Formosa
Background information/company profile
Formosa Plastics Corporation is a company which produces petrochemical products and other plastic products. It is located in Taiwan and it was founded in 1954 by Wang Yung-ching. In 2015, the company had higher sales and it was ranked as the fifth largest corporation in the world. In 2016, it was among the Forbes Global 2000 companies and ranked as No. 861. In Taiwan, the company is well known as the largest corporation which produces high capacity of PVC resin (FORMOSA PLASTICS GROUP, 2015). The company is also located in U.S.A as owned subsidiary. In financial performance, the company has enjoyed high margins and income revenue as a result of cheap petroleum prices. For example in 2015, the company’s income was US$ 1.5 million and this was an increase compared with 2014 which had US$ 0.3. In management concepts, the company focuses on ‘Diligence and Frugality’, sustainability, society development and ultimate excellence. The corporation has advanced processing in petroleum refining. It has logistic planning and production models which help the company meet the dynamic changes. The company also meets the demand of emerging petroleum market through located various trading houses in different areas in the globe (FORMOSA PLASTICS GROUP, 2015). In domestic market, the company ensures that all consumers’ ‘demand and preference are met. The management has created flexible marketing policies which boosts sales activities and market share. The policies include enhancing brand image, new customer sources, environmental gas stations and flexible pricing. Vertical integration and utility business are policies which the corporate implement to ensure smooth operation and profit maximization. Due to the high global economic growth, the company will create decision for future development, operation performance and higher achievements (FORMOSA PLASTICS GROUP, 2015).
Introduction
Environmental issues in Formosa Corporation have caused tough challenges in Vietnam. Despite the fact that cheap petroleum prices have caused a high demand on petroleum products, high profit margin and solid competition in this corporation, various unethical practices have caused a recession in the overall production. Though the company has a strong identity system which is tied with powerful development, the company lacks environmental business ethics (DesJardins, 2012). It is important to note that every organization or corporation should value the environmental ethics and understand the human interaction with nature. The corporation should be responsible in protecting the environment in which operations take place. Furthermore, corporations should understand that lack of environmental ethics will negatively affect the business operation and after all the business may collapse (DesJardins, 2012). Formosa Company is faced with environmental issues which range from environmental abuse and protection. The company is involved in the damage of natural environmental through discharging waste products thereby harming the ecological system. The waste has not only affected organism such as fish but also human beings (Ives, 2016). These are counted as immoral behaviors because the company for many years seems to be indifferent with the environment but rather focuses on a profitable business. The business and the management in general fails to understand the business ethics which are based on the idea that as human beings they should have the interest, moral obligation and be responsible in protecting the environment without following law. Formosa Corporation has caused environmental issues which have affected Vietnam where many fish have died; about 200,000 people have been affected and faced challenges from unfair compensation (Van, 2016).
Main issues
Marine pollution is among the main issues which Vietnam is facing as a result of Formosa’s unethical behavior. In the month of May, 2016, Vietnam’s people demonstrated their grievances and accused Taiwanese firm for causing an environmental disaster. In April 6 2016, there were several fish carcasses in Ha Tinh province (Nam, 2016). Later, other carcasses were found in three other provinces in central Vietnam. Protests expressed their feeling and demanded clean environment and investigation process in 1 May 2016. Hundreds of people argued that the company has brought the worst environmental disaster and caused death of fish in four provinces. The appalling thing is that Formosa corporation is indifferent with this matter from the evidence that Formosa spokesman said that “Vietnam should choose whether to catch fish and shrimp or to build a state-of-the-art steel mill”(Nam, 2016). The Vietnam government investigated and found 70 tonnes of dead fish and further investigation showed that Formosa Company had connected a sewage pipe which carried 12,000 cubic meters of waste every day. This clearly shows that the company has polluted the Vietnam’s ecosystem and affected the health of marine mammals (Ives, 2016). This is a big issue not only to the fishermen but also to the government which is responsible in addressing this issue. The scientific research on ocean environment confirms that human activities have highly affected the ecosystem and marine life through chemical particles in the ocean. As a result, marine mammals are not thriving for long and this not only affects the aquatic life but also the world economy. In this case, the company pollutes the ocean environment through connected a pipe directly to the ocean. Marine mammals such as fish are highly affected due to lack of oxygen and quality sea water (Ives, 2016). The toxic chemicals also affect the organisms through causing thermal pollution which makes temperature high and organism are unable to live in high temperature environment. The Vietnam populace is interested in the management of foreign investment, food safety and measures to protect the environment (Ives, 2016). The government is concentrating on creating a civil society which will help in addressing the environmental issues.
