Impact investment a capital option for greener economy

Vietnam’s smalland medium-sized businesses face an estimated $24 billion annual credit gap, creating a significant opportunity to attract a share of the global impact investment market, valued at over $1.5 trillion.

- By Bich Ngoc

Experts at a forum on impact investment held in Ho Chi Minh City last week noted that global impact investment has grown rapidly, while capital aligned with environmental, social, and governance (ESG) criteria now exceeds $30 trillion.

Organised by the Ho Chi Minh City Investment and Trade Promotion Centre in collaboration with the Impact Investment Exchange (IIX), the forum focused on identifying blended finance solutions for small and medium-sized enterprises (SMEs) and impact-driven businesses to connect with global capital markets.

The event heard that Vietnam’s social impact business (SIB) ecosystem plays a crucial role in supporting ethnic minorities, people with disabilities, and low-income households.

According to data from IIX, SIBS are concentrated mainly in the northern highlands and central regions, with 92.8 per cent classified as micro and small enterprises. In major urban areas, the density of SIBs remains significantly lower than that of conventional SMEs.

In terms of composition, the services sector accounts for 70 per cent of SIBs and contributes 73 per cent of total pretax profits. The industrial sector represents 16 per cent of enterprises and 19 per cent of profits, while agriculture, forestry, and fisheries make up 14 per cent of enterprises but contribute only 8 per cent of profits.

"Despite generating significant social impact, both SIBs and SMEs in Vietnam face the largest credit gap in ASEAN, with an estimated $24 billion annual financing shortfall for SMEs, leaving around 62 per cent of demand unmet," said Robert Kraybill, chief investment officer of IIX.