The success of these audit projects has opened up opportunities for EY Vietnam to participate in further consulting projects sponsored by international organizations to build capacity and reform SOEs.
Above all, with the right direction and the support of the EY Global team, EY Vietnam's team of business consultants has constantly grown, both in numbers and skills. We have developed a solid understanding of not only the SOE sector but also domestic businesses in general. This gives the firm the confidence to continue building on EY Global's methodology and fine-tune its advisory approach to the domestic market.
Innovation from corporate governance
Before 2008, the financial crisis and the global recession, the domestic economy was flourishing. Vietnam posted relatively good GDP growth, gradually approaching middle-income developing countries. A series of major developments – such as the launch of the Stock Market in 2000, the passing of the Enterprise Law in 2005, the Investment Law in 2005, as well as the WTO accession in 2007 – have created business opportunities and new markets for businesses, especially private and FDI enterprises. However, besides the successful integration and outstanding growth, businesses were also facing some fundamental challenges. These included the strong competition between domestic and foreign companies in technology, production costs and selling prices, as well as mounting pressure from imported goods. These challenges forced domestic enterprises to change. It has led to revamped business plans, improvements in corporate governance, and developed management and technical capabilities
We have received a steady flow of requests for consultancy, ranging from strategic and operational due diligence, financial and business process improvement to organizational restructuring and optimization as well as IT application. Not only providing services to clients from our global system, EY Vietnam also successfully approached domestic companies to help accelerate their development. By transforming family companies into well-organized joint-stock companies, EY Vietnam helped these businesses develop and attract investment. This affirmed EY Vietnam's strength in combining global experience with local understanding.
With each project, EY Vietnam has gradually accumulated a great deal of experience and has earned an industry-wide prestige for the quality of its consulting services and the dedication of its professional team of domestic experts supported by EY Global with knowledge and cutting-edge business administration know-how. More importantly, the firm has formed a deep understanding of corporate culture and business models in Vietnam.
In late 2008, the global financial crisis and the ensuing recession had a strong impact on Vietnam. Most production shrunk as business activities slowed down. The exports decreased with each passing month and the consumption and consumer price index fell, while some critical products and materials remained stagnant. The stock market stagnated as the stock price index continued to drop. The real estate market remained listless and intermittently froze over. These risks caused great concern to companies, investors and institutions who failed to make adequate risk provisions or implement large-scale corporate risk management protocols.
Seeing to the heart of the issue and spotting the opportunities in the crisis, EY Vietnam led the way in promoting risk management among Vietnamese companies between 2009 and 2011. The crisis showed that internal controls, internal audits and enterprise-wide risk management were essential to making companies resilient to external shocks. With the support from the regional EY team, we reached out to clients and other companies to devise risk management plans on an expedited basis. The challenge was huge. Most of the companies did not understand the concept of business risk management or did not understand it "the right way", in accordance with international practices. Through great effort, we have made some critical progress in these pioneering projects.
As soon as we realized the positive impacts this move could bring, we were determined to repeat it on a broader scale. We wanted to disseminate risk management practices to listed companies and the State Securities Commission (SSC). Our goal was to provide the staff of the SSC, the Stock Exchange and listed companies with at least basic knowledge of international risk management principles and practices.
From the perspective of State management, adequate risk management at enterprises is an effective internal prevention and compliance mechanism to control and minimize the risks they may face.
Thus, it is impossible not to mention the efforts of EY Vietnam to stand side by side with the State's supervisory management agencies in the process of orientation and training. Those are fundamentals to help enterprises access the standard capacity and knowledge framework in the field of corporate risk management.
Following the success of this pivotal partnership, the SSC and EY Vietnam continued to cooperate in subsequent programs. These helped to bring the Vietnamese business community the most up-to-date information and recommendations to improve corporate governance and support the long-term development of the Vietnamese stock market. For its continuous contributions since 2010, EY Vietnam received a Certificate of Merit from the SSC in September 2013.
Its pioneering orientation has made EY Vietnam the leading risk consulting firm in Vietnam. The firm’s services not only benefit clients, they also have a positive influence on the general market. With many consulting projects on assessing, improving, and building corporate risk management strategies, as well as transforming internal control activities, the firm’s dedicated consulting team has been growing continuously. It has also been seamlessly collaborating with the EY Global team to develop risk management models for different industries.
Amid the economic, political and social turmoil, corporate governance rooted in standardization, transparency and systematization has given us a competitive advantage not only in Vietnam but also in the countries where we invest. It has helped us to continue generating value for our shareholders and partners participating in our value chain. Throughout our 5 years of companionship, EY Vietnam has been an important partner of SBT, a member of TTC Group, in building corporate governance systems such as risk and financial management systems. They have accompanied SBT in our expansion to Laos, Cambodia, Singapore and soon Australia. We highly appreciate the experience, professionalism and responsibility of EY Vietnam and their contributions to the development of both SBT and the Vietnamese economy.