Ethics and economy go hand in hand and in this case environmental ethics has an impact on economic performance. Before affecting the economy, the business which fails to follow environmental ethics faces legal issues. For example, state government creates rules which a business should follow and failure to comply with rules results to large fines and other costly legal battle (DesJardins, 2012). In addition, failure to follow the rule may affect internal and external environment and as a result the business may face criminal charges. Other point is that the company with unethical behavior loses credibility and this affect the business image (DesJardins, 2012). In terms of economy, Vietnam is counting losses in tourism and fisheries sectors as a result of the environment disaster. A great impact is felt by central provinces of Vietnam since the environmental disaster which has occurred in the ocean has affected the tourism. In 2015, tourists had booked trips to these four provinces but the trip was canceled due to the disaster. It is important to note that tourism play an important role in economic development and when a country’s environment is unhealthy, economy cannot develop since tourists cannot visit surroundings which are unpleasant and unclean (Van, 2016). When the shores are contaminated, the economy is damaged in that a longer period will be required to restore the environment.
The toxic disaster has affected the life of 200,000 people in Vietnam. 41,000 are fishermen who rely on fishing in order to sustain their life. According to the Vietnam government, 41,000 fishermen who not only sustain their lives but also sustain the lives of 176,000 people have been highly affected (Van, 2016). The authority also asserted that the fishing activities have reduced following that out of the total number of seafood in monthly basis; the number has decreased by 1,600 tons per month. The unethical issue did not only affect the people’s lives and economy but it also created detestation between people and government. People accuses government as it failed to provide measures for protecting public health and it has offered a slow response on Formosa corporation (Clark, 2016). On May 2016, Vietnamese believed the long-anticipated visit of president Obama could save them from the environmental calamity. They petitioned the president and showed their interest in need of appropriate action against corporate wrongdoers. Vietnam’s citizenry wants a strong government which will implement international environmental standards. Government crisis argued that the government uses a long period for investigation and they argue that the incident could have been dealt with if the government took matter seriously from the beginning (Binh, 2016). The protest says that as a result of the late response, the Corporation will take decade in dealing with environmental issues. It is important to note that the environmental disaster is the worst ever and its impact on job and economy is immeasurable. They also blame the government for failing to hold rallies for discussing the incidence on mysterious deaths of fish. This is one way of showing that the government has a sluggish response (Binh, 2016).
The sluggish response with the government towards solving the environment disaster is brought by foreign investment and corruption. The Vietnam government is facing some challenges which hindered quick response to the environmental issues. There is evidence that the government is corrupt in that during Vietnam’s reforms conduct by national congress, the hot issues were fighting corruption, creating a transparent government and rule of law (Clark, 2016). However, environmental laws for foreign investors were overlooked. This clearly shows that the government ignores environmental laws and this is the issue which makes the populace become angrier with the government. The ruling party in Vietnam is not serious with government transparency because the environmental issue is not the only problem that affects the populace in Vietnam. These people face everyday problems such as corruption, police violence among many. Protests voices are not heard particularly when they express their opinions against South China Sea and Chinese actions (Clark, 2016). The violent condition of protests has made the corruption issues with the government to emerge. The populace in eager is see how the government will react not only to the pollution issue but also to the other deeper problems which has affected the Vietnam in many decades. The awful thing is that the government is reluctant and populace faced unexpected reaction such as arrests and violence from the government. Educated people in Vietnam who have adequate knowledge on global environment tell how the climate will affect Vietnam in future (Binh, 2016). The government itself is aware of the negative impact of climate change which will affect Vietnam and in particle the Mekong regions in future. However, despite the environmental concern, the government views the issue of climate change as an external threat. Vietnam has faced environmental scandals and people become irritated since the government does not take the matter at hand. For example in 2008, MSG polluted the environment by pumping untreated water into Thi Vai River over ten years. The company paid low fines and the matter was not disclosed to the public. These environmental issue and more have worsened the environment condition (Binh, 2016).
