VBCF Final report_EN

Disclaimer
This material has been funded by UK aid from the UK government; however the views expressed
do not necessarily reflect the UK government’s official policies.
“Reducing poverty is no longer the exclusive responsibility of governments
or the donors community; the private sector has a great business opportunity
and potential in this field. The VBCF has supported financially and
technically more than 20 entrepreneurs to develop innovative inclusive
business models that deliver both commercial benefits for the company and
social impact for the low income people. There are many other talented
entrepreneurs in this country. Just wake them up, challenge them, give them
a hand and go by their side. They will make the change.”
- Javier A. Ayala -
Executive Manager - Vietnam Business Challenge Fund

The companies for believing in this model and investing their financial and technical resources
to test and implement innovative business models that have allowed millions of people to
improve their lives.
The VBCF team for their hard work during the whole implementation of the programme and of
course for organising this event. Without your work this wouldn’t be possible.
SNV is proud to deliver the VBCF to Vietnam and we look forward to continuing to use our
experience and knowledge to support the private sector in the design and implementation of
inclusive business model to contribute to achieving sustainable and inclusive economic growth
for Vietnam.
Miguel Mendez
Country Director
SNV Netherlands Development Organisation in Vietnam
Foreword
This report presents the Vietnam Business Challenge Fund (VBCF) as
one of the flagship programmes in Vietnam. It is an example of how the
private and public sector can work and invest together to achieve social
impact at scale and at the same time create competitive advantage for
the companies. This work made a great contribution to improving the
competitiveness of Vietnam by increasing productivity, driving innovation
and enhancing efficiency.
Achieving impact at scale and ensuring the sustainability of that impact are two of the main
goals that many development programmes struggle to achieve. The VBCF-supported companies
are doing business with millions of low income people by enabling them to have a job, increase
their income and/or have access to an LED lamp, medicine, clean drinking tap water, a cook
stove, a biogas plant, a money transfer, and so on. But the most important thing is that this will
continue tomorrow, next week, next month, next year and will continue wherever there is a
business opportunity for both the companies and the low income people.
This success wouldn’t have been possible without the contributions of many actors. SNV
Netherlands Development Organisation, the manager of VBCF, would like to express our since
thanks to:
The United Kingdom Department for International Development (DFID) and the Embassy of
the United Kingdom in Vietnam for their leadership, vision, financial contributions and their
continuous support to create the conditions for a successful project.
The Vietnam Business Council for Sustainable Development from the Vietnam Chamber of
Commerce and Industry for its strong support during the implementation of the project and
especially because of its work in motivating the private sector to engage with the VBCF.

TraphacoSapa: Sustainable Medicinal Plant Production
with Northern Ethnic Minorities 32
Infrastructure and Basic Services Portfolio 34
Howaco: Centralised Water Treatment, Purification and Distribution 34
MService: Mobile Banking Platform for Migrant Workers 36
M-Pay: E-Wallet and Mobile Payment Services 38
Liem Duyen Hai: Toll Bridge to Connect Vibrant Communities 40
Low Carbon Growth Portfolio 42
Rang Dong: Affordable LED Light Production 42
Green Generation: Green and Affordable Biomass Cook Stoves 44
Hi Tech: Efficient Cook Stoves Fuelled by Agro-forestry Waste 46
Green Environment: Biogas Digester Made From Recycled Plastic 48
Discontinued Projects 50
Part 3: Results 55
Summary 56
Changes and Outcomes 58
Scalability and Sustainability 62
Value for Money 63
Additionality 64
Lessons Learned 66
Conclusion 69
A Final Word 70
Contents
SUMMARY
Part 1: Introduction 1
Context 2
Approach 4
The Three Sectors 6
The Seven Challenges 7
Application Process 8
Criteria for Selection 11
Contracts Awarded 12
Part 2: Project Partners 15
Evaluation of Projects 16
Agricultural Portfolio 18
Ecofarm: Transforming Rice to Corn Farming with Bio-char Production 18
SSC: Hybrid Corn Seed Production 20
Bio Spring: Probiotic Production for Livestock and Aquaculture 22
Hai Nam Seafood Company: Restoring Scallop Natural Resources
for Sustainable Fishing 24
NSC: Japonica Rice Development 26
DHG Nature: Sustainable Medicinal Plant Production with Khmer
Ethnic Minorities 28
A119: Innovative F1 Hybrid Seed Production 30

