Impact Investing Landscape of

Vietnam
IMPACT INVESTMENT READINESS VIETNAM (IIRV)
PROJECT NO. P010406
DECEMBER 2022
TABLES OF CONTENTS
SECTION I: AN OVERVIEW OF IMPACT INVESTMENT READINESS VIETNAM (IIRV) PROJECT .. 1
SECTION II: MARKET RESEARCH OBJECTIVES .......................................................................... 5
SECTION III: ECOSYSTEM APPROACH AND DATA COLLECTION METHODOLOGY ................... 7
Phase 1. Conceptual Phase ....................................................................................................... 7
Phase 2: Empirical Phase .......................................................................................................... 7
Phase 3. Analytics Phase .......................................................................................................... 8
Phase 4. Design Phase.............................................................................................................. 9
Phase 5. Dissemination Phase ................................................................................................... 9
SECTION IV: MACROECONOMIC OUTLOOK ............................................................................ 11
GDP and Economic Growth..................................................................................................... 11
FDI ....................................................................................................................................... 13
Enterprise Development and Market Capitalization .................................................................. 14
Human Development Index (HDI) and Gender Equality ............................................................. 15
Vietnam SDGs ....................................................................................................................... 17
Responses to COVID–19 and Recovery Pathway ....................................................................... 18
SECTION V: IMPACT INVESTING LANDSCAPE IN THE COUNTRY DEVELOPMENT CONTEXT. 21
National Policy and Regulatory Framework ............................................................................. 21
Impact Investing Ecosystem and National Sustainable Development ......................................... 25
Current Impact Investing Ecosystem in Vietnam ....................................................................... 27
Social and Environmental Impact Measurements ..................................................................... 32
SECTION VI: DEMAND SIDE OF IMPACT INVESTING............................................................... 36
SIB Profile ............................................................................................................................. 36
SIB Financials, Capital Structure, and Capital Raising................................................................ 42
SIB Impact Potential, Agendas, and Development Goals ........................................................... 53
Impact of COVID-19 ............................................................................................................... 67
SECTION VII: SUPPLY SIDE OF IMPACT INVESTING................................................................ 72
Vietnam’s Foray into Sustainability and ESG ............................................................................ 72
IIX Approach ......................................................................................................................... 72
Gender and Access to Finance in Vietnam ................................................................................ 73
Avenues for Impact Investing.................................................................................................. 74
Global Impact Investing Trends ............................................................................................... 76
Impact Investing in ASEAN ..................................................................................................... 80
Overview of Traditional MSME Financing in Vietnam ................................................................ 85
GoV as an Ecosystem Enabler ................................................................................................. 89
 Pathways to Catalyze Impact Investing in Vietnam................................................................... 90
SECTION VIII: CONCLUSION ................................................................................................... 94
Short Term: IIRV Design, Intervention, and Implementation ..................................................... 94
Medium Term: Establishing Vietnam as A Global Player in Impact Investing ............................... 98
Long Term: Policy Development and Market Regulation ........................................................... 99
Conclusion .......................................................................................................................... 102
ACKNOWLEDGEMENTS ........................................................................................................ 103
BIBLIOGRAPHY ..................................................................................................................... 104
APPENDICES ......................................................................................................................... 108
TABLE OF FIGURES & TABLES
Figure 1. Spectrum of capital .......................................................................................................... 1
Figure 2. IIRV’s investment and technical assistance to enterprises by growth phase .................... 2
Figure 3. Key phases of market research ........................................................................................ 7
Figure 4. Key themes of market research surveys........................................................................... 8
Figure 5. Key project activities to be developed during the design phase ....................................... 9
Figure 6. Vietnam GDP Growth for the period 2010–2021 ............................................................ 12
Figure 7. Inflows of FDI to ASEAN–6, 2010–2021 .......................................................................... 13
Figure 8. Vietnam Market Capitalization, 2010–2020 ................................................................... 15
Figure 9. Global Gender Gap Trends in Vietnam, 2017–2022 ........................................................ 16
Figure 10 . Vietnam SDG Index 2016–2021 ................................................................................... 18
Figure 11. Vietnam LOE, 1990–2020 ............................................................................................ 23
Figure 12. Vietnam MSME Growth rate, 2010–2019 ..................................................................... 26
Figure 13. Impact Investing Ecosystem Enablers in Vietnam ........................................................ 28
Figure 14. Types of SIBs by location ..............................................................................................37
Figure 15. SIB Outreach ................................................................................................................ 38
Figure 16. SIBs’ ownership/ leadership by gender ......................................................................... 39
Figure 17. SIB Employee size and percentage of female employees ............................................. 39
Figure 18. SIBs by economic sectors and sub-sectors ................................................................... 40
Figure 19. SIBs involvement in industry value chains .................................................................... 42
Figure 20. SIB revenue for October 2021-2022 ............................................................................. 43
Figure 21. SIBs’ business results over the last 12 months (2021-2022) .......................................... 44
Figure 22. SIBs’ current debt......................................................................................................... 45
Figure 23. SIBs’ expected types of funding ................................................................................... 46
Figure 24. SIBs’ capital raised from foreign investors ................................................................... 46
Figure 25. SIBs’ confidence and readiness to absorb private capital ............................................. 47
Figure 26. SIBs’ projected capital raised from private sector ........................................................ 48
Figure 27. Ranking of SIBs’ capital raising purposes (1–5) ............................................................. 48
Figure 28. Ranking of SIBs’ familiarity with capital raising processes (1–5) ................................... 49
Figure 29. SIB familiarity with reporting requirements for and after raising capital ...................... 49
Figure 30. Ranking of challenges facing SIBs’ capital and business growth (1–9) .......................... 50
Figure 31. Activities to help SIBs access and convert investment opportunities ........................... 51
Figure 32. SIBs’ need for capacity building on impact investment readiness ................................ 52
Figure 33. SIBs’ need for capacity building on capital raising process ........................................... 52
Figure 34. Percentage of SIBs advancing each of 17 SDGs ............................................................ 54
Figure 35. Percentage of SIBs advancing specific development agendas ..................................... 54
Figure 36. SIBs creating positive environmental impact ............................................................... 55
Figure 37. SIBs supporting climate action ..................................................................................... 55
Figure 38. SIBs undertaking specific climate action ...................................................................... 56
Figure 39. SIBs with specific mitigation activity ............................................................................ 56
Figure 40. SIBs with specific adaptation activity ........................................................................... 57
Figure 41. SIBs adhering to sustainability, client protection, fair trade, or other sectoral
standards/principles ..................................................................................................................... 58
Figure 42. Areas that women-owned and men-owned SIBs focus on to create sustainable impacts
..................................................................................................................................................... 58
Figure 43. Number of people reached as employees, clients or customers and suppliers by all
surveyed SIBs ............................................................................................................................... 59
Figure 44. Number of people reached or beneficiaries by sector .................................................. 60
Figure 45. Classification of beneficiaries or people reached by women-owned and men-owned
SIBs .............................................................................................................................................. 61
Figure 46. Criteria for GLI ............................................................................................................. 61
Figure 47. Leadership profile of women-owned SIBs .................................................................... 62
Figure 48. Percentage of females among the beneficiaries or people reached by women-owned
and men-owned SIBs .................................................................................................................... 62
Figure 49. Percentage of females in the workforce of women-owned and men-owned SIBs ....... 63
Figure 50. Percentage of female employees in women-owned and men-owned SIBs (Legend:
Gray – none, Violet – 1 to 10%, Blue – 11 to 30%, Yellow – 31 to 50%, Green – 51 to 100%) .......... 63
Figure 51. COVID impacts on SIB cashflow to maintain staff and business operations ................. 68
Figure 52. COVID impacts on SIB revenue and profit .................................................................... 68
Figure 53. COVID impacts on SIB number of employees .............................................................. 69
Figure 54. COVID impacts on SIB number of customers and business partners ........................... 69
Figure 55. SIBs’ adaptation strategies to COVID ........................................................................... 70
Figure 56. Average Revenue Comparison of Women-Owned and Men-Owned Companies ..........73
Figure 57. Access to Finance – Comparison between Men-Owned and Women-Owned SIBs ...... 74
Figure 58. Spectrum of SEs and sources of capital available ......................................................... 75
Figure 59. Percentage of capital deployed.....................................................................................77
Figure 60. Investor Preference per Stage of Company ................................................................. 78
Figure 61. Geographical distribution of impact investing.............................................................. 78
Figure 62. Overall Investment Activity in SE Asia ......................................................................... 81
Figure 63. Capital Deployed per Deal Size .................................................................................... 84
Figure 64. Investor Activity Based on Sector ................................................................................ 85
Figure 65. Capital Deployed from Impact Investors in Vietnam .................................................... 87
Figure 66. Death Valley in business cycle...................................................................................... 88
Figure 67. IIX End to End Investment Readiness Services ............................................................. 96
Figure 68. IIX’s Impact Assessment Sustainability Pyramid .......................................................... 97
Figure 69. IIX’s Gender Lens Investing framework ........................................................................ 98

Table 1. Gender Equality Indicators for Economic Participation ....................................................17

Table 2. Summary of diversity among SIB owners and employees in North region. ..................... 65
Table 3. Summary of diversity among SIB owners and employees in the Central region. ............. 65
Table 4. Summary of diversity among SIB owners and employees in the South region. .............. 66
Table 5. Traditional financing vehicles .......................................................................................... 76
Table 6. Difference between TAPS and Incubators/Accelerators.................................................. 96
Table 7. IIRV results .................................................................................................................... 108
Section I: An Overview of Impact Investment
Readiness Vietnam (IIRV) Project
SECTION I: AN OVERVIEW OF IMPACT INVESTMENT READINESS
VIETNAM (IIRV) PROJECT

Commissioned by Global Affairs Canada (GAC), IIX is implementing the Impact Investment
Readiness Vietnam (IIRV) Project between 2022 and 2027. IIRV aims to create sustainable
livelihoods and improve the economic well–being of vulnerable groups in Vietnam,
particularly for women and people in disadvantaged areas, by increasing the impact
investment readiness of targeted social impact businesses (SIBs) and social enterprises (SEs).
IIX is using the concept of SIB in the IIRV framework based on GAC’s guidance.1

SIB and SE Concept Note

SEs were first recognised in Vietnam by legislation in 2015. They are required to meet criteria such
as addressing impact-driven issues for societal benefit and commit at least 51% of yearly profits
to reinvestments in registered objectives. The SIB concept was developed in the 2018 study
“Fostering the Growth of the Social Impact Business sector in Vietnam” conducted by the
National Economics University (NEU) with support from UNDP. UNDP introduced SIB as a wider
concept of SE—an organization or business with commerce as the main source of income and
clear–cut commitments to social or environmental objectives. SIBs maintain financial
sustainability while creating a positive impact on society. The SIB sector mainly consists of four
core groups: SEs; social businesses; social impact startups; and inclusive businesses. SIBs can be
in the form of companies, not–for–profit organizations with trading activities, cooperatives, and
schools. In 2018, the number of SIBs under the study was 22,000. It estimated that 49,800
organizations and initiatives would likely transform into SIBs.

The SIB terminology under IIRV closely correlates to investment capital that enterprises can
mobilize and deploy throughout their operations. A SIB differentiates itself from traditional
Micro, Small, and Medium-sized Enterprises (MSMEs) by source and use of capital, which is
geared towards environmental and social impact. SIBs are similar to traditional MSMEs in
their financial viability. Figure 1 illustrates the spectrum of capital.

Figure 1. Spectrum of capital

Grant Capital Social Finance Commercial Capital

Traditional Strategic Venture Socially

Impact Traditional
Philanthropy Philanthropy Philanthropy Responsible
Investing Investing
Investment

Geared towards social impact Geared towards returns

Copyright 2022 by IIX. All rights reserved. Source: IIX

SIBs conceived with the purpose of social and environmental impact, often born out of
philanthropic commitment, have limited access to capital outside of government funding

1 UNDP, 2018. Fostering the Growth of the Social Impact Business sector in Vietnam. Available here.

1
and international donors. Current SIB capital is almost wholly raised through grant funding.
Meanwhile, traditional MSMEs have access to commercial capital through investors, banks,
and commercial funds. IIRV seeks to drive the ecosystem to an equilibrium that bridges the
gap between impact and finance focus, creating balance by increasing the financial viability
of SIBs and leveraging the benefits of social and environmental impact to transform
traditional MSMEs into sustainable businesses (or sustainable MSMEs). Therefore, IIRV end
beneficiaries include SIBs as per the UNDP definition and traditional MSMEs that have the
potential to create greater sustainable impact.

IIRV will work to catalyze private investment into selected SIBs and sustainable MSMEs in
high-impact and women-focused sectors. On the demand side, the project will increase the
impact investment readiness of targeted enterprises to ensure that their internal processes
can meet impact investors’ and lenders’ requirements. This increases the likelihood that
these enterprises will effectively raise capital to scale operations and impact. Impact
investment readiness programs that cater to the varied needs of the SIBs and sustainable
MSMEs at different stages of growth will be tailored, as illustrated in Figure 2.

Figure 2. IIRV’s investment and technical assistance to enterprises by growth phase

Seed stage Early stage Growth stage Mature

Enterprises that Enterprises seeking Enterprises that Enterprises that have

have potential but capital that cannot have already built achieved scale at a
no proof-of concept be raised through the machinery for commercially
whose main source grants, their own growth and have competitive level and
of funding is grants, funding, or funding proven their can absorb a large
their own funding, from family and capacity to use amount of capital
or funding from friends, and deemed capital to fuel before an initial
family and friends too risky for faster growth public offering
commercial capital

Capacity building on Financing via innovative

In-depth technical instruments (eg:
basic financial
assistance and capital
literacy and business Women’s Livelihood
raising support
management BondTM)

Copyright 2022 by IIX. All rights reserved. Source: IIX

IIRV will focus on enhancing the level of business management and financial literacy skills
needed by smaller and early–stage SIBs in rural and disadvantaged regions while factoring
in gender and environmental issues that can help SIBs create a positive impact. For growth
stage SIBs, value-adding technical assistance (TA) and capital raising support (including deal
facilitation and transaction structuring) will be equipped via Impact Partners, an investment
placement platform. IIRV will also create infrastructure for the growth of the impact
investing ecosystem and engage players by improving business linkages within the

2
ecosystem and raising awareness on impact investing and gender-lens investing (GLI) in
Vietnam. IIRV expects to benefit more than 2,400 players in the impact investing ecosystem
directly and indirectly to achieve the development results summarized in Appendix 1. These
results are based on the IIX Project Implementation Plan.

IIX is aiming to unlock a minimum private investment of CA$ 6 million for SIBs committed to
social and environmental impact in Vietnam. Of this, CA$ 2.5 million investment capital is
expected to be raised for 20 (out of 200) SIBs. These are the SIBs that will receive in-depth
technical assistance/ capital raise support during the investment capital raising lifecycle, and
CA$ 3.5 is mobilized to other SIBs in Vietnam market (beyond the 200 directly benefitting
SIBs) as a result of the project building and strengthening the impact investing ecosystem
and connecting the capital supply and demand side throughout its fruitful activities and
movements.

3
Section II: Market Research Objectives

4
SECTION II: MARKET RESEARCH OBJECTIVES

IIX conducted a market study on the impact investing ecosystem in Vietnam from July–
December 2022. The objective of the market research was to assess the present impact
investing ecosystem and shape its development in the coming years (2023-2027) through
IIRV intervention. The designed intervention targets strengthening the impact investing
ecosystem, facilitating SIB growth, supporting gender equality, agriculture, health,
education, clean technology, and the environment, enhancing the impact investing
ecosystem, and increasing the inflow of private capital.

Key Research Themes

- The development of the impact investing ecosystem in Vietnam and how it has
contributed to recent development of the impact economy;
- Gaps in the ecosystem and solutions that may bridge them;
- SIB segments/sectors that have the most potential for impact;
- Factors that help SIBs, especially women–focused SIBs, succeed;
- Drivers of GLI that can unlock private investment;
- Drivers of sustainable/green investment by sector through environmental lens
assessment;
- Challenges facing investments; and
- Innovative financing solutions that meet the demands of the impact ecosystem in line
with GAC development priorities

These research themes constitute three core components under the market research—the
demand and supply sides of the impact investing market, and the enablers/intermediaries of
the impact investing ecosystem that consider financial, social, and environmental impact,
country policy frameworks, and legislation. The market research will generate insight on
Vietnam’s impact investing at the national and sub–national levels, providing evidence to
form the project intervention and serve the needs of relevant stakeholders including GAC
and ministries representing the Government of Vietnam (GoV). IIRV will contribute to
inclusive socioeconomic development in Vietnam, benefiting vulnerable demographics in
disadvantaged areas by increasing the quantum of private capital invested in SIBs.

5
Section III: Ecosystem Approach and
Data Collection Methodology

6
SECTION III: ECOSYSTEM APPROACH AND DATA COLLECTION
METHODOLOGY

IIX adopted a systematic five-phase approach as outlined in Figure 3.

Figure 3. Key phases of market research

Phase 1: Phase 2: Phase 3: Phase 4: Phase 5:

Conceptual Empirical Analytics Design Disseminati
Phase Phase Phase Phase on Phase
Copyright 2022 by IIX. All rights reserved. Source: IIX

Phase 1. Conceptual Phase

IIX reviewed Vietnam’s development plans, growth strategies, United Nations Sustainable
Development Goal (UNSDG) alignment, and relevant legislation to build an understanding
of Vietnam’s economy, investment landscape, development, and private sector
contribution. In parallel, IIX conducted an impact mapping, identifying key ecosystem
stakeholders including capital users (SIBs), capital providers (investors), and ecosystem
enablers (from the public, private, and non-profit sectors).

Recognizing these stakeholders as key components of IIRV, IIX involved them in developing
a detailed research plan. IIX developed selection criteria for project provinces, business
sectors, and SIBs that will be considered during IIRV implementation and also drew out the
implementation timeline and milestones for the research.

Phase 2: Empirical Phase

IIX leveraged its extensive database of published research reports and past work to create a
database of ecosystem stakeholders that included 1,978 SIBs nationwide, 90 impact
investors, and 105 ecosystem enablers. Online surveys were sent to each type of stakeholder.
The questionnaires were designed to capture the themes listed in Figure 4.

7
Figure 4. Key themes of market research surveys
SIB survey
• Business profile
• Social and environmental impact
• Financials and capital raising activity
• Challenges
• Impact of COVID-19 on business and adapatation strategy
• Need for capacity building and technical assistance
• Gender-Based Analysis (GBA) Plus

Impact investor survey

• Investor profile
• Impact investment activity including GLI
• Revolving role of GoV in impact investing
• Challenges

Ecosystem enabler survey

• Enabler profile
• Perception of impact investing in Vietnam
• Challenges faced by SIBs and proposed solutions
• Gender-Based Analysis (GBA) Plus

Detailed questionnaires can be found in Appendix 2.

Surveys were disseminated nationwide and sought to get a significant response from 14
cities and provinces identified in Phase 1. Selected provinces include Hanoi, Hai Phong, Ha
Giang, Yen Bai, Bac Ninh, Hai Duong, Thai Nguyen, Da Nang, Thua Thien Hue, Binh Duong,
Ho Chi Minh City (HCMC), Ben Tre, Tra Vinh, and Can Tho. IIX also contracted the Research
Institute for Innovation & Development to conduct surveys within their SIB database. In
total, SIB surveys received 189 responses. For more details on the survey data quality control,
please refer to Appendix 3.

In addition to surveys, Vietnamese and foreign impact investors interested in Vietnam were
organized into two focus groups to share their thoughts on impact investment market in
Vietnam. Key takeaways from the round tables will augment investor-side analysis for IIRV.

Phase 3. Analytics Phase

IIX conducted an in–depth analysis of the data collected in Phase 2. The analysis evaluated
the demand for and supply of capital and the roles of ecosystem enablers in the impact
investing market. A gap analysis identified crucial needs and opportunities for capacity
development, capital mobilization, and creation of market linkages. On the demand side, IIX
identified challenges facing SIBs in terms of capacity, investment readiness, access to
capital, and awareness of regulations, grouping SIBs by region, province, and urbanization.
On the supply side, IIX evaluated pipeline development, impact measurement, and
understanding of regulations.

8
GBA Plus (GBA+) identified social gaps related to access to capital and GLI from both
demand and supply sides2. Further, an environmental analysis focused on impact
assessment and opportunities in relevant sectors was conducted for the next
implementation phase. The analysis considered sectors such as agriculture that depend on
weather conditions, thus aligning with SDG 11–Sustainable Cities and Communities and SDG
13–Climate Action.

Policy analysis is an integral component of the analytics phase. IIX reviewed Vietnam’s
current regulatory space in impact investing, evaluated the policy gaps, and suggested
supportive policy development in line with best practices of other countries in ASEAN
(Association for South East Asian Nations) region.

Phase 4. Design Phase

IIX formulated the design of IIRV implementation by identifying patterns and drawing on
best practices from across the world. The project design was specifically customized to the
Vietnamese context—addressing key gaps and optimizing potential opportunities based on
national development plans. Key design phase activities are listed in Figure 5.

Figure 5. Key project activities to be developed during the design phase

Develop basic investment Enhance in-depth technical

Develop training program for
readiness training program for assistance and capital raising
investors/capital providers
SIBs support for SIBs

Expand and maintain IIX

Impact Partners' Design a country impact
Crowdfunding Platform investment index for Vietnam
localized for Vietnam

Phase 5. Dissemination Phase

IIX shared the draft market research with GAC for review, after which the final report will be
shared with the impact investing ecosystem online and via a dissemination event co–hosted
by GAC and IIX. The dissemination event will solicit feedback, opinions, and insights that
strengthen and adjust the IIRV implementation plan if needed, seek to align the Vietnam
impact investment ecosystem players, identify challenges and opportunities, and galvanize
stakeholder support throughout IIRV implementation (2023–2027).

2
A separate GBA+ analysis will be shared with GAC after the market paper. Only key findings from the
analysis are included in the main paper.

9
Section IV: Macroeconomic Outlook

10
SECTION IV: MACROECONOMIC OUTLOOK

Country facts This macroeconomic outlook of Vietnam’s socio–

- Population: 98.51 million (2021)– economic performance in recent years focuses on
urban: 31.7% and rural 62.9%3 gross domestic production (GDP) and key factors
- Population growth rate: 0.8% (2021)4 contributing to economic growth and poverty
- GDP: US$ 362.64 billion (2021)5
reduction such as foreign direct investment (FDI),
- GDP per capita: US$ 3,756.5 (2021)6
business environment, enterprise development,
- GDP growth rate: 2.58% (2021)7, 6.42%
(6 months of 2022)8 sources of financing for economic activities, and
- Real Interest rate: 4.9% (2021)9 human development indicators including gender
- Inflation: 1.8% (2021)10, 3.94% (Sept equality and gaps. This overview also highlights
2022)11 the country’s development projections,
- FDI net inflows: US$ 15.8 billion challenges, and opportunities on the pathway
(2020)12 towards sustainable development.
- Government 10-year Yield: 1.93% (Dec
2021)13
- Balance of trade: US$ 4.08 billion
(2021)14
- Public debt to GDP: 43.1% (2021)15
- Rating: BB+ Stable (S&P) (May 2022) 16
- Human development index (HDI):
0.703 (2021)17
- Gender gap index (World Economic
Forum): 87/156 countries18
- Gender inequality index (UNDP):
117/189 countries19
GDP and Economic Growth

Vietnam transformed from one of the poorest countries in the world to a lower middle–
income country because of a successful economic reform program that was started in 1986.
The GoV replaced its center–planned economic management model with a market–driven
economy oriented towards socialism, opened the economy to international trade and the

3 General Statistics Office of Vietnam, Infographic Population, Labor and Employment in 2021. Available here.
4 World Bank, Population growth (annual %) – Vietnam. Available here.
5 World Bank, GDP (current US$) – Vietnam. Available here.
6
World Bank, GDP per capita (current US$) – Vietnam. Available here.
7 Statista. Vietnam: Growth rate of real gross domestic product (GDP) from 2017 to 2027*. Available here.
8 General Statistics Office of Vietnam, Press Conference to Announce the Socio-economic Situation in the 2nd quarter and

6 months of 2022. Available here.

