Understand Inclusive Business Inclusive Business in Vietnamese agro-economy Case studies: Traphaco Sapa & PepsiCo Food Collaboration Opportunities for startups and ecosystem players

1. Inclusive Business Promotion
through
Startup Innovation Ecosystem Development
Innovative Thinking & Ideas
Pham Hoang Ngan (MA), Founder & CEO
Innovative AgriBusiness Research & Investment JSC
Email: ngan@inarivietnam.com

2. • Inclusive businesses are
• commercially viable & scalable
• innovative business lines,
• designed to solve the relevant
problems
• of the poor and low-income people
(VND 15 million/year/household)
• IB companies assessment (19 IB companies)
(Dr. Armin Bauer, UNESCAP, AED, 2019)
• Predominance in agribusiness (13 of 19 IB
companies)
• IB revenue: VND 2,955 billion (2018)  VND
4,817 billion (2023)
• IB reach: 2.6 million  3.5 million people
(B40)
* AED-MPI workshop (Hanoi, Oct 15, 2019)
• Inclusive businesses create triple
wins: for the poor, for companies,
and for society
What is IB- Why IB - The Triple Wins

3. Inclusive Business models in Agro in Vietnam
(AED- MPI workshop (Hanoi, Oct 15, 2019), UNESCAP))
Dakado
Hamona
TMTM-Moringa
Pepsi (potatoe),
HTC
Traphaco Sapa
Bio King (service model)
MyLan
Sao Thai Duong
Potential (those who are interested in making the
transition from a mainstream business to a real IB) Real
Probable many others, once IB is more known
Mainly income models, not much service models
VinaSamex,
AgriMedia
Sapa Napro
East-West
Seeds...
The study assessed and did IB rating for a total of 30 agrobusiness companiese

4. Difference of an IB
(AED- MPI workshop (Hanoi, Oct 15, 2019),
UNESCAP)
Revenue and growth
Profitability
Bankability
Company governance, social and
environmental standards
Reach and targeting (including
women empowerment)
Depth (more than before and without the
company, 20% more than market rate, 15% more
than competitor, sustainability of “more”)
Systemic change for the poor
(geographic, sector, gender, transformation)
Commercial viability
Direct social impact
Business innovations
to reduce risks of the poor and low income people (also technology, social, and
environmental innovations)
Strategic IB intension of CEO and
company management team

5. IB 1: Traphaco Sapa
• Location: Sapa, Bac Ha district (Lao Cai province)
• Company: 100% owned by Traphaco, established in 2009
• IB model:
• Researching and practicing GACP herbal material zone for Traphaco (mainly
artiso). 100 ha (Sapa: 75ha, Bac Ha: 25 ha)
• Producing herbal medicine from artiso plant
• Traphaco Sapa Factory has been certified GMP-WHO standard.
• IB business line: seeds and training; buy back leaves of artiso plants, 30% higher than
market price; produce herbal medicine (Boganic) from Artiso plants
• Social impact:
• Reach: 300 suppliers; 400 suppliers in 2023. Suppliers are poor; 80% ethnic
minority, 70% women; 50% of labors are women.
• Social depth: Households earn VND 5 million/month. Income from artiso (VND
150 million per ha) is much higher than rice (VND 70 million per ha)
• Systemic change for poverty reduction and inclusion: Herbal is key policy for
poverty reduction in Lao Cai province (Decision 4478/QĐ-UBND dated on Dec
14, 2016 on approving herbal development scheme in Lao Cai to 2020, vision to
2030)
• Innovation:
• High tech standard (herbal materials meet GACP standard);
• Final herbal processed products meet WHO standard);
• 3/2018: Launching new product: Chocolate Detox using artiso plant combining
with cocoa from Ben Tre (get certification of 4 star OCOP product by Lao Cai
province)
• Open media center on herbal medicine with 20 ethnic people to attract tourists
IB strategic intention:
Thinking about New Business Line of Herbal
Farm Community Based Tourism for support
local farmers earn more income
IB different from mainstream business: reach,
social depth, systemic transformation, innovation,
IB strategic intention

6. Opportunity with IB Traphaco Sapa
• Resources:
• Sapa, Bac Ha is tourism center of Lao Cai Province
• Artiso flower season: May to July Hot tourism
season in Sapa
• Artiso farm: meet GACP standard healthy
• Artiso farming by local ethnic minority cultural
exchange
• Traphaco Sapa products (Artiso concentrate and
Chocolate Detox): Favourite products to foreign
tourists
• Attractive Stories: Inclusive business stories
• Business opportunities:
• New business model: Herbal IB+ Tourism Business
• Herbal: Strong willingness to cooperation
• Results:
• Increase impact of the original inclusive business
• Upscale triple wins: for the poor, for companies
(both for herbal IB, tourism business), and for
society