Summary
The Vietnam Business Challenge Fund (VBCF) was designed to support
the private sector in Vietnam to develop innovative business models that
deliver both commercial benefits for the company and social impact for
the low income population using Inclusive Business (IB) models.
The first call for proposals was launched in late 2012 and, in 2013, 21 projects initiated
activities. Of these, five were terminated for various reasons but the other 16 achieved positive
results across the key objectives.
In total, VBCF invested over 113bn VND in the selected business initiatives, the equivalent of
24% of total investments made in these inclusive business projects, and the businesses made
2,293.4bn sales out of these specific business models.
As VBCF funding has now ended, an external consultancy company has conducted an
evaluation study.
The purpose of this report is to summarise the VBCF approach and highlight its successes and
lessons learned. Part 1 covers the background to the VBCF, Part 2 introduces each of the projects,
along with their impact, and Part 3 summarises the overall results.
Abbreviations
BoP Base of the Pyramid
DFID The UK Department for International Development
IB Inclusive Business
LIP Low Income People
SNV SNV Netherlands Development Organisation
VBCF Vietnam Business Challenge Fund
VBCSD Vietnam Business Council for Sustainable Development

2 3
Context
Vietnam’s private sector
development, marked by rapid and
steep growth, is due in large part to
foreign investment, export increase
and industrialisation, transitioning
the country from an agrarian-
based economy to one based on
manufacturing of value-added
products.
Despite the remarkable economic
achievements that have made Vietnam a
middle income country, the poverty gap and
inequality are increasing. Many, particularly
in rural areas, still have limited access to
markets, employment and basic services.
It is difficult for the government to address all
the issues felt by the low income population
as they are so wide spread and numerous,
but private businesses could be in a position
to help if they can access the financial and
technical support they need to overcome these
market inefficiencies with innovative inclusive
business models.

4 5
INCLUSIVE BUSINESS
Inclusive Business models generate profit for companies by bringing low income
markets into the core business of the company as employees, producers, distributors
and/or consumers. Profit is generated by increased efficiency in the business or the
creation of new markets. At the same time, the low income population benefits due
to opportunities for jobs, increased incomes or an improvement in their quality of life
through access to basic goods and services. In this way, Inclusive Business models
are win/win.
Boost economic growth of Vietnam + Increase company sales and
income + Address social inequalities
INNOVATIVE INCLUSIVE
COMMERCIALLY
VIABLE
It provided technical assistance, training, mentoring and non-reimbursable funding of up to 49%
of the total investment to models that were:
Technology, business model,
product, service, market
Number of low income
beneficiaries, impact level
and type, benefits to other
enterprises and wider
community
Market demand, commercial
feasibility and sustainability,
technical and managerial
capability, financial
profitability, capacity
and profile
The level of investment was determined based on how well the project met, or had the potential
to meet, these three criteria and ranged from 100,000 - 800,000USD for each project.
“Our company uses the most cutting edge
technology from the world to serve the most
underprivileged communities.”
Huynh Minh Viet
BIOSPRING CEO
Approach
VBCF is a specialised fund mandated to support the private sector in Vietnam to develop
innovative Inclusive Business models that deliver both commercial benefits for the company and
social impact for the low income population.
2012-2015
Funded by
Managed by
Vietnam Business
Challenge Fund

