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Environmental & Social Review Summary
This Environmental and Social Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.
East Asia and the Pacific
Masan Group Corporation
Date ESRS disclosed
February 18, 2010
Invested: July 6, 2010
Signed: May 11, 2010
Approved: May 6, 2010
View Summary of Proposed Investment (SPI),
Category & Applicable Standards
Key Issues& Mitigation
Overview of IFC's scope of review
The scope of review of Masan Food Corporation (the “Company” or “Masan Food”) compliance with IFC’s Performance Standards and local environmental, social and occupational health and safety standards, included assessment of the effectiveness of the Company’s environmental and social management system for its proposed capital expenditure projects and its ability to ensure and monitor compliance with regulatory requirements and IFC’s Performance Standards in its operations. The review relied on documents and reports made available by Masan Food and interviews conducted by IFC staff during their site visits to their manufacturing facilities located in Hanoi and Ho Chi Minh cities in Vietnam. During the visit IFC staff conducted interviews with key management personnel including plant managers, EH&S staff and Human Resources, as well as various engineering and support staff.
Masan Food is one of Vietnam’s largest packaged foodstuff companies with five subsidiaries that manufacture soy, chili and fish sauces, granules and instant noodles at facilities located in Hanoi, Ho Chi Minh City and Phu Quoc island in Vietnam. The company is seeking funding from IFC of up to $15 million to support its capital expenditure programs that include expansion in existing production capacity, modernization and setting up of new production lines in Hanoi and Ho Chi Minh City. In addition to its fish sauce blending facilities in Ho Chi Minh City, Masan Food also has a fish sauce production facility on Phu Quoc island in Vietnam. The scope of modernization/expansion will include construction of new production lines for instant noodles in Dai An Industrial Park, Hanoi, and relocation of sauce manufacturing operations from Tan Binh to the Tan Dong Hiep Industrial Park, Ho Chi Minh City. It is anticipated that some packaging operations will continue to operate at the Tan Binh facility post closure of the sauce manufacturing lines. The Company is also considering other opportunities to expand its presence in the agribusiness sector in Vietnam.
Identified applicable performance standards
While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:
- PS1: Social and Environmental Assessment and Management System;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement;
- PS5: Land Acquisition and Involuntary Resettlement; and
- PS6: Biodiversity Conservation and Sustainable Natural Resource Management;
Issues associated with the following PS were not encountered during the assessment of the project: PS4: Community Health Safety and Security – Masan Food facilities are located in well managed and maintained industrial parks with safe access roads and away from residential communities. Impacts or risks to nearby communities are marginal and no documented complaint has been presented since beginning of operations at any of the Company's facilities; PS7: No Indigenous People are known to have been in the area or affected by the project; PS8: No evidence of the presence or impact to issues associated with Cultural Heritage.
Because the proposed investment will be used to support future, but as yet, undefined projects in addition to existing projects, the principal Performance Standards to be applied to this investment are those listed above. A condition of IFC’s investment going forward will be that the Company shall consider all relevant social and environmental risks and impacts, including the issues identified in PS1 through PS8 while assessing any new business opportunities or service models.
Environmental and social categorization and rationale
This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Key environmental, health and safety, human resources and social issues that were reviewed included the following: Environmental and social management system; Quality and sustainability of water resources; Emissions to the environment – air, water and subsurface; Solid and hazardous materials management, including transportation; Life and fire safety; Community and occupational health and safety; Energy use and efficiency; and Community engagement; Land acquisition; sustainability of natural resources (anchovies for fish sauce); and issues associated with the supply chain. Masan Food has an actively engaged management team, and has presented specific plans to put in place a management oversight program that address key issues and gaps to ensure continued compliance with local regulatory requirements as well as consistency with IFC Performance Standards and applicable environmental, health and safety guidelines.
Key environmental and social issues and mitigation
Masan Food has provided information on its current practices and policies that seek to address these risks and impacts to ensure that the proposed project complies with or, will upon implementation of specific additional agreed measures, comply with host country laws and regulations and the IFC Performance Standards on Social and Environment Sustainability and applicable environmental, health and safety guidelines. Environmental, social and health and safety issues that require ameliorative measures will be addressed by Masan Food as part of IFC’s Equity and any associated Agreements.
