While all Performance Standards are applicable to this investment, IFCs 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. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
PS 5 – Land Acquisition and Involuntary Resettlement
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

Key risks and issues related to this Project include: TMG’s corporate capacity, monitoring and performance to date in terms of E&S management; design plans for the proposed hotel developments and the use of an internationally recognized life and fire safety code for such; efficiency of raw material, water and energy use in hotel operations; emissions and waste management and disposal; labor and working conditions; management of contractors and suppliers (during construction and operational phases) and possibility of involuntary resettlement due to land acquisition for the Project in the future.

The Company is still finalizing the locations of its proposed greenfield hotels to be developed under the Project and is currently at an early stage of negotiations with several parties. The Company will, therefore, be required to develop policies and procedures to comply with PS5 requirements, in case any of these developments encounter involuntary resettlement or economic displacement.

Further, based on TMG’s current and proposed expansion plans, it is expected that the Project will not result in adverse material impacts on local indigenous groups, biodiversity and natural resources and cultural heritage. Hence PS6, PS7 and PS8 are not triggered; however, the Company will assess the applicability of these PSs for all the future developments, through the project screening and assessment procedure developed as per PS1 requirements.

The Project has a limited number of potentially adverse environmental and social impacts, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. On this basis, this project is therefore classified as a Category B project according to IFC’s Policy on Environmental and Social Sustainability.

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

- Environmental & Social Assessment:



For the proposed new developments under the Project, the Company will commission the ESIA study and shall procure the necessary environmental approvals for establishing and operating its greenfield hotels, once the detailed designs are finalized and will comply with the applicable mitigation measures as per the permit conditions..



Design and development are done strictly in accordance with local legal requirements - including the specifications outlined in the master plans of each city or area development, and the requirements defined by the permit conditions as well as Company’s corporate policies - such as those related to green building architecture, construction safety and resource efficiency.



- Assessing and Complying with Performance Standard Requirements for Future Developments



IFC’s investment may be used in the future for hotels yet to be designed and constructed. Locations/ land for these developments are yet to be finalized. The Company shall, therefore, assess all new business opportunities against, and comply with, the requirements of PS5, PS6, PS7 and PS8.



For compliance with PS5: Land Acquisition and Involuntary Resettlement, the Company will develop policies and procedures as described below under PS5.



Impacts related to PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources, PS7: Indigenous People and PS8: Cultural Heritage will be primarily identified and assessed through ESIA studies. For this purpose, TMG will accordingly include in the Scope of Work for the ESIA studies for all the future developments, an assessment of applicability of PS5-PS8. In case, issues related to these PSs are encountered, TMG will develop necessary mitigation measures to ensure compliance with the applicable requirements of these PSs.



With regard to cultural heritage, TMG will develop a formal procedure for managing chance finds (i.e. tangible cultural heritage encountered unexpectedly during project construction or operation), which will be applied in the event that cultural heritage is subsequently discovered. The Company will not disturb any chance find further until an assessment by competent professionals and local regulatory bodies is made and actions consistent with the requirements of local regulations and PS8 are identified. TMG will include specific clauses to this effect in the contracts of the excavation contractors.



- Management Systems:



As a condition of IFC’s previous investment, many of the TMG’s existing hotels have been certified compliant with ISO9001 Quality Management Systems (QMS), while the target is to achieve certification for all the properties by the end of 2013.



TMG has also implemented principles of HACCP (Hazard Analysis and Critical Control Point) food safety management system in its kitchens and food and beverage (F&B) outlets, which has been certified by local authority.



The Company has developed an Engineerin
g Department Operating System (EDOS) and Engineering Department Fire System (EDFS) including a detailed standard operating manual to guide both existing and newly hired technical staff on practices and requirements of the Engineering Department.



Similarly, TMG has developed corporate policies and procedures to manage and monitor its E&S performance, which are appropriate to the nature and scale of its operations, although these do not yet have any external certification. During the site visits a robust implementation of these E&S and safety procedures and practices was observed.