6 7
The Three Sectors
The VBCF operates in three main sectors:
AGRICULTURE
Foods
Industrial raw material
Supporting services,
machinery and
equipment
LOW CARBON
GROWTH
Renewable Energy
Waste Recycling
INFRASTRUCTURE
AND BASIC SERVICES
Water and Sanitation
Housing
The agriculture sector remains of critical
importance to the Vietnamese economy and
has significant potential for job creation,
especially among rural low income
populations. The challenge - and opportunity
- is to transform the sector from low quality
high volume products to higher quality, market
orientated and value added products. Solutions
that employ environmentally friendly practices
and technologies, and introduce infrastructure
solutions for small farmers’ value chains are
particularly beneficial.
Low carbon growth is an increasingly
important area in Vietnam and a rapidly
growing part of the economy. It offers an
important opportunity for income increase and
basic services for low income populations,
as well as improving quality of life through
provision of low cost, safe, environmentally
friendly and sustainable solutions.
Although the infrastructure sector was
affected by the economic downturn in 2009,
it remains an important sector for short-term
job creation and GDP growth. It also has
an indirect impact on many other sectors,
including agriculture and low carbon growth.
There is an opportunity to find innovative
models that meet the demand created by the
significant gaps in infrastructure and basic
services and provide solutions to benefit low
income and remote rural households.
The Seven Challenges
Private sector companies operating in one or more of these sectors were invited to apply if their
innovative business idea could address one of the following challenges:
AGRICULTURE
LOW CARBON
GROWTH
INFRASTRUCTURE
AND BASIC SERVICES
Increase global VALUE ADDITION of agricultural domestic and /
or global value chains that benefit the low income consumer
Introduce ENVIROMENTAMLLY FRIENDLY practices and
technologies for small farmers
Introduce INFRASTRUCTURE SOLUTIONS (irrigation, storage,
drying, collection, etc.) for small farmers’ value chains
Provide HOUSING, WATER AND SANITATION, AND RURAL
INFRASTRUCTURE (roads, bridges, irrigation, et.) solutions that
benefit the low income population
Introduce new MOBILE SOLUTIONS improving access to value
added services (information, financial services, etc. ) for the
rural household
Introduce SUSTAINABLE ENERGY AND LOW EMISSION
SOLUTIONS that engage and / or benefit the low income people
Reduce the environmental pollution and improve the economic
conditions of the low income population by TURNING WASTE
INTO ENERGY

8 9
Application Process
Two rounds for applications were launched
in from November 2012 to October 2013. To
ensure an open and competitive application
process, these were made through public
adverts, offline and online communications at
national and local levels and launch events
and road shows
across Vietnam.
Top-down activities were also conducted to
attract applicants, including partnerships
with business associations, training sessions,
brand development and recruitment of
“Ambassadors”, to identify investment
opportunities countrywide.
Other communication tools used as support
included: the VBCSD and SNV websites;
social media; roadshows; flyers, posters;
newspaper advertisements and promotions;
and other materials such as brochures,
guidebooks, videos and banners.
CALL FOR PROPOSALS
VBCF LAUNCH AND FIRST CALL FOR PROPOSALS
APPLICATION GUIDANCE
INCLUSIVE BUSINESS EXECUTIVE
SUMMARIES SUBMISSION
EVALUATION AND SHORT-LISTING
GUIDANCE FOR INCLUSIVE BUSINESS
PLAN DEVELOPMENT
FULL INCLUSIVE BUSINESS PLAN SUBMISSION
DUE DILIGENCE, SELECTION AND APPROVAL
CONTRACT SIGNING