Social and Environmental Assessment and Management Systems:
As required by local regulatory requirements, Masan Food has obtained approval for its construction and production operations at the industrial parks where they are located. Since these food and beverage manufacturing facilities are located within established industrial parks with adequate support infrastructure for the treatment and discharge of wastewater, Masan Food was not required under the Vietnamese regulatory framework to conduct a formal Environmental and Social Impact Assessment for its planned manufacturing operations. Nonetheless, management at Masan recognizes the importance of assessment and effective management of environmental and social issues, and plans to hire staff and implement policies and procedures that take into account these issues moving forward. The Company expects to achieve management system certifications for ISO 9000, 14000 and OHSAS 18000 as well as HACCP for food safety for all its operations by December 2010 (by which time the first phase of the move of the plant is expected to have been completed).
The Company’s management program includes operational policies and procedures that are implemented at the facilities level by HSE supervisors and line managers who report to management on a regular basis. Policies and procedures comply with applicable local regulatory requirements for operation of these facilities. As part of the Environmental and Social Action Plan (ESAP), Masan Food will implement an Environmental and Social Management System (ESMS) to provide consistent oversight of environmental, social and health and safety for all its operations, sub-contractors and supply chain. Masan Food will also designate an individual on the board of the Company to ensure compliance with group policies, procedures and regulatory requirements.
Human resources are managed effectively at the corporate level with oversight of all the Company's facilities and operations. Training of staff is done on a routine basis in compliance with Vietnamese workplace regulations. Facility managers are responsible to ensure that employees are adequately trained to perform their work safely. Masan Food has a monitoring program for occupational health and safety (OH&S) that are managed at the facilities level in compliance with local regulatory requirements. Managers monitor that standards are met in every facility and any reportable incidents are reported and follow up action taken when required. Reporting requirements comply with national laws and regulations, and will be designed to be consistent with applicable IFC policies and guidelines for the sector after achieving ISO and HACCP certification.
Labor and Working Conditions:
Masan Food employs more than 4,800 employees across all its operations which include manufacturing, sales and distribution. The Company has a Human Resources policy that is consistent with local and national regulatory requirements. The policy is included in employment contracts, and addresses working conditions, terms of employment, and wages and benefits. This information is provided in the form of an employee handbook at the time of induction. Employment relationships recognize the principals of non-discrimination and equal opportunity. Employees have the right to freedom of association and have the opportunity to collectively represent to the management any issues or grievances that they may have. Consistent with Vietnamese labor laws, employees at Masan Food have the right to be part of a trade union. Employees of the instant noodle manufacturing facilities located in the Dai An industrial park are unionized, while other facilities will have a trade union post consolidation of its operations. The minimum employment age at Masan Food is 18 years. Child labor or forced labor is not employed directly or by subcontractors. Subcontractors are expected to comply with all local labor requirements specified in contractual arrangements. There is a plan for accident prevention and worker safety consistent with local regulatory requirements. All employees in the company have to undergo a full training program at induction and subsequently regarding worker health and safety relevant to their job activity.
Masan Food will consolidate most of its manufacturing operations in Ho Chi Minh City to a single facility in the Tan Dong Hiep industrial zone by 2011. While some packaging operations will continue to operate at the Tan Binh facility, sauce manufacturing operations will be moved to the new facilities in the Tan Dong Hiep industrial zone. Consolidation of operations and increased automation may result in a work force reduction of almost 2,000 employees. As part of the agreed ESAP, Masan Food will develop an action plan to manage the retrenchment process in compliance with local regulatory requirements and IFC Performance Standard 2 on Labor and Working Conditions.