Going forward, as a condition of IFC’s new investment, TMG will establish an overarching sustainability policy defining its objectives and principles that will guide the Company to achieve sound EHS performance – including compliance with the applicable local laws and regulations and the IFC Performance Standards.



Moreover, in order to explore the possibility of implementing environmental management systems as per ISO14001 and Food Safety Management Systems as per ISO22000, Company will conduct a detailed gap analysis and feasibility study for implementation and external certification of these systems. Based on the outcomes of this exercise, Company will plan to progressively implement environmental and food safety management systems across all its operations with possibly external certification in the future.



- Organization:



TMG has designated staff – both at corporate level as well as at each facility - with clearly defined responsibilities to manage operational E&S issues such as waste management, labor and working conditions, energy and water usage efficiency, and life and fire safety.



General Managers and Chief Engineer at each hotel are responsible for day-to-day activities at their facility, supported by a team from various departments. This E&S team at each hotel also reports to the Group Technical Director (Engineering Department) who is responsible for ensuring proper functioning of all hotels’ equipment and facilities, energy and water conservation programs, conducting fire safety exercises, and training the technical staff; in addition to the responsibility of developing new projects.



- Monitoring & Reporting:



Once operational, each hotel operates rather independently. The Company has developed a detailed monitoring program, which is implemented by each facility. At the hotel level, each General Manager and Chief Engineer monitor environmental performance through daily inspections, weekly meetings and compilation of monthly reports for the top management. Much of the data collection is automated using PLC (programmable logic controller) system.



Each facility submits information on key performance indicators (KPIs) including energy and water use, among others. Water and energy consumption data is collected at the facility level on daily basis, and monthly aggregates are submitted to corporate office once a month.

TMG employs a total of 1883 staff across all its facilities, of which 858 are women. The Company expects to have a headcount of about 2,000 by 2014-15 as the Project becomes operational. Except for some temporary staff locally recruited during peak season to assist the regular employees on the needs basis, all staff are regular employees with term contracts as per the Vietnamese law.



In addition, the inbound tour business works with about 200 freelancers working as tour guides, drivers, and crew members – who are on retainer contracts with the Company.



- Human Resources (HR) Policy, Management



HR policies and practices of TMG are consistent with Vietnam’s legal requirements as well as IFC’s PS2 requirements. The Company has developed separate HR manuals for its tourism (hotels), tours and online business verticals, and shall develop one for the seaplane business in due course. These manuals are based on core HR policies and principles applied throughout TMG group, across all the verticals.



Dedicated HR teams for each vertical are in place at corporate level, responsible for HR management and training. In addition, each hotel has its own HR manager and other support staff to handle the day to day matters at facility level. TMG has a dedicated team of lawyers at corporate level which is responsible for ensuring legal compliance, including that related to HR and labor issues.



Terms of employment as well as rights and responsibilities of employees are formalized into employment contracts and an employee manual. Hiring and employment practices recognize the principles of non-discrimination and equal opportunity. There is no evidence of child or forced labor in the workforce.



Visits to hotels and discussions with staff confirmed working conditions to be reasonable, safe and clean. Remuneration is competitively determined by referencing market rates. Employment benefits offered to staff include health, unemployment and travel insurance; monthly and annual performance-based bonuses; company-paid training courses, annual leave and annual retreats. Meals and Housing (as needed) are provided for employees working at TMG hotels. Service charge collected from the guests is distributed amongst all the employees.



- Freedom of Association, Grievance Mechanism



As required by Vietnamese law, worker unions have been established and union membership includes all staff at TMG.



As part of its HR policies, a documented grievance mechanism is available for all the employees to raise any concerns and is included in the staff handbook given to each employee at the time of joining. Employees can raise their grievances either through unions, through supervisors or HR Grievance Committee, which has representation from employees, management and HR department.



During the site visits, TMG confirmed that there have been no labor disputes in its operations during the past years.



