Despite a challenging global and local economic climate, Mr Warrick Cleine, CEO of KPMG Vietnam and Cambodia, is particularly pleased with its Vietnam operations.
How do you view Vietnam’s economic performance in 2011?
2011 was a very challenging year for the global economy and Vietnam was no exception. The dual challenges of high inflation and high interest rates made the business environment very challenging. The good news is that global demand for Vietnam’s exports have remained relatively robust, and the country has continued to attract foreign investment, albeit at a lower rate than previously.
Of concern, the profitability of the Vietnamese corporate sector - whether State-owned, private or foreign invested - has come under pressure. Lower profits for business can mean lower tax revenues and lower capital investment, which will reduce the capacity of both the government and the business sector to weather the economic storm and rebuild after the financial crisis has passed.
There is an ongoing need for Vietnam to define its strategic competitive advantages and build upon those advantages in 2012. Relying on lower cost labour as a selling point is not sustainable as living conditions and salaries in Vietnam improve, and as new markets such as Myanmar are emerging to compete with Vietnam in attracting capital and trade.
How were KPMG’s business results in 2011 and what have been its achievements over the last few years?
KPMG has continued to build on its market presence as the largest professional services firm in Vietnam. In 2011 we employed around 300 graduates from Vietnam’s accounting, economics, business, banking and law universities, making us the largest single recruiter from these faculties. We are proud that our business provides world class careers to Vietnam’s talented young people.
Our Audit practice provides services to the foreign invested sector, giving multi-national corporations comfort when investing in Vietnam, and our services to the State, listed and private sectors are increasing as these entities demand better quality financial reporting.
Our Tax business is growing in line with ongoing increases in FDI, increasing sophistication in tax regulations, and increasing tax controversy as authorities enforce tax regulations and companies work to comply with the new requirements. KPMG’s Transactions and Restructuring team was extremely active in 2011, advising on a large number of M&A deals and helping the stressed corporate sector deal with the challenging financing environment. KPMG has proven that our services are part of the solution for business owners and management seeking to deal with the financial crisis in a constructive manner.
What are the possible challenges and opportunities for Vietnam’s economy in 2012? And what are the opportunities and challenges for auditing companies in general and for KPMG Vietnam in particular?
Business needs stability and certainty to prosper, and the government’s determination to stabilise the macro-economic situation is therefore an important priority. This means lowering inflation and interest rates, and ensuring that confidence in the currency is maintained. It is critical for Vietnam’s long-term growth that the banking system recognises and acts on bad and non-performing loans, and the same can be said of borrowers who are not addressing balance sheet weaknesses.
Use of the bankruptcy laws, and in particular the restructuring provisions, has rarely been applied in Vietnam to date, and should be viewed as an opportunity to start with a clean balance sheet and not as an admission of failure. It will be difficult, and therefore threatening to Vietnam’s ongoing success, if issues in the banking sector are not robustly addressed. Bank consolidation is only the start of this process, and is not an end in itself.
KPMG will continue to play an important role in Vietnam’s economic development through our ability to attract investors and capital to the country, our safeguarding of investors’ interests through our audit activities, our support of financial transparency and corporate governance in the capital markets, and our provision of tax advice and compliance services to Vietnam’s growing corporate sector.
What did KPMG Vietnam do in support of the local community during 2011?
KPMG supports the community by the nature of the work our 1,100 professionals in Vietnam do every day. Our audit, tax and advisory services help Vietnam’s corporate sector compete and succeed in Vietnam and internationally. We advise Vietnam’s leading corporations, helping them grow and prosper, employing more people in Vietnam, providing more and better goods and services, and paying taxes to support Vietnam’s public sector.
We also directly support Corporate Citizenship initiatives in a variety of ways. We adopt a Code of Conduct in Vietnam, which sees our professionals work to international standards of ethics. We offer Excellence Scholarships to Vietnamese students, along with internships and world class careers to the best and brightest Vietnamese graduates.
Additionally, our staff participate every year in KPMG Community Day, where over 1,100 KPMG’ers take a day off work to go into the community, working on health, the environment, education and poverty alleviation.
If you were asked to advise authorities on the further development of the economy and the auditing industry, what would you tell them?
As KPMG is the largest professional services firm in Vietnam, we work with the government every day, both directly and indirectly, in improving the business environment and public policy in these challenging times.
We continue to stress the importance of audit quality, the operation of healthy capital markets through financial transparency and corporate governance, the attraction of foreign capital by the adoption of a level playing field and the recognition that the demand for capital is competitive, and the operation of a robust but fair taxation system.