9 World Bank, Real interest rate (%) – Vietnam. Available here.
10 World Bank, Inflation, consumer prices (annual %) – Vietnam. Available here.
11 Trading Economics, Vietnam Inflation Rate. Available here.
12 World Bank, Foreign direct investment, net inflows (BoP, current US$) – Vietnam. Available here.
13 World Government Bonds, Vietnam 10 Years Bond – Historical Data. Available here.
14 General Statistics Office of Vietnam, Overcoming difficulties, export and import in 2021 to spectacular destination.

Available here.
15 Ministry of Finance, Bulletin Public Debt No.14. Available here.
16 Ministry of Finance, S&P Global Ratings (S&P) upgrades Vietnam sovereign credit rating to BB+, outlook Stable.

Available here.
17 UNDP, Planetary pressures-adjusted human development index (PHDI). Available here.
18 UN Women, Country Gender Equality Profile Vietnam 2021. Available here.
19 UN Women, Country Gender Equality Profile Vietnam 2021. Available here.

11
global market, and initiated pro–business reforms. This economic restructure coincided with
beneficial global trends in trade and investment liberalization, further enhancing Vietnam’s
global economic opportunities. Vietnam sustained high economic growth rates and became
one of the most dynamic countries in East Asia. GDP per capita increased 3.6 times from
2002–2021, reaching almost US$ 3,70020 and making Vietnam from the 8th to the 6th highest
GDP per capita country in ASEAN region.21 Vietnam posted GDP growth in 2020 despite
being severely affected by the COVID–19 pandemic. In 2021, the country was repeatedly hit
by the Delta variant and suffered a decrease in most economic indicators and targets, but
GDP growth remained at 2.58% as shown in Figure 6.22 23 Vietnam’s GDP growth rate is
expected to rebound to 6.05% in 2022 and continue expanding based on growth in exports,
domestic demand, and the manufacturing sector in the coming years.24

Figure 6. Vietnam GDP Growth for the period 2010–2021

GDP and GDP Growth Rate (2010 - 2021)

8 7 6.9 7.2 7.2 362.6 400
6.4 6.4 6.4 6.7 330.4 343.2

GDP (Current US$), Billion

GDP Growth (Annual, Percent)

7 308.7 350
5.5 5.6 281.4
6 257.1 300
233.5 239.3
5 213.7 250
195.6
4 172.6 2.9 200
147.2 2.6
3 150
2 100
1 50
0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

GDP (Current US$), Billion GDP Growth (Annual, Percent)

Source: World Bank Database

In the past decades, the GoV has enormously succeeded in improving social equality and
reducing poverty. Vietnam’s poverty rates as per the World Bank’s Lower–Middle Income
Class (LMIC) poverty line at US$ 3.20/day dropped to 5% in 2020 (from 16.8% in 2010, based
on 2011 purchasing power parity). Poverty rates among poorer groups, especially ethnic
minorities and households in the Midlands and Northern Mountains regions, were reduced
by 50% during the same period.

The multidimensional poverty25 approach factoring in income and non–monetary

dimensions including access to housing water, sanitation, education, health services, and
insurance was adopted in Vietnam in 2015. This approach was used to design the National
Target Program for Sustainable Poverty Reduction (NTP–SPR) 2016–2020. The country’s
poverty rate was 2.23% at the end of 2021.26 In fact, the rapid economic growth lifted a large

20 World Bank, Vietnam overview. Available here.

21
ASEANStatsDataPortal, Gross domestic product (GDP) per capita in ASEAN, at current prices (nominal), in US
dollars (Annually). Available here.
22 World Bank, GDP (current US$) – Vietnam. Available here.
23 World Bank, GDP growth (annual %) – Vietnam. Available here.
24 World Bank, Vietnam overview. Available here
25 Multidimensional Poverty Peer Network (MPPN), What is Multidimensional Poverty? Available here.
26 Government news, Poverty rate drops to 2.23%. Available here.

12
portion of population out of poverty. However, many remained economically vulnerable as
the development left behind those with fewer opportunities to join the most vibrant sectors.
A dynamic and growing economy with capital infusion in the growing SIBs/impactful MSMEs
can create jobs, increase public revenues for health and education programs, assist and
include vulnerable communities and lead to higher personal and household incomes that can
all work towards overall poverty reduction. Hence, growth of SIBs and sustainable MSMEs
can lead to inclusive poverty reduction and break intergenerational poverty patterns.27

FDI
Since Vietnam joined the World Trade Organization (WTO) in 2007, FDI has increased
sharply to become a key source of capital invested in manufacturing, processing, and hi–tech
industries. Vietnam is moving up the global value chain and has potential to become a global
leader in manufacturing.28 Increase in FDI has been driven by the relocation of industries
from People’s Republic of China (PRC) and ASEAN countries in tandem with Vietnam’s
strong economic fundamentals, administrative reforms, and fiscal and non–fiscal incentives.
Furthermore, Vietnam has accelerated international economic integration by joining
multilateral and bilateral free trade agreements (FTAs) with ASEAN, PRC, the Republic of
Korea, India, Japan, Australia, New Zealand, India, Chile, and the European Union (EU).
These FTAs have enabled Vietnamese enterprises to expand to regional and global markets
while bolstering FDI in the country.29

FDI net inflows in Vietnam increased during 2010–2020, reaching US$ 16.12 billion in 2019,
US$ 15.8 billion in 2020, and US$ 15.66 billion in 2021, falling slightly due to COVID–19. The
country is well positioned to strengthen FDI and expand its export base in the short and
medium term. Vietnam has a stable growth momentum and strong competitive advantages
in attracting FDI compared to ASEAN-6 peers Malaysia, the Philippines, and Thailand,
especially in 2017–2021, as shown in
Figure 7. FDI was lower than in Indonesia (US$ 20.74 billion) and Singapore (US$ 87.45
billion), indicating future growth potential.30

Figure 7. Inflows of FDI to ASEAN–6, 2010–2021

Inflows FDI to ASEAN-6, 2010-2021

120.0 106
99
100.0 82
74 75
80.0
57
60.0
US$ Million

40
40.0 21 21 24 19 20
14 19 9 12 9 8 8 12 10 10 9 7 11 15
8 13 5 11 14 16 16 16 16
20.0 3 1 2 2 8 8
0.0
-20.0 -5
Indonesia Malaysia Philippines Singapore Thailand Viet Nam

2010 2011 2017 2018 2019 2020 2021

27 World Bank, From the last mile to the next mile: 2022 Vietnam Poverty and Equity Assessment. Available here.
28 The Leader (2020), Vietnam emerges as next production hub of Asia. Available here.
29 Asia Business Consulting, Free Trade Agreements in Vietnam. Available here.
30 ASEANStatsDataPortal, Flows of Inward Foreign Direct Investment (FDI) to ASEAN Countries (in million US$). Available

here.

13
Source: ASEANStatsDataPortal
Enterprise Development and Market Capitalization

The enterprise sector has grown exponentially over the last three decades. Supported by the
formalization of existing household businesses as well as the creation of new firms, the total
number of enterprises operating in Vietnam in 2020 was approximately 800,000.31 MSME
development has resulted in strong growth of private capital stock. To date, MSMEs account
for 97% of all enterprises, contributing to 45% of annual GDP and 31% of state budget
revenue while creating jobs for 5 million people.32

MSMEs can be a dynamic force in generating labor–intensive growth, increasing competition

in local markets, generating savings, and fostering innovation, representing significant
potential for dynamic and inclusive economic growth. The movement of workers from low–
to high–productivity sectors requires and facilitates MSME business expansion.

Effective policy mechanisms and innovative financing models can enhance the capital raising
capability of MSMEs and promote sustainable private sector development on the pathway
to achieving national SDG targets. MSMEs play an important role in promoting SDG 5–
Gender Equality, SDG 8–Decent Work and Economic Growth, SDG 9–Industry, Innovation,
and Infrastructure, and SDG 10–Reduced Inequalities.33

The stock market is an important channel for mobilizing capital for mature companies and
remains a reliable channel for investors to realize return on their investments, as shown in
Figure 8. At the end of 2020, stock market value accounted for 54.2% of Vietnam’s GDP,34
while outstanding loans were 146% of GDP,35 indicating that bank financing is the main
source of funding. In 2020, the year–on–year credit growth rate was 12.2% which is higher
than ASEAN peer countries.36 This implies that there are open opportunities for Vietnam’s
capital market to grow in the coming years, postulating increased enterprise access to
finance.

31 General Statistics Office of Vietnam (2021). White Book on Vietnamese businesses 2021. Available here.
32 Ministry of Planning & Investment (2021), Roundtables: Small and Medium Enterprises and the EVFTA. Available here.
33 United Nations University World Institute for Development Economics Research (2020), Micro, Small, and Medium

Enterprises in Vietnam. Available here.

34 World Bank, Market capitalization of listed domestic companies (% of GDP). Available here.
36 Ministry of Finance E-Portal (2021), Vietnam’s stock market capitalization reaches 90.3% of GDP. Available here.
36 Statista, Vietnam: Credit growth rate. Available here.

14
Figure 8. Vietnam Market Capitalization, 2010–2020

Market Capitalization, Current US$ Billion (2010 - 2020)

200
Market Capitalization,
Current USD Billion

150
(2010 - 2020)

100 186.0
125.3 132.7 149.8
50
52.4 58.7 73.2
36.7 45.1
0 36.9 26.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: World Bank Database
Human Development Index (HDI) and Gender Equality

To measure the country’s development level, the GoV has adopted UNDP’s HDI, constituted
of three dimensions: a long and healthy life, access to knowledge, and a decent standard of
living.37 Vietnam’s HDI values have steadily improved from 0.661 (2010)38 to 0.703 (2021),
positioning the country in the high human development category.39

Vietnam continues to reduce gender inequalities. This is reflected in its improved Gender
Inequality Index (GII; 0.296 in 2021) and Global Gender Gap Index (GGGI) of the World
Economic Forum (up four places to 83 in 2022) as shown in Figure 9. These indices reflect an
improvement in education of girls, female labor force participation, access to economic
participation and opportunity, and maternal mortality. Women representation in the
parliament remains low.40

37 UNDP, Human Development Index (HDI). Available here.

38 UNDP, Human Development Report 2020. Available here.
39 UNDP (2022), Vietnam is well placed to regain Human Development momentum. Available here.
40 World Economic Forum (2022), Global Gender Gap Report 2022. Available here.

15
Figure 9. Global Gender Gap Trends in Vietnam, 2017–2022

WEF Global Gender Gap Overall Index

0.71

0.705

0.7

0.695

0.69
2017 2018 2020 2021 2022

Economic Participation & Health & Survival

Opportunity
0.78 0.96

0.76 0.95

0.74 0.94
0.72 0.93
2017 2018 2020 2021 2022 2017 2018 2020 2021 2022

Educational Attainment Political Empowerment

0.99 0.14
0.98 0.13
0.12
0.97
0.11
0.96 0.1
2017 2018 2020 2021 2022 2017 2018 2020 2021 2022

Source: WEF Global Gender Gap Reports

National policies and institutional frameworks such as the Law on Gender Equality 2006, the
Law on Support 2015, and the National Strategy on Gender Equality 2011–2020 have
contributed to closing gender equality gaps. Formal equality under the law, high workforce
participation, access to economic opportunity, and improving health and higher education
creates a nurturing landscape for the growth of SIBs and MSMEs, furthering the achievement
of Vietnam’s gender equality goals.

Efforts are still needed to address barriers to women’s economic empowerment and
participation. Women in Vietnam are primary care givers and viewed as secondary earners.
This bias leads to gender gaps in promotion, leadership representation, and remuneration,
as highlighted in Table 1.41 Women are still underrepresented in leadership roles, with
women running only 17% of large enterprises and 26.5% of MSMEs with less than 50 employees.
IIRV seeks to ensure that gender gaps are comprehensively reduced through the
implementation of gender-sensitive and gender-responsive interventions.

41
UN Women (2021), Country Gender Equality Profile Vietnam 2021. Available here.

16
Table 1. Gender Equality Indicators for Economic Participation
Indicator Men Women
Labor force participation rate 75.4% 62.3%
Unpaid domestic and care work 170 minutes/day 275 minutes/day
Gender wage gap 29.5% favoring men in general
13.7% favoring men for formal workers
Source: UN Women 2021 Country Gender Equality Profile Vietnam

Vietnam SDGs

The GoV has committed full resource mobilization to implement the 2030 Agenda and
achieve the targets of UN SDGs. Vietnam’s SDG rankings and scores from 2016–2021 depict
the country’s strong commitments to SDG implementation despite the adverse impact
COVID–19, as summarized in Figure 10 42 43 44 45 46 47.

The GoV has localized all 17 global SDGs and 115 targets in a national action plan. SDG
implementation results in 2016–2020 show that Vietnam will likely meet the targets of five
SDGs, namely SDG 1–No Poverty, SDG 2–Zero Hunger, SDG 4–Quality Education, SDG 13–
Climate Action, and SDG 17–Partnerships for the Goals, by 2030.48

42 Sustainable Development Solutions Network (2016), SDG Index & Dashboards – A Global Report. Available here.
43 Sustainable Development Solutions Network (2017), SDG Index and Dashboards Report 2017 – Global Responsibilities:
International spillovers in achieving the goals. Available here.
44 Sustainable Development Solutions Network (2018), SDG Index and Dashboards Report 2018 – Global Responsibilities:

Implementing the Goals. Available here.

45 Sustainable Development Solutions Network (2019), Sustainable Development Report 2019: Transformations to

achieve the Sustainable Development Goals. Available here.

46 Cambridge University Press (2020), Sustainable Development Report 2020: The Sustainable Development Goals and

Covid-19. Available here.

47 Cambridge University Press (2021), Sustainable Development Report 2021: The Decade of Action for the Sustainable

Development Goals. Available here.

48 The Socialist Republic of Vietnam (2020), National Report 2020 Progress of Five-Year-Implementation of Sustainable

Development Goals. Available here

17
Figure 10 . Vietnam SDG Index 2016–2021

Vietnam SDG Index (2016-2021)

120
96.4
100 88
80 69.7 73.8 72.8
68 67.9
57.6 57 54
60 49 51

40

20

0
2016 2017 2018 2019 2020 2021

Rank Score

Source: Sustainable Development Reports, 2016–2021

The GoV has put great efforts toward achieving the other SDGs, despite challenges facing
the country. The effective use of resources to build enabling infrastructure and meet SDG
targets while considering vulnerable groups will bolster Vietnam’s social and industrial
development pathways.

Responses to COVID–19 and Recovery Pathway

The COVID–19 pandemic caused economic disruption and adverse effects on all segments
of Vietnam’s population, including migrants, ethnic minorities, workers, smallholder
farmers, and people living with disabilities or chronic health issues. The largest outbreak in
April 2021 hit households and firms hard, increasing economic uncertainty and business
performance risks.49

In response to the pandemic, the GoV adopted and implemented a series of protective socio-
economic policies and measures. These included increasing vaccination coverage, cash
delivery to poor/near poor households and informal workers, and fiscal support for
businesses through loan restructuring, corporate tax deferments and credits, and rent
reduction for enterprises in specific sectors. The GoV’s pandemic response enabled
international trade, maintained growth momentum, and created important engines for the
whole economy.50 51 Vietnam is well on its path to recovery post–COVID. The economy
started to rebound late in 2021, when 80% of the population was fully vaccinated and
mobility restrictions were removed. Economic growth increased from 5.2% in Q4 2021 to
7.7% in Q2 2022.

49 World Bank, A Year Deferred: Early Experiences and Lessons from Covid-19 in Vietnam. Available here.
50 Eco Emerging, Vietnam: The health shock was more severe in 2021 than in 2020. Available here.
51 The GoV (2021), Resolution 128/NQ-CP of the Government on the promulgation of the temporary regulation "Safely

adapting, flexibly, effectively controlling the COVID-19 pandemic". Available here.

18
Summary

Vietnam’s positive macroeconomic outlook is rooted in trade openness and successful social
inclusion. There is immense potential to promote green growth and upgrade national core
infrastructure. To achieve the ambitious development goal of becoming a high–income
country by 2045, targeted efforts to boost results in key areas such as green growth, digital
transformation, financial inclusion, social protection, and infrastructure upgradation are
needed. Vietnam needs to grow greener at an annual average rate of 5% per capita for the
next 25 years with a strong commitment to carbon neutrality by 2050.52

The participation of IIRV in strengthening the impact investing market and ecosystem,
increasing the impact investment readiness of SIBs, facilitating the SIBs’ access to private
capital investment, and sustainably uplifting vulnerable groups promises to play a significant
role in Vietnam’s socioeconomic development. IIRV will address SDG 5–Gender Equality,
SDG 8–Decent Work and Economic Growth, and SDG 10–Reduced Inequalities. By
prioritizing agriculture, forestry, and clean energy, IIRV will also contribute to achieving the
targets of SDG 7–Affordable and Clean Energy, SDG 9–Industry, Innovation, and
Infrastructure, and SDG 12–Responsible Consumption and Production.

52 World Bank, A Year Deferred: Early Experiences and Lessons from Covid-19 in Vietnam. Available here.

19
Section V: Impact Investing Landscape
in the Country Development Context

20
SECTION V: IMPACT INVESTING LANDSCAPE IN THE COUNTRY
DEVELOPMENT CONTEXT

IIX is targeting the impact investing landscape in Vietnam

in connection to the country’s socioeconomic development
goals for 2021–2030 and alignment with the 2030
Sustainable Development Agenda. Following is an
overview of Vietnam’s development goals, prevailing
policies supporting impact investing and the development
of the ecosystem, the contribution of impact investing
sustainable development, the roles of public, private, and
NGO sectors, and social and environmental impact
measurements in Vietnam.

National Policy and Regulatory Framework

National Socioeconomic Development Strategy (SEDS), 2021–2030

Vietnam has successfully completed a 10–year socio-economic development

implementation plan (2011–2020), facing roadblocks in achieving some goals of the 2030
Sustainable Development Agenda. With the renewed efforts, the GoV has established the
10–year SEDS 2021–2030 and the five–year Social Economic Development Plan (SEDP)
2021–2025 in contexts where the country experienced a sharp decline in official development
aid (ODA). ODA may be in the form of TA, capacity development grants, and concessional
loans, and relate to issues such as slow increase in private sector investments and
government budget constraints.53

The SEDS directs an inclusive growth model and sustainable development pattern with the
objective of making Vietnam an upper middle–income country by 2030 and a high–income
country by 2045. The strategy is based on pillars of economic prosperity and environmental
sustainability, equity and social inclusion, and capable and accountable governance.

The National Green Growth Strategy 2021–2030 is an integral part of the SEDS. Through
economic restructuring, it seeks to achieve economic prosperity, environmental
sustainability, social justice, and carbon–neutrality in the long run.54 In addition, to promote

53 UNDP, Project Document Vietnam: Support developing and implementing the new reforms and development
partnership framework to accelerate the achievement of SDGs and Agenda 2030 (Partnership for Agenda 2030). Available
here.
54 Vietnam Circular Economy, Decision No. 1658/QD-TTg dated October 01, 2021, on approval for National green growth

strategy for 2021 – 2030 period, with a vision by 2050. Available here.

21
gender equality and women entrepreneurship, the GoV endorsed the National Gender
Equality Strategy 2021–2030 and reinforced the SEDS .

Under the SEDS, the GoV has prioritized human–based development. Focus areas include
granting equal access to resources, development opportunities, and basic social services to
target demographics which include children, women, ethnic minorities, people with
disabilities, and migrants. SEDS priority areas align with target-based national programs
focused on socioeconomic development for ethnic minorities, residents of mountainous
areas, and people with disabilities. 5556

The GoV’s Economic Restructuring Plan 2021–2025 aims to mobilize resources for
developing and promoting private enterprises. By 2025, the GoV plans to reach 1.5 million
enterprises, including 60,000 to 70,000 medium and large–sized enterprises, increase the
private sector contribution to GDP t0 55%, and build at least 5 national products into
international brands. This reflects the private sector’s key role in the country’s growth and
national competitiveness.

By removing administrative and non–administrative barriers, strengthening the enabling

business environment for private sector development, and supporting the innovation–driven
enterprise sector that in turn, leads to sustained high–growth in Vietnam, SEDS addressed
the importance of the private sector as the key driver of growth for the economy and national
competitiveness. SEDS recognized the importance of innovation and technology adoption
for business resilience and amplifying productivity growth. Additionally, the SEDS
strategized establishing and developing economic groups positioned to compete regionally
and globally. There are at least 2 million enterprises in the private sector whose contribution
to GDP will reach 60–65% by 2030 in alignment with the National Plan for Sustainable
Development of Private Enterprises till 2025 and vision towards 2030.57

Law on Enterprise (LOE) and Law on Support (LOS) for MSMEs

On the regulatory side, the LOE and LOS for MSMEs play critical roles in enterprise
development. The legal framework around enterprises began incorporating fair labor
practices, social justice, and sound environmental practices, demonstrating the GoV
intention to integrate sustainability with business operations. The LOE’s development
pathway is described in Figure 11.58 59

55 The National Assembly of Vietnam (2014), Resolution No. 120/2020/QH14 approving the investment policy of the
National target program on socio-economic development of ethnic minority and mountainous regions in the 2021-2030
period. Available here.
56 Prime Minister of Vietnam (2020), Decision 1190/QD-TTg of the Prime Minister approving the Program to assist people

with disabilities for the period of 2021 – 2030. Available here.

57
Legal Library, Decision No. 1362/QD-TTg 2019 plan on sustainable development of private enterprises. Available here.
58
Lexology (2015), The new remarkable points of Law on Enterprise 2014. Available here.
59
Vietnam Law Magazine (2020), Six important changes in the new Enterprise Law. Available here.

22
Figure 11. Vietnam LOE, 1990–2020

LOE revised with the legal

framework on corporate
governance in compliance with
international practices; promoting
business development, capital
Laws on private enterprise and investments in production and
companies laid a legal foundation The revised LOE created a fair legal businesses; improving Vietnam’s
for the development of the private framework for all types of business environment to the level
sector in the country enterprises in all economic sectors of ASEAN - countries; and
reinforcement of social enterprises

1999 2015

1990 2005 2020

LOE revised with creation of fair

Law on enterpise (LOE) replaced conditions among enterprises in all
the 1990 law. LOE 1999 complied economic sectors; administrative
with general standards and procedures towards simplicity and
practices of corporate laws in most transparency; and official
countries recognition of the legal status of
social enterprises with at least 51%
of profit in the business committed
to fulfiling social and
environmental needs

SEs in Vietnam were first recognized by LOE 2015 and later reinforced by LOE 2020. Under
LOE 2020, a SE is required to meet criteria such as registering in compliance with LOE
stipulations, addressing social and environmental issues for community benefit, and
committing at least 51% of annual profit after tax to reinvestments in registered objectives.
SEs are not differentiated from other enterprises in terms of legal structure.