- Training and Human Resources Development



Being a ser
vice organization, training, capacity building and professional development of its staff are important aspects of the Company’s HR management. Accordingly, TMG focuses on developing and improving management skills for all leaders, managers and directors to be capable of supervising more staff, dealing with emergency issues, handling more responsibilities with professional skills.



A documented policy and structured program for training and staff development is in place, which includes separate objectives and internal/external training requirements for different grade levels in the organization (e.g. staff/leaders, managers and directors).



A structured and standardized performance review process is in place with well-defined Key Performance Indicators (KPIs) for all grade levels. Necessary formats for performance evaluation have been developed, which cover 360 degree feedbacks from supervisors, peers as well as juniors.



- Contractors /Construction Safety



TMG only works with contractors and sub-contractors which are legally registered entities. TMG ensures safety and welfare of construction workers by incorporating necessary clauses in the contract documents and controlling its implementation through ongoing monitoring. All contractors’ workers are required to be trained on safety aspect and are provided with appropriate PPE before commencing the work.



A Project Management Board is constituted for each new project, which together with the Compliance Department, is responsible for ongoing monitoring of contractors’ performance. On site safety is checked by the project department as well as management team from TMG side, in addition to safety supervisors of the contractor.



In case, labor accommodation is provided by the Company or contractor for the construction activities under the Project, TMG will include necessary clauses in the contracts regarding the quality and management of the workers’ accommodation and provision of basic services (such as minimum space, supply of water, adequate sewage and garbage disposal system, appropriate protection against heat, cold, damp, noise, fire and disease-carrying animals, adequate sanitary and washing facilities, ventilation, cooking and storage facilities and natural and artificial lighting, and in basic medical services as needed).



Further, TMG will ensure that the accommodation services will be provided in a manner consistent with the principles of non-discrimination and equal opportunity, and those will not restrict workers’ freedom of movement or of association.



- Occupational Health and Safety



While significant occupational health and safety risks to the employees are not anticipated due to the nature of working environment, TMG is committed to provide both guests and employees with a safe and healthy environment.



Adequate safety training is provided to all employees as part of induction training as well as annual training calendar. Some of the trainings (such as fire
safety) are provided by government departments.



Safety committees have been formed at each property, comprising of members from security and maintenance departments. The members of safety committee are specially trained and are also responsible for conducting mock fire and safety drills. A mock fire drill is conducted by the local government agencies once a year.



Detailed safety awareness messages have been displayed prominently for guests and the staff throughout the property, including especially the back of the house.

- Resource Efficiency:



TMG has launched a Water and Energy Conservation program since 2012, which has shown very positive results.



For instance, TMG’s Victoria Hoi An hotel reduced energy and water costs by over 1% in comparison with 2012, even though its occupancy increased by 12% and the electricity, gas, diesel price in Vietnam increased 5-7% and water price increased over 50%.



Similarly, in 2012 Victoria Can Tho hotel reduced its costs by about 6% in comparison with those in 2011, in spite of increase in fuel and water costs as well as occupancy.



These results were achieved mainly through better power demand management (e.g. deploying high loads during low-tariff off-peak hours), staff awareness, and reduction in wastages.



For its proposed greenfield hotel developments under the Project, TMG is planning to integrate several water and energy conservation measures in the design of new hotels such as:

better use of natural light and ventilation (high Window to Wall ratio, vertical and horizontal exterior shading on windows with a high shading factor, Naturally ventilated non air-conditioned corridors);

Energy and water efficient fixtures and fitting (Individual air conditioner units with inverter technology; high efficiency light bulbs, Occupancy sensor control of lights in corridors, Low flow showerheads with a maximum flow rate of 8 lit/min; aerators for taps; auto shut-off taps in all toilets resulting in water flow of 3 liters/min; dual flush for all water closets at 6 and 3 litres per flush; installation of solar hot-water collectors)

selection of energy efficient equipment in kitchen and laundry, including heat recovery from laundry waste water at minimum 30% efficiency.