10 11
Criteria for Selection
ELIGIBILITY CRITERIA
To be short-listed for assessment, applicants
had to fully meet all the following criteria:
•• Involve low income people in Vietnam
•• Benefit both the business and low
income people
•• Be relevant to one or more of the
three sectors
•• Have proven and relevant experience of at
least two years
•• Be able to finance at least 51% of the
project budget
•• Be registered and operating in Vietnam
ASSESSMENT CRITERIA
A standard set of assessment criteria was used
to evaluate key elements of the concept note
and full proposal:
•• Compliance with the eligibility criteria
•• Long term commercial feasibility
and sustainability
•• The number of low-income beneficiaries
and the level of benefit
•• Projects with large (thousands of
beneficiaries) and medium (hundreds
to a couple of thousands) scale impact
potential were prioritised by VBCF
•• The innovation in the project
•• The cost effectiveness of the investment
•• Benefits to other enterprises and the
wider community
•• Non environmental harm or
negative impact
•• Assurance of gender equity
of beneficiaries
•• Those projects with more than 50% of
women’s participation were positively
evaluated
•• Enterprise record on corporate social
responsibility actions
•• Up-scaling potential
•• Those projects with proven potential
for significant scale ups were positively
evaluated
•• Capacity (financial and technical) in
implementation of the investment project
•• Those applicants with a private co-
investment above 51% were positively
evaluated.

1312
Contracts Awarded
COMPANIES APPLIED AND,
OF THOSE
402
WERE SHORT-LISTED
38
CONTRACTS WERE
SIGNED WITH A VALUE
OF MORE THAN
ULTIMATELY
23
MILLION AND
$5
INITIATED
ACTIVITIES
21
PROVIDED FULL
BUSINESS PLANS AND
37
WERE
SELECTED
FOR
CONTRACT
NEGOTIATION25
CONTRACTS BY SECTOR
AGRICULTURE
LOW CARBON
GROWTH
INFRASTRUCTURE
AND BASIC SERVICES
Japonica rice seeds
Medicinal plants
F1 vegetable seeds
Fresh water sea bass
Medicinal plants
Corn seeds
Probiotics
Sustainable scallops
restoration
Organic rice
Corn – Biochar
CFL bulbs
LED lamps
Biogas digester
Agrochemical
container recycling –
(Didn’t start)
Gasifier cookstove
Biomass cookstove
Unbaked brick
machine
1
2
3
4
5
1
2
3
4
5
6
7
Centralised chemical
free water treatment
plant
Mobile banking
E-wallet
Amphibian housing
(Didn't start)
Water purifiers
Inclusive bridge
1
2
3
4
5
6
6
7
8
9
10
47% 29% 24%
Successful applicants were spread throughout Vietnam with a concentration in the Red River
Delta and the Mekong Delta.

16 17
Evaluation of Projects
The results and lessons learned
shown in these case studies have
been taken from the final evaluation
report conducted by independent
evaluators, MCG and Spark, on
behalf of VBCF.
The consultants used the following
methodologies for evaluating the project:
•• Desk review of documents provided
by VBCF
•• Interviews with representatives of the
companies
•• Interviews with other stakeholders
•• Quantitative surveys with beneficiaries and
non-beneficiaries
Social impact results include both direct and
indirect impact figures.