SEs are entitled to receive aid, properties, financial support, and technical support from
international NGOs, individuals, and domestic organizations to mitigate social and
environmental issues according to prevailing laws and regulation. 60 The official recognition
under LOE has catalyzed the development of an enabling environment for SEs and
associated impact investing.61 However, there are less than 200 registered SEs in Vietnam,62
questioning the attractiveness and effectiveness of this preordained business structure. Also,
greenwashing is a normal practice whereby normal businesses register as SEs to avail fiscal
incentives and reduce communication and marketing expenses.63

The LOS for MSMEs (effective January 1, 2018) covers 15 categories of MSME support,
including access to credit and information, credit guarantee funds, and assistance for

60 Government e-portal, Decree No. 47/2021/ND-CP detailing the Law on Enterprises. Available here.
61 APEC Small and Medium Enterprises Working Group (2022), APEC Workshop on Promoting Social Enterprises for
Inclusive Growth. Available here.
62 British Council (2019), Social Enterprise in Vietnam. Available here.
63 VN Economy (2019), Removing difficulties for social enterprises to develop sustainably. Available here.

23
incubators and market expansion. For the first time in the legislative history, the LOS defined
terms such as women-owned MSMEs. Several LOS articles give priority to employing
women workers, thereby helping advance the gender equality and women’s economic
empowerment movement in Vietnam. The GoV has supported efforts to improve access to
capital among Vietnamese MSMEs, such as the MSME Development Fund (SMEDF) and the
Credit Guarantee Fund (CGF).64 These funds collaborate with commercial banks to provide
80% of the project cost at interest rates capped below market rates. Borrowing MSMEs are
required to contribute the remaining 20%.65

Investment Law 2020

The Investment Law 2020 aims to effectively attract more domestic and foreign investment
towards Vietnam’s industrial development. The law has specific provisions that incentivize
investments in strategic economic sectors and locations, guaranteeing rights and presenting
eligibility for all entities doing business in Vietnam.

The Investment Law came into effect in 2021 and highlighted sectors that are eligible for
investment incentives, including (i) manufacturing of high technology, hi–tech supporting
products, research and development, and products made of scientific and technological
results; (ii) manufacturing of new materials, new clean, and renewable energy; (iii)
manufacturing of products with 30% and more value added, energy–saving products; (iv)
manufacturing of electronic products, core mechanical products, agricultural machineries,
automobiles, and auto parts; (v) shipbuilding; (vi) manufacturing of products listed in the
prioritized supporting industry products; (vii) manufacturing IT products, software, and
digital content; (viii) cultivation and processing of agricultural, forestry, and aquatic
products; (ix) planting and protecting forests; (x) fishing, and fisheries logistics services; (xi)
production of plant varieties, animal breeds, and biotechnology products; (xii) waste
collection, treatment, reuse, and recycling; (xiii) investment, operation, and management of
infrastructure works and public passenger transport in urban areas; (xiv) investment in pre–
school, general education, vocational, and higher education; (xv) medical examination and
treatment, and manufacturing of drugs, raw materials, management, scientific research on
pharmaceutical technology, biotechnology for new drugs, medical equipment; (xvi)
investment in physical training and sports facilities for people with disabilities (PWDs) or
professionals, protection and promotion of cultural heritage; (xvii) investment in geriatric
and psychiatric centers, medical treatment for orange agent infected patients, centers for
the elderly, disabled, orphans, and homeless children; (xviii) people's credit funds and
microfinance institutions; and (xix) producing goods and providing services for industry
clusters and value chains.

These incentives catalyze investment in target areas with difficult socio–economic

conditions, industrial parks, hi–tech parks, export processing zones, economic zones, and
projects that create employment for people with disabilities. Investment support may
include technical and social infrastructure for a project or the surrounding ecosystem, human

64 UN Women (2021), Review of the implementation of small and medium enterprises (SMES) support legislation and the
capacity building needs and training services for women-owned SMES and women entrepreneurs in Viet Nam. Available
here.
65 OECD (2021), SME and Entrepreneurship Policy in Vietnam. Available here.

24
resource development, access to finance, site clearance, technology transfer, market
information, development, and research.66 The Investment Law 2020 also covers provisions
related to foreign investment in line with WTO commitments and international investment
treaties.

The Investment Law has a significant impact on investment activities in Vietnam, including
present and future SIB investment under the IIRV framework. IIRV will take a deep dive into
the legal aspects of impact investing and assist both investors and SIBs during project
implementation.

Impact Investing Ecosystem and National Sustainable Development

Mobilization of private investments is considered one of the top priorities for Vietnam to
reach its 2030 SDG targets.67 According to McKinsey Global Institute,68 improving gender
equality could add as much as US$ 40 billion to Vietnam’s GDP by 2025, 10% higher than the
business-as-usual baseline. According to the UNDESA’s report on MSMEs and the SDGs,
sustainable business models could unlock economic opportunities valued at US$ 12 trillion
and create 380 million jobs by 2030. More than 50% of the value would be created in
developing countries.69

MSMEs are drivers of inclusive economic growth in Vietnam. With a growth rate of 11% per
annum, MSMEs accounted for 97% of total enterprises in 2019, as shown in Figure 12.70 71 In
2017, women–owned enterprises represented 26.5% of total active enterprises. 93.2% were
micro and small-sized enterprises, and 79.2% operated in the service sector.72

66 Legal library,Law on Investment No. 61/2020/QH14 dated June 17, 2020 of the National Assembly. Available here.
67 IMF (2020), Vietnam’s Development Success Story and the Unfinished SDG Agenda. Available here.
68 McKinsey Global Institute (2018), The Power of Parity: Advancing Women’s Equality in Asia Pacific.
69 UNDESA (2018), Micro-, Small, and Medium-sized Enterprises (MSMEs) and their role in achieving the Sustainable

Development Goals. Available here.

70 ADB SME Monitor (2020), Vietnam. Available here.
71 General Statistics Office of Vietnam (2021). White Book on Vietnamese businesses 2021. Available here.
72 UN Women (2020), The Study: A Review of The Implementation of Small and Medium Enterprises (SMEs) Support

Legislation and The Capacity Building Needs and Training Services for Women-owned SMEs and Women Entrepreneurs
in Viet Nam. Available here.

25
Figure 12. Vietnam MSME Growth rate, 2010–2019

Vietnam MSME Growth rate, 2010–2019

700 100.0
Number of MSMEs ( thousand)

600
80.0
500
400 60.0

300 40.0
200
20.0
100
- -
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Year

Number of MSMEs MSME to total (%) MSME growth (%)

Source: ADB MSME Monitor, Vietnam, 2020

SIBs as an integral part of the MSME sector in Vietnam are well positioned to address and
bridge SDG financing gaps. Thus, impact investing in the MSME sector, represented by SIBs,
can significantly contribute to the implementation and results of SEDS based on their
relevance, roles, and contributions to SDGs through economic activities, employment, and
income generation, especially for vulnerable groups.

The following improvements would strengthen the ability of women–impacting MSMEs to

contribute to sustainable development:
 Access to financial resources: A 2018 survey of women–owned enterprises73 showed that
66% of women–owned enterprises required financing and only 21% could access it.
Women–owned MSMEs had an estimated financing gap of US$ 1.2 billion74 in 2017.
Loans were of shorter durations for women than men and nearly half (40%) the women
found loan procedures difficult. 75
 Access to market and business network: 47% of women entrepreneurs surveyed faced
challenges in access to markets and business networks. More women than men
entrepreneurs also identified major roadblocks in their introduction to production
linkages and value chains, referrals to local and foreign associations, and access to
information and knowledge. Women entrepreneurs faced challenges in access to
enterprise support policies (47%), legal and administrative procedures (32%), and
knowledge and skills (25%). Majority of the women entrepreneurs also mentioned
needing support in finding partners (78%), training on corporate governance (68%),
online training (64%), information on marketing and sales (57%), and business training
(55%).76

73 Vietnam Women Entrepreneurs Council (2018) Report on Needs Assessment of Women-Owned Small and Medium
Enterprises in Vietnam.
74 IFC (2017) Women-owned Enterprises in Vietnam: Perceptions and Potential
75 UN Women (2021) Country Gender Equality Profile Vietnam.
76 Vietnam Women Entrepreneurs Council (2018) Report on Needs Assessment of Women-Owned Small and Medium

Enterprises in Vietnam.

26
The SDG targets are ambitious by nature and require significant transformation of public and
private activities, including adaptation of new business models with the application of
innovation and technologies and adoption of sustainable business practices. In Vietnam’s
development context, challenges exist in bridging the development financing gap. As such,
the mobilization of private investments has been considered one of the top priorities for the
country to reach its 2030 SDGs through implementing SEDS for 2011–2030.77

Current Impact Investing Ecosystem in Vietnam

The practice of impact investing fosters business models that generate financial, social, and
environmental impact. Impact investing has become more significant than ever, an effective
financing vehicle that generates positive social and environmental impact alongside a
financial return. The potential for development is huge.78 The key features of impact
investing are: (i) expectation of financial return from investments with the intention of
generating positive social and environmental impact; (ii) inclusion of social and
environmental impact evidence in investment design; (iii) management of social and
environmental impact performance; and (iv) contribution to the sustainable growth of the
company and ecosystem. 79 80

Investing in SDGs or impact investing needs market participants and an impact investing
ecosystem that creates growth opportunities through investment for underserved
stakeholders and the planet.81 The five building blocks of an impact ecosystem are supply of
impact capital, intermediation of impact capital, demand for impact capital, policy and
regulation, and impact market enablers.

In Vietnam, the impact investment landscape has been mapped and analyzed with reference
to the OECD Impact Investing Market Framework 2015. The framework identified key
ecosystem players—investors, investees, and intermediaries—and correlates social impact
investment to the context of Vietnam’s social needs and environment enabling general
financial market development.82 83 Under IIRV, IIX has conducted stakeholder mapping and
adopted an impact investing ecosystem with the participation of three groups of
stakeholders—the demand side (SIBs), the supply side (investors), and market enablers.
Enablers may be from the private, public, or non-profit sectors, as shown in Figure 13.

Public sector enablers, represented by government, donors, and multilateral agencies,

create an enabling environment for SIBs through policies, programs, and financial support.
Private sector enablers, represented by corporations and intermediaries, support SIBs
through capital, skill, and knowledge transfer, market access, and integration into their value

77
IMF (2020), Vietnam’s Development Success Story and the Unfinished SDG Agenda. Available here.
78 Ibid
79
GIIN, What is impact investing? Available here
80
Bridges Fund Management (2015), The Bridges Spectrum of Capital: How we define the sustainable and impact
investment market. Available here
81 The Global Steering Group for Impact Investment (2018), Catalysing an Impact Investment Ecosystem: A Policymaker’s

Toolkit. Available here.

82 CSIP (2019), Vietnam Impact Investment Landscape Report. Available here.
83 OECD (2019), Social Impact Investment 2019: The Impact Imperative for Sustainable Development. Available here.

27
 chains. Finally, civil society advocates for development policies, conducts research and
training, and educates the next generation of SIBs. 84

Figure 13. Impact Investing Ecosystem Enablers in Vietnam

Government of Vietnam Donors

• AED-MPI
• VWEC-VCCI • GAC
• NATEC-MOST UNDP Vietnam
• SMEPC-VCCI •
• VWU
• VINASME • USAID Vietnam
• DPIs • Government of Australia

Private Investors Capacity-Building Orgs

• Thriive/SK2 Fund • VEON Ventures • USAID WISE Project
• KisStartup • EME Asia PUBLIC • WECREATE Vietnam
• BK Holdings • DFCD/SNV SECTOR
(Government • NEU-CSIE
• Patamar/Beacon • Rabo Foundation and Donors) • CARE International Vietnam
• Ascend Ventures • Lotus Impact • WISE Vietnam
• PhiTrust • Quest Ventures
Alignment
of • CSIP
• Atris Finance VN • Omidyar incentives • BambuUP
• Blue7 • Circle Capital Impact • XLABs
• Sweef Capital • Nuveen Investing
NON-
PRIVATE • Creatella
• Earth VC • VinaCapital SECTOR PROFIT
(Corporates (NGOs and
and SMEs) Foundations) Other Ecosystem Enablers
Banks and Advisory firms • AusCham • Oxfam
• Visa • SHB • AmCham • Kris Impact
• VPBank • Ernest and Young • Nexus for • Business
• Nam A Bank • Vilaf development associations
• HDBank • Rise Partners

Source: Impact Investing Exchange (IIX), Singapore

Public Sector as an Ecosystem Enabler

Government. The GoV safeguards the integrity of impact investing, helping achieve scale
where impact capital is global and government policy is national.85 The GoV influences
ecosystem stakeholders by creating an enabling regulatory environment, adopting national
impact measurements that are harmonized with global standards, and driving capital into
impact sectors by providing technical assistance, investment readiness programs, fiscal and
non–fiscal incentive schemes, guarantees and subsidies, and co–investment in blended
finance instruments.

In Vietnam, several government departments play key roles in the facilitation of impact
investing and MSME growth. The Ministry of Planning and Investment (MPI) is the agency
responsible for state management of investment, in coordination with concerned line
ministries and department.86 Under the MPI’s direction, the Agency for Enterprise
Development (AED) and MSME Development Promotion Council (MSMEDPC) are the key
agencies formulating and implementing policies for MSME sustainable development.
Complementarily, other relevant ministries and agencies are involved in implementing
relevant policies and projects in supporting MSMEs, such as the Ministry of Finance (MoF)

84 IIX, IIRV Project Implementation Plan, 2022

85 IFC (2021), IFC Insights: As Impact Investing Grows, So Do Expectations. Available here.
86 Legal library, Law on Investment No. 61/2020/QH14 dated June 17, 2020 of the National Assembly. Available here.

28
which guides the implementation of budgeting and financial mechanism to support MSMEs
and the Ministry of Industry and Trade (MOIT) which guides MSMEs on participating in
industry clusters and value chains.

Government-affiliated business associations and sociopolitical organizations such as

Vietnam Chamber of Industry and Trade (VCCI), Vietnam MSME Association, and Vietnam
Women Union (VUW) are proactively involved in supporting the business community,
especially women–owned/led enterprises and SIBs, by promoting trade and investment,
business networking, partnership development, and policy advocacy, joining programs and
projects to effectively support the improvment of enterprise management capabilities. 87 88
89

Development Finance Institutions (DFIs). Increasingly, DFIs represented by multilateral

and bilateral development banks, including Asian Development Bank (ADB), International
Finance Corporation (IFC), KfW Development Bank, Norfund, Proparco FMO, and others,
play an important role in the development of impact investing market and ecosytem in
Vietnam by providing catalytic capital. This capital complementarily unlocks private sector
investments in traditionally undeserved markets. DFI impact investing has been executed
through designated initiatives and programs, tracked activities integrated into their existing
programs, and maintained impact investing funds in prioritized sectors such as agriculture,
energy, education, healthcare, financial services, manufacturing, water, sanitation, and
tourism.90 91 92

Development partners (donors). In Vietnam’s impact ecosystem, development partners

such as Department of Foreign Affairs and Trade (DFAT), GAC, UNDP, USAID, Irish Aid,
Japan International Cooperation Agency (JICA), and Korea International Cooperation
Agency (KOICA) have provided TA and investments to mobilize capital, remove barriers to
investment, and facilitate private investments in high–impact sectors. The donors also help
enhance social innovation and entrepreneurs’ capabilities to scale their businesses, make
positive social and environmental impact, and build partnerships with local, regional, and
global impact investors. Importantly, the donors have made efforts (with varying levels of
success) in market–based approaches to tackle development problems such as gender
inequality and social exclusion. This has spurred the development of the impact investing
ecosystem, strengthening the regulatory environment for SIBs in terms of gender–
responsiveness, inclusiveness, and transparency. 93 94 95

The donor community has also supported the development of the impact startup ecosystem
in the country through programs and initiatives such as ADB Ventures–Supporting

87 Vietnam Chamber of Industry and Trade (VCCI) (2021), VCCI’s New Vision and Mission. Available here.
88 Vietnam SME Association, About VINASME. Available here.
89 Vietnam Women Union (VWU), Introduction to VWU. Available here.
90 Australia Vietnam Policy Institute (2021), Advanced study on impact investing in Vietnam. Available here.
91 GIIN (2018), The Landscape for Impact Investing in Southeast Asia. Available here.
92 Initiative for Responsible Investment & Impact Investing Policy Collaborative (2014), Impact Investing in Development

Finance. Available here.

93 USAID (2021), USAID INVEST| Vietnam Portfolio. Available here.
94 Australian Embassy Vietnam, Australia Invests in Supporting Vietnamese Businesses. Available here.
95 UNDP, Leveraging Viet Nam’s Social Impact Business Ecosystem In Response to COVID-19 (ISEE-COVID). Available

here.

29
Innovative Startups,96 UNDP’s Accelerating Startup Innovations to Achieve the SDGs in
Vietnam,97 and Finland’s Innovation Partnership Program (IPP).

Private Sector as an Ecosystem Enabler

Private Impact Investors (PIIs). There are different types of PIIs participating in impact
investing market to provide capital to impact investees (SIBs), including institutional
investors–fund managers, family offices, foundations, pension funds, financial institutions,
crowdfunding platforms, and individual impact investors. PIIs located in Vietnam and abroad
that are vested in Vietnam’s impact investing market will be discussed in Chapter 7 of this
report.

Financial institutions. Private financial institutions (commercial banks) contribute to the

impact investing market by creating liquidity, lowering transaction and information costs,
facilitating payment mechanisms, and controlling risks. In recent years, commercial banks in
Vietnam have received capital from DFIs and donors to create financial products, vehicles,
and investment structures that meet the impact investors’ investment requirements and the
needs of SIB sector. These investments have widened access to finance for the targeted SIBs,
prioritizing women–owned/led enterprises.98

IIRV will promote private investments in impact investing market in Vietnam through
collaboration with commercial banks and non–bank financial institutions, such as Housing
Development Bank (HD Bank), Vietnam Prosperity Joint–Stock Commercial Bank (VP Bank),
Nam A Bank, and others.

Non-Profit Sector as an Ecosystem Enabler

Center for Social Initiatives Promotion (CSIP). CSIP introduced the SE concept in 2008 and
has significantly contributed to the development of the impact ecosystem in Vietnam
through research and advocacy. 99

British Council. British Council in Vietnam is supporting SE ecosystem development through

social entrepreneur training, sector mapping research, and funding SEs in collaboration with
other organizations. Recently, British Council has cooperated with the Ministry of Education
and Training (MOET) to promote SEs in universities that aim to contribute to the sustainable
development environment in Vietnam. 100

Oxfam Vietnam. Oxfam has been implementing its Enterprise for Development (EFD)
Program in Vietnam since 2015, working with SIBs that generate positive impact for
vulnerable groups engaged in Oxfam value chains. Oxfam intends to support vulnerable
communities, especially small–scale farmers, poor women, and youth, in finding
employment, increasing incomes, and accessing relevant products and services for a better

96 Vietnam National Innovation Center, Supporting Innovative Start-ups. Available here.

97 UNDP, Accelerating Startup Innovations To Achieve the SGDs in Viet Nam. Available here.
98 Agency for Enterprise Development, Development Finance Institutions. Available here.
99 CSIP, About CSIP. Available here.
100 University of Languages & International Studies - Vietnam National University, Hanoi (2019), Cooperation agreement

with British Council Vietnam signed. Available here.

30
standard of living. To this end, the EFD program intervention focuses on capacity building,
business management, and development for participating enterprises through in–depth
training courses and coaching. 101

Center for Social Innovation and Entrepreneurship (CSIE). CSIE acts as a proactive
ecosystem builder under the National Economics University (NEU) in Vietnam. It has become
a leading hub of knowledge sharing, fostering social innovation and entrepreneurship in the
region. The NEU–CSIE is a pioneer, providing formal training and research on social
innovation and social entrepreneurship at universities, advocating policies to support SIB
development, and raising community awareness of SIB sector. It also works as a SIB
incubator. iMapVietnam, a product of CSIE, is an interactive map of the SIB sector, has
enhanced the business connection between SIBs and supporting organizations in Vietnam.
102 103

LIN Center for Community Development. LIN leverages local resources to build a
sustainable future for Vietnam. LIN’s Annual Cross–Sector Conference is a unique platform
that builds an interaction between sectoral stakeholders and nurtures an understanding of
strategic partnership in sustainable community development, solving social and
environmental issues, and creating impact for resilience in Vietnam. 104

Despite all these NGO enablers and numerous accelerators, the quantum of impact
investment in Vietnam remains lacking. This is because the essence of an ecosystem is to
ensure that the enablers are creating a system that lasts beyond donor funding. In a
functioning impact investing ecosystem, the enablers are motivated to be a part of the
system beyond donor funding. The enablers need to have a functioning knowledge of the
financial market mechanisms, know how to connect impact with finance, and most
importantly be able to unlock private sector investment.

In order to ensure the ‘investment’ side of impact investing happens, private sector enablers
need to play a greater role. These enablers are the likes of law firms, financial institutions,
accounting firms, investment platforms, and impact measurement firms. These players need
to be motivated to keep the ecosystem alive as they will generate business from a vibrant
and functioning impact investing market. For private sector enablers, other than perhaps
the initial support to create the investment infrastructures and related TA to get the SIBs
investment ready, donor involvement will be limited. The goal of IIRV is to sow the seeds of
this vibrant and evergreen new ecosystem, which will play an effective role in unlocking
private sector investment while ensuring deep impact.

101 Oxfam (2022), Concluding a 6-year journey supporting social impact businesses. Available here.
102 CSIE, About CSIE. Available here.
103 CSIE, IMAP Vietnam. Available here.
104 LIN Foundation, Cross sector partnerships. Available here.

31
Social and Environmental Impact Measurements

The social and environmental impact that SIBs are creating has to be measured in order for
it to be valued by private sector impact investors. To measure this impact, SIBs need a set of
tools to help quantify the positive and negative effects they create, directly or indirectly,
intentionally or unintentionally, on people and the planet. Impact management goes a step
further, whereby companies can utilize measurement data to improve business
performance, make decisions to maximize positive impact and minimize negative ones, and
report to donors or sponsors.

According to Global Impact Investing Network (GIIN)105, impact measurement and

management (IMM) is one of the core characteristics of impact investing. IMM may include
identifying and considering the effects business actions have on people and the
environment, then determining the best ways to mitigate the negative and maximize the
positive in alignment with impact goals. Successful IMM may also increase a fund manager’s
ability to demonstrate, articulate, and discern impact which can mobilize more capital when
communicated effectively. IMM hence provides a framework for impact investors to assess
possible investments, promotes the SIB brand and impact through media channels, and
connects impact with macro or global trends, promoting sustainable development, sharing
best practices, and developing international partnerships.

Despite growing levels of interest in impact measurement, there is yet a common impact
measurement tool or framework in the global market. According to a GIIN survey with 257
respondents106, impact investors use different tools, indicator sets, and standards in their
IMM practices. Most investors use more than one system or framework, the average uses
three. Most used are the UN SDGs, which have gained significant traction across the global
development community, used by 72% of respondents. The IRIS (Impact Reporting
Investment Standard) Catalog of Metrics and IRIS+ Core Metric Sets were used by 48% and
28% of respondents respectively. More than 25% of respondents use principles that establish
behaviors and processes, such as the UN Principles for Responsible Investment (UN PRI) or
IFC’s Operating Principles for Investment. It is worth noting that the UN and IFC investment
guidelines are broad and need effective tools and indicators to capture the positive and
negative impact the company. In order to value the impact, verification of the data by
beneficiaries is imperative.