Due to the nature of our business, we were aware of the importance of risk management relatively early. Economic and financial crises have a significant impact on businesses. Through the risk management project consulted by EY Vietnam, we not only had the opportunity to look at the overall risk picture of the enterprise but also assessed new risks from the changing economic environment. EY oil and gas industry consultants have been of great help with both up-to-date risk expertise and advanced risk modeling. As a result, we are more confident in seizing new opportunities. The project also laid the foundation for the building of a modern management model for PVD Drilling in the future.
Restructuring to embrace new opportunities
As the country integrated deeper into the world economy, the competition also became fiercer, not only for local but also for foreign companies. Imported products and services, offering high quality at reasonable prices, which has put a lot of pressure on home-made goods and domestic businesses. Companies could no longer operate in the traditional way, they had to embrace change to be able to compete. Besides, as companies grew stronger and had better access to capital markets, they started optimizing their cost structure and getting ready for IPOs.
Domestic industries like real estate, e-commerce, IT, retail and manufacturing of industrial products and automobiles are also driving growth. Businesses were engaged in wholesale restructuring to rationalize and streamline resources, maximize core competencies, create new competitive advantages and access capital through various channels such as IPOs, investment funds or strategic investment partners
In addition, after accumulating capital and experience in the domestic market, many large-scale enterprises have started looking abroad for business and capital.
EY Vietnam has constantly received requests for consultancy for business strategy reviews, as well as restructuring of ownership, operating and organizational models, from SOEs, global clients, private enterprises, family businesses and listed companies alike.
To provide comprehensive consultancy for businesses, EY Vietnam established a team of experienced consultants from diverse disciplines. Our tax and legal consultants provide clients with solutions that are effective, feasible and in compliance with the law. Meanwhile, finance and accounting consultants from EY Vietnam and EY Global provide industry-leading expertise to model restructuring scenarios. Simultaneously, EY corporate governance consultants review and help build operating models that are streamlined, effective and highly feasible.
Whenever an ownership model is restructured, tax efficiency must always be scrutinized. This is due to the tax costs of transformation transactions, IPO structuring or similar fundraising, as well as related compliance requirements. Moreover, tax efficiency brings values to businesses, especially those with a complex operating model featuring multiple separate companies or holding companies.
Auditing plays an important role, especially for businesses that are implementing restructuring projects, both before, during and after the restructuring. We give customers confidence in the success of restructuring projects, with practical experience in accompanying businesses in Vietnam, good practices in the world based on legal regulations in country. This is the most important value the clients are expecting from the audit firm.
Corporate restructuring projects are becoming more ambitious as most companies want to access capital markets and cooperate with strategic investors. There are constant opportunities to support businesses and we have made heavy investments in our ability to design solutions from strategy to operations. That is our strategy to be a trusted advisor that clients seek.
Corporate governance towards international standards
In addition to competition and a changing business environment, businesses felt significant pressure to reform from regulatory authorities and the capital and stock markets. These pressures drove companies to improve and enhance their corporate governance.
The Law on Enterprises (2014), the Law on Securities (2019), and relevant regulations set the direction and ground rules on corporate governance for public companies, in accordance to international standards.
The efforts of international organizations to bring global standards to the Vietnam market, along with guidelines and good governance practices, provided public companies with better visibility of the appropriate corporate governance principles as prescribed by relevant laws such as Handbook of Corporate Governance in Vietnam by SSC and IFC, October 2010. However, after 10 years, public companies had first received an instructive document about the principles of company management, called Code of Corperate Governance by Best Practice by SSC and IFC, published in August 2019. This was an encouraging and especially positive outcome.
EY Vietnam delivered not only analysis and benchmarks to relevant agencies and organizations, it has also supported numerous clients to implement the framework and critical components of corporate governance. These consulting services involved global best practices on corporate governance adjusted through insights from EY Vietnam.
With a holistic corporate governance approach based on corporate strategy in combination with the best governance practices in the pharmaceuticals and health sciences, EY Vietnam has helped us build principles and successfully transform critical components of corporate governance, from strategic planning, risk management to financial management. For us, the insights and working methods transferred by EY Vietnam have had high practical value and created positive effects on Hau Giang Pharma's day to day corporate governance.
Part 2. Future Planning
Data trends and digitization
Technology is transforming our social life and is changing rapidly today. Digital transformation has become a new trend and a challenge for businesses looking to secure a new competitive advantage. Businesses need to rethink their strategies and transform their business models and processes. The requirements of EY Vietnam's clients have inspired a great deal of dedication from our consulting team.