18
Ecofarm: Transforming
Rice to Corn Farming with
Bio-char Production
THE MARKET OPPORTUNITY
Vietnam’s import of corn for the feed industry
has increased rapidly at an average growth
rate of 18.3% per year. Heavy reliance on
imported products results in high animal feed
prices, which generates a demand for locally
produced feed materials. Additionally, the
burning of agricultural residue causes serious
environmental pollution.
A market business opportunity existed for
effective solutions that converted biomass into
useful and environmentally friendly products,
and substitute corn imports for
local production.
THE INCLUSIVE
BUSINESS MODEL
Ecofarm developed an innovative business
model that addresses this market opportunity
and engages LIP in its operations at two points:
1. As producers: Ecofarm engages low-
income farmers with a new form of corn
cooperative. These cooperatives are more
organised than individual farmers would
be and receive technical support and
inputs from Ecofarm to improve farming
productivity. Ecofarm also guarantees buy
back prices.
The company has also invested in a
factory to separate corn from the husks
and pack ready for distribution. It then
uses the husks in the production of bio-
char, which helps improve soil quality
and, ultimately, corn productivity.
2. As consumers: Ecofarm sells corn to
feed processors that will sell animal
feed to low-income consumers that
raise livestock.
VBCF INVESTMENT
5.46BNVND 29%
of total
investment
RESULTS
Ecofarm has achieved most of the key
project performance indicators at the levels
of beneficiaries, business and environment.
There is also clear evidence of the project’s
scalability and sustainability.
SCALABILITY
Scalability has been achieved:
•• Higher number of farmers and production
areas than in original plan
•• Expansion to new provinces and new
crops
LESSONS LEARNED
The following may have contributed to
increased success:
•• Production planning with farmers
•• Bio-fertilizer needs to be adapted to
specific soil conditions
Key success factors
•• Good implementation capacity and
previous pilot experience
•• Strong cooperation with scientists and
local authority
•• Investment in R&D and retaining control of
the knowledge for competitive advantage
•• Not just selling seed and fertilizer but also
buying the corn and selling it on
Business
Environmental
Social
SALES OF
22,350BNVND
EMISSION REDUCTION
CREATED
1,186
JOBS INCLUDING 983 FOR LIP
CORN PRODUCTION
6,150TONS
DIRECTLY AND INDIRECTLY
INCREASED INCOME FOR
2,832
BENEFICIARIES, INCLUDING 2306 LIP
Other achievements:
•• Farmers reduced Use Of Chemical Fertilisers
•• New processing workshop
Other benefits:
•• Reduced cost of production for most farmers
•• Access to new cultivation techniques
•• Better access to credit through revolving fund

20
SSC: Hybrid Corn Seed
Production
Vietnam has high demand for hybrid corn
seeds and it is expected to rise dramatically
in the coming years. The domestic corn
production capacity meets only 30% of the
market demand, which is dominated by the
animal feed industry, so the country relies
heavily on imported corn seeds.
Farmers in Tra Vinh province, home to a
majority of Khmer ethnic groups, have a long
history of growing rice on sandy soil that
provides low yields. As a result, they often
earn very low incomes. There is a clear need
for shifting from low-yield rice production to
other crops that have a higher market value.
THE INCLUSIVE
BUSINESS MODEL
As a result of the company’s partnerships
with leading institutes and research centres,
SSC, a leading seed development company,
developed an innovative business model
that introduces advanced technologies in the
development and production of F1 hybrid
corn seeds.
SSC has made inclusivity a core aspect of its
operations, engaging low-income populations
at three points:
1. As producers: The company trains and
provides farmers, the majority of whom
are Khmer ethnic minorities, with
technical support in the production and
processing of F1 hybrid corn seeds. It
is also committed to buying back the
seeds produced by its farmers, generating
stable income.
2. As consumers: Corn growers can buy
quality F1 hybrid corn seeds from the
company at prices that will be up to 50%
cheaper than imported seeds.
3. As employees: The company creates jobs
and income opportunities for low-income
individuals who engage in packaging,
storage, and preservation of corn seeds.
VBCF INVESTMENT
7.87BNVND 23%
of total
investment
RESULTS
This was a successful project achieving key
of beneficiaries and business. There is clear
evidence of project scalability beyond the
scope of the project as well as a plan for
continuing the inclusive business model. It
is a strong inclusive business model with
comprehensive support to effectively engage
with LIP farmers in the supply chain of SSC.
SCALABILITY
Scalability has been achieved:
•• The farming area and number of farmers
involved reached higher than the
original target
•• SSC has replicated this IB model to green
beans in 40 ha and okra in 16 ha in Cau
Ngang district of Tra Vinh
LESSONS LEARNED
Key success factors
•• Close monitoring and support to farmers
•• Enforcement and compliance with
the contract
•• Effective cooperation with qualified
input suppliers
•• Uniqueness of the satellite dryer model
•• Bio-fertilizer needs to be adapted to
specific soil conditions
Business
Social
SALES OF
103,800BNVND
CREATED
3,162
JOBS INCLUDING 2,859 FOR LIP
6,948
BENEFICIARIES, INCLUDING
6,250 LIP
IMPROVED ACCESS TO GOODS
AND SERVICES TO
692,740
PEOPLE, INCLUDING 630,393 LIP
•• Income increased by an average of 328,000VND /
month due to higher selling price
Other achievements:
•• Purchased 7,065.6 tons of corn cobs from farmers
•• Produced 3,463.7 tons corn seed
•• Enhanced business and project management skills
within SSC
•• New processing facility led to lower transportation costs
Other benefits:
•• SSC Conducted 241 training sessions and 24
review workshops
•• Access to high quality input supply
•• Access to finance and to the market