The investor approach to impact measurement varies and the choice of what to measure
usually reflects investor goals, capacities, and intentions. In general, components of impact
measurement best practices include establishing and stating social and environmental
objectives to relevant stakeholders, setting performance metrics/targets related to these
objectives using standardized metrics wherever possible, monitoring and managing the
performance of investees against these targets, and reporting on performance to relevant
stakeholders.

105 GIIN (2019), Core Characteristics of Impact Investing. Available here.

106
GIIN (2020), The State of Impact Measurement and Management Practice second edition.

32
According to the UNDP study107 on the SIB sector in Vietnam with 492 survey responses,
IMM was time consuming and not a top priority for SIBs when compared to achieving sales
targets, product development, and fundraising. CSIP has published a study on impact
investing and IMM in Vietnam108 according to which impact investors correlate parameters
for impact measurement to impact thesis and sector of operations. Impact measurement is
an additional time commitment for investees and hence measurement frameworks used are
often simple. Frameworks may include indicators that are a part of IRIS. As in the
international context, there is no common IMM framework used by all investors in Vietnam.
Investors and investees highlighted that there is an opportunity to build capacities in impact
measurement, even leveraging philanthropic capital to fund impact measurement and
reporting.

Vietnamese SIBs recognized the following benefits of IMM: (i) reporting to donors or
sponsors; (ii) providing a framework for impact investors to assess possible investments; (iii)
promoting the SIB brand and impact through media channels; (iv) briefing potential
supporting organisations/partners on SIBs and their impact; (v) reporting on impact
requirements to the relevant Government agencies as registered SEs; (vi) providing an
internal management method for organisational development; and (vii) connecting social
and environmental impact with macro or global efforts to promote sustainable
development, share best practices, and develop international partnerships.

As one of the creators of IRIS methodology and a member of IMM Advisory Board, IIX has
played a key role in the impact measurement process and also effectively linking the
measurement to investments. IIX’ proprietary digital impact measurement platform, IIX
ValuesTM, aligns SIBs’ social and environmental impact scoring and reporting with the UN
SDGs, the IRIS+ system, Impact Management Project, and the SDG Impact Standards.
Leveraging these catalogs of standards that have been established by convening impact
investing ecosystem leaders across the globe, IIX ValuesTM enables SIBs to map their impact
performance to metrics that are recognized and used by investors and other key
stakeholders for impact benchmarking. IIX ValuesTM also holistically captures primary,
secondary, and tertiary outcomes of SIB activities and operations on customers, their
families, and communities to the last mile and verifies the data using mobile devices.

In addition, IIX ValuesTM’s underlying impact assessment methodology combines the

analysis of risk mitigation factors and financial returns with deep impact creation. The
convergence of these interrelated factors effectively provides investors with valuable insight
on the effect of SIBs’ impact performance on their financial sustainability. As a result of these
features, SIBs can leverage their impact reporting practices on IIX ValuesTM for capital raising
and business development efforts.

To foster the IMM and impact investing ecosystem, additional capacity building is needed to
understand the benefit of impact measure and to be able to relate the impact to investment
decisions. A robust impact measurement framework which could be used nationally in
Vietnam is also needed. Such a framework would further substantiate the status of SIBs in
the country.

107
UNDP (2018), Fostering the Growth of the Social Impact Business Sector in Viet Nam.
108 CSIP (2021), Advance study on Impact Investing in Vietnam.

33
Summary and Key Takeaways

Vietnam has demonstrated a commitment to socio-economic development through various

center-driven interventions running concurrently since 2011. Despite the obstacle-strewn
nature of this endeavor, the GoV has remained steadfast, coming out with actionable plans
and effective strategies that reinforce ideas of social justice, environmental sustainability,
economic prosperity, and resilient governance. Several of these plans have demonstrated
proof of concept and build upon previous developmental trajectories.

SEDS and SEDP are multi-year plans that seek to maintain an inflow of ODA towards
economic areas that otherwise do not receive sufficient funds from the private and public
sectors. These plans look at various general developmental indicators including climate
change and women entrepreneurship, with specific focus delivered through interventions
such as the National Gender Equality Strategy and the National Green Growth Plan. LOE and
LOS incorporate sustainability with enterprise development, fortifying the identity of impact
business and validating the need to empower women-owned/led MSMEs. However, due to
slow uptake, there is scope for these laws to introduce more attractive incentives for
businesses to register as SEs. Similarly, the Investment Law 2020 that seeks to incentivize
strategic investments has yet to mobilize private investments in a way that can substantially
address the US$ 6 billion109 financing gap Vietnamese MSMEs face.

Since there is a lucrative business opportunity at hand—10% growth over the business-as-
usual trend line and US$ 40 million added to the GDP by 2025—deeper engagement with
ecosystem players, especially private sector players, would maximize the synergy and
momentum of development. In parallel, it is important to ensure that the inflow of money is
supported by institutions, infrastructure, and regulations that strengthen capacity building,
learning, information access, and business outreach. Finally, what can be measured can be
managed. A standardized framework to measure impact needs to be adopted and mandated
nationally. In this environment, Vietnam may herald in a new age of gender equality,
development, and social focus through enterprise development.

109 AsianDevelopment Bank (2021), Proposed Loan and Administration of Technical Assistance Grant: Vietnam
International Commercial Joint Stock Bank Vietnam International Bank Supporting Small and Medium-Sized
Enterprises and Improving Living Conditions Project. Available here.

34
Section VI: Demand Side of Impact Investing

35
SECTION VI: DEMAND SIDE OF IMPACT INVESTING

This section provides a comprehensive understanding of impact investing in SIBs in Vietnam. To

this end, IIX explores SIBs’ perspectives on their business development status, environmental
and social impact, economic sectors that have the greatest potential to generate impact, the
support that would drive success, and drivers of GLI. Focus areas include SIBs’ capacity
constraints, needs for capacity building, and TA. This analysis will determine the type of capital
that SIBs can absorb for growth and if the local financial institutions and impact investors (both
local and foreign) are willing and able to deploy the capital.

This demand side analysis of the impact investing market investigates the evolution of SIBs in
Vietnam that have yet to receive impact investment and those that have. The analysis also
provides SIBs’ expectation from impact investors, given dynamic market changes. This paves
way for a better understanding of impact investing in Vietnam, especially in provinces and
underserved areas.

The SIB survey presents different facets of SIBs’ experiences and interests based on
responses received from 25 (of 63) cities and provinces. 189 (9.55%) SIBs in the survey
provided feedback from Bac Kan, Bac Ninh, Ben Tre, Binh Duong, Can Tho, Da Nang, Dak
Lak, Ha Giang, Hanoi, Hai Duong, Hai Phong, HCMC, Hoa Binh, Hung Yen, Nam Dinh, Nghe
An, Phu Yen, Quang Ninh, Quang Tri, Tay Ninh, Thai Nguyen, Thanh Hoa, Thua Thien Hue,
Tra Vinh, and Yen Bai.

SIB Profile

Legal Structure and Location

By legal structure, SIBs in the survey are classified as for–profit organizations including
cooperatives110 (79%) and not–for–profit organizations (21%). Hanoi, HCMC, and Da Nang

110 Legal library, Law No.23/2012/QH13 dated November 20, 2012 of the National Assembly on cooperative. Available here.
According to the law, a cooperative is a collective economic organization, co–ownership, legal entity, established by at least
07 members voluntarily and cooperatively supporting each other in production, business, and job creation activities to meet

36
are the major impact business markets. The geographical locations of all types of SIBs are
detailed in Figure 14. For–profit SIBs are located in 24 cities and provinces, including Hanoi
(26), HCMC (21), Da Nang (9), Can Tho (8), Thua Thien Hue (8), Hai Phong (7), Hai Duong (6),
and Tra Vinh (6). The number of cooperatives is high in Ha Giang (6), Hanoi (5), and Thai
Nguyen (5). Not–for–profit SIBs are concentrated in two cities, Hanoi (7) and HCMC (7).

Figure 14. Types of SIBs by location

Types of SIBs by location

30

25

20

15

10

For-Profit Organization Cooperative Not-for-Profit Organization

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

SIB networks have been established in various locations. SIBs located in major cities have a
wider geographic reach across provinces. Business outreach is in line with certain SIBs’
management and development conditions, such as the comparative advantages in input
supplies and availability of raw material, competitive manufacturing and production costs,
and market expansion for products and services to other cities and provinces. Similarly, SIBs
located in other cities and provinces have built interconnected business networks with Hanoi,
HCMC, Da Nang, and others to support and promote their business lines in the market.

the common needs of members, based on its autonomy, self–responsibility, and equality in management of cooperative
(Clause 1 of Article 2. 3).

37
Figure 15. SIB Outreach

SIBs' outreach by province

20

18

16

14

12

10

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Business Establishment and Ownership

The number of SIBs established grew gradually from 41 to 148 during 2015–2022. 2018 was
the peak year, with 34 new SIBs. 90% of the total SIBs formed in this period are for–profit
organizations. Majority of SIBs were established in Hanoi and HCMC (51), while 10 were set
up in Thua Thien Hue, 9 in Ha Giang, 7 each in Ben Tre and Can Tho, and 6 each in Thai
Nguyen and Tra Vinh.

Most SIBs are owned by the Vietnamese, including ethnic groups in Ha Giang and Yen Bai
provinces, while 5 are owned by foreign nationalities. Women–owned/led SIBs account for
72% of SIBs by ownership/leadership, with male business-owned/led SIBs making up the
remaining 28%. Figure 16 presents business ownership/leadership by gender in all cities and
provinces.

38
Figure 16. SIBs’ ownership/ leadership by gender

SIBs' ownership/ leadership by gender

30

25

20

15

10

Women-owned/led SIBs Men-own/led SIBs

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

SIBs and Employee Size

The majority of SIBs are micro and small–sized business (88%) and medium–sized businesses
constitute 12%. The rate of female participation in the labor force is higher than that of male
workers for SIBs of all sizes, as shown in Figure 17.

Figure 17. SIB Employee size and percentage of female employees

SIBs' business and employee size

90 80%

80 70%
Percentage of Female Employees

70
60%
60
Number of SIBs

50%
50
40%
40
30%
30
20%
20

10 10%

0 0%
1-10 11-50 51-200 201-500 501-1000 Self-Employed
SIB's Employees

SIB Percentage of Female Employees

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

39
Business Sectors and Products

SIBs are present in 16 economic sectors and subsectors, namely sustainable agriculture,
sustainable apparel, clean energy, education, financial inclusion, healthcare, waste
management, forestry, water, sanitation and hygiene (WASH), as shown in Figure 18.

A large number of the SIBs are in sustainable agriculture sector. Most SIBs in this sector are
micro and small–sized business (86.7%), and 15.6% of them are medium–sized businesses.
They are located in three major cities and Ha Giang, Thua Thien Hue, Hai Duong, Can Tho,
Tra Vinh, Ben Tre, Thai Nguyen, Yen Bai, Dak Lak, Hai Phong, Hai Duong, Binh Duong, Bac
Ninh, Ben Tre, Can Tho, Tra Vinh, Ha Giang, Dak Lak, Yen Bai, Thai Nguyen, Phu Yen, Hung
Yen, Bac Kan, and Nam Dinh provinces.

Figure 18. SIBs by economic sectors and sub-sectors

SIBs' economic sectors and subsectors

90 83
80
70
60
50
40 30
30
18
20 10
6 9 8
10 3 2 3 1 4 1 3 4 4
0

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

SIBs located in the three major cities (Hanoi, HCMC, and Da Nang) are engaged in many
economic sectors. The SIBs in other cities and provinces function mainly in sustainable
agriculture. A smaller number of them participate in sustainable apparel, education,
healthcare, forestry, tourism, and WASH. Some key information about these sectors is
detailed below. In addition, there are 17 SIBs operating in the tourism, fisheries and
aquaculture, information technology, mechanical engineering, construction, food
processing, and business support sectors and subsectors.

Sustainable agriculture comprising economic profitability, environmental stewardship, and

social responsibility throughout product value chains is the key sector, with 83 SIBs (43.9%
of surveyed SIBs). SIBs produce and supply a wide variety of clean and organic agricultural
products such as coffee, rice, tea, cashew, coconut, fruits, biological fertilizers, and other

40
products made from farming raw materials. Most SIBs in this sector are micro and small–
sized business (86.7%), and the rest are medium–sized.

Healthcare sector engages 30 SIBs (15.9%). 90% of the SIBs in this sector are micro and
small–sized. In the survey result, 19 SIBs are located in the three cities and provide health–
related products and services including traditional and herbal medicine, cosmetic care,
health examination and treatments, advisory services for the gay community, insurance and
healthcare services, and technological and bio-products. 11 SIBs produce nature–based
health products in Bac Ninh, Ben Tre, Can Tho, Hai Phong, Nghe An, Thai Nguyen, Thua
Thien Hue, and Yen Bai provinces.

Education is the third sector, with 18 SIBs (9.5%). 100% of education sector SIBs are micro
and small–sized. These SIBs focus on educational programs, vocational training including
foreign languages (English) and informatics, job–seeking and matching platforms, and
coaching services for the youth, especially those living in disadvantaged areas, people with
disabilities, and the other individuals and businesses. In doing so, SIBs in this sector have
contributed to connecting beneficiaries to various job markets and raising awareness of
social responsibility and environmental protection. Most SIBs are located in Hanoi, HCMC,
and Thua Thien Hue.

Sustainable apparel industry has 9 operating SIBs. 89 % of SIBs are micro and small–sized
and located in Hanoi, HCMC, Thua Thien Hue, Can Tho, Bac Ninh, Hai Phong, and Yen Bai
provinces. The main products are reusable products such as cotton towels, brocade apparel,
macrame knots, cords, patterns, and handicraft products made from natural/organic cotton
fabric and agricultural sub–products such as pineapple fiber and banana yarn.

Waste management sector has 8 operating SIBs, of which 100% are micro and small–sized.
These are located in Hanoi, Binh Duong, HCMC, and Da Nang. The SIBs manufacture
biological hygiene products such as dishwashing liquid and laundry detergent from organic
wastes and organic microbial products for waste treatment from agricultural by-products.
They also collect plastic waste including PET, PP, HDPE, and PV bottles to recycle, collect
organic waste to produce organic fertilizer, and developed a smart waste management
application to facilitate users’ payment of waste collection fees.

Clean energy sector has only 3 micro and small–sized SIBs, located in Hanoi and HCMC.
Clean energy SIBs manufacture and supply electric power–assisted bicycles with use of
Lithium battery technology, internet of things (IoT) products and services, energy–saving
electronic products, green and renewable engines, and machineries such as wind turbines.

Forestry sector has 5 micro and small–sized SIBs and 1 medium–sized SIB. They are located
in Hanoi, Hai Phong, Tra Vinh, Binh Duong, Thanh Hoa, and Quang Tri provinces. These SIBs
are involved in forest–based projects such as afforestation, restoring mangroves, raising
awareness for the community regarding the protection of mangrove forests, developing
forest garden models, and making herbal products, furniture, and handicraft products.

WASH sector has 4 running SIBs, all are micro and small–sized. 3 of them are located in
HCMC and 1 is in Can Tho. These SIBs increase access to clean and safe drinking water and

41
build water treatment, water supply, and drainage systems in compliance with Vietnam’s
environmental standards.
The financial inclusion sector has only 1 SIB, which maintains a crowdfunding platform to
raise funds for charity projects that support people with disabilities in Vietnam.

Production is the main activity, engaging SIBs in most sectors. Some SIBs specialize in
providing services to customers, developing platform activities that connect demand and
supply sides, and processing products respectively. Other SIBs take part in both upstream
and downstream linkages in the value chains from pre–processing to services.

Figure 19 presents the average SIB involvement in each stage of industry value chains,
depending on business models and links with other entities in supply chains.

Figure 19. SIBs involvement in industry value chains

SIBS' involvement in industry value chains

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00
Clean Energy Sustainable Sustainable Waste Forestry WASH Education Healthcare Financial
Agriculture Apparel Management Inclusion

Pre-Production Processing Production Market/Platform Retail Distribution Services

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

SIB Financials, Capital Structure, and Capital Raising

SIBs lay at the capital intersection of financial return and positive stakeholder impact. While
SIBs address pressing issues related to ongoing environmental catastrophes and social
unrest, their business models can be financially viable and profitable investments. This
subsection of survey responses focuses on the profitability and investment potential of SIBs
in Vietnam. The next subsection will focus on impact indicators for SIBs.

42
Figure 20. SIB revenue for October 2021-2022

SIB revenue for October 2021 - 2022

40
35
30
25
20
15
10
5
0

Cities and Provinces

Less than US$ 100K US$ 100K - US$ 499K US$ 500K - US$ 999K
US$ 1mil - US$ 5mil More than US$ 5mil

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Revenue of SIBs for October 2021–2022 ranged from less than US$ 100,000 to over US$ 5
million. High revenue (over US$ 1 million) generating SIBs are clustered in Hanoi, HCMC, Da
Nang, Binh Duong, and Thai Nguyen. Most SIBs considered are still young, generating less
than US $1 million in revenue.
Investors are generally interested in SIBs with annual revenue in the US$ 100,000–500,000
range. This SIB group is mostly located in cities such as Hanoi and HCMC. Several cities and
provinces such as Binh Duong, Can Tho and Tra Vinh also have a lucrative pipeline of SIBs in
this group. These cities and provinces can be considered during IIRV implementation.
SIBs located in the North such as Ha Giang, Hai Duong, Hai Phong, Thai Nguyen, and Yen Bai
are mostly early stage with annual revenue less than US$ 100,000. These SIBs are not yet
mature and investment-ready, therefore IIRV implementation with start with basic training
so that SIBs grow with the right framework of financial, social, and environmental
sustainability and can in due time raise capital from the private sector.

43
Figure 21. SIBs’ business results over the last 12 months (2021-2022)

SIBs' business results over the past 12 months (2021-2022)

20
18
16
14
12
10
8
6
4
2
0

Yes Breakeven No

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

The survey demonstrates that 52.38% of SIBs earned profits, 20.63% of SIBs broke even, and
26.9% of SIBs ran at loss over the last 12 months (2021–2022). The number of SIBs earning
profits or reaching breakeven level outweighed unprofitable SIBs in Ben Tre, Can Tho, Hai
Duong, Hai Phong, Tay Ninh, Thai Nguyen, Thua Thien Hue, and Yen Bai provinces. SIBs
making losses are mainly located in Hanoi, HCMC, and Da Nang.

Business results imply capital deficit and capability to absorb capital. In-loss SIBs are more
willing to take risks and receive capital. Breakeven SIBs, on the other hand, do not have high
capital demand. In the Central region (Thanh Hoa and Thua Thien Hue province), there are a
number of capital-absorptive SIBs.

Capital structure refers to the split between equity and borrowed capital in an enterprise.
This structure has many risk and return implications on a business—a favorable split can
leverage high returns and reduce risk. With the inflow of outside capital, SIBs have an
increased burden of performance. It is hence important to consider the correct window and
source for an investment inflow.

44
Figure 22. SIBs’ current debt

SIBs' current debt - US$' 000

HCMC 1,452
Binh Duong 1,300
Hoa Binh 740
Da Nang 253
Thai Nguyen 223
Tra Vinh 199
Hai Duong 148
Hai Phong 114
Hanoi 98
Thua Thien Hue 93
Nam Dinh 80
Quang Tri 65
Phu Yen 36
Ha Giang 33
Thanh Hoa 30
Dak Lak 24
Tay Ninh 20
Nghe An 17
Yen Bai 16
Bac Kan 9
Can Tho 2
Quang Ninh -
Ben Tre -
Bac Ninh -
Hung Yen -

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

The average SIB debt value varies by province, subject to business scope and capital needs.
SIBs’ current debt is recorded at US$ 4.95 million. Two areas, HCMC and Binh Duong, have
the highest amount of outstanding debt at 29.3% and 26.2% respectively, as seen in Figure
22. In other cities and provinces, the current debt of SIBs ranges from less than US$ 10,000-
700,000.

SIBs in most locations prefer debt and hybrid financing, accounting for 34.9% and 44.4% of
surveyed SIBs respectively (Figure 23). SIBs in far-flung provinces such as Ha Giang, Thai
Nguyen, Yen Bai and Tra Vinh prefer debt to equity financing while SIBs in cities are more
receptive to the idea of equity or hybrid financing. This is partly attributed to the fact that in
far-flung provinces bank loans are the major sources of finance to SIBs. Also, rural SIBs with
limited financial literacy and investment knowledge are often in a disadvantaged position to
access a more diverse source of financing.

45
Figure 23. SIBs’ expected types of funding

SIBs' expected types of funding

20 18
18
15
16
14
12 10
10
7 7
8 6 6 6 6
5 5 5 5
6 4 4 4
3 3 3 3 3 3
4 2 2 2 2 2 2
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
2 0 0 0 0 0 0 0 0 0 0 0 0
0

Debt Equity Hybrid

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

In terms of experience with foreign investment, surveyed SIBs have not gained much
experience in raising capital from foreign investors. Less than 20% of them actually earned
funding. In addition, foreign capital mostly flows into sustainable agriculture, healthcare,
and education sectors and more than half of the invested SIBs work in these three sectors
(Figure 24).

Figure 24. SIBs’ capital raised from foreign investors

SIBs' capital raising from foreign investors

90
80
70
60
50
40
30
20
10
0

Yes No

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

46
Regarding SIBs’ confidence and readiness to absorb private capital, there is a huge gap
between cities and provinces, with higher level of confidence and readiness reported in big
cities and related provinces than far flung ones (Figure 25). SIBs in Hanoi express highest
business confidence or readiness for absorption of private capital (94.8%). Meanwhile SIBs
in remote provinces such as Hoa Binh, Hung Yen, Nam Dinh, Nghe An, Phu Yen, Quang Ninh,
Quang Tri, and Tay Ninh reported a very low rate of confidence and readiness.

Figure 25. SIBs’ confidence and readiness to absorb private capital

SIBs' confidence and readiness to absorb private capital

40

35

30

25

20

15

10

Confident & Ready to Absorb Private Capital Unready

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

SIB Projections of Private Capital Demand

One major observation is the correlation between SIBs’ capital demand and their confidence
and readiness to absorb the capital. The more the capital demanded from SIBs, the more
confident they are that they will attract and absorb it. SIBs with high capital demand tend to
be, in fact, capable of properly and effectively absorbing investments.

47
Figure 26. SIBs’ projected capital raised from private sector

Projected capital raised from private investors (US$) by SIBs

1,443,696
1,343,083

1,047,000

600,000
462,500
398,588 361,875
350,000
283,000 249,375
175,344 200,000 200,000 200,000
150,000
100,000 100,516 100,000 130,000 100,000 96,164 101,390
92,400
50,000

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

SIBs may raise capital to apply towards capital expenditure, business or product
development, working capital needs, human capital, and research and development, as seen
in Figure 27. Most SIBs in Vietnam prioritize business or product development. There is a big
untapped opportunity in working capital financing, a less popular capital application as
ranked by SIBs surveyed. IIRV seeks to strengthen understanding about different
opportunities to raise capital that SIB owners have at their disposal.

Figure 27. Ranking of SIBs’ capital raising purposes (1–5)

SIBs' capital raising purposes by rank (1-5)

9
8
7
6
5
4
3
2
1
0

Trade Finance/Working Capital Capital expenditure Research and development

Business/Product Development Human Capital

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

48
Currently, few SIBs are very familiar with the capital raising process and reporting
requirements, as seen in Figure 28 and Figure 29, respectively. Through awareness, training,
and development programs, IIRV seeks to increase SIB owners’ familiarity with the capital
raising process and hence their access to capital.

