Phân tích báo cáo tài chính của vinamilk và quyết định mở rộng đầu tư sang thị trường thái lan và malaysia

Phân tích báo cáo tài chính của Vinamilk và quyết định mở rộng đầu tư sang thị
trường Thái lan và Malaysia của hãng
TABLE OF CONTENT

1.INTRODUCTION:.............................................................................................................2
2.CONTENT........................................................................................................................... 2
2.1Financial Analysis:........................................................................................................... 2
2.3 The legal and regulatory framework on foreign investment:.........................................11
2.4 National Risk Analysis..................................................................................................14
2.5 Business expansion strategy:........................................................................................18
3.CONCLUSION:................................................................................................................21
After analyzing financial situation of our company-Vinamilk; financial situation, Nation
risks, Legal & Regulatory Framework of Thailand and Malaysia; advantage &
disadvantage of entry modes to Malaysia, Group 3, in the role of Business Development
Team of Vinamilk company, gave out the analysis report as above to recommend to
CEO to expand Vinamilk’s current domestic business to the international business in
Malaysia, with the entry form of joint-venture with a Malaysia company, who has been
working in the dairy industry, to build a manufacturing plant and sell dairy products
there. Challenges are ahead, but with the analysis in detail as above, which will help us
to avoid the risks as much as possible and do the business more confident in Malaysia.
............................................................................................................................................... 21
4.REFERENCE....................................................................................................................21
5.ATTACHEMENT..............................................................................................................22


1. INTRODUCTION:
Playing role of Business Development team of Vinamilk Joint Stock Company, which has
stock as VNM, listed on the HCM stock exchange-HOSE, Our group will proceed to study
business practices of 2 countries in Asian region: Thailand and Malaysia, to analyse financial
situation, nation risks, legal frameworks on foreign investment in these 2 coutries to report to
CEO of company for making decision of our company business expansion in the next time.

2. CONTENT
2.1 Financial Analysis:
2.1.1 Vinamilk JS Company Financial Statement Analysis :
Analyzing Financial Index of Vinamilk Joint Stock Company in 2012:
A. Liquidity Ratio: (unit: billion VND)
Current Ratio:
Current Assets

11.110

Current Ratio = ------------------------------- = ----------- = 2,68
Current Liabilities

4.144

Comment: 1 VND current liability in 2012 was secured by 2.68 the current assets, the ability
of liquidity by current asset is high.
Quick Ratio:
(Current Assets –Inventories)
Quick Ratio

= -----------------------------------------Current Liabilities
(11.110 – 3.473)
= ---------------------- = 1,84
4.144


Comment: 1 VND current liability in 2012 was secured by 1.84 VND shows the ability of
liquidity in a short term of company is good, ensure a quick liquidity for customer.
B. Effective Performance Ratio:

Inventory Turnover Ratio:
17.485
Inventory turnover ratio = ------------- = 5,18 round/year
3.373
Comment: Good inventory management capabilities, in 2012 with rapid inventory turnover
(5.18 cycles / year).

Days Sales Outstanding (DSO):
Receivables

2.208

DSO =------------------ = ------------- = 29,43 days
Average sales per day

75

Sale per year

26.561

Average sales per day = -------------------- = ------------ = 73,78 Bil VND/day
360

360

Comment: Average sales per day is high, VNM’s business effectiveness is very good. The
company DSO is about 30 days, which is acceptable.

Fixed Asset RatioTurnover Ratio

Net sales
Fixed Assets Turnover = -------------------------------------Net fixed asset
26.562
= ---------------- = 4,06
6.543


Comment: In 2012, 1 VND of fixed asset makes 4,06 VND of net sales, so fixed asset
turnover is high, which shows fixed asset used efficiently.
Total Asset Turnover:
Net sales
Total Asset turnover = -----------------------------------Total assets

26.561
= --------------------- = 1,5
17.640

Commentt: 1 VND of total fixed asset makes 1.5 VND of net sales. Value of total fixed asset
of commany increased which shows that the company expanded its business operations.

C. Debt Management ratio:
Debt/ asset ratio:

Total debt

4.204

Debt ratio = ---------------------- = ---------------- = 0,21
Total asset

19.698

Comment: 1 VND of asset finaced by 0,21 VND of debt, this ratio is hi-safe for the company.