22
Bio Spring: Probiotic
Production for Livestock
and Aquaculture
Many farmers in Vietnam use antibiotics
to prevent diseases among their livestock,
which reduces production costs and increases
profitability. However, the antibiotics content
in animal feed is a major quality control
hurdle for Vietnamese exporters that wish to
enter the US, EU, or Japanese markets. By
introducing probiotics, the use of antibiotics
and harmful additives can be reduced.
Until now, the feed industry in Vietnam has
primarily imported its probiotics at high cost.
This is because there has not been much
investment in research and development
within the country.
THE INCLUSIVE
BUSINESS MODEL
Bio Spring developed new generation heat-
resistant probiotics in close collaboration with
leading research laboratories in Vietnam
and overseas.
The probiotics are distributed through two
main channels: (1) large scale contracts
with established feed companies and (2)
smallholder farmers. The smallholder farmers
will benefit from technical support, affordable
probiotics, and improved productivity in
animal husbandry and aquaculture.
VBCF INVESTMENT
15.45BNVND 29%
of total
investment
RESULTS
The project has completed the project
activities and achieved key changes at the
level of business and the number of farmers
using the products. There is also a clear plan
for continuing the project that confirms its
sustainability and the company has invested
in a new factory to increase capacity.
“The support of SNV, as the VBCF
Manager, has been critical for BioSpring
to understand the low income markets,
define strategies, innovate and leverage
resources to achieve our probiotics
business targets”
Huynh Minh Viet, CEO
Bio Spring
SCALABILITY
There are clear signs of potential for
scaling-up:
•• The company has invested in a
new factory
•• Bio Spring currently only serves 6%
of market demand so there is a big
opportunity for the company to increase its
share of the market
LESSONS LEARNED
The main issue for consideration is that it takes
time to change behaviour and for farmers to
adopt a new habit.
Key success factors
•• Innovative product at high quality with
strong RD capacity
•• Unique heat resistant product suitable for
the market
•• Use of powerful marketing tools
•• Highly educated and energetic
management team
Business
SALES OF
6.82BNVND
Other achievements:
•• Expanded distribution network to 19 provinces
•• Improved collaboration with feed mills to get feed at a
good price
Social
CREATED
41JOBS
57,100BENEFICIARIES, INCLUDING
34,260 LIP
•• Economic benefits due to reduced medicine costs and
increased animal weight
Other benefits:
•• Improved safety of pork and poultry for customers
Environmental
•• Reduced use of antibiotics leading to cleaner
livestock production