Figure 28. Ranking of SIBs’ familiarity with capital raising processes (1–5)

SIBs' familiarity with capital raising process

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Very Familiar Somewhat familiar Not Familiar

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

While SIBs in the major cities have indicated their familiarity in capital raising process, they
have conversely also indicated that they are not familiar with the reporting requirement
during and after the capital raising process, indicative perhaps of over confidence in their
ability in to raise capital. The capital raising process has financial and legal requirement
attached to it and the post capital raising process is equally important to ensure that
investors are kept abreast of performance. This may be through regular board meetings,
audited financial statements, regular impact disclosures, and others.

Figure 29. SIB familiarity with reporting requirements for and after raising capital

SIBs' familiarity with reporting requirements for and after

raising capital
40
30
20
10
0

Yes No

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

49
Most important for IIRV, the survey investigated the challenges facing SIBs. This will help
effectively address key issues identified during the implementation of the project. 9
challenges were identified for SIBs to rank, as seen in The two important kinds of support
that the SIBs are deeply in need of are accessing local and foreign investors and innovative
financial products. These are also among key supporting activities that IIRV will bring to
Vietnamese SIBs.

Figure 30. The two important kinds of support that the SIBs are deeply in need of are
accessing local and foreign investors and innovative financial products. These are also
among key supporting activities that IIRV will bring to Vietnamese SIBs.

Figure 30. Ranking of challenges facing SIBs’ capital and business growth (1–9)

Challenges facing SIBs' capital and business growth by

10
rank (1-9)
9
8
7
6
5
4
3
2
1
0

Finance and business literacy

Access to resources other than capital
Access to business support services
Access to transaction advisory services (TA/CR)
Awareness and understanding of impact investing, issues, and opportunities
Awareness and understanding of laws and regulations
Access to business and investor networks
Access to marketing networks and resources
Complicated regulatory structure

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

The survey also conducted an inquiry into activities that could help SIBs access and convert
investment opportunities, as seen in Figure 31. The two important kinds of support that the
SIBs are deeply in need of are accessing local and foreign investors and innovative financial
products. These are also among key supporting activities that IIRV will bring to Vietnamese
SIBs.

50
Figure 31. Activities to help SIBs access and convert investment opportunities

Activities to help SIB access and convert investment

opportunities
100%

80%

60%

40%

20%

0%

Access to local and foreign investors

Friendlier regulatory schemes and policies

Capacity building on impact investment and deal readiness

Advisory services/ Technical assistance on capital raising process

Access to innovative financial products of impact investment, for example crowd-funding platform or social impact
bonds
Source: SIB survey, Impact Investing Exchange (IIX), Singapore

By identifying key result areas in impact investment readiness (Figure 32) and capital raising
(Figure 33) for SIBs, the data gathered builds a strong foundation for IIRV strategy and
implementation. Regarding the area of impact investment readiness, the SIBs are in need of
further training on financial modelling and valuation as well as business plan readiness.
Investor outreach and presentation skills among SIBs also needs to be enhanced.

51
Figure 32. SIBs’ need for capacity building on impact investment readiness

SIBs' need for capacity building on impact investment

readiness
60%
50%
40%
30%
20%
10%
0%

Financial modelling and valuation Business plan readiness

Investor outreach & presentation Deal structuring
Social and environmental assessment

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

To prepare themselves for the capital raising process, SIBs would mostly look forward to
reaching out to a wider network of local and foreign investors and getting access to relevant
advisory services and TA during the process.

Figure 33. SIBs’ need for capacity building on capital raising process

SIBs' need for capacity building on capital raising process

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Access to local and foreign investors

Friendlier regulatory schemes and policies
Capacity building on impact investment and deal readiness
Advisory services/ Technical assistance on capital raising process

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

52
In short, the survey result and the corresponding charts above have well captured the picture
of the finance and investment positions of SIBs across different provinces in Vietnam. There
has been a significant difference observed between SIBs in major cities such as Hanoi, HCMC,
and Da Nang and SIBs in remote, far-flung provinces in terms of their preferred type of
funding, capital demand, and readiness to absorb the capital raised. SIBs in large cities, with
a higher capital demand, are more receptive to the idea of equity or hybrid financing and also
more confident in their capital use. Agriculture, healthcare, and education are currently the
most attractive sectors to investors, particularly foreign investors. These are a potential area
for IIRV activity implementation. Successfully mobilizing capital to these sectors might set a
good example for other sectors and strengthen the whole enabling system to facilitate the
capital flow to other sectors.

The challenges faced by most SIBs during their capital raising are a lack of finance and
business knowledge as well the lack of understanding of impact investing, particularly the
offered opportunities. To address the challenges, SIBs look forward to support such as
accessing a wider network of local and foreign investors as well as innovative financial
products, such as crowd-funding platforms or social impact bonds. To prepare themselves for
the capital raising process, SIBs desire to improve their specific skills, including financial
modelling and evaluation and business plan preparation. Even though SIBs are performing
well in terms of generating positive impacts, there is still scope to work on the verification
and measurement of impacts so as to attract impact investors. These definitely are areas that
IIRV will touch on.

SIB Impact Potential, Agendas, and Development Goals

Each SIB in every sector promotes at least one of the 17 UN SDGs, with many promoting a
combination. Popular SDGs among SIBs include SDG 12-Responsible consumption and
production (59%), SDG 3-Good health and well-being (52%), SDG 1-No poverty (48%), and
SDG 8-Decent work and economic growth (48%).

53
Figure 34. Percentage of SIBs advancing each of 17 SDGs

Percentage of SIBs advancing each of 17 SDGs

SDG 17: Partnerships for goals 15%
SDG 16: Peace, justice, and strong institutions 10%
SDG 15: Life on land 20%
SDG 14: Life below water 8%
SDG 13: Climate action 25%
SDG 12: Responsible consumption and production 59%
SDG 11: Sustainable cities and community 21%
SDG 10: Reduced inequalities 27%
SDG 9: Industry, innovation, and infrastructure 13%
SDG 8: Decent work and economic growth 48%
SDG 7: Affordable and clean energy 13%
SDG 6: Clean water and sanitation 14%
SDG 5: Gender equality 35%
SDG 4: Quality education 19%
SDG 3: Good health and well-being 52%
SDG 2: Zero hunger 21%
SDG 1: No poverty 48%

0% 10% 20% 30% 40% 50% 60% 70%

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

SIBs across sectors advance a combination of these agendas: women’s entrepreneurship

(52%) and livelihood empowerment (66%), climate change adaptation (25%), climate change
mitigation (38%), and service of the underserved rural population (51%).

Figure 35. Percentage of SIBs advancing specific development agendas

Percentage of SIBs advancing area of development

Underserved rural population 51%

Climate change mitigation 38%

Climate change adaptation 25%

Women’s livelihoods 66%

Women’s entrepreneurship 52%

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

54
SIB Environmental Impacts

79% of surveyed SIBs responded that they have created a positive environmental impact
while only 4% acknowledged that they haven’t. There are still 17% SIBs who are unsure of
their net environmental impact, which is a relatively high rate if their impact turns out to be
neutral or negative.

Figure 36. SIBs creating positive environmental impact

Percentage of SIBs committed to creating

positive environmental impact

17%
4%

79%

Yes No Not sure

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Of the 21% of SIBs that do not create positive impact or are unsure, nearly 43% plan to create
positive environmental impact in the future. However, around 57% of these SIBs are yet to
set intentions regarding positive environmental impact.

Figure 37 presents the high proportion of SIBs supporting climate action—114 SIBs, 60% of
those surveyed. However, it is significant that 33% of SIBs have not supported climate action
and 5% are not sure regarding their stance.

Figure 37. SIBs supporting climate action

Percentage of SIBs supporting climate action

2%

33%

60%

5%

Yes No Not sure No answer

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

55
SIBs currently support climate action through a combination of mitigation (79%), adaptation
(51%), and resilience building (25%), as shown in Figure 38.
Figure 38. SIBs undertaking specific climate action

SIBs with specific climate action

90%
79%
80%
70%
60%
51%
50%
40%
30% 25%
20%
10%
0%
Through mitigation Through adaptation Through resilience building

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

As seen in Figure 39, out of 91 SIBs that support climate change mitigation, most SIBs (69%)
adopt energy efficiency practices. 51% mitigate climate change through designing,
manufacturing, or distributing clean energy solutions, and 48% use or develop green
buildings and infrastructure. 29% of SIBs support green/blue carbon sequestration initiatives
and the remaining 8% use other mitigation pathways.

Figure 39. SIBs with specific mitigation activity

SIBs with specific mitigation activity

80%
69%
70%

60%
51%
48%
50%

40%
29%
30%

20%
8%
10%

0%
Designs, Follows energy Uses or develops Supports green/blue Finances any of the
manufactures, and/or efficient practices green/sustainable carbon sequestration above
distributes clean buildings and initiatives
energy solutions infrastructure

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

56
Regarding adaptation, 40 out of 58 (69%) SIBs engage in climate smart agriculture. 30 (52%)
SIBs support biodiversity conservation on land or under water. Other adaptation measures
include providing local populations with weather-resilient housing and shelter (14%),
providing access to clean, affordable water in drought-prone areas (10%), or others (12%) as
shown in Figure 40.

Figure 40. SIBs with specific adaptation activity

Percentage of SIBs with specific adaptation activity

80%
69%
70%
60%
52%
50%
40%
30%
20% 14%
10% 12%
10%
0%
Engages in climate – Provides access to Provides local Supports biodiversity Finances any of the
smart agriculture clean, affordable populations with conservation on land above
water, in drought weather-resilient or in the sea
prone areas housing and shelter

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

As presented in Figure 41, 34% of SIBs adhere to sustainability, client protection, fair trade,
or other sectoral standards/principles. Only 6% of SIBs do not adhere to any of the above.
However, 40% of SIBs have not responded to this question and 20% are not sure about their
adherence to the above standards or principles.

According to the comprehensive enterprise survey conducted by Vietnam Chamber of

Commerce and Industry (VCCI) with support from the Asia Foundation (TAF), climate change
has significantly effected the operation of enterprises.111 This survey result is similar to the IIX
survey that MSMEs working in agriculture, forestry, and fisheries are the most affected by
climate change and natural disaster. The MSMEs have also taken several actions to adapt to
the changing climate. In particular, most MSMEs applied adaptation measures like repairing
and reinforcing existing factories and workplaces (53%), adjusting working hours due to
inclement weather (30%), training staff in coping with natural disasters and climate change
(28%), and responding to post-natural disaster relief activities (28%). Other adaptation
activities applied by MSMEs include change strategies and business methods (26%),
rebuilding storage (24%), and moving factories and workplaces to safer locations (10%). In
term of mitigation activities, only 19% of MSMEs have upgraded their production
technology.

111
VCCI and TAF (2020), Adapting for Succeed: Assessing the impact of climate change on Vietnam Bussiness. Available
here.

57
Figure 41. SIBs adhering to sustainability, client protection, fair trade, or other sectoral
standards/principles

Percentage of SIBs adhering to sustainability, client

protection, fair trade, or other sectoral
standards/principles

40% 34%

20% 6%

Yes No Not sure No answer

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

SIB Social and Gender-Specific Impacts

Based on survey results on the areas of focus for creating sustainable impacts and target
beneficiaries, as well as the SDGs supported, the likelihood of IIRV selecting women-owned
and men-owned SIBs that are supporting socially impactful goals is promising (Figure 42 and
Figure 43).

Figure 42. Areas that women-owned and men-owned SIBs focus on to create sustainable
impacts

Areas of Focus

Other 41%
20%

Underserved rural pop 43%

51%

Climate Change Mitigation 33%

38%

Climate Change Adaptation 18%

28%

Women's livelihood 35%

78%

Women's entrepreneurship 16%

66%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Men-owned Women-owned

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

58
 Target Beneficiaries

Other 10%
14%
Communities vulnerable to climate-related disasters 20%
19%
Minority groups 24%
28%
Urban poor population 27%
28%
Rural population 55%
67%
Micro entrepreneurs 29%
32%
Low income groups 75%
69%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Men-owned Women-owned

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Majority of SIBs (30%) across sectors report that they reach a small number of people, (less
than 50, Figure 43). However, in sectors such as sustainable agriculture, healthcare,
education, clean energy, financial inclusion, and WASH, some SIBs report reaching up to
10,000 people (Figure 44). Sustainable agriculture and healthcare sectors have significantly
more women-owned and men-owned SIBs when compared to all the other sectors. Thus, the
Sustainable Agriculture and Healthcare sectors show the most potential for selecting SIBs
that can contribute to creating positive social impacts and meeting the targets set by the
SDGs.

Figure 43. Number of people reached as employees, clients or customers and suppliers by
all surveyed SIBs

Number of People Reached as Employees,

Clients/Customers and Suppliers

1 to 50
2%
51 to 100
14%
101 to 200
30%
201 to 500
12%
501 to 1,000
1,001 to 10,000
4% 12% 14%
More than 10,000
12%
None

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

59
Figure 44. Number of people reached or beneficiaries by sector

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

60
The beneficiaries or people reached by the surveyed SIBs are a combination of employees,
clients or customers and suppliers (Figure 45).

Figure 45. Classification of beneficiaries or people reached by women-owned and men-

owned SIBs

Classification of People Reached or Beneficiaries

As suppliers

As clients or customers

As employees

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Men-owned Women-owned

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

GLI

Most of the surveyed SIBs will also be able to pass the criteria for GLI as seen in Figure 46
given that:
 Women-owned or led SIBs make up 71% of the SIBs while the men-owned SIBs
represent 29%. Of the women-owned SIBs, 60% have owners represented by
majority-women, 60% have a board members represented by majority-women and
55% are majority-women in their senior management (Figure 47)
 Most (82%) of the women-owned SIBs reported that females represent 51 to 100% of
the people they reach whereas only 45% of men-owned SIBs reported that they are
reaching majority-women beneficiaries (Figure 48).
 A vast majority (87%) of the women-owned SIBs have more than 51% female
employees as compared to 27% of the men-owned SIBs. (Figure 49).

Figure 46. Criteria for GLI

Source: https://www.2xchallenge.org/criteria

61
Figure 47. Leadership profile of women-owned SIBs

Women Leadership Profile

70%

60%

50%

40%

30%

20%

10%

0%
Owners >51% women Board >51% women Senior Management >51%
women

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Figure 48. Percentage of females among the beneficiaries or people reached by women-
owned and men-owned SIBs

Women-owned Men-owned

19% 8%10% 12%

29%

33%

63% 26%

0-24% 25-50% 51-70% 71-100% 0-24% 25-50% 51-70% 71-100%

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

The percentage of female employees is the one factor that shows a very clear difference between
surveyed women-owned and men-owned SIBs across all regions (Figure 49). The results confirm
the Harvard Business School112 postulate that women are more likely than men to hire other
women. Furthermore, aside from enjoying a comparatively high female labor participation – in
2021, Vietnam’s was 69% versus ASEAN average of 60%113 – a Mekong Business Initiative report
stated that women-owned MSMEs in Vietnam employ a higher percentage of female workers than
the men-owned MSMEs (43.4% vs 36%).114

112 Harvard Business School Working Knowledge, 2017. Why Employers Favor Men. Available here.
113 The Global Economy, 2021. Female labor force participation - Country rankings. Available here.
114 Mekong Business Initiative, 2016. WOMEN-OWNED SMALL AND MEDIUMSIZED ENTERPRISES IN VIET NAM:

SITUATION ANALYSIS AND POLICY RECOMMENDATIONS. Available here.

62
Figure 49. Percentage of females in the workforce of women-owned and men-owned
SIBs

Women-owned SIBs: Percentage of Female

Employees
1% 0% 2%

10%

87%

None 1 to 10% 11 to 30% 31 to 50% 51 to 100%

Men-owned SIBs: Percentage of Female

Employees

14%
23%
9%

27% 27%

None 1 to 10% 11 to 30% 31 to 50% 51 to 100%

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Figure 50. Percentage of female employees in women-owned and men-owned SIBs

(Legend: Gray – none, Violet – 1 to 10%, Blue – 11 to 30%, Yellow – 31 to 50%, Green –
51 to 100%)

In the North region:

63
 In the Central region:

In the South region:

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Diversity

The results of the SIB survey give a snapshot of the gender, diversity, and inclusion factors
that the SIBs operate in and will be used to guide further GBA Plus+ research. Once IIRV
selects locations and SIBs to focus on, a deeper inquiry into the gender, diversity, and
inclusion issues of selected SIBs will be undertaken to refine the design of gender-, diversity-
and inclusion-responsive interventions that would support capital financing of SIBs.

In all regions, cities show the most diversity and hence, have more potential for
intersectionality. More women-owned SIBs show diversity than men-owned SIBs in the
North. Gender diversity is lacking in the non-urban locations in the North. The summary of
the diversity profile among SIB owners and employees in the urban and non-urban areas is
seen in Tables 2, 3, and 4 respectively. These tables provide guidance on what type of
intersectionality may be present when considering supporting SIBs in different locations. If
IIRV chooses SIBs in areas where diversity—and potentially, intersectionality—exists, the
project needs to further understand the regional context and incorporate insights into
designing and implementing interventions.

64
 Tables 2, 3, and 4: Legend
Box color: the proportion of women-owned or men-owned SIBs that report having a category of
diversity. For example, a green box color means that 51 to 100% of SIBs reported that some owners
and employees are ethnic minorities
Tick colors: the proportion of employees that come from ethnic minorities. For example, some
SIBs report that ethnic minorities make up 31 to 50% of employees, as represented by the yellow
tick. SIBs report that ethnic minorities make up 71 to 100% of their employees are represented by
the orange tick
N (the bottom row of each table.): the number of women-owned and men-owned SIBs for each
province.

Table 2. Summary of diversity among SIB owners and employees in North region.
Location Hai Hai
Bac Ninh Ha Giang Phong Duong Thai Nguyen Yen Bai Hanoi City
Women-owned or Men-
owned SIBs WO MO WO MO WO MO WO MO WO MO WO MO WO MO

Ethnic owners
minorities employees ✓ ✓✓ ✓✓ ✓ ✓✓✓ ✓✓✓✓✓ ✓ ✓✓✓✓ ✓
Persons with owners
Disabilities employees ✓✓ ✓ ✓ ✓✓✓✓ ✓✓✓
owners
LGBTQIA
employees ✓✓ ✓
Diverse owners
religion employees ✓ ✓ ✓ ✓
Disadvantaged owners
groups
(displaced
communities,
victims of employees
human
trafficking,
refugees, etc.) ✓ ✓ ✓✓✓ ✓
N= 2 3 6 4 6 4 3 5 9 1 8 1 28 10
Box color: Blue - less than 25% of SIBs, yellow- 25% to 50% of SIBs, green - 51% to 100% of SIBs.
✓ : ✓ - less than 10% of employees, ✓ - 10 to 30% or two to three religions, ✓ - 31% to 50%, ✓- 51% to 70%, ✓ - 71 to 100% or four to five
religions
Source: SIB survey, Impact Investing Exchange (IIX), Singapore

In Central region, only women-owned SIBs show diversity in all locations. These women-
owned SIBs showed all types of diversity except gender diversity, which is absent in the non-
urban location of Thua Thien Hue (Table 3).

In the non-urban locations of South Vietnam, men-owned SIBs have some type of diversity
in all locations while women-owned SIBs have some type of diversity in all except in Binh
Duong (Table 4).

Table 3. Summary of diversity among SIB owners and employees in the Central region.
Central Vietnam
Thua Thien Hue Da Nang City

Women-owned or Men-owned SIBs WO MO WO MO

owners
Ethnic minorities
employees ✓✓ ✓✓
owners
Persons with Disabilities
employees ✓✓ ✓✓

65
 owners
LGBTQIA
employees ✓
owners
Diverse religion
employees ✓✓ ✓
Disadvantaged groups owners
(displaced communities,
victims of human trafficking, employees
refugees, etc.) ✓✓ ✓
N= 10 1 10 1
Box color: Blue – less than 25% of SIBs, yellow – 25% to 50% of SIBs, green – 51% to 100% of
SIBs.
✓ : ✓ - less than 10% of employees, ✓ - 10 to 30% or two to three religions, ✓ - 31% to 50%,
✓- 51% to 70%, ✓ - 71 to 100% or four to five religions
Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Table 4. Summary of diversity among SIB owners and employees in the South region.
South Vietnam Binh Ho Chi Minh
Can Tho Ben Tre Tra Vinh
Duong City
Women-owned or Men-owned
SIBs WO MO WO MO WO MO WO MO WO MO

owners
Ethnic minorities
employees ✓ ✓ ✓✓ ✓ ✓✓ ✓✓
Persons with owners
Disabilities employees ✓✓✓ ✓ ✓ ✓ ✓✓
owners
LGBTQIA
employees ✓✓ ✓ ✓ ✓✓ ✓✓
owners
Diverse religion
employees ✓ ✓ ✓ ✓ ✓
Disadvantaged owners
groups (displaced
communities,
victims of human employees
trafficking,
refugees, etc.) ✓ ✓ ✓ ✓✓✓ ✓
N= 6 4 7 1 4 2 7 3 18 11
Box color: Blue – less than 25% of SIBs, yellow – 25% to 50% of SIBs, green – 51% to 100% of SIBs.
✓ : ✓ - less than 10% of employees, ✓ - 10 to 30% or two to three religions, ✓ - 31% to 50%, ✓- 51% to 70%, ✓ - 71 to 100%
or four to five religions
Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Reasons for Lack of Diversity Among Employees

In all regions, the top reason given by SIBs who do not have diversity among employees is
that there are not sufficient applicants from diverse groups. This is followed by the reason
that SIBs do not ask about potential employees’ diverse background. If SIBs do not ask what
the background of their job applicant is, it may indicate that diversity is not a factor in their
hiring process and thus they are not be biased against hiring people from diverse
backgrounds. The top three reasons given by SIBs for not having diverse employees are
indicative of a lack of discrimination in hiring practices.

In all the regions, some men-owned SIBs also said that applicants from these diverse
backgrounds do not have the skills and knowledge their SIB required. In Central region, some
men-owned SIBs indicated they do not hire people from ethnic minorities or Persons with
Disabilities (PWDs), which suggests an intentional exclusion.

66
Workplace Diversity Policies or Facilities

Having workplace diversity policies is one of the indications of maturity of a business and its
responsiveness to the needs and welfare of employees. SIBs that have gender and diversity
policies are also more likely to be receptive to improving workplace conditions that can
enhance productivity, improve business performance, and create social impact. Thus, IIRV
can use the presence or absence of policies as well as the reasons for their absence to gauge
the openness of SIBs to making improvements in their business and assess the type and level
of assistance SIBs require to support IIRV goals.

Survey Results Relevant to IIRV’s Goals, Design, And Implementation

Results supporting IIRV Goals

Women leadership is one of the criteria for GLI and the results of the survey support this.
Given that almost 70% of the SIBs surveyed are women-owned or led and that with over 51%
female employees make up the majority in these SIBs in the workforce, women leadership is
one of the criteria for GLI and the results of the survey support this.

The prevalence of employee diversity in terms of ethnic minorities, other genders,

disadvantaged groups, and PWDs among SIBs indicates a good level of awareness,
intersectionality, and willingness to include these groups. SIBs employ diverse employees
and have policies or facilities that support such employment is a good indication that these
SIBs can meet social sustainability goals.