Occupational health and safety at Masan Food facilities are currently managed by ISO and HACCP consultants. Facilities are audited yearly by regulatory agencies to monitor compliance with labor regulations. As part of the agreed ESAP, Masan Food will retain an external occupational health and safety consultant to build internal capacity and develop an implementation plan to achieve international standards for occupational health and safety at all its facilities. It is anticipated that the Company's occupational health and safety performance will achieve consistency with applicable IFC policies and guidelines for the sector after recommendations from the external consultant are implemented and ISO and HACCP certification achieved.
Pollution Prevention and Abatement:
Emissions to the environment from Masan Food facilities include discharge of treated effluents, storm water and exhaust from boilers and miscellaneous process equipment. After completion of expansions and consolidation of operations, the Company will discharge 500 cubic meters per day from the noodle manufacturing operations in Hanoi, and about 1500 cubic meters per day of treated process wastewater from their operations in Ho Chi Minh City. Treated effluent from both operations will be discharged directly to surface water and have been designed to comply with Vietnamese regulations for discharge of treated wastewater to Class A water quality standards and, will meet compliance with IFC guidelines for the direct discharge of treated effluents to surface water bodies. Sanitary wastewater and storm water for both facilities is discharged to the collection and treatment system operated by the industrial parks. Air emissions are primarily from boilers that burn heavy fuel oil, and others that are anticipated to use mixed fuels with natural gas as the primary fuel. Masan Food is installing new emission control equipment to achieve compliance with local regulatory requirements for its boilers burning heavy fuels oil, and expects to commission this equipment by October 2009. Moving forward, as agreed in the ESAP, the company will ensure that specifications for procurement, training and resource allocation will be adequate to maintain consistent compliance with regulatory requirements and applicable IFC guidelines for the sector, for both process and sanitary wastewater treatment, and air emission control equipment at Masan production facilities in Hanoi, Ho Chi Minh City and Phu Quoc island.
Solid waste from Masan Food’s facilities includes both recyclable and non-recyclable materials that are sold to or disposed by licensed vendors. Limited quantities of hazardous wastes are also generated from Masan facilities including spent machine oils and lubricants, chemicals and containers from laboratories which are also disposed as per local regulatory requirements.
Annual fresh water consumption by Masan Foods after completion of expansion in production capacity and commissioning of new lines is estimated to exceed 2 million cubic meters for the facilities in Hanoi and Ho Chi Minh City. Water at the Hanoi facility is obtained from deep wells, and from the industrial park at the Ho Chi Minh city facility. Although local regulatory requirements neither mandate water conservation nor provide incentives for sustainable water usage, Masan Food will assess and take remedial action on reducing fresh water usage at its facilities as agreed in the ESAP.
After expansion and commissioning of new lines is complete in 2010, Masan Food is expected to consume about 24,000 MW-h of electric energy annually, all of which is obtained from the public service grid. Additionally Masan Food consumes 20,000 tons of heavy fuel oil and 8,000 cubic meters of gas. Net green house gas (GHG) emissions attributable to Masan Food’s consumption of energy is estimated to be about 75,000 metric tons of carbon dioxide equivalents per year. Energy and fuel consumption post consolidation will remain about the same per unit volume of product.
Land Acquisition and Involuntary Resettlement
The Masan Food group currently owns and operates five manufacturing facilities, and a number of distribution and warehousing centers in Vietnam. After consolidation of its operations in Ho Chi Minh city, the Company will have two primary manufacturing operations, including one in Hanoi (Dai An Industrial Park) and another in Ho Chi Minh City (Tan Dong Hiep Industrial Park). Masan Food has obtained long term leases on land use rights in these industrial parks for locating its manufacturing operations. The Dai An (147 ha) and Tan Dong Hiep (47 ha) parks were established by the Vietnamese government in August 1998 and January 2001, in which Masan Foods foot print is 4 ha and 10 ha respectively. Resettlement at the Dain An Industrial Park required the resettlement of 20 individuals from 5 families who were paid compensation above the prevailing fair market value of 24,000-31,000 VND/m2; the resettlement at the Tan Dong Hiep Industrial Park required the resettlement of 400 individuals from 51 families who were paid compensation above the prevailing fair market value of 15,000-42,000VND/m2 for agricultural land, and 100,000-500,000VND/m2 for homes.