7. IB 2: Pepsi Co Food &
Opportunity with IB
Location: Duc Trong, Di Linh, Don Duong district (Lam Dong province)
Company: 100% FDI
IB Business line: potato, direct contract; 35% of potato to import in rainy
season; new seeds with higher productivity
IB model:
Direct contract farming with farmers for cultivating potato
Pepsi provides training; fertilizer and seeds, natural and disease risk
sharing with farmers
35% of potato we need to import in rainy season;
Social impact:
Reach: 150 farmers (2010); 600 farmers (2019): Lam Dong and DakLak.
Plan to increase to 2,500-3,000 farmers (2025)
Social depth: Revenue for farmer is $4000 per ha/crop/year; average
yield is 25 tons; Household (0.6 ha), income = $2500 per year (VND 5
million/month);
Systemic change for poverty reduction and inclusion: Scaling up
business to DakLak province
Innovation:
New seed/variety: provide new seeds with higher productivity,
increasing crop rotation (from 1 crop 2 crops/year)
Sustainable farming: environmentally friendly, protect land, natural
resource (water saving, smart irrigation) increase productivity 20-30%
Working with agritech company to help farmers increase farming
productivity
Scale up: 2025: 2.500-3.000 farmers, Average yield reaches 30 ton/ha
Pilot in the Northern mountainous province: Moc Chau district, Son La
province
IB strategic intention: Plan to increase to 2,500-3,000
farmers (2025); Mobilize agritech to increase farming
productivity from 25 ton/ha to 30 ton/ha
 Opportunities for Agritech for
providing service/product to address
the problems for farmer/for IB
strategic intension

8. ASEAN context to promote IB
• ASEAN Summit 2017:
• Call for greater emphasis on creating an enabling
environment for inclusive businesses in ASEAN member
states
• Recognized the role of Inclusive Business models in
achieving the ASEAN economic community vision 2025
of a resilient, inclusive, people-oriented and people-
centered community, through market driven and
innovative solutions
• IB landscape studies in 13 Asian economies, 5
countries develop IB promotion policies (PHI,
MYA, CAM, MAL, VIE)
• Vietnam will be chairing ASEAN in 2020 and
delivering on the IB agenda under innovation
approach. Vietnam needs to tell stories of the
country’s IB agenda and initiative.
Linking IB to innovation programs –
some examples
Malaysia  MaGIC
Myanmar  Phandeeyar and DaNa
as innovation facilitator
Viet Nam  Impact Hubs, Oxfam, CSIP
and other facilitators
For IB business innovations matter
more than technology innovations
• Governments are increasingly interested to promote Inclusive Business
as part of industrial and development policies
• Because: Inclusive businesses create triple wins: for the poor, for companies, and for society

9. 10 key programs for IB promotion in ASEAN
1. Strategic commitment
2. Dedicated institutional setup (focal points, steering committee, IB unit)
3. Information sharing and advocacy (business associations)
4. IB accreditation and recognition
5. IB business coaching
6. IB financing (risk reduction facility, credit line)
7. Prioritizing IB in public procurement
8. Tax and other investment incentives
9. Other policy work
10. Impact monitoring and reporting
Viet Nam is intending to do the first 5

10. Why start-up business development programs should align more with the
inclusive business agenda
1. IB business models are promoted mostly by
established medium sized companies with successful
business cases and large scale of social impact
2. Potential IB are looking for new ideas to transform
their business; here start up facilitators can help, but
3. The start up support should be more for business
innovations rather than for technology innovations
only

11. Conclusion and Recommendations: IB Promotion Integrated with Startup
Ecosystem Development
• Valuable actions by Danang City Government:
• IB accreditation
• IB award
• IB annual report
• IB promotion: Call for inclusive innovation thinking & ideas for upgrading IB business
• Valuable actions by Incubators/Accelerators in Danang:
• Providing technical assistance to IBs for improving inclusive business plan in the way
collaborating with innovative business (such as tourism startups, agritech..)
• Screening agritech/ tourism starups may be potential for matching with IBs to explore new
IB lines
• Business matching/partnership matching for IBs+ agritech/tourism startups in
implementing improved business plan
• Valuable actions by IBs:
• Open to join IB accreditation (by government) +Open to join IB acceleration program (by
incubator/accelerator), to
• To explore new IB strategic intentions or explore new IB business lines
• To explore new technology to grow IBs
• Valuable actions by Tech/Innovation Startups:
• Learn what IB - why IB
• Learn IB business model and Proposing innovative thinking and ideas how to work with
IBs to make triple wins: for the poor, for companies, and for society

12. THANK YOU
Dr. Armin Bauer, Development Economist- Inclusive Business,
Strategy and Policy Work. 27 years of international work and
management experience
Advisor for Agency for Enterprise Development- Ministry of
Planning and Investment, Vietnam, for Inclusive Business Policy
Development.
Email: mail@armin-bauer.com
Mr. Đỗ Tiến Sỹ, CEO Traphaco Sapa
Email: dotiensy67@gmail.com