In a time of countless changes and uncertainties, companies are forced to undertake a transformation. Business leaders must simultaneously focus on solving the current problems, while identifying and exploiting the upcoming opportunities and understanding the major trend to "seize" the future.
EY Vietnam provided advisory services to Vietnam Posts and Telecommunications Group (VNPT) during the digital transformation journey of this state-owned telecommunications giant. In 2020, VNPT's leadership realized that the group needed to undertake a large-scale transformation to meet its growth targets and maintain its competitive position. EY Vietnam was the first choice of consulting partner to support this project. The firm was required to redesign major business processes to facilitate VNPT’s strategic orientation of offering mobile data services focusing on Customer Lifecycle Management and Customer Value Management, and based on VNPT’s digital management platform and big data analytics capabilities.
After a thorough analysis of reliability trends, management practices and the current state of affairs at VNPT, we helped the company not only transform their actionable business processes but also supported the pilot implementation of new business and management initiatives in accordance with the proposed model.
The world has truly changed in 2020 when the pandemic descended across the globe. In the blink of an eye, COVID-19 pushed the healthcare systems of many countries to the limit, sending the global economy into disarray. The pandemic has redrawn social norms and interactions, spurring the development of new technologies such as 5G, AI, IoT, AR/VR, machine learning, blockchain and new generation batteries. This will change every aspect of human life, from consumption to entire professions and the way we work. Digital transformation is inevitable, and the Government has been strongly promoting development in this direction.
Digital transformation is a key part of the repositioning businesses need today. Our Transformation Realized approach tested and verified across the globe helps our customers align their digital transformation strategy with their business vision through Future Back. When formulating a vision for digital transformation, we ensure it puts humans at the center, technology at speed and innovation at scale to help clients successfully transform. This model helps EY accompany businesses through every step of their digital transformation journey
Besides capital and human resources, data is now a paramount resource. Data helps companies not only make operational and strategic decisions but also helps them create new competitive advantages. What is more, data is always at the heart of digital transformation.
Understanding the importance of data and clients’ concerns, with support from EY Global and the region, we will continue to strengthen our team and consulting tools to help clients build reliable data structures to standardize, reuse, and scale data and data models. In particular, we will support the effective application of multi-dimensional data analytics for strategic decisions in business.
Cloud technology enables businesses to transform, set themselves apart and gain a competitive advantage. It is a big leap from traditional IT solutions. Cloud computing helps optimize business resources by providing infrastructure, platform and software solutions for the entire supply chain while delivering financial and operational benefits.
Cloud technology is becoming a very important market segment for us. EY is ranked by International Data Corporation (IDC) as one of the top three cloud technology service providers in the world. With an excellent team, the support of EY Global, and close cooperation with technology partners, we are helping many clients assess their readiness, build strategy, deploy and optimize the operation of cloud technology.
Information security
Information security is a constantly increasing challenge. According to EY Annual Global Information Security Survey 2021 (GISS 2021), 77% of 1,400 global cybersecurity leaders claimed that the number of disruptive attacks, such as ransomware, has increased at their company over the past 12 months (compared to 59% in the previous year).
The challenge lies in identifying and managing threats from outside and within the company, vulnerabilities caused by weak business processes, as well as the impact of a security breach. When something goes wrong, the damage is not purely financial, there is a potentially significant loss of reputation, in addition to legal repercussions. Moreover, even indirect damage such as costs for litigation, crisis resolution, loss of market share, or disrupted supply chains could be substantial, with the impact often felt in the long run.
For many years now, we have been supporting a large number of clients, regulatory authorities and organizations to address cybersecurity issues. We have also quantified cyber risk by looking at cross-functional security capabilities for improvement and enhancement. In addition, with the support from our global and regional network, we will continue to build our capacity to perform specialized services to support the management and operation of corporate and institutional clients’ cybersecurity systems.
Currently, companies are struggling with inadequate awareness of cybersecurity issues. EY Vietnam, with its efforts to maintain constant development, is always ready to help clients safeguard their digital interests.
Strategy and digital transformation of the telecommunications industry
In Vietnam digital transformation is a strategic imperative, driven by our need for modernization, evolving consumer behavior and lifestyle, as well as market trends. It inherently challenges all strategic assumptions and we want to be at the forefront, supporting our clients in this vital industry.
Economic and technological disruptions are undermining long-standing assumptions in most sectors. This is a catalyst, prompting companies to create new business strategies and discover new approaches.
Post and telecommunications are crucial infrastructure and an effective management tool. It is also essential for the protection of national security and improving the cultural and social life of the people. It is also a profitable business sector, especially in the context of the digital economy and the COVID-19 pandemic.