24
Hai Nam Seafood
Company: Restoring
Scallop Natural
Resources for
Sustainable Fishing
Binh Thuan province is well known for its
seafood products. However, the scallop
natural resources have been degrading due to
unsustainable fishing practices that jeopardize
the livelihoods of thousands of households in
the area. The volume of scallop has decreased
by 5 to 10 times over the past 10 years while
domestic and international demand
is increasing.
THE INCLUSIVE
BUSINESS MODEL
Hai Nam Seafood Company developed a
business model that contributes to recovering
natural sources of scallop in Binh Thuan Sea.
It works with various stakeholders on engaging
LIP in the management, protection and
sustainable exploitation of scallop and builds
up a stable supply base through fishermen’s
self-managed groups to ensure the quantity
and quality of inputs. This is the first time
in Vietnam scallop fingerlings have been
produced and spread to the sea on a
large scale.
VBCF INVESTMENT
3.53BNVND 45%
of total
investment
RESULTS
The project has been successful, with
performance at the beneficiary and systemic
levels exceeding expectations. The project
has brought about tangible changes in the
fishing practice and income for participating
farmers as well as changed perceptions of and
approach to sustainable resource management
of local government. More importantly,
the project has demonstrated excellent
cooperation between local government-
business-scientific and community for
recovering, farming, fishing and protecting
fishery resources in general and scallop in
particular in Binh Thuan.
SCALABILITY
There are clear signs of potential for
scaling-up:
•• Production area has been expanded to
other locations
•• There is a plan to expand the farming
areas in the coming years and continue the
credit fund
LESSONS LEARNED
The following may have limited project
success:
•• Fingerling suppliers didn’t have sufficient
capacity, which delayed supply and
slowed project progress
•• Managing the increased scallop production
zone was challenging
Key success factors
•• Strong leadership of Binh Thuan Sub
Department of Fisheries (FRD) with
dedicated team
•• Innovative project design characterised by
shared benefits and responsibility
•• Direct cooperation with fishermen/fishing
model in cooperation with fishermen
•• Strong partnership between private and
public sector
Social
282
BENEFICIARIES, INCLUDING 180 LIP
Other benefits:
•• Access to credit from the revolving fund
Environmental
This business has a positive impact on the environment,
as the communities are being trained in controlling
destructive fishing practices and restoring natural scallop
resources in the area.
•• Significant increase in number of scallop and small fish
•• 90% reduction in harmful net fishing
Business
•• Secured a large potential supply of
scallop
•• Obtained MSG certificate for export

26
NSC: Japonica Rice
Development
Demand for Japonica rice accounts for 20%
of the total global demand for rice. Because of
its high quality, Japonica rice is often sold at a
high price. For example, in Vietnam, Japonica
rice is 1.3 times as expensive as Indica rice
while the production costs of both varieties are
almost the same.
There is an increasing demand for Japonica
rice within Vietnam. Export markets such as
Japan and Taiwan, which currently import
a large volume of Japonica rice from China,
also offer an opportunity for Vietnamese
exporters that meet food safety and hygiene
standards. Rice importers from these countries
are reaching out to Vietnamese Japonica rice
producers to reduce their dependency on
Chinese suppliers.
THE INCLUSIVE
BUSINESS MODEL
NSC, a leading seed company, made a
breakthrough in innovation by developing a
closed Japonica rice production cycle from
seeding to distributing finished products. It
combines traditional production methods
and new biotechnologies to create Japonica
rice seeds that are adaptive to deltas and
mountainous areas and provide higher
productivity, quality and market value.
The company made inclusivity a core aspect
of its operations, engaging low-income
populations at two points:
1. As producers: NSC builds production
capacity through cooperatives
2. As consumers: NSC sells high quality
Japonica rice seeds to farmers
VBCF INVESTMENT
9.13BNVND 33%
of total
investment
RESULTS
The project has completed all milestones
and achieved the scale of Japonica seed and
commercial rice production. Development of
the supply chain for Japonica commercial rice
has gained good initial results.
SCALABILITY AND
SUSTAINABILITY
Positive signs of scalability:
•• Opportunity to expand production area
•• Strong management capacity
•• New factory
•• Expand into rice for consumer market -
down the value chain
NSC will continue to work with farmers as
seed producers and purchase Japonica rice
from commercial producers. The market is
growing fast, they have just closed a deal to
supply 45,000 tons to an Australian buyer.
LESSONS LEARNED
Key success factors
•• Good network with local partners to get
production model organised and operated
•• Good quality Japonica rice bringing higher
economic benefits for farmers
•• Flexible in its business operation to adapt
to changing context
•• Good brand already established
Business
SALES OF
37.45BNVND
Other achievements:
•• Produced 940 tons of seed and 700 tons of rice
•• Organised 74 training sessions and 59 workshops
for farmers
•• Built new rice processing and packing factory
Community
CREATED JOBS FOR
1,691
24,176
IMPROVED ACCESS TO GOODS AND
SERVICES FOR
174,074
Other benefits:
•• Access to higher quality input supply through
involved cooperatives
•• Improved access to market with higher selling price