Results relevant to IIRV design and intervention

The prevalence of ethnic minorities, PWDs, persons from disadvantaged groups, and diverse
gender and religion, especially among SIBs where any of these make up the majority of
employees, indicates potentially significant intersectionality. Likewise, the presence of
gender-based violence in some locations may affect business performance. Thus, depending
on which SIBs and locations IIRV chooses to focus on, a deeper understanding of
intersectionality or issues such as gender-based violence that could affect business
performance must be made, through for example focus group interviews, to incorporate
responsive or appropriate interventions in project design and implementation. Addressing
any issue that affects business performance and chances of meeting social sustainability
goals will improve the chances of the SIBs in accessing capital and meeting social impact
goals.

Impact of COVID-19

A macroeconomic overview of COVID-19 in Vietnam has been presented in Chapter 4. This

subsection discusses SIB-specific impact of the COVID-19 pandemic as regards to financial
metrics such as cash flow, supply chain prices, revenue, and profitability, as seen in Figure 51-
Figure 54. Despite the global economic slowdown, SIBs in 14 of 25 provinces including Hanoi
and HCMC reported increased performance in revenue and profit. These provinces are
characterized with more diverse sectors, thus indicating business resilience to
macroeconomic volatility, which is a positive sign for investors. A few regions including Binh

67
Duong reported decreased performance across both financial and social performance
indicators. In fact, as a large industrial zone of the country with various manufacturing
companies, Binh Duong was heavily impacted by the social distancing order and factory
shutdown during the pandemic.

Figure 51. COVID impacts on SIB cashflow to maintain staff and business operations

COVID impacts on SIB cashflow to maintain staff and

business operations
100%
80%
60%
40%
20%
0%

Increase Unchanged Decrease

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Figure 52. COVID impacts on SIB revenue and profit

COVID impacts on SIB revenue and profit

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Increase Unchanged Decrease

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Considering the devastating human impact of COVID-19, the subsection also considers social
indicators relating to the number of employees, customers, and business partners in SIBs.
There is a strong correlation between changes in the number of employees, customers, and
business partners. It is a positive sign to see growth across regions despite the prevailing
socioeconomic environment. As seen in Figure 53, most SIBs tried to keep their workforce
unchanged. Meanwhile, for Binh Duong province, with a large percentage of manufacturing

68
workers, majority of SIBs there had to downscale their operations and reduce their
workforce.

Figure 53. COVID impacts on SIB number of employees

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Increase Unchanged Decrease

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Figure 54. COVID impacts on SIB number of customers and business partners

COVID impacts on SIB number of customers and business

partners
100%
80%
60%
40%
20%
0%

Increase Unchanged Decrease

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

Resilience to economic shocks can be credited to timely adaption. SIBs reported their chosen
strategies to respond to COVID-19, as seen in
Figure 55. These strategies included reconfiguring business models, restructuring business
operations, market diversification, restructuring distribution channels, creating new business
partnerships, and mobilizing talent. Among the strategies, most SIBs chose to modify their
business models by introducing new products and services and creating new partnerships.

69
Figure 55. SIBs’ adaptation strategies to COVID

SIBs' adaptation strategies to COVID

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Reconfiguration of business models, including inclusive and sustainable businesses, with new products and services

Restructuring business operations

Reallocation of capital

Market diversification

Restructuring distribution channels

Creation of new business partnerships

Mobilization of more talent

Source: SIB survey, Impact Investing Exchange (IIX), Singapore

In summary, Vietnam generally fared relatively better economically and socially than other
countries due to the government’s rapid response to the COVID outbreak and the country’s
relatively young population. SIBs were impacted by the COVID pandemic to a limited extent
for the most part. Modifying business models and looking for new partnerships were key to
SIBs’ survival through the pandemic.

70
Section VII: Supply Side of Impact Investing

71
SECTION VII: SUPPLY SIDE OF IMPACT INVESTING

Impact investment has untapped potential as an innovative financing method to promote the
inflow of private and international capital in Vietnamese SIBs. This chapter conducts a detailed
assessment into the supply of capital along with an inquiry into some of the key challenges
investors face while deploying capital in Vietnam. Finally, a brief look into impact investments in
peer countries, key global initiatives, and case studies with good practices may suggest a
pathway for the development of impact investing in Vietnam.

Vietnam’s Foray into Sustainability and ESG

The GoV has implemented several effective economic strategic policies, inducing the country
to reach the lower middle-income status in 2010. Since, Vietnam has witnessed tremendous
growth and is on track to become a modern industrialized nation. In addition to general
market reforms, the GoV has had a strong emphasis on sustainable development,
implementing ESGi reforms in the country and also adopting the 17 UN SDGs in 2015. An
example of an enabling intervention is the European Union-Vietnam Free Trade Agreement,
which sets out the signatories’ commitment to enhance the contribution of trade and
investment to the goal of sustainable development in its economic, social, and environmental
dimensions, including the promotion of corporate social responsibility.

In parallel, because of more overtures towards FDI, Vietnam’s venture capital ecosystem has
also observed significant growth, both in terms of number of deals and the total quantum of
capital deployed in the country. Vietnam has become the third biggest startup ecosystem in
ASEAN. The primary factor contributing to this was the rise of new founders with exposure
to the western start-up experience and a social conscious leaning.

The combination of government interventions towards sustainability and rise in impact start-
ups has paved the way for a huge opportunity for global impact investors. Since 2019,
Vietnam has been among the top 5 largest impact investment destinations in Asia. Despite
the current macroeconomic slowdown, Vietnam has been constantly outperforming its peers
and is touted to be Asia’s next major investment destination.

IIX Approach

For this market research, IIX targeted both individual and institutional investors. Investors
may be Vietnamese or international investors, located in Vietnam or abroad. Institutional
investors may be business angels, venture capital/private equity impact fund managers,
private financial institutions, insurance companies, pension funds, microfinance institutions,
crowdfunding platforms, foundations, and listed company investment fund managers.115

In October 2022, IIX delivered an online investor survey and organized a roundtable
discussion with Impact investors to learn their insight on impact investing performance and
strategies in Vietnam and other countries in the region. The analysis under this chapter is
based on selected primary and secondary data. However, market information and survey
data are not systematically available.

115 The list of private impact investors (Impact investors) is attached to Appendix 4 in this Market Research report.

72
Gender and Access to Finance in Vietnam

Vietnam has had a long tradition of women being involved in and running businesses.
Vietnamese women operate and own over 31% of formal SIBs, much higher compared to
other countries such as India (11%), Indonesia (15.8%), and Singapore (27%)116. These
women-led SIBs are also similar in size to those of men-led SIBs with comparable revenues,
as seen in Figure 56.

Figure 56. Average Revenue Comparison of Women-Owned and Men-Owned Companies

Average Revenue Comparison of Women-Owned

and Men-Owned Companies
5.29
4.6

0.71 0.8

Women-Owned Men-Owned

Small Enterprise (<USD 3 Million)

Medium Enterprise (USD 3 to USD 15 Million)
Source: IFC (2017)

In the last two years, over 63% of women-led SIBs in Vietnam have witnessed growth rates
(both in terms of revenue and creating employment) exceeding 20%, while only 57% of men-
led SIBs have shown similar growth rates. This demonstrates the tremendous potential for
gender lens investing (GLI) in the country117.

Despite their success and contribution to the economy, women-led entrepreneurs face a
major lack of access to finance as shown in Figure 57. 37% of women-owned MSMEs have
secured bank loans in the past two years, compared to 47% of male business owners. Even
when eligible for bank loans, women entrepreneurs tend to receive less than what they asked
for—lower amounts than men, usually with higher interest rates and collateral requirements.
As it stands, the financing gap for women-owned MSMEs is estimated at US$ 1.19 billion.

116
CEOWorld Report. Available here.
117
Women-owned enterprises in Vietnam: Perceptions and Potential – IFC. Available here.

73
Figure 57. Access to Finance – Comparison between Men-Owned and Women-Owned
SIBs

Access to Finance – Comparison between Men-Owned and

Women-Owned SIBs

60%
54%

16% 17%
4% 1% 2% 3% 1% 3%

Women-Owned Men-Owned

Commercial Banks Money Lenders Government Suppliers

Friends and Family Retained Earnings

Source: IFC (2017)

Vietnam has over 1 million women-led SIBs, mostly MSMEs, that provides employment to
over 10 million people. They form the stabilizing backbone of the economy and can act as
engines for recovery during difficult macroeconomic situations.

Avenues for Impact Investing

Prior to analyzing the supply of capital, it is critical to understand the types of financing
available for Vietnamese SIBs. There are different types of SIBs across the ecosystem which
operate with varying mandates, from driving pure social returns to solely profit driven.
Depending on the type of SIB and growth stage, there are several forms of financing
available, as seen in Figure 58.

74
Figure 58. Spectrum of SEs and sources of capital available

Source: IIX

The development of the Vietnamese impact investing ecosystem has accelerated in the
recent past with an influx of policy reforms, donor-led capacity building initiatives, and
foundations developing new research that brings deeper knowledge and transparency into
the space. This transition not only requires an inclusive multi-stakeholder approach but also
mandates the need to utilize a multi-capital approach—ranging from debt and equity to
grants and guarantees—from different sources structured to achieve different outcomes.
This section explores three key sources of capital: private, public, and philanthropic, and the
role each is best suited to play in transforming Vietnam’s impact investing ecosystem.

Private Sector Capital

Private sector investors primarily include financial institutions, corporates, (ultra) high net
worth individuals ((U)HNWIs), and retail investors. These investors can be both traditional
investors, who expect a higher than market rate of return and impact investors, are interested
in the financial returns (market or below market rate of return) as well as social and/or
environmental impact. The traditional financing vehicles that private sector actors avail of
could typically use to invest in SIBs are listed in Table 5.
.

75
Table 5. Traditional financing vehicles

Source: IIX

Public Sector Capital

The public sector consists of two key players: governments and the development assistance
arms of OECD countries, known as donor agencies or DFIs. Beyond influencing policies and
enforcing regulations in their own countries, OECD governments play a critical role in
catalyzing the supply side of impact capital by investing in funds and financial instruments.
These in turn invest directly in SIBs, providing subsidies, concessionary loans, and guarantees
to improve overall basic operating infrastructure. Donors and DFIs typically participate in the
ecosystem by implementing capacity building programs that lay the foundation for more
attractive risk-return-impact profiles for beneficiary entities, increasing demand for and
attracting private sector capital.

DFIs can further catalyze investment flows by de-risking investments through guarantees or
first loss capital. Such mechanisms raise private sector confidence and attract private
investment.

Philanthropic Capital

Foundations and NGOs adopt an impact first and risk tolerant approach as against traditional
investors. While grants are the dominant form of capital provided, foundations are
increasingly looking to invest in financially sustainable SIBs that can create a zero- or below-
market-rate return alongside scalable impact through program related investments.

Global Impact Investing Trends

A new report published by the UN identifies a funding shortfall of over US$ 7 trillion on the
road to achieving the 2030 Sustainable Development Goals118 (this is a pre-COVID figure, post
COVID the number is much larger). Financial markets have seen unprecedented
commitments from asset managers allocating capital toward the funding gap and this has
enabled the total impact investing market to reach the US$ 1 trillion mark in October 2022—
up 63% since 2019.

118
UNCTAD Conference – Data available here.

76
As of 2021, globally there are over 1000+ privately managed funds that aim to deploy capital
into SIBs (compared to 850+ in 2019). Despite the growing market size and increase in the
number of funds for SIBs, capital allocated to SIBs accounts for approximately 4% of total
capital available, showing a large financing gap. With growing awareness of the need to
address social and environmental challenges and governments globally pushing for a more
sustainable way of doing business, the impact investing market is expected to grow rapidly.

Amongst the (1000+) organizations deploying capital into SIBs, fund managers accounted for
the majority at 63%. The detailed breakdown of the stakeholders is given in the Figure 59.

Figure 59. Percentage of capital deployed

% CAPITAL DEPLOYED

Others, 16%

Pension Funds,
2%
Financial
Institutions,
5%
Foundations,
11% Fund
Managers,
Family Offices 63%
, 4%

Source: GIIN (2020)

Impact start-ups or early stage companies that seek a triple bottom line—to include people,
planet, and profit—embody innovative solutions where peacebuilding and capitalism
converge. It is critical for SIBs across every stage to have access to private sector capital.
Investors deploy capital into SIBs at various stages of growth, from seed funding to maturity.
Capital deployed and total AUM allocated at each stage of the enterprise growth is shown in
the Figure 60.

77
Figure 60. Investor Preference per Stage of Company

Investor Preference per Stage of Company

25%
22%
18% 18% 17%

Seed Stage Venture Stage Growth Stage Mature Listed

Companies

% Deployed per Stage of Enterprise % AUM Allocated

Source: Barclays Private Bank (2021)

The market for impact investing is predominantly within developing and emerging markets,
as can be seen in Figure 61. 57% of global impact capital focuses on investments in developed
markets, while 31% invest primarily in emerging markets. If there are opportunities for
somehow reducing the investment risk, Funds, in general, are opening up to investing in more
challenging environments. This may pose an opportunity for DFI and donors to step in and
provide the derisking and consequently, Vietnamese SIBs to increase capital access.

Figure 61. Geographical distribution of impact investing

GEOGRAPHICAL DISTRIBUTION
Global
Funds, 12%

Emerging
Developing
Markets,
Markets,
31%
57%

Source: Barclays Private Bank (2021)

Given India’s success as the premier destination for impact investing in the Global South,
below is a case study that touches on the growth of the Indian impact investing.

78
 Case Study: Impact Investing Ecosystem in India

In recent years India has emerged as a thriving hub for impact investing, with over US$14 billion
deployed through over 300 deals between 2019 and 2021.119 It is estimated that there are over 600
SIBs within India, currently impacting over 500 million lives and raising over US$ 9 billion in capital,
thereby making India a lucrative investment opportunity for investors.120

The s upply of tech-enabled solutions to uplift the underserved population and make a positive
impact both socially and environmentally has been bolstered by the impact investing sector and
this was catalyzed during the lockdown, which demanded tech-enabled solutions and
interconnectedness. This can be seen as the investments in tech-enabled SIBs focusing on
development rose to US$ 1,298 million in 2021—a 224 % jump from 2020.

On the capital supply side, diverse pools of capital are crowded in to augment social impact. An
increasing number of impact investors co-invest with commercial investors through club deals.
Noticeably, between 2019 and 2021 commercial capital providers constituted more than 60% of
the total capital deployed into Indian SIBs. In 2021 only commercial capital funding was 7.5x times
more prominent than impact capital.121

Apart from direct financial investment, other key stakeholders have also contributed to the
vibrancy of the impact investing ecosystem in India. Intermediaries such as incubators, universities
or advisory services provide intellectual and social capital to both SIBs and investors in terms of
knowledge and connections, fueling the growth of the impact investing ecosystem further.
Ecosystem enablers provide customized, tailor-made, and needs-based non-financial support to
impact SIBs. Below is an example of the different types of support:122
Focus on entrepreneur-first
Ecosystem enablers providing this support are focused on capability building over
capacity-building. These methods involve high-touch training and mentoring on
entrepreneurship such as refining financial & impact management, and leadership
knowledge of the entrepreneur.
Renowned enablers include Stanford-Seed, Upaya Social Ventures, Villgro and
Ammani Institute.

Focus on the problem statement first

Investors with strong investment thesis to improving sector outcomes or community
outcomes focus on the problem statement and tie up with either accelerators or
develop internal centers of excellence to problem-solve at scale.
Examples of this investor type include Village Capital.

Focus on business-capacity building

This type of support can be broadly classified as technical assistance, with a view to
optimizing operations by building efficient processes and improving business
functions.
Examples of enablers include Sattva Consulting.

119 Impact Investors Council (2022), India Impact Investing Handbook. Available here.
120 Forbes India (2022), Impact Investing: An underrated investment opportunity for family offices and high-net-worth
individuals. Available here.
121 Impact Investors Council (2022), India Impact Investing Handbook. Available here.
122 Yunus Social Business (2021), Enterprise Support Landscape Study (India). Available here.

79
 Case study of Indian Diaspora: The Indus Entrepreneurs

The Indus Entrepreneurs (TiE) is a non-profit organizations formed by the Indian Diaspora over 29
years ago, with a mission to nurture startups by mentoring, networking, educating, incubating, and
funding. TiE is now present in over 14 countries with 61 chapters and has more than 15,000 members
who take an active role in supporting Indian entrepreneurs and investing in their ventures.

Over the last 30 years, they’ve invested over US$ 50 billion in capital and have unlocked over US$ 1.5
trillion by supporting over 25,000 startups. This is a true testament to the power of the diaspora, who
have catalyzed the Indian investment ecosystem.

Despite the supportive ecosystem enablers, India’s impact investment ecosystem is still faced
with challenges. The three main challenges identified are:
1. Lack of standardized legal structure governing SIBs and impact investors. This results in a
less conducive business environment for SIBs because of high costs of registration,
compliance and operations. In turn, potential investors would feel discouraged to invest in
the impact sectors.
2. Lack of a preferential taxation system for SIBs and investors. Despite creating positive
social and environmental returns, for-profit SIBs are still taxed in the same manner as other
entities. The lack of tax concessions and exemptions on investment capital towards such
SIBs also deters private and domestic investors from deploying capital.
3. Lack of awareness surrounding impact investment within the country. Many investors and
entrepreneurs are not aware of the ecosystem’s dynamics such as registration norms,
taxation protocols and the importance of maximizing impact.
4. The concern of greenwashing. With the impact investing sector becoming more
mainstream, “impact investors” are shifting into bigger ticket sizes and shorter exit
horizons, but also having less focus on distinguishing impact from non-impact.
5. The lack of true involvement of end beneficiaries. While there are some efforts in listening
to the end communities during the pre-investment due diligence, there is not much
involvement of end-customers by investors throughout the whole investment process,
which can be more time-consuming and difficult to quantify.

Impact Investing in ASEAN

Amongst the developing and emerging markets, ASEAN countries experienced the highest
growth of capital deployed between 2015-2019, increasing from US$ 4 billion (2015) to US$
9.4 billion (2019). Impact investing in ASEAN has grown significantly, at a CAGR of 23%
between 2015 and 2019. The quantum of impact capital deployed in the last 3 years (2017-
2019) in the region is more than half of the capital deployed in the 10 years prior (2007-2016)
as seen in Figure 62.

80
Figure 62. Overall Investment Activity in SE Asia

Overall Investment Activity in SE Asia

100 2500
90 86

80 2067.4 2000
70
60 1500
50 46 1287.7 1250.2
43
40 36 1000
31
834.9
30 23
627.4 17
20 13 500
355.9
10 4
1 116.9
31.1 85.5
0 1.5 0
Cambodia East Timor Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam

Number of Deals Capital Deployed (USD Million)

Source: GIIN (2018)

For the purposes of the research report, investments from DFIs have not been taken into consideration as “impact investments”
since the primary source of financing from such organizations is into infrastructure projects, government lending and lending
programs to state and central banks for MSME programs.

Impact Investor Activity

250 227.4 70
62 60
200
49 48 50
150 134.6
40

100 30
74 70.4
20 20
50 13 14
10
6
0 3 0
Avg 2007 - 2016 2017 2018 2019

Capital Deployed Impact Deals GLI Deals

Source: GIIN (2018)

Within ASEAN, investments into SIBs have grown significantly after 2016. Prior to 2016, only
US$ 74 million was deployed in 20 deals, while over US$ 350 million has deployed between
2017 and 2019. The number of deals increased more than 5x within the same time frame. A
decline in investments in 2018 is primarily attributed to the growth stage of companies
fundraising during that period—over 66% of the SIBs raising capital were in very early stages,
needing ticket sizes of approximately US$ 1 million.

81
Vietnam’s impact investing landscape has proliferated over the last few years. Between 2017
and 2019, Indonesia, Philippines, and Cambodia received more funding than Vietnam. As the
most populous ASEAN country and with a high rate of digitization and internet connectivity,
Indonesia is the most attractive destination for impact investing capital in the region.

Case Study: The Robust Impact Investing Ecosystem in Indonesia

Indonesia has remained the leading country for impact investors within SE Asia, attracting almost
38% of deals by volume and 32% of total capital deployed.

Impact capital of nearly US$4 billion (including funding from DFIs) of was deployed between 2007
and 2017. A study by Mekar estimates that the impact investment potential of the country stands
at US$ 23+ billion over the next five years. Impact investors are active across diverse sectors
including finance, agriculture, energy, manufacturing, and services. Investors have also been able
to generate exits, validating the financial viability of Indonesian impact investments.

The evolution of the impact investing ecosystem in Indonesia has led to increased awareness. Even
during pandemic, the government made notable efforts to push environment friendly practices
and incorporate climate considerations into policy agendas. Government initiatives to adopt
sustainability, policies to drive investments, and adoption of technology for development are a few
of the reasons why the sector is thriving.

The country currently has many impact-focused business support providers. Industry associations
and networks including the Aspen Network of Development Entrepreneurs (ANDE) and the Asian
Venture Philanthropy Network (AVPN) are active in Indonesia.

Role of Government and Innovative Finance:

In 2017, President Joko Widodo mandated the Ministry of National Development Planning
(Bappenas) with developing a roadmap for Indonesia’s contribution to achieving the SDGs. This
roadmap also outlined the measures to be taken with sector-specific targets. To make funds
available for action, the government has put in place village financing companies called BUMDes,
enforced a blended finance policy, and successfully raised US$ 2 billion via a Green Sukuk—a
shariah government green bond. Much of these funds go towards return-generating SDG-relevant
investments. More such green bonds are likely to follow, like the Green Corporate bond issued by
OCBC-NISP with the IFC.123

Indonesia attracted US$31.1 billion in FDI in 2021, up $2.4 billion from 2020. The surge in FDI is
mainly due to the Indonesian government improving the overall economic climate and through
structural reforms, and rising domestic consumption stimulated by a huge market and a growing
middle class of nearly 70 million people.

Indonesia aims to achieve an economic growth rate of 5.7-6%. To support this goal, the
government will contribute 17.5% of the required budget and the rest will be covered by the public
and/or private sector. The removal of some investment risks combined with favorable
demographic conditions renders the Indonesian market ripe for investment.

While the impact investing landscape is growing in the country, some challenges exist. The
volatility of the Indonesian Rupiah has resulted in currency risk and losses, increasing the cost of
capital for both investors and SIBs. New investors find it difficult to make equity investments in

123 Mekar (2019), Investing in Indonesia: 10 Benefits and Challenges, with a Spotlight on Impact Investing. Available here.

82
 Indonesian-based companies. It is procedurally complicated to register new shareholders,
requiring new articles of the association every time, and requiring a paper-based registration of
shareholding with the Ministry of Justice and human rights.

The Philippines receives the second highest number of investments. Alongside

macroeconomic stability, a conducive regulatory environment, rising domestic consumption
expenditure, and growing recognition of SIBs as drivers of development have resulted in
increased impact investing activity. The SE landscape in the country has evolved from
cooperatives and community-based model concentration to asset-light, tech-enabled, and
inclusive business models. the Philippine economy benefits from a young workforce, high
literacy rate, and recent government investments in technology and infrastructure. In
addition, a stable currency and benign outlook for inflation make the Philippines attractive to
foreign investors.

