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Summary of Project Information (SPI)

This Summary of Project Information is prepared and distributed to the public 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 decision. Board dates are estimates only.
Project number24073
Project nameKhai Vy
CountryVietnam
SectorFurniture and Related Products
Department
Company nameKhai Vy
Environmental categoryB
Date SPI disclosedMay 5, 2005
Projected board dateJune 6, 2005
StatusActive
Previous EventsInvested: August 11, 2006
Signed: June 29, 2005
Approved: June 28, 2005

Description of company and purpose of project
Khai Vy Corporation (Khai Vy) and Duyen Hai Corporation (Duyen Hai) – known collectively as KVC or the group – together produce and export outdoor and indoor furniture to the Asian, European and North American markets and employ 6,200 workers in four operating sites across Vietnam. Total export market for the group is split 70% to European market, 25% to U.S. market and 5% to Asia. The group has its main factory in Ho Chi Minh City and three others are located in Binh Dinh Province.

By investing in this project, IFC will be providing longer-term financing to help a low cost Vietnamese company maintain its competitive edge while upgrading its operations, and improving environmental, social and corporate governance practices.

Project sponsor and major shareholders of project company
Mr. Doan Van Trang, the Chairman, founded the group in 1995. Prior to establishing Khai Vy, Mr. Trang worked in the local wood sector for nearly 17 years. Mr. Trang and his wife have majority ownership of the group with 90% of Khai Vy (Mr. Trang’s brother-in-law owns the remaining 10%) and 100% of Duyen Hai.

Total project cost and proposed IFC investment
The total project cost is estimated at $11.5 million project, which involves predominantly the expansion of permanent working capital. A small component (12% of project cost) of the funding would be directed towards additional capital expenditure. IFC’s proposed investment is $6 million in the form of an A Loan.

Location of project and description of site
KVC has four operating sites across Vietnam. The main site, Khai Vy Factory, is based in Ho Chi Minh City and the remaining three - Duyen Hai 1 Wood Processing Factory, Duyen Hai 2 Wood Processing Factory and Duyen Hai 3 Wood Processing Factory are located in Binh Dinh Province. The Binh Dinh Province is a predominantly rural and less developed province in Central Vietnam with vast forest resources.

Project Development Impact and IFC's Role
Development Impact:

KVC is an internationally competitive and export-oriented company that specializes in outdoor and indoor medium end furniture. The group has achieved low operating costs in Vietnam despite a partial reliance on imported wood. KVC benefits from long-term contracts with well-known established clients such as Carrefour and Costco and low cost skilled labor. The Project will allow the company to continue to compete internationally through the extension of its debt maturity. Domestic subsidies and tariffs appear to play no role in the company’s profitability.

IFC’s Role:

- In addition to providing financing, IFC would provide guidance to KVC on improving HR practices and safety measure and if necessary, would seek Trust Funds to provide technical assistance.

- Environmental Improvement and Guidance: IFC’s participation in the project will ensure that the Company meets IFC’s environmental and social standards, thereby building confidence and earning mileage with existing and potential clients. Additionally, with increasing demand for FSC certified wood in its markets, the group is open to IFC’s advice on managing raw material procurement risk.

Environmental and social issues - Category B
This is a Category B project according to IFC’s Environmental and Social Review procedure. Environmental, social and health and safety issues which may be associated with this project and which will be reviewed during project appraisal include: environmental and occupational health and safety management, employment conditions, wood sourcing from sustainable managed forests, air and water emissions, solid waste management and disposal, hazardous materials management, fire protection and emergency response and workplace conditions including occupational health and safety.

To view the environmental documents for this project, click here


Location of environmental documents in locally affected community
The environmental document Environmental Review Summary (ERS) will be available at the company’s headquarters in Ho Chi Minh City. (See the company’s address below).

To contact the project company, please write to:
Mr. Trang Van Doan, General Director
KVC
No 4, Dao Tri t.; Phu Nhun AR. D.7; HCM, Vietnam
Phone: + 848785 0115
Fax: + 848785 0113

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