Debt to equity ratio
Total liabilities
Debt to equity ratio

4.204

= ------------------------ = ---------------- = 0,27
Shareholders equity

15.493


Comment: the ratio < 1, show that the company has effective use of debt, the debts are
guaranteed payment.
Long term debt ration:
Long term debt

60

Long term debt to Equity Ration = -------------------------------- = ---------------- = 0,004
Equity

15.553

Comment: The use of long-term debt to long-term investment in the company in 2012 is very
low, companies limit the risks.

D. Earning power ratio:
Net Profit margin
Net income

5.819

Net Profit margin = ----------------------- = ------------- = 0,22
Sales

26.561

Comment: 1 VND of sales makes 0,22 VND of net profit. Business result(profit) of company
is very good.

Return on Assets-ROA
Net income

5.819

ROA = ----------------------------- = ------------- = 0,33
Total assets

17.640

Comment: 1 VND of asset makes 0,33 VND of net income. Asset joining in business
activities is high. The company was managed well and being used the asset effectively.
Return on Equity (ROE)
Net income

5.819

ROE = ---------------------------------- = ------------- = 0,42
Shareholder’s equity

13.985


Comment: 1VND of shareholder’s equity makes 0,42 VND of net income show that the
company is using effectively shareholder’s equity.
In summary:
- By analyzing the financial index, the financial situation of the company is healthy.
- The company operates efficiently, ROA and ROE are high.
- Net cash flow from operations is 5,294 billion, demonstrating a good cash flow balance, is a
prerequisite for re-investment.

 From the above analysis, the investment expansion of Vinamilk abroad is
entirely feasible.
2.1.2 Financial Situation Analysis of Malaysia and Thailand:
A. GDP Growth:
Thailand's strong growth in the end of 2012:
Social Development Commission and the national economy of Thailand (NESDB) on 18/2
for gross domestic product (GDP) of the country in the quarter 4/2012 increased 18.9%
compared to the same period last year, and up 3.1% from the previous quarter.
NESDB projected GDP growth of Thailand in 2013 will reach 4.5 to 5.5 percent.
CEO NESDB, Arkhom Termpittayapaisith, said that the economic recovery in the U.S.,
China and Europe will also have a positive impact on exports of Thailand.
Malaysian economy grew 5.6% in 2012:
Central Bank of Malaysia, said despite facing difficulties and the impact of the global
economic crisis, but in 2012 the Malaysian economy grew by 5.6%. Particularly in quarter

4/2012, the economy grew a record 6.4%.
B. Capital market
Malaysia
Malaysian capital market is highly appreciated by international commune
Malaysia's capital market has achieved high results in a recent international assessment, even
better than some developed countries.
Framework of the country's capital markets, according to the International Monetary Fund
and the World Bank, the peak due to "fully implement" 34/37 rule of International
Organization of Securities Commissions (IOSCO).


Malaysian capital market in 2012 is unprecedented high, double-digit growth despite global
market volatility because of political and economic factors.
Annual Report of the Securities Commission (SC) Malaysia Malaysian capital market in
2012 showed that 16.4% 2470 billion ringgit (RM 793.3 billion U.S. dollars), stock market
capitalization increased 14.1%, assets under management increased by 19.2% and the Islamic
capital market increased by 22.6%.
Malaysia is well placed when the ASEAN Economic Community takes effect in 2015 and
when the capital markets are connected.
Mr. Ranjit Ajit Singh emphasized regional integration will be "extremely important" for
ASEAN, as it will allow the transaction to greater cross-border investment, fund distribution
easier and help the region cope competition from China and India.
However, he said that the ASEAN members still need to develop infrastructure in order to
facilitate cross-border investment even after standardization of the legal framework of the
capital market.
Thailand: Capital market in overview
The SSC model (as figure 1 below) consists of three major sectors, namely stability,
structure, and challenge. An ultimate goal of market stability can be decomposed into four
components, namely: liquidity, volatility, effciency, and transaction costs. In other words, our
goals of market stability bowls down to how to induce market liquidity, to control the market

volatility, to increase the market efficiency, and to minimize the transaction costs in the
market.
In order to achieve the ultimate goal of market stability, structures must be taken into
consideration.The structure components consists of exchanges (or market microstructure),
investors, listed companies (or products) and intermediaries (especially, brokerage firms).
Finally, the authors challenge theview on regulations, technology and procedure, competition
and behaviour for developing the stability of the Thai capital market.