Land acquisition and associated resettlement for establishing the parks was conducted by the government in accordance with the local regulatory guidelines, relevant laws, regulations and procedures established by the Vietnamese government and implemented by a government appointed Resettlement Committee. Compensation for land is based on a general land pricing framework by the government and Provincial People’s Committee which establishes the fair market value for the land or property being acquired. The government has confirmed that all due process was followed in the resettlement and that the compensation paid was equal to or better than the fair market value of the property acquired. Additionally the industrial parks provide jobs and training for people displaced due to resettlement activities. Further, Masan Food has confirmed that there are no outstanding legal actions challenging the acquisition of land or establishment of the industrial parks. As such, the reported outcomes of the land acquisition undertaken by the local government in Hanoi and Ho Chi Minh City are consistent with the objectives and requirements of IFC’s Performance Standard for Land Acquisition and Involuntary Resettlement.
Biodiversity Conservation and Sustainable Natural Resource Management
Masan Food produces about 30% of the fish sauce manufactured in Vietnam, and has 40% share of the market share in key cities. The annual Vietnamese demand is 150 million liters of raw fish sauce, most of which is manufactured from anchovies harvested around the Phu Quoc island in Vietnam. The company purchases 45 million liters of raw fish sauce from the spot market, without any long term contracts, and does not source more than 5% of its procurement from a single entity. The company manufactures an additional 5 million liters of raw fish sauce in its facility on Phu Quoc island from anchovies also harvested locally. In all Masan requires in excess of 40,000 tons annually of anchovies as raw material, much of which is sourced from Phu Quoc. The sustainability of the Phu Quoc anchovy fishery industry is therefore highly material to Masan's current operations.
Landing data available from the Kien Giang Fisheries Department shows about 15,000 tons of Anchovies for 2003 for the Phu Quoc district. While more recent data is not available to compare anchovy harvesting with the Maximum Sustainable Yield (MSY) for the Phu Quoc area, consumer demand for aquatic products sourced from environmentally and socially certified production systems such as the Marine Stewardship Council (MSC) are becoming increasingly relevant to the industry. An initial review of the fishery against MSC criteria was undertaken in 2004 which raised concerns on enforcement. Moving forward, as agreed in the ESAP, Masan Food will retain qualified expertise to help develop a system to monitor the Phu Quoc anchovy fishery and ensure that it continues to be below the Maximum Sustainable Yield (MSY), which is based on international best practice, and which reviews viability of third party certification options (such as MSC certification) for the fishery. If viability of third party certification is demonstrated, Masan Food is committed to achieve certification within three years from that date. If the Phu Quoc fishery exceeds MSY, IFC will require Masan to develop other sourcing options and/or collaborate with the government or other parties to achieve MSY.
Client's community engagement
Masan Foods has good neighborly relations with the communities in which it operates. No local communities have been significantly affected by environmental risks or impacts from Masan Foods ongoing operations. The company creates jobs and other opportunities for local communities, and has no adverse social impacts. As a result, no formal information dissemination activities have been undertaken so far. Notwithstanding, as part of its Environmental and Social Management program, Masan Food will establish methods for communicating environmental and social aspects to external interested parties and maintain procedures for receiving, documenting and responding to concerns from any external interested parties relating to the project. Masan will also report on its progress in ensuring implementation of sustainable business practices for the Anchovy industry.
For more information see the company’s website at
. masanfood.com or contact:
Mr. Michael H. Nguyen, Vice President
Address Central Plaza, Suite 802
17 Le Duan St., Dist.1. HCMC
Tel # 84-8-6256 3862
Local access of project documentation
Environmental and social information pertaining to the project will be available for access by the locally affected communities outside the company’s premises:
Masan Food Corporation
Lot 6, Tan Dong Hiep A Industrial Park
Di An Dist., Binh Duong Province, VN
Ho Chi Minh City:
Masan Food Corporation
Lot 22 Dai An Industrial Zone,
Hai Duong City, VN
Availability of Full Documentation
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