In early 2021, EY Vietnam provided consultancy to MobiFone on its development strategy for 2021-2025, with a vision to 2030. The project aims to meet MobiFone's goals regarding technological innovation and an innovative governance model in the era of Industry 4.0.
According to the leader of MobiFone, by collaborating with a globally prestigious strategic consulting unit, MobiFone wants to fullfill its ambition of transforming from a traditional telecommunications services provider to a technology company providing digital infrastructure, digital services and digital content. MobiFone believes that our 2021-2025 development strategy will lay a solid foundation for MobiFone’s continued development.
Launching Ceremony of Development Strategy Consultancy Project 2021-2025, Vision 2030 for MobiFone, 2021
Within the scope of the project, EY Vietnam conducted a strategic analysis of the market and MobiFone's resources and operations. Based on these findings, EY Vietnam has supported MobiFone to complete the vision, goals and overall mission for its development until 2025 and vision to 2030. It offered the telecommunications giant comprehensive solutions to innovate its business and growth models. The changes proposed by the firm would revamp MobiFone’s strategies on telecommunications networks, IT, media, R&D, human resources and KPI tools.
EY Vietnam was honored to be chosen as the consultant for the strategic development project of VNPost Corporation with a 10-year vision to 2030, based on the pillars of logistics, wholesale and retail, as well as digital and financial services.
In addition to proposing multi-dimensional strategies, EY Vietnam also supported the implementation of the business strategies for each pillar. It also supported the monitoring of the overall strategy to help VnPost consolidate its leading position while building new capabilities to achieve the goals set for each pillar.
A major strategic risk companies face is developing new business segments in a discrete manner, based solely on their judgments of market trends. We help EY-Parthenon clients to challenge their long-standing assumptions. Our experts’ insights help our clients identify and solve core problems and grow together with their customers.
Affirm your position, step firmly into the future
Technology is not the only trend affecting the business and social landscape. Globalization, demographic change, the environment and the COVID-19 pandemic have all created changes. These changes are taking place from the roots, across many industries, transforming economic policies, as well as consumer and market dynamics.
Although less affected by COVID-19 than many others, the Vietnamese economy still suffered heavy damage. Its GDP growth of 2.58% in 2021 (2.91% in 2020) was the lowest in the past 30 years. Many service industries reported negative growth such as wholesale, retail, transportation and warehousing, lodging, as well as food and drink services. Meanwhile, finance, banking and insurance, information and communications, healthcare and social assistance were the sectors that maintained growth. The total capital mobilized by the stock market in the first 11 months of 2021 was estimated at VND444,941 billion, up 23% on a year-on-year basis, according to the General Statistics Office. Industries that are essential and where technology has been adopted earlier and at a larger scale (minimized human-to-human interaction), and where customer experience was placed at the center, seem to have gained the advantage and will soon generate superior value compared to others.
The pressure to change is huge for both our clients and EY Vietnam. As industries are being reshaped, consumers grow super smart and professions change, Vietnam needs to come to terms with change.
At a meeting with businesses on the 17th anniversary of Vietnam Entrepreneurs' Day in 2021, National Assembly Chairman Hue Dinh Vuong suggested that entrepreneurs and businesses need to proactively adapt their strategies, innovating business models and technology while keeping workers safe. He also highlighted that the pandemic had brought not only challenges but also new opportunities for the country’s development, promising that the National Assembly would always support the companies to thrive.
EY Vietnam will continue to offer consulting services to customers to identify growth opportunities, craft growth strategies and create new competitive advantages based on digital and technological platforms. The firm’s support leverage data and new technology from design to implementation, including AI, IoT, AR/VR, machine learning, RPA and blockchain – on technology platforms built and developed by EY Global. Simultaneously, EY Vietnam will accelerate support for building operational and corporate governance capabilities to enhance strategic planning, business risk management, technology, as well as financial and human risks.
Each success in EY Vietnam's 30-year journey helped the firm mature and acquire an effective combination of international knowhow and deep local understanding. The close and seamless collaboration has earned us valuable relationships with partners and built unrivaled trust in EY Vietnam.
Every success recorded on EY Vietnam's 30-year journey into business consulting bears the mark of a rapidly maturing consulting team, an effective combination of knowledge, tools, international experience and a deep understanding of local contexts and practices, close and seamless coordination between brilliant consultants, energized by the trust of clients, along with valuable relationships with relevant partners.
Placing people at the center, we understand our responsibilities and are committed to providing breakthrough interactions and experiences to consultants in particular and other employees in general, especially the technology experience.
Summary
Part 1. Pioneering innovation
Part 2. Future Planning