Structure of Thai Capital Market:
-Exchange Structure:
The authorized secondary market in Thailand consists of three major markets, namely the
Securities Exchange of Thailand (SET), the Bangkok Stock Dealing Center (BSDC), and the
Bond Dealer Club (BDC). These authorized secondary markets are regulated by the
Securities and Exchange Commission (SEC).


- The Investor Structure of the Thai Capital Market
The investors in the SET (Security Exchange of Thai) are divided into four sectors:
individual investors, foreign investors, mutual funds, and brokerage portfolios. While mutual
funds and brokerage portfolios are institutional investors, foreign investors can actually be
divided into individual and institutional investors.

-

The Listed-Company Structure of the Thai Capital Market


In the capital market, Products include not only securities but also companies issuing
securities. The criteria of the basic qualifications for listing common or ordinary and

preferred shares are shown in Table 3.

C. Interest rate
InterestRate
Country
Malaysia
Thailand

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

1.08574
6.40100

5

8.848513

3.296312

2.906032

0.0345

1.263715

2.511636

1.448113

3.86649

3.10761

5.075493

6.009057

4.549112

2.302153

1.248565

1.989262

3.378127

3.083622

3.867492

Thailand: most economists expect the BoT will keep interest rates at 2.75% from now until
the end of 2013.
Malaysia: In Malaysia, the interest rate decisions are taken by The Central Bank of Malaysia
(Bank Negara Malaysia). The official interest rate is the Overnight Policy Rate.The
benchmark interest rate in Malaysia was last recorded at 3 percent. Interest Rate in Malaysia
is reported by the Bank Negara Malaysia. Historically, from 2004 until 2013, Malaysia
Interest Rate averaged 2.92 Percent reaching an all time high of 3.50 Percent in April of 2006
and a record low of 2 Percent in February of 2009.

D. Inflation
Inflation
Country
Malaysia
Thailand

2000

2002

2003

2004

2005

1.53474

2001
1.41678
5

2006

1.807873

0.992816

1.518542

2.960865

3.609236

1.591969

1.626909

0.697309

1.80435

2.759149

4.540369

4.637474

2007

2008

2009

2.027353

5.440782

0.583308

2.241541

5.46849

0.84572


Thailand: Thailand's inflation in February / 2013 dropped to 3.23%, lower than the median
forecast of 3.4 percent in a Reuter poll and 3.39% of 1/2013.
This is the second consecutive month inflation of Thailand reduced by government subsidies
caused commodity prices do not raise and the strong Baht makes imports cheaper.
Ministry of Commerce of Thailand also forecast inflation in quarter 1/2013 is 3.3% and at
2.8 to 3.4% in 2013, compared to 3.02% in 2012.

Malaysia: According to the Central Bank of Malaysia, the inflation index in quarter 4/2012 at
1.3%.

2.3 The legal and regulatory framework on foreign investment:
THAILAND:
Thailand's legal system is based on civil law system but there is some influence of the
common law system.
a. The provisions on import:
- Documents to import: import goods into Thailand must have documents: commercial
invoice (at least 5); lading (2); packing, special certificates (in the regulations on public
health), import and export license.
- Commodities of import restrictions: the government agencies are responsible for controlling
the import, marketing, distribution and sale of goods, including Administration Food and
Drug Administration, Bureau of Customs, Department of Agriculture business and industry;
including some commodities such as agricultural products, chemicals, garments, Milk, Wood,
Flour ...
- The goods banned from export, import: Cigarettes, Arsenic, ethylene diclorua, chemical
thallium waste and waste.
- Temporary import: under Tariff Thai law, a certain number of items if temporary import and
re-exported within six months from the date of accession, shall be exempt from import duties
and / or taxes, but the importer must agreement with the tax authorities to ensure the item
will be re-exported within a certain period of time and may have to pay a fee to the tax
authorities.
b. Tax policy and tax rates:
- Import tax: appling the two columns under HS tariff, imports from ASEAN countries enjoy
preferential tariffs. Imported goods are usually subject to two taxes, import tax is calculated
based on the gathering import tax rates of the CIF value of the goods (the price includes the
value of goods, insurance and freight transport switch) and value added tax (VAT) is

