the estate to be sold within the next four years and that sales would be strong on land being
acquired for an ambitious new project.

4. DOES AMATA’S INVESTMENT IN WASTE WATER TREATMENT BEYOND REQUIRED STANDARDS MAKE
GOOD BUSINESS SENSE?
Yes, as Amata was determined to go beyond compliance with environmental law to provide the
best possible environmental protection. This was why Amata upgraded its waste water treatment
plant in 2005 from the required Level B standard to Level A standard. The upgrades in standards
and analysis increased costs to the point that the estate lost money on its treatment. However, the
estate factories had willingly contributed to the added costs and that the expense was justified by
the good will generated with the authorities, the clients and the community.
Showing off the waste water treatment plant to a visitor, officials of Amata said that the treated
water was as clean as tap water and was used for watering plants in the estate. They pointed to the
large number of fish living in the final pond of the treatment plant.

5. HOW DOES AMATA’S EMPHASIS ON ENVIRONMENTAL CARE PROTECT THE COMPANY AND ITS
CUSTOMERS FROM RISK? HOW WOULD YOU CONTRAST THIS WITH THE CASE OF VEDAN VIETNAM?
Amata’s operations in both Thailand and Vietnam developed from the insight that most investors in
developing Asia want to focus on their core business competencies rather than the difficulties of
improving infrastructure, dealing with government permits, finding workers and meeting
environmental standards. Amata also saw that company location decisions were not driven simply
by cheap land prices, but by complex needs for access to transportation, availability of
appropriately skilled workers, provision of water and electricity, ability to handle solid and liquid
waste, and proximity to executive housing, recreation, clients, services and markets. Amata
addressed these needs through the concept of the Perfect City which provides clients with a high
quality, full service industrial estate, including infrastructure, such as roads capable of enduring
heavy industrial trucks and ready built factories, water, waste water treatment facilities, phone
lines, broadband internet, vehicle leasing, power, housing, shopping, a health clinic, schools and
restaurants. In other words, the perfect city is an ‘industrial estate that functions as a complete
town, where people can both earn a living and live well.’ This comprehensive approach has meant
land costs may be slightly higher than competitors, but it attracts top quality clients that appreciate
the long term benefits. Two large industrial estates were developed in Thailand on this concept and
it was extended to Vietnam to respond to the demand for industrial facilities there.
Amata realized that, as in Thailand, most foreign companies planning to manufacture in Vietnam
would face difficulties relating to infrastructure, environmental management, electricity, transport,
administrative procedures and tax policies. Amata’s provision of full services and infrastructure
under the Perfect City concept was well suited to relieving investors of those difficulties. The
environmental aspect of the concept was a critical part of the discussion between Amata owner
Vikrom and then Vietnamese Prime Minister Vo Van Kiet when Amata was seeking government
approval to acquire land for the estate.
Thus, it has been established that environmental protection was the key from the start. At that
point in time when there were few requirements, Amata decided to build the wastewater
 treatment plant to the highest specifications. Amata wanted to develop industry without harm to
the natural environment – to be in harmony with nature and society.
In the case of Vedan Vietnam Enterprise Corp., the following facts emerged. Vedan (Vietnam)
Enterprise Corp. Ltd. is a MSG (monosodium glutamate) plant. It was established in 1991, located in
Phuoc, Thai Village, Long Thanh District of Dong Nai Province – about 70 kilometers southeast of Ho
Chi Minh City. The plant was built next to Thi Vai River, therefore the waste water treatment had
great influence on Thi Vai. Studies showed that the river began to be polluted in 1994 right after
Vedan started its operation. In 1995 the river color started to change and a disgusting smell
emanated and immediately fish and shrimp raised by farmers were decimated due to the pollution.
By the end of that year, Vedan had to pay a compensation equivalent to USD 107,000.00 at todays
exchange rate to the farmers. However the pollution after that continued up to 2008 when Vedan
was caught in the act of dumping untreated sewage into Thi Vai River. That heavily polluted this
river, caused immense damage to the residents living near this river. Damages done include ill
effects on local residents health as it affected underground water for food and drinking use from
soil, air and water pollution, effects on farmland, and more importantly effects on Thi Vai itself. .All
these for the main reason that Vedan Vietnam wanted to cut down the cost of waste-processing.

6. HOW WOULD YOU CALCULATE THE VALUE OF THE TRUST THAT AMATA HAS EARNED WITH LOCAL
GOVERNMENT AND COMMUNITIES DUE TO ITS ENVIRONMENTAL POLICIES AND HANDLING OF
RESETTLEMENT?
Amata’s strong reputation and its relationship of trust with local government are leading to a much
bigger project to build a high tech city in Dong Nai’s Long Thanh District. The company hope to
receive the land area for the development of a new high tech industrial park in junction with a
modern service city from Dong Nai People’s Committee in the coming time. Vietnam’s national
government has already approved in principle the development of this project over an area of 1,500
hectares, which was awaiting approval from the local government in Dong Nai at the end of
September 2010.
Another key part of the company’s approach to social responsibility was tested when squatters
were occupying the land being sold to Amata for an upcoming project. The company decided
against forcible resettlement of the squatters, instead providing them with incentives to move.
Amata said that it took three rounds of negotiations with the squatters to convince them to move in
a process that took two and one half years. In other provinces, land owners just call in the police
but Amata wanted to be more understanding. Thjs slowed development of the site, but earned
good will from both the squatters and the local government. Amata said that it has learned that, in
the long run, the industrial estates that provide benefits to the community end up being more
stable and profitable.
As a consequence, due to all the actions by Amata, the Vietnamse government, both local and
national, also brings clients to the company. Amata officials said, “The government now trusts us to
fulfill our promises and cause them no problems, so they prefer to see new investors locate here.”