Cambodia has also drawn a steady flow of foreign capital. Social economy policies in have
focused on mobilizing social investment, with the Cambodian government taking the crucial
first step to promote the integration of ESG factors into investment decisions. The
Cambodian economy is relatively open with very few restrictions on foreign investment.
Current economic activity is narrowly based and presents opportunities for international
investors to enter the country. For international impact investors, the Law on Investment and
Incentive Schemes lays out multiple incentives including 100% ownership and land lease for
up to 50 years. The establishment of social innovation hubs in large universities will likely
result in a larger pool of high-quality human capital for the social investment sector. The
relatively high number of investments in Cambodia is due to the flexibility around currency
and the manageable regulatory requirements for international investors.

As an emerging country with similar market dynamics and level of overall development,
Vietnam stands to gain much insight from peer ASEAN countries in further developing its
nascent impact investing ecosystem.

Deal Sizes

Majority of the impact investment deals in the region, which usually has the largest ticket size
deals) have ticket sizes under US$ 5 million. Over 85% of impact capital has been directed to
a number of startups and MSMEs raising capital for the first time. A comparatively smaller
pipeline of growth and mature-stage SIBs have absorbed larger Series B and C rounds of
capital.

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Figure 63. Capital Deployed per Deal Size

Capital Deployed per Deal Size

181.1

108.5 106.4

40 43
22 25 21.8
13.1 15 8
1.4

< USD 0.1 Mil USD 0.1 Mil to USD 0.5 M to USD 1 M to USD USD 5 M to USD> USD 10 Million
USD 0.5 M USD 1 M 5M 10 M

Number of Deals Capital Deployed (USD Million)

Source: GIIN (2018)

Between 2017 and 2019, the average impact investment ticket size is US$ 2.8 million while
median deal value is about US$ 1 million. Average deal size for Impact investors from 2007-
2016 was US$ 3.7 million while the median deal value was US$ 0.6 million. The dispersion
between average and median values has reduced in the period 2017-2019 as compared to
2007-2016 indicating that PII investments are becoming more equally distributed across
ticket sizes. In 2017-2019, deals with ticket sizes between US$ 1 million and US$ 10 million
accounted for 50% of total capital deployed by impact investors. In comparison, close to 65%
of PII investments from 2007-2016 had a ticket size below US$ 1 million.

Sectors of Operation

Financial services is the most favored sector among impact investors in the region (Figure 64)
and has received almost 50% of total capital deployed. Equity investments comprise over
60% of the financial service investment both in terms of the number of deals as well as the
value of investment.

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Figure 64. Investor Activity Based on Sector

Investor Activity Based on Sector

212.9

64.8
20.3 23.3 28.7 21.6
32
14.7 41 16.4 25
13.6 3.4 11.6 1
5 13 6 1 8 3 9 4 12

Capital Deployed (USD Million) Number of Deals

Source: GIIN (2018)

Microfinance institutions accounted for over 80% of impact investment activity from 2007-
2016. The investment focus in the latter half of the decade has shifted to fintech companies.
15% of capital has been deployed into sectors including forestry, industrial trading, and
logistics, among others. The agriculture sector saw the second highest number of impact
deals, with over 70% of deals in Indonesia, and the remaining primarily in the Philippines and
Vietnam. The majority of the SIBs in the sector raised approximately US$ 1 million each.

Overview of Traditional MSME Financing in Vietnam

Traditional Lending

MSMEs play a crucial role in the overall economic growth of Vietnam. Therefore, GoV and
international development organizations take an active role in supporting their success
through incentives, subsidies, and building the capacity of banks to increase access to
finance. Promoting MSMEs has been on the agenda of GoV for over a decade.

Traditionally, MSMEs within Vietnam have had to rely on financing from bank loans, informal
sector financing, and retained earnings. Informal lending has been the most common form
of accessing capital for MSMEs as the process of securing a bank loan is arduous and time
consuming. However, women-led SIBs face acute challenges in accessing informal sector
financing and have to rely on retained earnings to sustain, scale, and grow.

As developing the MSME sector has become a priority, many banking institutions, including
state-owned commercial banks, policy banks, and joint-stock commercial banks provide
reduced interest rates and other preferential loan conditions. Funding is often provided to
national banks by international finance and donor organizations for on-lending to MSMEs.
Due to the dependence of national banks on donor organizations, the number of MSMEs that
have access to loan products is limited. Lastly, non-bank financial institutions are still in a
nascent stage in Vietnam. Microfinance institutions (MFIs) and financial leasing companies
cater to micro and large enterprises respectively.

85
Despite the positive development, financing for MSMEs remains limited by various factors.
MSMEs often do not approach banks because they lack information on financing
opportunities or do not have the capacities to comply with application procedures. Banks are
reluctant to lend to MSMEs because of high costs for monitoring and verification. Many banks
still prefer to cater to large enterprises and have restrictive credit access for MSMEs.

Impact Investing in Vietnam

A decade ago, in the early days of impact investing, there was only a handful of international
investors with positions in Vietnam. The overall economic progress in recent years combined
with a new generation of entrepreneurs has induced private sector capital deployment in
Vietnam. Some investors include Capria, Crevisse Partners, Insitor, and Omidyar Network.

While there have been foreign investors who have deployed capital into Vietnamese SIBs,
there are several restrictions and associated procedural hoops to pass through. This has
limited the participation of international investors within the country. For example, in 2021,
the total amount of venture capital invested in innovative startups reached US$ 1.4 billion.
The funds were not invested directly in Vietnamese SIBs—instead, investments were made
through operating entities established abroad, usually in Singapore, that then transferred the
capital to Vietnam. The challenges faced by investors is detailed in the last part of this
chapter.

In addition to international investors, homegrown funds have also been cropping up within
Vietnam. One such fund is Dragons Capital’s Mekong Brahmaputra Clean Development Fund
(MBCDF), which is the first local impact fund in Vietnam. MBCDF invests an average of US$
5 million in renewable energy, energy efficiency, water conservation, and waste recycling.
Lotus Impact, another domestic impact fund, invests capital into seed stage SIBs and
provides them with a range of incubation support.

Case Study: Success of Homegrown Funds

Lotus Impact Fund

Overview: Lotus Impact is a venture capital firm based in Ho Chi Minh City, Vietnam. The firm
focuses on seed-stage and incubation support. Lotus Impact is founded by the VinaCapital
Foundation and the VinaCapital Group, one of the largest investment managers (US$1.5 billion in
AUM) in ASEAN that establishes global standards for social and financial investing. The firm seeks
to invest in the agriculture, education, WASH, and technology sectors. To date, Lotus impact has
facilitated the inflow of over US$ 20 million in Vietnam through 7 different investments in the
country.

Financial Strategy: Lotus Impact's financial strategy is to provide debt, convertible debt, and
equity investments in instances where an exit opportunity is visible. Deal sizes range from US$
500,000 to US$ 7 million and benefit small or medium-size SIBs that generate high impact and
financial returns.

Partnerships and Ecosystem Development: Starting in 2017, Villgro and USAID are working with
Lotus Impact to set up an incubation and investment program alongside new local angel investor
networks such as the Mekong Angel Investor Network.

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The diverse presence of international and local funds has made Vietnam one of the most
dynamic impact investing hubs in ASEAN. Vietnamese SIBs raised over US$ 26 million from
impact investors between 2007-2017 and US$ 30 million between 2017-2022, making
Vietnam the 3rd largest ASEAN market for impact investing.

Figure 65. Capital Deployed from Impact Investors in Vietnam

Capital Deployed from Impact Investors in Vietnam

30 25
25.8
25 22
20
20
15
15
10
10
5 3.5 6 4.5 5
4 3 32
0.3 2
0 0
2007 - 2016 2017 2018 2019

Capital Deployed Number of Deals GLI Deals

Source: Intellecap (2020)

Although there has been strong growth in impact investing firms recently, the market is still
fragmented. Due to the regulatory barriers and investors’ risk perception, the average deal
size is between US$ 1 million and US$ 5 million. As a result, only 5-10% of SIBs successfully
graduate from Series A to B. Meanwhile, 90-95% of SIBs fail in the early stages as they do not
have enough funding for the expansion stage. This gap arises from investors’ requirements
of proven successes and startups’ inability to demonstrate their potential growth. As shown
below in Figure 66, there is a severe dearth of growth capital in the country, which is not
providing the necessary runway for SIB growth. This phenomenon of SIB failure is known as
dying in Death Valley.

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Figure 66. Death Valley in business cycle

Source: DI Interview and Analysis

In terms of types of deals, more than two-thirds of the impact deals in Vietnam are debt
investments. Only 30% report equity deployment. Over 50% of the equity impact
investments were by Impact investors, while over 80% of the debt deals were by DFIs. Almost
60% of debt investments were in the financial service and energy sector, with some debt
funding also going into the agriculture and healthcare space. Owing to lower understanding
and familiarity of social entrepreneurs with equity and SIBs lacking required structural,
financial and administrative best practices, equity investments are likely to remain limited in
the country.

GLI in Vietnam

Vietnam is a relative newcomer GLI, despite which GLI is on an upswing. Between 2019-2022,
over 15 companies had raised capital totaling US$ 15 million, demonstrating significant
growth. Global investors, DFIs, and other ecosystem actors are at the vanguard of early GLI
in the country.

While strides are being taken to improve the GLI landscape in Vietnam, women
entrepreneurs face difficulties in accessing capital and networks to grow their businesses, due
in parts to cultural barriers and structural gender gaps across the country. GLI ecosystem
players have an overarching focus on women-led businesses in their capital allocation, more
so than businesses that supply high-impact products for women or promote gender inclusion
in their workforce. This focus on capital allocation to women-led businesses has been the
predominant lens in the GLI discourse, excluding businesses that perhaps are not led by
women but have huge gender impact potential nonetheless.

In Vietnam, energy and financial services are the leading sectors in terms of impact capital
deployment. Despite Vietnam’s historically agrarian economy, agriculture has received less

88
than 2%124 of total impact investment flowing into the country. However, GLI was primarily
in the agriculture and financial services sectors.

Vietnam’s first foray into public impact investing

Although the private impact investing market is developing in Vietnam, the public capital
market for impact investing remains elusive. The only exception is the enterprise iCare that
received public capital through IIX’s Women’s Livelihood Bond (WLB) and was listed on the
Singapore Exchange.

Case study: iCare Benefits and WLB

IIX deployed US$ 3.7 million into iCare Benefits, a SIB that provides insurance and affordable loans
for essential goods and services to women factory workers in Vietnam, through WLB1, the first
social bond that was listed on the Singapore Exchange in 2017.

WLB SeriesTM: the first impact investing instrument on public financial market

In 2017, IIX made history by launching the US$ 8.5 million* WLB1 transaction, the world’s first
gender-lens impact investing security listed on a stock exchange. By addressing dimensions of risk-
return-impact, IIX created a new kind of financial instrument that delivered stable returns and
sustainable impact to investors.

Ultimately, 12 investors participated in the US$8 million senior debt tranche helping create
livelihoods for 385,000 women across ASEAN. WLB1 included an entity from Vietnam. Over its 4-
year tenure, WLB1 enabled investors to deploy capital sustainably while meeting their financial
expectations and exceeding all impact targets ahead of schedule (within the first 2.5 years). WLB1
matured and was fully redeemed at par on 6 July 2021. All loans to underlying borrowers were
repaid in full with no credit losses. The successful execution and the strong performance of WLB1
has enabled IIX to replicate the bond and scale the WLB Series. To date, the WLBTM Series has
mobilized over US$ 128 million and is empowering over 1 million women across the Asia-Pacific
region.

GoV as an Ecosystem Enabler

Vietnam’s rise to one of the top economies in Asia can be attributed to strategic economic
reforms tied to sustainability dating back to the 2000s. Since 2005, Vietnam has issued one
of the most comprehensive labor codes in Asia, Environmental Protection laws that include
polluter pays measures, and mandatory impact assessments. The National Strategy for the
Environment, established in 2010, set goals related to clean technology, pollution control,
and wastewater treatment.

While the actual enforcement of these laws is contentious, the GoV continues to develop
strategies around ESG performance, implementation, and framework. In 2013, the State
Security Commission (SSC) collaborated with the IFC to produce the Handbook on
Sustainability Reporting—a guide aimed at facilitating public and listed companies’
disclosure of environmental and social performance. Such measurement and disclosure is
one of the first steps towards meeting SDGs. It also helps introduce Vietnamese companies

124 The landscape of impact investing in SE Asia – GIIN. Available here.

89
to global standards in ESG reporting. Importantly, implementing ESG practices helps SIBs
approach and attract investments, especially foreign capital, in a sustainable manner.

In 2019, the SSC developed the Vietnam Corporate Governance Code of Best Practices.
Public companies are recommended to observe best practices, establish a compliance
roadmap in their annual report, and include key non–financial information relevant to
environmental and social impact. In 2020, the Ministry of Finance (MoF) issued Circular125
providing guidelines on information disclosure in the securities market for public and listed
Vietnamese companies. In this regard, public and listed companies are required to disclose
GHG emissions, energy consumption, water consumption, compliance with the law on
environmental protection, policies concerning employees, responsible for the local
community, investments, and other community development activities in their annual ESG
reports. The current status is that ESG measurement and assessment are not yet required for
non–listed companies—many SIBs, SEs, and MSMEs—in Vietnam.

ESG–focused investments into Vietnamese companies have been growing. Several

investment funds, such as Tundra Fonder and AFC Vietnam Fund consider ESG criteria in
investments in local companies. Vietnam Holding Asset Management and Dragon Capital
have adopted the UN PRI for their portfolio companies.

While ESG is about risk mitigation, impact investing is about rewarding positive impact. Thus,
given the GoV’s and publicly listed companies’ familiarity with ESG, the adoption of impact
investing would be easier in private markets among SIBs. Capital related to impact investing
would assist in achieving Vietnam’s SDGs and also grow MSMEs, the backbone of the
economy.

Impact investment involves assessing SIBs’ non–financial performance and incorporating of

deep social and environmental impact. Recently, through the Ministry of Natural Resources
and Environment (MONRE), the GoV has prepared to promulgate the regulations on
environmental criteria and verification for climate resilient projects financed by green credit
and green bonds. This green taxonomy is tentatively scheduled for Q4 2022.126 However,
Vietnam has yet to establish a social taxonomy to classify business activities that contribute
to national social objectives and set a common code on sustainability for investors,
businesses, and regulators. A thematic taxonomy set for impact investing by sector is yet to
be developed. Currently, environmental and social impact measurements of investments in
SIBs/sustainable MSMEs in Vietnam are subject to investors’ criteria and standards, which are
highly variable.

While impact investing in Vietnam develops at a policy level, the market needs an effective
ecosystem structure, where a common framework and standard for social and environmental
impact measurements is established to facilitate impact investing on the supply and demand
sides.

Pathways to Catalyze Impact Investing in Vietnam

125 https://vanban.vcci.com.vn/thong-tu-962020tt-btc-huong-dan-cong-bo-thong-tin-tren-thi-truong-chung-khoan
126 http://gizmacro.ciem.org.vn/tin-tuc/1499/green-taxonomy-for-green-credit-and-green-bond

90
IIX conducted a robust assessment on the supply side of the impact investing landscape in
Vietnam through a mix of primary and secondary research. While the private sector
investment landscape is growing tremendously, significant challenges persist in encouraging
investors into the country and closing the funding gap.

PII perspectives shared at IIX–hosted roundtable meetings in October 2022 disclosed

bottlenecks caused by the current regulatory and business environment in Vietnam. For
instance, a recent Decree guiding the operations of venture capital funds (VCF) aims to
channel capital into early stage startups. However, the decree has several stipulations that
make it difficult for SIBs, especially innovative start-ups without collateral, to raise sufficient
funds in practice127. A VCF is formed with the participation of no more than 30 private
investors, who may make capital contributions either in cash (Vietnamese Dong), gold, land
use rights, and other assets. Investors are not allowed to invest in the form of debt capital.
The total investment of each in a startup is not allowed to exceed 50% of the startup’s charter
capital.128 These provisions limit the number of investors and investment activities of VCF,
for example, covertible loan financing for innovative startup MSMEs is not yet allowed. At
the same time, investment size is controlled. Given that impact investors have full insight into
innovative businesses and a strong investment motivation, the decree may be perceived as
overly prescriptive.

Another issue highlighted by investors is the lack of ecosystem support to find viable
investments and conduct related due diligence. The costs associated with sourcing of
enterprises along with the high costs of due diligence deters investors from entering the
market. Currently, there isn’t a ready database of investable enterprises for investors to
access, due to which they must rely on international ecosystem players. Lastly, the lack of
national investors deploying capital is limited, due to which there haven’t been notable exits
in the ecosystem. The lack of demonstrated successful exits likely deter potential investors.

Based on the market assessment and the feedback received from investors, key challenges
have been summarized below:
o While there exists a policy framework on the national level, there is scope to build on this
framework as well as frame specific policies that help new impact investors scale their
impact. Similar to the global context, Vietnam needs to develop a uniform framework or
standard for IMM. This would involve sophistication in impact measuring and
coordination in the management approach
o Regulation in Vietnam currently covers disclosure mandates for public and listed
companies. Regulation that mandates and standardizes private companies’ disclosures
can strengthen IMM and increase inflow of impact capital
o A national-level risk analysis can be conducted to link lowering of financial risks with
deepening social and environmental impact. Building the impact investing risk mitigation
and deeper impact ecosystem will also tap into more risk averse investors
o More data can be gathered on the financial viability of SIBs, SEs, and sustainable MSMEs
across time

127 DezanShira and Associates – Foreign Exchange Control in Vietnam. Available here.
Legal library, Decree No. 38/2018/ND-CP dated March 11, 2018 of the Government detailing the investments in small
128

and medium-sized start-up companies. Available here.

91
o Creating impact investing indices and linking them with financial performance will start
creating formal reporting structures that would set Vietnam apart from its peers
o Foreign exchange conversion can be simplified to create a more enticing pathway for
international investors
o In many instances, impact-driven businesses and investors do not have cost benefits. A
reduction in transaction cost and IMM/reporting expenses would be lucrative for the
supply and demand side of impact investing

With interventions such as IIRV, it is expected that the Vietnamese impact investing
ecosystem will develop past these bottlenecks and catalyze private sector investments, both
nationally and globally.

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Section VIII: Conclusion

93
SECTION VIII: CONCLUSION

Reflective of the global context, Vietnam’s impact investing and social business landscape is
at a nascent stage. Vietnam’s transforming socio-polity and careful planning at the center has
spurred economic growth, leading to per capita upliftment of economic status and an
abundance of opportunity. In the economic foreground of this newly empowered business
class, competition thrives with lucrative opportunities, especially in tech, suggesting higher
returns for investors. To elevate this high growth momentum, IIRV comes in to streamline
the development of the impact capital ecosystem.

IIRV is an ambitious multi-stakeholder developmental plan that seeks to strengthen the

enabling environment for SIB growth in Vietnam. A sweeping objective of IIRV is to change
the perception that businesses can be either for impact or for profit. By shifting the balance
of MSMEs towards impact and SIBs towards profit, IIRV seeks to create a middle ground
where sustainable businesses can thrive—environmentally, socially, and financially.
Strengthening IIRV-targeted sectors (sustainable agriculture, healthcare, and education) and
demographics (women, economically disadvantaged) holistically plays into Vietnam’s plan
for achieving the UN SDGs. IIRV strongly focuses on the concept of GLI, linked with SDG 5-
Gender Equality.

Considering perspectives of the demand side (capital users, chapter 6) and the supply side
(capital providers, chapter 7), IIRV studies the current scenario and maps out a robust
framework across short, medium, and long-time horizons. The short- and medium-term
interventions look to mobilize capital through IIX’s innovative financing solutions and
catalyze the ecosystem through IIRV. On the business side, IIRV identifies the need to bolster
the internal processes of SIBs through training and development, support them in capital
raising and capacity building, and create awareness on topics such as working capital
financing and business sense. On the investor side, IIRV suggests frameworks and policy
reform that would simplify domestic and foreign private capital inflow into Vietnamese SIBs.
By bringing private sector players to the table (during IIX moderated roundtables in October
2022), IIX has opened a window for relationship-building, engagement, and incorporating
supply side feedback into ecosystem growth. In the long term, government participation
through regulation can solidify Vietnam’s cadence as an impact investing hive.

Short Term: IIRV Design, Intervention, and Implementation

IIRV will first target sectors representing the majority of surveyed SIBs: sustainable
agriculture, healthcare, and education. These three sectors also attract the majority of
foreign investment. Improving the investment readiness of SIBs in the sector and actually
mobilizing capital sets a strong precedent for other emerging sectors, like clean energy and
forestry, that will lead to integrated scaling of the ecosystem.

Urban centers such as Hanoi, HCMC, and Da Nang have existing pipelines, business networks,
and SIBs that can readily access support from all actors. There is scope to enhance the
foundations present in these regions. In parallel, IIRV will also target capacity building and TA
for SIBs in emerging regions such as Binh Duong, Can Tho, and Tra Vinh, where there is
growth potential.

94
Building and sustaining an impact investing ecosystem starts with a system-wide approach
that goes beyond capital to knowledge building, skill development, and an enabling business
environment. In the short term, IIRV will identify the need to bolster all ecosystem
stakeholders through training and development. This involves different elements of
knowledge and capacity building, such as investment-readiness for SIBs, favorable
regulations for capital providers, and innovative finance solutions for ecosystem enablers.
IIRV starts with stakeholder mapping and engagement to better understand the ecosystem
and customize it based on stakeholder needs.
● Capital users (SIBs)
○ Conduct market mapping studies, including one dedicated to women-focused
SIBs
○ Offer in-depth capacity building, TA, and transaction assistance services in
collaboration with IIX Impact Partners to selected SIBs and aid them in raising
capital
○ Conduct due diligence and impact assessments that determine SIB eligibility
to tap into the benefits of innovative finance tools and transactions
● Capital providers (investors)
○ Convene and train capital providers, including specialists, impact investors,
and debt providers
○ Create ease of investment for the foreign investors
○ Demonstrating correlations of deep impact and reduced operational risk of
the SIB
● Ecosystem enablers (public, private, and non-profit sectors)
○ The public sector (governments, donors, multilateral agencies) create an
enabling environment for SIBs through policies, programs and financial
support
○ The private sector (corporations, intermediaries) support SIBs through capital,
skills/knowledge transfer, market access, and integration into their value
chains
○ Non-profits (foundations, NGOs) advocate for policies, publish research,
provide training, and educate SIBs
○ Through IIRV, create opportunities for collaboration and cooperation among
the various enablers

IIRV makes technical recommendations for ecosystem enhancement, drawing on IIX’s

background and experience in implementing innovative solutions.

Capacity-Building and TA for Investment Readiness

To address the challenges that SIBs face on the supply-side in accessing capital and the
demand-side in delivering results, a program that works with one or more Technical
Assistance Providers (TAPS) can provide ecosystem players on all sides with customized
capacity building and investment readiness services. The key objective of the program would
be to create a pipeline of investment-ready SIBs and hence build demand for capital, while
creating links between SIBs and potential investors to mobilize capital supply. TAPS hence
support the capital raising process.

95
TAPS may be capacity builders that equip SIBs with tools, resources, and networks that make
them more attractive to potential investors. SIBs should then be able to deploy capital raised
to effectively scale their operations and magnify their social or environmental impact. TAPS
are well positioned to develop appropriate filtering criteria and ensure that suitable SIBs with
high future growth potential are selected for capacity-building and investment readiness
programs. The difference between TAPS and Incubators/Accelerators are discussed in Table
6.