calculated based on the entire CIF price and the import of goods. Common goods for reexport are exempt from import tax and VAT.
- Value Added Tax (VAT): applies to all goods and services produced (currently 7%) with the
exception of services sold agricultural products, books and newspapers.
-Corporate income tax: adjusted based on the profits of the company, equal to 30%.
c. Regulations on packaging and labeling:
- Packing: be made of secure and resistant to heat and moisture (avoid hay and straw
packing).
- Labels: very strict regulations on the labeling for dairy products, children's food, canned
food, vinegar, beverages, cooking oil and gunpowder. Labeling of food products must be
licensed by the Administration of Food and Drug Administration.
For drinks, the label must specify the percentage of alcohol in the product, warnings about
the dangers to health (if any) and must be printed in Thai.
d. Animal and plant quarantine regulations:
- All food items imported in Thailand must comply with health and safety requirements and
national standards in Thailand.
- The food items imported in Thai must be certified into medical quarantine with the
certifcate together with food import shipments. Food commodities must be certified in
accordance with hygiene standards, suitable for users , which allows import / export.
e. Established businesses:
Foreign enterprises can do business in Thailand in a number of forms:
- Joint venture: by a group of people with common economic interests through agreements
cooperation venture formed, it is not the Thai Civil and Commercial Code recognized but
still subject to enterprise income tax per Law on income.
- Branch company: when established, it must follow 1 certain provisions to calculate
correctly the income subject to Thai tax because the tax authorities considered gross income
of foreign companies gained in Thailand are taxable (branch wants to have a business license
must have a minimum capital of 5 million baht at the same rate over the next four years).
- Representative Office: limited to non-commercial activities such as sourcing of goods and
services in Thailand for the company or the inspection and supervision of the quality of
goods which it bought in Thailand and other activities, such as products marketing

management activities, new services, report on the situation of local business.
- Regional Office: established to act on behalf of the company to coordinate and direct the
activities of the subsidiary companies in the region, the advantage is not registered or
incorporated as a legal entity in Thailand and do not submit any financial reports with the
Business Registration Office.
MALAYSIA


Malaysia's legal system is mainly based on the common law (common law) of the United
Kingdom and each state has more system state laws given by the state's Legislative Council.
a. Legal environment for foreign investment in Malaysia:
Malaysia has signed investment guarantee agreements with 54 countries around the world.
Malaysia has no regulations restrictions on the transfer of profits abroad or import of capital.
Government encourages foreign direct investment in projects producing goods for export and
high-tech sectors on the basis of joint ventures but retains significant authority approval for
each investment project. For investment projects aimed at the domestic market, the
Malaysian government limits foreign capital contribution at 30% and requires foreign
companies to joint ventures with local partners in Malaysia.
b. Import and export regulations:
Documents imported: All imported goods (including goods not subject to import duty) must
declare the prescribed declaration form and submitted to the tax authority at the place of
importation.
- Import License: is mandatory for some items, including weapons and explosives, motor
vehicles, a number of pharmaceutical and chemical plants, some food ...
- Some items are prohibited imports: milk and dairy products import restrictions or import
ban.
c. Tax policy and tax rates:
- A federal tax legislation drafted and passed by parliament as income tax law, income tax
law from real property, law to promote investment ...
- Indirect Taxes including import and export tax, sales tax and services tax, domestic property

tax, entertainment tax, road tax.
- Malaysia has a system of comprehensive tax treaty and signed 48 agreements on tax to
twice tax avoidance and to encourage foreign direct investment. An important point of
agreement on a tax is "tax savings", which, interest is divided from income to be exempt the
tax under the tax incentives will be paid from the income tax payable.
- To ensure foreign investment capital, Malaysia has signed 54 agreement guaranteed
investment (IGA) to ensure for the investor that their funds are not expropriated or
nationalized and allows free to repatriate capital.
- Value Added Tax (VAT) in Malaysia has no, but consumption tax which is similar with VAT,
is included after unified sales tax and service tax (sales tax and service (SST).
- Import duties: to regulate the import of goods, in the range of 0% to 300%.
- Income tax: Malaysia do not have payroll taxes, wage income tax, sales and development.
d. Animal and plant quarantine regulations
- Import controlled goods through quarantine regulations: drugs and raw materials for the
production of drugs, pharmaceuticals, chemicals and additives for food.
- Goods with compulsory quarantine: raw materials used in food processing, manufacture of
drugs and pharmaceuticals
e. Free zones


