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  • Vietnam Impact Investment Landscape Report

    1

  • Vietnam Impact Investment Landscape Report

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    Acknowledgement

    Centre for Social Initiatives Promotion would like to express our gratitude for generous supports from

    the Canadian Embassy in Vietnam during the production of Vietnam Impact Investment Landscape

    Report. We also treasure the cooperation of policy makers, impact enterprises, impact investors,

    development agencies who have contributed your invaluable information about the impact investing

    ecosystem in Vietnam.

    This report used data and information from papers issued by the Organization for Economic Co-

    operation and Development, the Global Impact Investing Network, Asia Venture Philanthropy

    Network, United Nations Development Programme in Vietnam, National Economics University. CSIP’s

    research team could not complete this report without your continuous efforts in supporting the

    development of social ventures ecosystem in Vietnam and in the World.

    The analysis and the view addressed in this report are the work of CSIP and do not necessarily reflect

    the views of the Government of Canada.

    Research team: Pham Kieu Oanh, Hoang Le Trang, Phan Duy Quang

    August 2019

    Hanoi

  • Vietnam Impact Investment Landscape Report

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    Contents

    I. Background of the report 4

    1.1. Objectives 4

    1.2. Methodology 4

    1.3. Terminology 5

    II. Global impact investing snapshot 9

    2.1. Overview of impact investing in the World 9

    2.2. Global impact investing ecosystem 11

    III. Vietnam’s impact investing snapshot 15

    3.1. Overview of impact investing in Vietnam 15

    3.2. Impact investing ecosystem in Vietnam 17

    3.3. Key challenges of impact investing ecosystem in Vietnam 18

    IV. Findings 19

    4.1. Finding 1: There is a mismatch between current practices of impact investing

    activities and the actual capital demands and capability of impact making

    business in Vietnam 19

    4.2. Finding 2: Lack of pipeline for impact investment 21

    4.3. Finding 3: Lack of investments in early stage impact businesses 23

    4.4. Finding 4: Gender lens Impact Investment 27

    4.5. Finding 5: Lack of key players among ecosystem enablers to form a well-

    functioning impact investing ecosystem 29

    V. Recommendations for Development Agencies 32

    5.1. Roles of Development Agencies in the impact investment ecosystem: 32

    5.2. Recommendations 33

    5.3. Further actions: 34

  • Vietnam Impact Investment Landscape Report

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    I. Background of the report

    1.1. Objectives

    As a low-medium income country, Vietnam faces economic, social and environmental

    challenges that cannot be addressed solely by Official Development Assistance flows. In order

    to mobilize all resources for socio-economic development, the country is exploring how to use

    public resources to facilitate private sector investment towards development impact. This

    report seeks to deepen understanding of the impact investment ecosystem in Vietnam and

    and potential areas for intervention by multiple actors.

    The Vietnam Impact Investment Landscape Report is prepared by the Centre for Social

    Initiatives Promotion for the Canadian Embassy in Vietnam. The objective of this report is to

    provide a deeper understanding of the impact investment ecosystem in Vietnam and exploring

    Canada’s potential engagement in this area would contribute to Canada’s strategic planning

    efforts in the country.

    In this report, the following key questions regarding Vietnam’s impact investing landscape are

    analyzed:

    ● What weaknesses exist in the impact investment ecosystem that result in a dearth of

    investable impact enterprises and what interventions/measures can help?

    ● Why is there a considerable financing gap for early stage capital, and what

    measures/interventions (e.g. venture debt, support to impact angel investor network)

    could help?

    ● What opportunities/challenges exist for gender lens impact investing in Vietnam?

    1.2. Methodology

    The research team has taken an impact imperative approach while studying about the impact

    investing landscape in Vietnam and in the World. Following this approach, the research team

    would not only carry out a study about impact investment but put it in a large spectrum of

    financing tools for impact making businesses. The purpose is to examine the role of impact

    investment in the whole spectrum and figure out whether this financing tool has effectively

    addressed social challenges as well as be able served the demand of capital from a wide range

    of Vietnamese impact enterprises.

    Moreover, a wide range of stakeholders in the development and business sectors have been

    involved during the making of this report. The participation of these stakeholders reflect a

    belief of the research team that the impact investing ecosystem should not be separated from

    the movement of conventional private investment with financing tools such as private equity,

    private dents, real assets going alongside with business development supports… Recently, the

    development of financing schemes for start-up would also provide good options for social

    purpose business while considering about funding for their operation. In fact, those tools

    could be good sources of funding and support for enterprises while a mature impact investing

    ecosystem is being built.

  • Vietnam Impact Investment Landscape Report

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    In order to meet the objective of the report as stated above, the methodology applied by the

    research team is a combination of desk study and gathering market insights from a facilitated

    consultative workshop with the participation of key stakeholders in Vietnam’s impact

    investing ecosystem.

    ● The desk study covers reports about impact investing landscape and summarizes

    relevant theories and statistics to have a brief overview of impact investment situation

    in the world in general and particularly in Vietnam.

    ● A mapping of current key stakeholders in impact investing ecosystem in Vietnam was

    used to better understand and reflect the current impact investment landscape in

    Vietnam in the global market, as well as to identify target audience for the impact

    investment consultative workshop.

    ● The consultative workshop was organized in June 2019 in Hanoi. The objective of the

    workshop is to collect insights from key stakeholders in Vietnam’s impact investing

    ecosystem regarding challenges as mentioned in the three key questions of the report

    (see section 1.1. Objective).

    1.3. Terminology

    Since impact making businesses and impact investing are still a new topic for studying, there

    are only a few mutual definitions and terminology agreed upon among researchers.

    Consequently, different terms with interchanged meanings are commonly used across papers

    of the topic. In this section, we will introduce terms which are frequently used in the

    referenced literature of this report and the definitions chosen by the research team as a basis

    of understanding for this report.

    Impact Investment, Social Investment and Social Impact Investing

    According to the Global Impact Investing Network (GIIN), impact investments are investments

    made with the intention to generate positive, measurable social and environmental impact

    alongside a financial return. This definition is widely recognized in reports and papers about

    impact investing across the World. GIIN also defines impact investing practices following 4

    core characteristics:

    ● Intentionality: An investor’s intention to have a positive social or environmental

    impact through investments is essential to impact investing.

    ● Investment with return expectations: Impact investments are expected to generate a

    financial return on capital or, at minimum, a return of capital.

    ● Range of return expectations and asset classes: Impact investments target financial

    returns that range from below market (sometimes called cessionary) to risk-adjusted

    market rate, and can be made across asset classes, including but not limited to cash

    equivalents, fixed income, venture capital, and private equity.

    ● Impact measurement and management: A hallmark of impact investing is the

    commitment of the investor to measure and report the social and environmental

  • Vietnam Impact Investment Landscape Report

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    performance and progress of underlying investments, ensuring transparency and

    accountability while informing the practice of impact investing and building the field.

    However, in actual practices, impact investments’ portfolios are highly shaped by the interests

    of investors, who are giving priority to financial returns rather