- Energy Supply and Emissions:



For all the operational properties, as well as those proposed under the Project, electricity, sourced from the national grid, is/will be used for lighting, air conditioning, elevators, water heating and other mechanical and electrical systems in the back of the house. As a backup for emergency use, diesel-fired generators are provided.



In all its hotels, air-conditioners and electrical heaters for generating hot water are installed as individual units in each room and there are no centralized chillers or boilers.



All hotels use natural gas for kitchens and a few hotels have installed gas fired heaters for hot water for swimming pool and space heating.



As such, there will be minimal air emissions from the project.



- GHG Emissions:



GHG emissions from the Project are primarily due to energy consumption (electricity and gas), leakage from refrigeration systems, and the Jet fuel consumed by the seaplanes.



Accordingly, it is estimated that the Project’s annual Scope 1 and 2 GHG emissions due to fuel and electricity use, and making allowance for refrigerant leakage will be in the order of 8,000 tonnes CO2 equivalent once it is fully operational. Actual records will be used to review amounts of
tons CO2 equivalent per year that will be emitted from the Project once it becomes operational.



- Water Supply and Wastewater Management:



TMG sources water from local utility companies or deep wells in its premises. The usage is monitored and monthly payments are made according to the use. While many of its existing properties have installed filtration system for water treatment, all new properties will also have similar water treatment systems. Treated water is regularly tested to ensure its conformance with WHO drinking water quality standards.



After acquisition of Victoria Hotels, TMG has progressively installed wastewater treatment systems at its properties, and all the new developments will similarly have adequate wastewater treatment facilities on site. The treated wastewater is reused for gardening to the extent possible and the balance discharged outside the property as per the permit condition – either in the nearby river or in the municipal sewers.



Treated effluent is regularly monitored – by TMG as well as by regulatory agencies. Monitoring reports submitted by TMG confirm that the treated effluent meets the requirements of WBG EHS Guidelines.



- Solid and Hazardous Waste Management:



As in the existing hotels of TMG, new hotels will also follow the process of reduction, segregation, recycle, reuse for the solid waste. While recyclable waste (such as glass, paper and cartons) is sold to local recyclers, the other waste is disposed of through the licensed contractors and/or municipal solid waste management systems. Leftover food waste is picked up by nearby local pig farms.

- Life and Fire Safety



As per the requirement under the previous IFC investment, TMG commissioned a consultant from Thailand to carry out fire safety audits against NFPA in late 2011. All non-compliances have been corrected. As such, all TMG’s properties are in compliance with local standards and NFPA requirements for existing buildings.



TMG has developed standard requirements for fire safety systems design and operation which build upon the requirements of local and NFPA (National Fire Prevention Association, USA) fire safety codes for existing low rise buildings.



Each property is then designed in accordance with local and international fire safety regulations and equipped with appropriate firefighting systems consisting of: smoke/ heat detectors, glass breakers, fire alarm, emergency lighting, exit lights, hydrant, hose reel, fire extinguishers and central control panel. Regular training and fire/ evacuation drills are conducted to maintain the system.



For the new developments under the Project, TMG will commission a fire safety professional to develop a site-specific Life and Fire Safety Master Plan, responsive to all national requirements and an internationally accepted fire and life safety code, as required by the life and fire safety section of the WBG EHS General Guidelines. The fire safety professional shall represent that each building-specific Master Plan shall meet the requirements of local and an international code and the WBG EHS General Guidelines.



Following construction, the fire safety professional shall inspect the newly constructed buildings. TMG will submit to IFC certifications from this professional that each facility is designed, constructed, and operated in full compliance with the Life and Fire Safety Master Plan, or alternatively listing additional work needed for such compliance.



TMG will consider the potential risks due to earthquakes, typhoons as well as potential impact of tsunami in the design of the proposed buildings.



- Hygiene and Legionella:



TMG undertakes legionella monitoring across all its hotels. All TMG’s properties are accordingly certificated by local authorities for general hygiene and legionella. Also, there have been no past incidents of legionella infections from the use of water systems (e.g. showers, spa baths, evaporative cooling systems).