Malaysia has the free zone (FZs) for the establishment of export-oriented manufacturing base
and storage of goods. Raw materials and equipment may be imported free tax in these areas
under the minimum customs procedures.
f. Regulation on standards for goods and services:
To be able to circulate in the market, some kind of end products are required to have some
sort of certification by the Ministry of Health Malaysia): Health Certificate, Free Sale
Certincate-FSC, Good Hygienne Practice (GHP) Certificate...
The packaged foods sold in Malaysia must be labeled nutrients including cereals, milk, juice,
soft drinks ...
g. Established a business in Malaysia:

The types of businesses to comply with the Enterprise Law of Malaysia, the type that is:
Corporation (the company must have at least "Berhad_Bhd" at the end of the company name
or the word "Sendiriam Berhad_Sdn Bhd" for private companies; branches of foreign
companies, limited liability companies and infinite.
Establishment of branches of companies in foreign: by ROC responsible agencies receive
registration documents established, ROC will approve the name of the branch on the basis of
review of records (including charter operations of branches and other documents as required
in English).
Business licensing regulations for the direct selling company: Malaysian law provisions: the
foreign party is not in power for more than 30% in a company that was established in the
country, the price increases must be approved by the Ministry of Domestic Trade and
Consumer (MDTCA).

2.4 National Risk Analysis
2.4.1 Foreign Exchange Rate risk
Foreign exchange risk refers to the risk faced due to fluctuating exchange rates. For example,
a Malaysian trader who exports palm oil to India for future payments in Rupees is faced with
the risk of Rupees depreciating against the Ringgit when the payment is made. This is
because if Rupee depreciates, a lesser amount of Ringgit will be received when the Rupees
are exchanged for Ringgit. Therefore, what originally seemed a profitable venture could turn
out to be a loss due to exchange rate fluctuatiosn. Such risks are quite common in
international trade and finance.


A significant number of international investment, trade and finance dealings are shelved due
to the unwillingness of parties concerned to bear foreign exchange risk. Hence it is
imperative for businesses to manage this foreign exchange risk so that they may concentrate
on what they are good at and eliminate or minimize a risk that is not their trade. Elsewhere
traditionally, the forward rates, currency futures and options have been used for this purpose.
The futures and options markets are also known as derivative

markets.
Malaysia:
The 1997 East Asian currency crisis made apparent how vulnerable currencies can be. The
speculative attacks on the Ringgit almost devastated the economy if not for the quick and
bold counter actions taken by the Malaysian government, particularly in checking the
offshore Ringgit transactions. It also became apparent the need for firms to manage foreign
exchange risk. Many individuals, firms and businesses found themselves helpless in the wake
of drastic exchange rate movements. Malaysia being among the most open countries in the
world in terms of international trade reflects the degree of Malaysia’s exposure to foreign
exchange risk.
 In Malaysia, futures and options on currencies are not available. This is a risk of
exchange rate for foreign investment.
Thailand:
Prior to 1997, Thailand operated under a fixed exchange rate regime. The mechanics of the
regime as well as the value of the peg were adjusted from time to time.
Thailand’s monetary policy after the crisis: After the floatation of the baht, the immediate
macroeconomic policy priority turned towards the restoration of both internal and external
stability. With the support of an IMF program, Thailand began to put in place a series of
economic adjustments and reforms to deal with the structural problems in the economy and
restore investor confidence
In regards to the monetary policy framework, a new nominal anchor as needed after the fixed
exchange rate regime was abandoned and Thailand adopted a monetary targeting regime
under an IMF program whereby domestic money supply was targeted to ensure
macroeconomic consistency. Together with a managed float currency regime on 2July 1997,
this framework gave the Bank of Thailand sufficient flexibility to respond quickly to fast
changing domestic and external developments while ensuring price stability in the long run.
Figure 2 shows that Thailand’s inflation and growth performance has generally been quite
good with the sharp recovery not accompanied by a corresponding pickup in inflation.

