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Seminar discusses new Business Fund
About 70 representatives of private-sector firms, investment funds and development agencies gathered in a forum in HCM City on Apr. 1 to discuss the establishment of an inclusive business fund.
"Inclusive businesses were those that provided socially beneficial products or services, as well as income for the poor," said Asian Development Bank (ADB) Country Director for Viet Nam Ayumi Konishi.
"The concept fits in perfectly with the Government's strategy to develop a market economy with a socialist orientation, which must provide for inclusive growth that shares the benefits of rapid economic expansion with low-income groups," he said.
The forum was held by the Ministry of Planning and Investment, the Asian Development Bank (ADB) and the Netherlands development organisation SNV.
SNV Asia regional director Asia Allert van der Ham said, "Inclusive business initiatives are being tested in Latin America and Africa, but our work in Viet Nam would be the first comprehensive development partner-supported initiative in Asia."
The event discussed key findings of the ADB/SNV study, confirmed possible investment opportunities, promoted the exchange between companies interested in inclusive business and possible financial institutions, and determined further steps needed to establish an Inclusive Business Fund in Viet Nam.
The feasibility study found that over 70 companies were already doing business at the "base of the pyramid (BoP)", and at least 16 investors and funds in the country could be interested in debt or equity investment in an inclusive business fund for Viet Nam with an initial size of US$60-100 million.
Some private companies in Viet Nam had already engaged in business ventures working with and for the poor, the study noted. It further found that the business environment in Viet Nam was highly conducive to the idea of social financing at the base-of-the-pyramid. Private-sector enterprises were also found to be forthcoming with specific concepts for new BoP ventures seeking investment.
The study proposed the ADB act as the "seed investor" with $20 million. Financing needs for inclusive business ventures were estimated to be between $400,000 and $10 million for an average of six years, with an average of about $3.7 million per venture.
In addition, the study also proposed a grant-financed $5-6 million regional technical assistance project to facilitate inclusive business incubators in six countries. Various development partner agencies showed interest in co-operating with the ADB on both the capacity-building initiative as well as on the establishment of the investment fund.
Capital markets had adequate conditions for the establishment and operation of an inclusive business fund that generated attractive social and financial returns, according to the study.
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