Table 6. Difference between TAPS and Incubators/Accelerators

TAPS Incubators/Accelerators

one-on-one tailored support to SIBs support to a cohort of entities

work with SIBs across early to growth stages typically only work with seed-stage entities

focus on raising larger amounts of equity or typically provide SIBs with a small amount
debt capital of grant money or seed investment

As such, IIX as a Technical Assistance Provider will draw on deep experience creating
comprehensive TA programs to design bespoke arrangements for each of the SIBs identified.
IIX can provide a holistic suite of end-to-end investment readiness services, as shown in
Figure 67, effectively guiding SIBs through capacity building.

Figure 67. IIX End to End Investment Readiness Services

Copyright 2022 by IIX. All rights reserved. Source: IIX

. The tailored TA services will include:

● Preparation of business plans and pitch decks that include an overview of the
financial, operational, logistical, human resources, and social/environmental impact
aspects of the business
● Financial modeling and analysis including historical and full projections for profit and
loss (P&L) and cash flow. This could also include a company valuation for potential
investors, ensuring alignment of enterprise, investor, and market expectations

96
 ● In-depth impact assessment
● Deal structuring
● Support for ad hoc information requests from investors

Impact Partners

The capacity building corridor leads to capital raising. Enhancing the capacities of selected
SIBs will open doors to unlocking additional capital. These SIBs will be showcased on IIX
Impact Partners, the world’s largest impact investing platform, that has a network of over
1,200 global investors. Investor showcases held by Impact Partners will give SIBs
opportunities to promote their businesses to a range of ecosystem players, unlocking capital
to scale their businesses.

As such, the capital raising and transaction advisory support provided by Impact Partners will
serve as a bridge to mobilize fresh capital for SIBs in Vietnam, introducing newer transaction
approaches to Vietnam’s impact investing market.

IIX Values and Sustainability Pyramid

Structured impact assessments in this way provide potential investors with a clearer
understanding of SIB impact. As mentioned in earlier, IIX ValuesTM, IIX’s digital impact
assessment and verification tool, is an innovative impact verification solution which
effectively measures the social and environmental impact of an investment and gives value
to the voices of the underserved, thereby accounting for these voices in the market. The tool
is built on the foundation of IIX’s proprietary Sustainability Pyramid.

All SIBs associated with IIRV will undergo annual impact assessment and verification through
IIX ValuesTM. Using IIX’s proprietary methodology, the tool applies a Risk-Return-Impact
framework to optimize investment value and enhance resilience while reducing enterprise
risk. Verification components and routine data collection will foster greater linkages between
gender, community, and climate, improving outcomes in Vietnam.

Figure 68. IIX’s Impact Assessment Sustainability Pyramid

Copyright 2022 by IIX. All rights reserved. Source: IIX

97
To establish impact measurement as a nationally and internationally recognized practice for
SIB, IIRV will establish impact indices and benchmark Vietnamese SIB impact results vis-à-vis
the other countries. This will create competition and an opportunity for the Vietnamese SIB
to be showcased with their global counterparts.

Medium Term: Establishing Vietnam as A Global Player in Impact Investing

IIRV provides a timely launch pad for large-scale private capital mobilization into Vietnam. In
the medium term, market-based solutions have the potential to galvanize stakeholder
participation in innovative ways that will structurally reform the ecosystem and drive the
sustained growth of SIBs. Vietnam’s budding financial growth and sustainable development
trajectories are well positioned to leapfrog past more mature economies by embracing
streamlined reform and innovation. Vietnam can be heralded as a lucrative impact
investment destination for global investors by supporting and empowering women-
owned/led/focused SIBs, accelerating gender equality, and using data analytics to create the
linkages between gender and climate.

IIX’s Gender Lens Investing (GLI)

IIX’s GLI framework is unique in how it actively shifts the current GLI narrative, by
empowering women and its inclusion of the Global South, the 99%, and civil society
members’ voices in the process. By improving access to the four types of capital (social,
green, financial, and economic), enterprises will be able to effectively create products,
services and opportunities that are accessible, affordable, and equitable — this will build an
enabling ecosystem for holistic women empowerment. This virtuous cycle catalyzes broader
positive changes for at individual level, societal level and in financial markets.
Under IIRV, IIX embeds gender lenses across the suite of products and practices that strive
towards meaningful women empowerment and investment in and for women. By using a
blended finance structure to balance risk, return, and impact, the supply-side support of the
Women Livelihood Bond (WLB) Series provides a platform of deal-flow and co-investment
opportunities for investors, donors, and other providers of capital to invest in (women-
focused) SIBs. Furthermore, IIX can provide training to service providers, as well as train
practitioners from commercial partners such as banks, rating agencies, stock exchanges, and
consultancies to provide advisory services in applying an impactful GLI lens in their work.

Figure 69. IIX’s Gender Lens Investing framework

Copyright 2022 by IIX. All rights reserved. Source: IIX

98
IIX’s WLB TM Series

The WLBTM is an award-winning innovative debt security that has, to date, mobilized US$ 78
million towards the empowerment of over 1 million women across Asia-Pacific. Each issuance
since the first in 2017 has increased in size, country participation, and sector engagement,
demonstrating proof of concept in tackling the gender-financing gap. Under IIRV, selected
SIBs will be put into the WLBTM Series to increase the provision of private capital.

In tandem, WLBTM Series issuances are supported by third-party credit enhancements. For
example, IIX’s Women’s Catalyst Fund (WCF) is a revolving catalytic subordinated debt
facility which works to reduce the risk associated with investing in women and increase
attractiveness of GLI. The revolving facility has proven to have de-risked the portfolios of
WLB4 and WLB5, evidenced by the increasing investor interest and WLBTM issuance sizes
over the years.

IIX’s Orange Bond

IIX’s Orange Bond InitiativeTM (OBI) and newly issued Orange Bond mark the world’s first GLI
asset class, by and for the Global South and the 99%. Through a series of blended finance
vehicles, OBI aims to unlock US$ 10 billion by 2030. The capital will be used to address the
broader financing gaps within GLI and the sustainable development agenda, empower over
100 million women and the LGBTQI+ community worldwide, and build a more resilient, green
future. OBI will mobilize capital through a series of transactions that effectively tap into
multi-trillion-dollar debt capital markets.

To ensure the conditions for a gender empowered ecosystem are facilitated, IIX will provide
training programs for ecosystem players from commercial partners such as banks, rating
agencies, stock exchanges, and consultancies, to investors and SIBs themselves. This will
meaningfully apply an impactful ‘Orange’ lens in the ecosystem. The success of the training
will be measured by data collected from IIX Values.

Moreover, by working with grassroot organizations on the ground to advocate for these
voices in the last mile, the GoV will be able to garner data-driven insights to institutionalize
women’s voices as part of national policies on empowerment, climate mitigation and
adaptation, and industry innovation, to further sustainable development.

Long Term: Policy Development and Market Regulation

A compelling business case must be made for capital providers to embrace the notion that
impact and financial returns are not mutually exclusive but rather mutually-reinforcing. The
GoV plays an important role in maintaining a conducive regulatory environment and thriving
impact ecosystem for businesses, investors, and other enablers alike. In a favorable
environment, SIBs that pose lucrative investment opportunities can attract global impact
capital. This will include mainstreaming GLI in the financial system and markets.

In the long term, policy reforms and incentives would simplify the flow of domestic and
foreign private capital to influence ecosystem stakeholders to invest in bolstering a vibrant
impact ecosystem. Regulatory support for the impact investment space can be through

99
overarching policies, investment readiness programs, fiscal and non–fiscal incentive
schemes, guarantees and subsidies, regulation of market competition, and co–investment in
blended finance instruments. Mobilizing new sources of mission-oriented capital, bringing
new stakeholders (particularly from the private sector) into the development equation, and
building a strong pipeline of high-impact organizations that can effectively absorb and deploy
capital will see the transition of Vietnamese impact investing from nascent stages to
maturity.

Impact Investing–Specific Policies to Attract Private Impact Investors

Historically, there has been a low level of private sector interest in Vietnam: current private
investment is 6% of total foreign investment capital deployed. This is attributable to friction
between the regulatory and business environments, wherein existing policies have been
producing some unintended crosscurrents. For example, the GoV maintains two funds
SMEDF and CGF to support MSMEs in accessing capital. These funds, whilst supportive public
sector entities providing diverse funding options (debt, equity, hybrid), are ultimately
crowding out private sector lending with their below-market interest rates.

To alleviate some sectoral friction, targeted actions to attract PIIs and SIBs alike should be
taken, including:
● Special tax incentives for investors and SIBs
The 2014 LOE, which encouraged registration of SEs, required businesses to allocate
at least 51% of annual profits for reinvestment in registered social/environmental
objectives. Business-owners were left wary of officially registering due to the 51%
profit reinvestment mandate, demonstrated by the low number of SEs that
registered. The GoV can thus instead create special business and tax incentives like
exemptions for SIBs and PIIs to encourage adoption of SE status, hence formalizing
the impact business sector.
● Ease of business
Efforts can be made toward creating and streamlining processes for faster company
establishment. There are several case studies of best practices by other ASEAN
countries that GoV can consider. For example, Singapore’s business-friendly
environment majorly contributed to the growth of SEs. A company can be registered
in Singapore in 24 hours. Singapore’s Centre for Social Enterprise (raISE) nurtures and
raises awareness of SEs in the absence of SE-specific regulations. RaISE also combines
all the efforts of government agencies relevant to SEs.
● Foreign exchange relaxation
The GoV strictly regulates foreign exchange. Practically, foreign currency inflows can
be time consuming, involving elaborate processes with steep transaction costs. There
is scope for the GoV to incentivize foreign capital inflow by revisiting the strict
mandates, requirements, and regulations. Cohesiveness among Ministries that
contribute to the impact investing space and market surveillance on foreign exchange
transactions can ultimately simplify processes for SIBs and PIIs, thereby reducing
transaction costs, promoting investor confidence, and attracting more impact capital
from domestic and foreign investors.

Standardizing Impact Investing Measurement

100
Whilst impact measurement is a core component of impact investing, there is yet a common
tool or framework in the global market. As such, the establishment of a national framework
or recognition of an international standard on impact investing will enable SIBs to uniformly
demonstrate, articulate, and discern their impact. This will enable them to raise more capital,
also substantiating the status of SIBs in the country and benefitting the whole impact
ecosystem. Currently, impact measurement has not been a top priority for SIBs when
compared with core business tasks. Setting a standardized framework to follow at the
national level signals coherence and mandates SIB participation in impact measurement.
Standardized impact measurement also allows investors domestically and internationally to
align their approach and objectives in Vietnam. In time, data can be managed in a national
database and analysis can inform future ecosystem development.

Direct GoV Involvement

The GoV plays an important role as a market maker that channels developmental efforts
across the board towards the SDGs and Agenda 2030. The GoV has introduced credit
guarantee schemes (SMEDF and CGF) to support the availability of timely and adequate
credit at reasonable interest rates for businesses—addressing a pressing concern for MSMEs,
especially those that cannot access private capital. Through lower collateral requirements
and modulated transaction costs, these initiatives have proven beneficial to SIBs and can be
modified as the ecosystem matures. Financing education can introduce concepts like
factoring to entrepreneurs, increasing the demand for such capital and developing alternate
investment parks. Forms of credit may be expanded to include traditionally underutilized
practices such as working capital financing. Given the novel nature of the impact business
ecosystem in Vietnam, creating awareness through various channels about GoV guarantee
schemes amongst banks, PIIs, and MSME associations can inspire confidence and lead to
inflow of less restrictive commercial finance.

Enabling Ecosystem Enablers

Over the last decade, DFIs like DFC, FMO, DEF, and IFC have played a huge role in the buildup
to impact investing thus far in Vietnam. By providing catalytic capital—almost 99% of the
US$ 1.25 billion impact capital invested in the country between 2007 and 2019—DFIs have
spurred the ecosystem and paved a way for private investments. Similarly, international
donors and DFIs are the main drivers of GLI investments. Out of the US$43 million of GLI
investments closed in 2017-2019, US$40 million came from the IFC.129

In addition, development assistance donor funding is now coming in the impact investing
space. This grant funding is disseminated through designated initiatives and programs,
tracked activities integrated into existing programs, and maintenance of investment funds in
prioritized sectors. However, issues arise with the overrepresentation of a single ecosystem
player in the market. Due to dominance of donor funding as a source of accessible capital
through grants and no-interest loans, there is a risk of over-reliance. The market becomes
less accessible for private sector players. Additionally, the absence of enabling infrastructure
or suitable investments may lead to risky investments in non-performing businesses, over-
flooding, and capital stagnation. Poor returns and a high risk profile will further deter private

129 Investing in Women and Intellecap (2020), The Advance of Impact Investing in South East Asia. Available here.

101
investment. Without accountability, SIBs could slip into non-profit behavior instead of
strategic growth mindsets. Eventually, progress within sectors and impact market growth
would stagnate due to undiversified investment portfolios and non-performing assets.

Competitiveness is essential for healthy growth, and its absence can be detrimental to
market dynamics. As such, DFIs can extend their donor agency role to that of ecosystem
enablers. Complementary non-capital and ecosystem-building support is needed for SIBs to
reach their full potential. Funds can be used wisely to bring more stakeholders into the
equation, build supportive infrastructure, and mobilize other sources of funding. DFIs can
also play a role in capital raising, introducing accountability through enablement of credit
guarantee schemes that facilitate commercial debt and 80-20 financing options (as in the
cases of SMEDF and CGF). These developments will compound the reach of capital and help
Vietnam’s impact ecosystem grow sustainability.

In this way, DFIs and donor agencies can leverage their multilateral position to take on more
risk as well as expand their direct reach and impact to the private sector, as they have
gradually developed an assortment of de-risking mechanisms (both financial and non-
financial) over time. That will shape Vietnam as a destination for private FDI and impact
capital inflow through blended finance. This must be done in collaboration with national
government bodies through policy that encourages impact investment from other
ecosystem stakeholders, while introducing capital accountability and supporting holistic
ecosystem development.

Conclusion

Stakeholders in Vietnam demonstrate a strong interest in social impact business. While

challenges remain in fully empowering Vietnamese SIBs and the national impact investment
space, current activity signals stakeholder commitment to the long term development of
impact investing in Vietnam. The solutions and interventions discussed in this paper and
implemented by IIRV will move ecosystem players closer together and forward, encouraging
bigger strides and concurrent efforts to achieve the country’s sustainable development goals.

102
ACKNOWLEDGEMENTS

This publication has been funded by Global Affairs Canada (GAC) and implemented by Impact
Investment Exchange Pte. Ltd. (IIX). The views expressed in this publication are the author’s
alone and not necessarily the view of the Canadian Government.

About IIX
Impact Investment Exchange (IIX) is the pioneer in the impact investing movement and a
global leader in sustainability. We have transformed the financial system so that women, the
environment and underserved communities are finally given a value and a voice in the global
market. Over the past decade, we have built the world’s largest crowdfunding platform for
impact investing (Impact Partners), operated award-winning enterprise technical assistance
programs such as IIX ACTS, created innovative financial products such as the Women's
Livelihood Bond™ Series and established an Impact Institute and Research & Advisory to
build the sustainable investing market. To date, our work has spanned 53 countries, unlocked
US$281 million of private-sector capital, positively impacted over 159 million direct and
household lives, and avoided over 1.83 million tons of carbon. The foundation of IIX's work is
IIX Values, an innovative impact verification solution for every organization, which effectively
measures the social and environmental impact of an investment and gives value to the voices
of the underserved. In 2022, IIX launched the Orange Bond Initiative™ to unlock $10 billion in
the capital markets by 2030 and impact 100 million women in the last mile. The recent
issuance of the Women’s Livelihood Bond™ 5 is now officially listed on the Singapore
Exchange (SGX) as the world’s first Orange Bond. IIX’s numerous awards for its work include
the Oslo Business for Peace Award, the P4G State-of-the-art Partnership award, the UN
Global Climate Action Award and most recently Environmental Finance's Award for
Innovation.

About GAC
Global Affairs Canada (GAC) is responsible for advancing Canada’s international interests and
relations, which include poverty reduction, the empowerment of women and girls, and
environmental sustainability. In 2017, Canada launched its Feminist International Assistance
Policy, committing to better leverage its Official Development Assistance (ODA) to mobilize
new streams of public and private finance for sustainable development, and to expand its
partnerships towards this end. By attracting new resources and partners to complement its
ODA, Canada is seeking to do all it can to achieve the Sustainable Development Goals (SDGs),
and to realize the scale and scope of what is needed to lift all populations out of poverty

103
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APPENDICES
Appendix 1: IIRV Results

Table 7. IIRV results

200 SIBs will be trained on improved business management skills,
financial literacy, basic investment readiness, and gender-lens
investing
200 SIBs will be trained on environmental issues and impact
100 women–focused SIBs will be trained on improved business management skills,
(from a selected group of financial literacy, basic investment readiness, and GLI and/or
200 SIBs) environmental issues and impact
500 people (250 women will be trained on improved business management skills,
and 250 men from the financial literacy, basic investment readiness, and GLI and/or
200 SIBs) environmental issues and impact
1000 people (500 women will be indirect beneficiaries of training given to SIBs on
and 500 men) improved business management skills, financial literacy, basic
investment readiness, and GLI and/or environmental issues
and impact
16 SIBs (at least 8 of will receive in-depth technical assistance to improve their
which will be women- investment readiness
focused SIBs)
4 SIBs will go through in-depth due diligence and impact assessment
by IIX to help facilitate their participation in innovative finance
deals, such as IIX's Women's Livelihood Bond™ (WLB) Series
1000 people will be indirect beneficiaries of activities that improve the
investment readiness of SIBs
40 ecosystem players will be educated on the SIB policy environment
200 ecosystem players will be educated on impact investment in Vietnam
110 investors and/or other will be educated on GLI, environmental impact, and innovative
ecosystem players financing
40 investors and 40 SIBs will be on-boarded into the Impact Partners Crowdfunding
Platform
10 SIBs (at least 5 of which will be showcased to investors at webinars and events
will be women-focused
SIBs)

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Appendix 2: Survey Questionnaires

1. SIB survey
2. Investor survey (for investors in Vietnam)
3. Investor survey (for investors outside Vietnam)
4. Ecosystem enabler survey

109
Appendix 3: Survey data quality control process

The survey data quality control process was executed through 3 main steps: (i) Cross-check
between research team members, (ii) Quality control by the contractor (Research Institute
for Innovation & Development); and (iii) Back-check.
(i) Cross-check between research team members
Each team member cross-checked the logic of completed response of each SIB before
finalizing and transferring to the database. Daily cross-checking gave the opportunity to
highlight any mistakes that need to be verified with the respondents as soon as possible.
(ii) Quality control by the contractor
In parallel with the research team, the contractor also performed data checking for responses
from their SIB database. Note that for some sensitive questions, for example on SIB’s
financial situation and capital demand, SIBs preferred not to disclose information, and
therefore leaving the response blank. In such cases, the research team needed to confirm
with the contractor whether the response was zero or missing (unavailable) for the purpose
of data accuracy.
(iii) Back-check
In addition to making follow-up calls to support respondents with trouble in filling the survey,
the research team performed back-check on 10% of completed responses. The team
contacted the respondent the second time by phone to re-administer a selection of questions
from the original questionnaire. Those back-check responses were then compared with the
original responses to identify discrepancies (if any). In case the discrepancies were identified
in more than 50% of the back-check questions, the team surveyed the respondent again.

110
Appendix 4: List of Private Impact Investors in Vietnam

1. Vietnamese investors

No. Name of Investor Investor’s Country/ Nationality

1. 5Desire Vietnam
2. Alpha Books Vietnam
3. Angel 4 Us Vietnam
4. AVV Alpha fund Vietnam
5. BK Holdings Vietnam
6. Earth VC Vietnam
7. Evergreen Lab Vietnam
8. FPT Ventures Vietnam
9. Green Startup Foundation Vietnam
10. IDG Ventures IDGVV Vietnam
11. Next100 Ventures Vietnam
12. Planet Impact Capital Vietnam
13. PVNI Vietnam
14. Teko Ventures Vietnam
15. ThinkZone Ventures Vietnam
16. Up Gen Vietnam
17. VIC Partners Vietnam
18. Viet Accelerator Vietnam
19. Viet Capital Ventures Vietnam
20. Vietnam Innovative Startups Accelerator VIISA (51 Valley) Vietnam
21. Vietnam Silicon Valley Vietnam
22. VP Bank (Women Enterprises) Vietnam

2. Foreign investors

No. Name of Investor Investor’s Country/ Nationality

1. 500 Global Vietnam United States

2. Amstrong Asset Management Singapore
3. Asia Sustainability Angels Singapore
4. Bamboo capital partners Switzerland
5. BK Holdings Vietnam
6. Blue 7 Singapore
7. Brightlight Australia
8. Capria United States
9. CARE-SheTrades Impact Fund United States
10. Ceniarth UK
11. Chris Chew Malaysia
12. Circulate Capital Singapore
13. CoCoon Capital Singapore
14. Convergence Ventures Indonesia
15. Creatella United States
16. Crevisse South Korea
17. Dragon Capital Group UK
18. ESP Capital Singapore

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19. FEBE Ventures Singapore
20. Golden Gate Ventures Singapore
21. Hatch ventures Singapore
22. Hugo Virag Singapore
23. Inclusive Impact Investments (triple I) Netherlands
24. Incubate Fund Japan
25. Intellecap India
26. Investment Fund for Developing Countries Denmark
(Investeringsfonden for udviklingslande – IFU)
27. Impact Investment Exchange (IIX) Singapore
28. Jason Yip Singapore
29. Jennifer Viloria UK
30. JLIN LLC United States
31. Jungle VC Singapore
32. KK Fund Singapore
33. LEAP 201 Singapore
34. LGT Venture Philanthropy Foundation Switzerland (LGT Switzerland
VP)
35. Min Chan Singapore
36. Monk's Hill Ventures Singapore
37. Merry Year Social Company (MYSC) South Korea
38. Nexus for Development Cambodia
39. Ncore Ventures Korea
40. Oikocredit Netherlands
41. Omidyar Network United States
42. Open Space Singapore
43. Pasudeco Philippines
44. Patamar Capital Singapore
45. Plug and Play United States
46. Phitrust France
47. Quest Ventures - Sustainable Impact Fund Singapore
48. Rabo Rural Fund Netherlands
49. ResponsiAbility Switzerland
50. Richard Hartung Singapore
51. Simon weston Hong Kong
52. Small Enterprise Assistance Funds (SEAF) United States
53. Social Impact Partners Hong Kong
54. Sopoong Ventures South Korea
55. Sprial Ventures Singapore
56. Sweef Capital Management Pte Ltd Singapore
57. Thriive/SK2 Fund United States
58. Tripple Australia
59. Uberis Cambodia
60. Unilever UK
61. Unitus Impact Partners United States
62. Uno Kapital Indonesia
63. Viet Nam Holding Asset Management Ltd Capria Grand Cayman
64. Vietnam Angel Investors Circle (VAIC) United States
65. YellowDog South Korea
66. Yogender Chhibber India

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i
Environment, Social and Governance refers to a set of risk mitigation standard related to
sustainable investing. Environmental criteria consider how a company safeguards the
environment, including corporate policies addressing climate change, for example. Social criteria
examine how it manages relationships with employees, suppliers, customers, and the communities
where it operates. Governance deals with a company’s leadership, executive pay, audits, internal
controls, and shareholder rights, Source -- https://www.investopedia.com/terms/e/environmental-
social-and-governance-esg-criteria.asp

IIX GLOBAL | IIX FOUNDATION 113

[email protected] [email protected]
www.iixglobal.com www.iixfoundation.org