=> Thailand implemented Practical Applications of Effective Exchange Rate throughout
Assessment of competiveness, Assessing the degree of possible exchange rate misalignment,
Evaluating monetary and financial conditions, Guide for intervention operation to maintain
the stability of monetary policy & exchange rare regime and to limit exchange risk for
foreign investments.

2.4.2 Political risk and Financial risk
Weight assigned by us to factors according to importance when investing in Malaysia
Political Risk Factors
Rule of law : 20%
Regulatory quality : 30%
Political stability : 30%
Government effectiveness: 20%

Financial Risk Factors
Interest rates: 70%
Inflation: 30%

Weight assigned by us to factors according to importance when investing in Thailand
Political Risk Factors
Rule of law : 20%
Regulatory quality : 30%
Political stability : 25%

Financial factors
Interest rates: 70%
Inflation: 30%


Government effectiveness: 25%

The risk weights of investments in Malaysia and Thailand are determined subjectively from
us (Group 3) by observing the changes of the factors in the country Malaysia and Thailand.
By the calculation of risk weights on the national risk & financial risk on the above table, we
see the results of assessing the risk of the country of Thailand and Malaysia as follows:

Below is a diagram that shows the level of country risk fluctuations from year 2000-2010

From the above results, we see that:
Malaysia has fluctuating levels of country risk is very high. In 2000 the level of risk only is
-0.12 while only a year later, in 2001, this risk increased to more than 1 and decreased to
-0.11 in 2004. However, by 2009 this ratio had increased to 1.4 and 1.3 in 2010. High level of
vibration indicates the stability of this country is not high.
Malaysia is one of the few countries in Asia appreciated by the international financial
institutions on the growth potential of the economy. But behind the impressive appearance
that is potentially more dangerous risks, such as the budget deficit is too high and the
explosion of electronic trading systems


Meanwhile, Thailand has fluctuating levels of risk is not as high as Malaysia. Highest risk of
falls in 2008 is 1.48. That is the year when Thailand was impacted from the financial crisis in
2007 while the lowest was 0.48 and 0.49 in 2009 and 2010.
Thailand is a country in Asia has the growth potential of the economy. But it is still
potentially more dangerous risks, especially political changes in this country is very high.
Recently, the consulting firm on political and economic risks (PERC) in Hong Kong has
announced the results of the investigation, said the level of business risk in Thailand soared,
due to political problems in the country.
In a scale of 0 to 10 that PERC publication (the lower the better), Thailand ranks 9/14
countries with score of 5.49, business risk indicators is much higher than other ASEAN
countries such as: Singapore, Malaysia, Vietnam, etc.
As the graph shows, although risk fluctuate levels in Thailand is more stable than in

Malaysia, but look at the general level in 10 years, Malaysia has up to 7 years with a lower
level of risk compare to Thailand. If Malaysia is to control the consequences of the financial
crisis impact in 2009, certainly this risk will decrease in the next years.
According to the International Relations Committee - VCCI, besides Malaysia have
appropriate policies for each period for the development of foreign trade, there are many
reasons for Malaysia to become investment choices:
• This is where the crowded gathering of religious and ethnic groups such as Muslims
Malai, Indians, Chinese and many other ethnic groups, but people living in peace and
harmony.
• Malaysia is a safe country and has low crime rate. Law and favorable business climate.
• Malaysia is always open for foreigners to do business and they can buy real estate in his
own name, which can not get in most Southeast Asian countries.
• Malaysian Investment Promotion Agency (MIDA) is very professional in assisting
investors to explore business opportunities as well as to establish a company or set up
shop in Malaysia.
• Malaysia has good relations with all countries in the world and not hostile to any
neighbors.
 So, our company-Vinamilk decided to choose Malaysia to expand our

business.
2.5 Business expansion strategy:
Malaysia is a potential market for Vinamilk for a number of reasons:


-

The demand and domestic production capacity: Like other Asian countries, rapid
income growth, expanding urbanization and conversion constant diet puts increasing
pressure on the string high value agricultural supply in Malaysia, especially dairy
products.

-

Climate: Malaysia is hot and humid climate, with climate control as this is an obstacle
for livestock production as well as dairy products, since this leads to the local
production does not meet the demand.