- Traffic / Vehicular Safety:



No traffic accidents related to TMG’s tour business (tourist boats, tourist vans and train cabin services) have been reported to date. Safe driving policies and guidelines are in place. The tourist boats have safety provisions in place such as unobstructed exits, life jackets, safety rafts, fire extinguishers, fire hoses, and sand pits.



Seaplanes proposed under the Project, will be operated by a reputed Australia-based international aviation firm, who is already operating seaplane flights in Sydney harbor. This operator will be responsible for ensuring aviation safety for TMG’s seaplane operat
ions – in accordance with local regulations as well international best practices modeled after Australian standards.

TMG closely engages with the local community near around its properties. For instance, it organizes annual community outreach activities such as a Green Action Day to raise environmental awareness amongst guests and local communities.

TMG has a policy of encouraging their hotels to buy produce and grains from local communities. The Mai Chau Lodge works closely with its neighboring ethnic communities to help develop income sources from selling handicrafts and other livelihood activities.

TMG runs a “voluntourism” program providing opportunities for tourists to take part in philanthropic activities during their stay in Vietnam.

To further formalize its community engagement activities, TMG will develop and implement a stakeholder engagement plan, comprising a grievance mechanism and plan for external communication on Project''s environmental and social impacts for the nearby communities and other stakeholders.

Thien Minh will place an advertisement in a major local newspaper both in Hanoi and Ho Chi Minh City to alert the public that results from IFC’s review is available for access.

It will also post a summary of the local language version of the environmental & social review summary (ESRS) and environmental & social action plan (ESAP) in a conspicuous location (e.g. front gate) at each of the existing facilities as well as project sites which are currently under development and/or construction.

The Sponsor will also post the local language ESRS and ESAP on its corporate website (http://www.thienminhtravel.com), and provide a web-link to IFC’s disclosed English-version ESRS and ESAP (english.thienminhtravel.com).

All inquiries and comments may be directed to:

Mr. Ho Viet Ha
Thien Minh Thien Minh Travel Joint Stock Company
Tel: +84(4)3828-0702
Fax: +84(4)3826-9370
Email: mailto:ha.ho@tmgroup.vn

Broad Community Support is not applicable for this project

Task Title/Description	Anticipated Completion Date
1.TMG will develop a standard operating procedure (SOP) for conducting E&S assessment of its future developments against the requirements of IFC PSs – specifically PS5, PS6, PS7 and PS8.	1/31/2014
2.With regard to cultural heritage, TMG will develop a formal procedure for managing chance finds (i.e. tangible cultural heritage encountered unexpectedly during project construction or operation), which will be applied in the event that cultural heritage is subsequently discovered.	1/31/2014
3.Establish an overarching sustainability policy defining its objectives and principles that will guide the Company to achieve sound EHS performance of the Project – including compliance with the applicable local laws and regulations and the IFC Performance Standards.	1/31/2014
4. TMG will conduct a detailed gap analysis and feasibility study for implementation and external certification of in order to explore the possibility of implementing environmental management systems as per ISO14001 and Food Safety Management Systems as per ISO22000.	6/30/2014
5. Develop standard language for contract clauses to be included in the future construction contracts regarding the quality and management of the workers’ accommodation and provision of basic services wherever applicable.	1/31/2014
6.TMG will develop an SOP for land acquisition for all its future developments, in compliance with the requirements of PS5.	1/31/2014
7.TMG will develop and implement a stakeholder engagement plan, comprising a grievance mechanism and plan for external communication on Project''''s environmental and social impacts for the nearby communities and other stakeholders.	3/31/2014
8.Provide to IFC a third-party certification from the competent professional that the designs of all new and refurbished hotels are in compliance with local as well as an internationally accepted life and fire safety standard.	Before Commencement of construction of any new hotel
9.Provide to IFC a third-party certification from the competent professional that each new hotel was constructed in full compliance with the design previously certified under Item 8.	After completion of construction of the Hospital and prior to commencement of operations