On June 30, 2016, the company admitted and agreed to take the responsibility and to compensate for disaster. The company also disclosed the information and said that there was a sewage pipe which imported 300tins of chemicals to the ocean. It apologized and agreed to compensate with $500 million (France-Presse, 2016). The compensation would help the local people recover from economic losses and get new employment. The compensation was also provided to help the four affected central provinces recover from the marine environment. To avoid corruption, Truong Hoa Binh, who is the deputy prime minister asked the government to approve corporation planning and follow standards and regulation when corruption arises (France-Presse, 2016). The deputy also urged the national institutions and all parties to implement law enforcement in order to deal with similar cases effectively. He said that the compensation money $500 million should be distributed equally to the affect people so that all people can restore their normal lives (Hoia Nguyen, 2016). The issue of corruption is still in Vietnam following that on Oct 2, 2012, 1,000 people from North central province petitioned the local government for unfair compensation. They argued that the government has provided small amount of compensation which failed to cover the total losses occurred (Nguyen & Pham, 2016). Despite the fact that corporation released the money, the local government showed slow pace in releasing the payouts. The corporate said it will cover 200,000 people who submitted their complaints to local authorities. However, villagers complained that some people were denied compensation and the government said they were not eligible. They also expressed their complaints and said the governments concealed some money and for that reason, Formosa should take the responsibility (Nguyen & Pham, 2016).
The environmental disaster in Vietnam introduced the issue of corruption with the government. The issue of corruption was made apparent when the civil society expressed their anger not only because of the compensation for environmental disaster but also for other governmental problems (Pike, 2016). The problem with the government is that it failed to implement anti-corruption law and this becomes a challenge to the public. Focusing on global corruption trend which was analyzed on July 2013, a high population of Vietnamese said that corruption is at a higher level. According to a report from the Transparency International, there is a higher level of corruption in Vietnam, compared with other nations like Asia. The survey showed that 55% of people from Vietnam said that the corruption is high and 48% in Southeast Asia said the corruption is low (Pike, 2016). In 2013, the Global corruption Barometer in Vietnam showed that populace in Vietnam does not trust the government in eliminating corruption. Several surveys in Vietnam have confirmed that corruption is a major problem in Vietnam and the areas affected by corruption are law enforcement, Property Township and public health (France-Presse, 2016). Other important point to note is that the corruption is at a higher level because the government lacks transparency and accountability. Many corruption opportunities are among the governmental agencies and this is brought by the fact that bureaucratic procedures are overlapped hence creates confusion. The Prime Minister Nguyen Tan Dung announced that under his leadership, there will be a new anti-corruption agency in order to end various corruption scandals (France-Presse, 2016). Since 2005 when the Anti-Corruption Law was implementing, corruption has remained to be a problems following that the government is has not shown accountability in implementation and enforcement. Despite the fact that various agencies such as the Steering Committee, Government Inspectorate and other have been assigned the duties to end corruption, corruption cases are still prosecuted. According the survey from USAID’s VNCI Project, paying commissions and petty corruption is viewed by the Vietnam government as a common business operation (Pike, 2016). The Anti-corruption law states that public official who practices corruption should receive criminal penalties. However, the government neglects the law and fails to effectively implement the law. Despite the fact that the government enforces the law and recommends the involved agencies to restructure the inspection measures and publicize officials’ corruption, corruption is a major concern (Pike, 2016). Vietnam citizens have the right to express to their concern and admit complaints when they notice failure with the government. However, the main problem is that when the citizens publicize the inefficient government, the government views the complaints as political criticism. Perpetrators are abused and arrested and their demonstration is regarded as an act against the law (Pike, 2016).