The business environment in Malaysia is open to all countries, especially Asian countries:
- Malaysia has a stable political situation, many people live - Malay 50.4%, Chinese
23.7%, Indigenous 11%, Indian 7.1% other ethnic groups 7.8%. They maintain
political neutrality peace and stimulate economic development.
- Malaysian corporate income tax system is not too high:
Indicator

Malaysia

East Asia &
Pacific average
25

Payments (number
13
per year)
Time (hours per year)
133
209
Profit tax (%)
7.5
16.7
Labor tax and

15.6
10.9
contributions (%)
Other taxes (%)
1.4
6.9
Total tax rate (%
24.5
34.5
profit)
Nguồn: Doing Business in Malaysia 2013 – World Bank.

OECD high income
average
12
176
15.2
23.8
3.7
42

- Malaysia has the advance scientific and technology, this is the premise for the
-

research and development of new products.
Has joined the AFTA free trade, this is the basis for export abroad.

In the type of businesses (entry modes) to expand to Malaysia: Franchise, License, Turnkeys,
Export, Whole owned subsidiary and Joint Venture, each entry mode has a number of
actractions & limitations as follows:

• Franchise:
Franchise requires an existing product and preferred brand, the unique products and services
and market expectations for expansion. In fact, Vinamilk is a strong national brand, with a
wide variety of products, but on the world market in general and Asian countries in
particular, it is still new and is not expected in Malaysia.

• License:
License requires the product or manufacturer owns the technology, advanced manufacturing
processes, and and when a licensed company get ownership of production, it will bring more


profit for the company. Currently, Vinamilk owns many quality product lines and modern
production process, but in fact, these advantages are only within the national scope and are
not superior to the potential markets such as Malaysia. Therefore, it’s very difficult to enter
the Malyasia market in the form of License.
• Turnkeys:
When expanding into Malaysia market, Vinamilk focus on market share, so the investment in
the form of turnkey is not in accordance with the development strategy.
• Export:
This is the entry form is preferred because it is less cost and low risk, but in the long run with
this direction, the market will not take full advantage of Malaysia. Besides, the cows
livestock and dairy production industry in Malaysia don’t meet all the needs for the future
growth of company to expand domestic market and increase the market share in Malaysia. So
this enter mode is not suitbale.
• Whole owned Subsidiary:
Enter the Malyasia market by this form help Vinamilk reduce the risk of losing control over
core competence but it’s unattractive because Vinamilk bear the full cost and risk of setting
up all operations in Malaysia.
• Joint- venture:
When entering the Malaysian market, the form of Joint-venture by cooperating with a

Malyasian partner to build a dairy manfucturing factory in Malaysia was chosen
because of its several advantages:

- Vinamilk can benefit from the local partner’s knowledge of the Malaysia country’s
-

compatitive conditions, culture, language, politic sysystem & business system
The cost & risk are shared with this partner
Reduce risk of nationalization or other adverse government interference, which
Vinamilk may be not better than the partner.

However, Vinamilk will be prudent when giving control of its technology for the partner or
share ownership can lead to conflicts and battles for control if thier goals & objectives differ
or change over time.


3. CONCLUSION:
After analyzing financial situation of our company-Vinamilk; financial situation, Nation
risks, Legal & Regulatory Framework of Thailand and Malaysia; advantage & disadvantage
of entry modes to Malaysia, Group 3, in the role of Business Development Team of Vinamilk
company, gave out the analysis report as above to recommend to CEO to expand Vinamilk’s
current domestic business to the international business in Malaysia, with the entry form of
joint-venture with a Malaysia company, who has been working in the dairy industry, to build
a manufacturing plant and sell dairy products there. Challenges are ahead, but with the
analysis in detail as above, which will help us to avoid the risks as much as possible and do
the business more confident in Malaysia.
4. REFERENCE
/> /> /> /> /> /> /> /> /> /> /> /> />o/review/2010/Boniface_et_al.htm
Hồ Sơ Thị Trường Malaysia – Ban Quan Hệ Quốc Tế VCCI – tháng 2 năm 2012
/> />exchange risk)

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5. ATTACHEMENT

- Finance Statement of Vinamilk Joint Stock Company
- Nation Risk Analysis