Ten years ago, Vietnamese dairy firm Vinamilk already occupied an enviable position: it was one of the biggest public companies listed on the Ho Chi Minh City Stock Exchange, and its name was synonymous with the country’s dairy industry. But Vinamilk’s leaders were concerned with what the company lacked: an advanced corporate governance framework to promote long-term efficiency. Without it, the company’s prospects for sustainability promised to be far less rosy than its past.
So in 2012, Vinamilk joined the Asian Corporate Governance Association (ACGA) and committed to implement corporate governance best practices as outlined in IFC’s Corporate Governance Manual for Vietnamese public companies. The idea of corporate governance—a system of rules, principles, and processes by which a company is directed and controlled—was relatively new in Vietnam at that time. Vinamilk’s board decided to lead by example.
“Corporate governance is key to our long-term strategy and growth,” says Le Thi Bang Tam, Chairwoman of Vinamilk’s Board of Directors. “Over the years, we have established a robust corporate governance framework that is in sync with international best practices. This strengthens our Board and management accountability, and inspires trust among stakeholders in the market. It also promotes long-term interest of our shareowners.”
Results back up this belief. Vinamilk experienced an average annual revenue growth rate of 13.5 percent from 2012 to 2017, while its net profit rose 12 percent per year on average. Tam says that this is a credit to the improved corporate governance framework implemented following IFC’s recommendations. And closing the year 2017, Vinamilk’s profit after tax was a record high: over VND 10 trillion (about $456 million).
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