Conclusion
Formosa Corporation is a company which has developed given that in Taiwan, it is ranked as the largest private corporation. However, the company has one major challenge which has not only affected its overall operations but also the Vietnam. The literature review on environmental ethics above explains that for a company to have a sustainable development there must be environmental ethics. However, lack of environmental ethics results to environmental damage. When the environment is damaged, people, organism and economy are affected. In this case, Formosa Corporation caused a big challenge in Vietnam. The corporation polluted the environment by directly connecting a pipe to the Vietnam Ocean. Not only fish were affected, but also people and economy. A higher percentage of people in Vietnam rely on fishing to sustain their life. Due to environmental damage, people were left jobless and the economy declined in areas of Tourism.The Corporation did an important thing because it decided to offer compensation for the environmental disaster. It agreed to pay $500 million to cover the 200,000 people who were directly and indirectly affected. However, the issue of compensation raised the corruption problems where the affected people blamed the government for unfair compensation. The government was also blamed for the lack of transparency and slow response toward the environmental disaster. The sentiment from the villagers disclosed the corruption practices with the government. The essay concludes that even though the corporate had unethical environmental practices, the Vietnam government is weak since it has failed to implement and enforce Anti-corruption law which would solve corruption scandal which Vietnam has faced for various decades. Corruption is a major problem in Vietnam and the only way to deal with it is through implementing and enforcing the Anti-corruption law. The law together with enforcement action will help the government in preventing and detecting misconduct.
Reference
Ives Mike. (2016). “Outrage Over Fish Kill in Vietnam Simmers 6 Months Later”. The New York
Times 2017.
https://www.nytimes.com/2016/10/04/world/asia/formosa-vietnam-fish.html?_r=0
Nam Chi. (2016). “Vietnam blames toxic waste water from steel plant for mass fish deaths”.
theguardian 2016
https://www.theguardian.com/environment/2016/jul/01/vietnam-blames-toxic-waste-water-fom-steel-plant-for-mass-fish-deaths
Nguyen Mai & Pham My. (2016). “Vietnam says recovery from Formosa industrial disaster could take a Decade”. REUTERS 2016.http://www.reuters.com/article/us-vietnam-environment-formosa-plastics-idUSKBN14C1F5
Van V.Thanh. (2016). “Toxic disaster from Taiwanese company affects 200,000 people: Vietnam gov't”. VN EXPRESS INTERNATIONAL 2016.
http://e.vnexpress.net/news/news/toxic-disaster-from-taiwanese-company-affects-200-000-people-vietnam-gov-t-3443951.html
Hoia Nguyen. (2016). “Deputy PM Requests corruption probe into Formosa's licensing”. VN EXPRESS
INTERNATIONAL 2016.
http://e.vnexpress.net/news/news/deputy-pm-requests-corruption-probe-into-formosa-s-licensing-3429792.html
France-Presse A. (2016). “Vietnam court rejects fishermen lawsuits against Taiwan's Formosa”. RAPPLER
2016.
http://www.rappler.com/world/regions/asia-pacific/148611-vietnam-court-reject-fishermen-lawsuit-taiwan-formosa
Binh H. Minh. (2016). “Rare rallies in Vietnam over mysterious mass fish deaths”. REUTERS 2016.
http://www.reuters.com/article/us-vietnam-formosa-plastics-environment-idUSKCN0XS0U6
Clark Helen. (2016). “As fishing protests turn violent, Vietnam’s new government faces its first tests”. theinterpreter 2016
https://www.lowyinstitute.org/the-interpreter/fishing-protests-turn-violent-vietnams-new-government-faces-its-first-test
FORMOSA PLASTICS GROUP. (2015). 2015 Formosa Chemicals & Fibre Corporation Corporate Social Responsibility Report.
DesJardins, J. R. (2012). Environmental ethics. Belmont, Calif: Wadsworth.
Pike John. (2016).Vietnam – Corruption. GlobalSecurity.org.2016
http://www.globalsecurity.org/military/world/vietnam/corruption.htm