28
DHG Nature:
Sustainable Medicinal
Plant Production with
Khmer Ethnic Minorities
There is an increasing demand for
pharmaceutical products made from natural
materials, including Plectranthus Amboinicus,
which are used in traditional medicine.
Bay Nui are in An Giang province has
favourable climate and soil conditions for
growing Plectranthus amboinicus, and local
authorities have earmarked the area for
medicinal plant cultivation. Plectranthus
amboinicus, among other medicinal plants
grown in the area, has higher market
value than rice and other crops. However,
cultivation of the crop has room
for improvement.
This presents a market opportunity for the
development of medicinal materials that meet
international quality standards.
THE INCLUSIVE
BUSINESS MODEL
DHG Nature (DHG), a leading domestic
pharmaceutical company, has developed a
business model that addresses this market
opportunity. In doing so it has developed
Plectranthus amboinicus cultivation area to
meet GACP-WHO standards. The company
has made inclusivity a core aspect of its
as suppliers. It provides farmers with
seedlings, credit for production inputs and
cultivation techniques. It also supervises
the growing process and buys back the
Plectranthus amboinicus products.
VBCF INVESTMENT
1.69BNVND 29%
of total
investment
RESULTS
DHG has successfully implemented a new
working model with farmer groups for mutual
benefit. The farmers were provided with
technical training to comply with GACP-
WHO standards and got higher income from
a new crop. The company established a more
stable and better quality supply of medicinal
materials and was able to increase its
processing capacity.
Business
SALES OF
4.2BNVND
Other achievements:
•• Adopted GACP-WHO practices
•• Installed and operated oil extraction machines to
increase processing capacity
•• Developed and piloted a new working model with
farmer groups
•• More stable supply of better quality medicinal material
Community
CREATED JOBS FOR
353
PEOPLE, INCLUDING 318 LIP
1,112
Other benefits:
•• Access to revolving fund
•• Introduced to new crops and new farming practices
Environmental
•• By applying GACP-WHO standards in cultivation, use of
pesticides has been reduced significantly. Farmers were
trained in making compost from extraction waste and
using it as a substitute for chemical fertilizer, saving costs
and preserving the environment.
SCALABILITY AND
SUSTAINABILITY
DHG will continue to purchase PA from
farmers in the coming years but rather than
sending its own technical staff to work with
farmers, will appoint a 3rd party to supervise
the technical aspects of cultivation.
The company also plans to utilise the
extraction factory at full capacity to process
other medicinal materials in Tri Ton.
For the project to be further scaled-up, DHG
either needs to share the implementation
model with other companies, or consider
growing other medicinal herbs for its own
production.
LESSONS LEARNED
It would be more efficient for the company to
play a management role and appoint and train
a contact person in the field rather than send
its own staff to the province.
DHG suffered from bad weather, a
discontinued order and wet weather but had
plans in place to deal with these eventualities.

30
A119: Innovative F1
Hybrid Seed Production
The seed market is an important part of the
growing agriculture industry in Vietnam, with
an estimated value of USD 45 million.
THE INCLUSIVE
BUSINESS MODEL
A leading horticultural seed company is
creating jobs and increasing income for
thousands of low-income farmers in the
highland areas of Vietnam. Its model has
integrated low-income groups as producers;
smallholder seed farmers are given access
to training, fertilizer and equipment to grow
high-quality F1 seeds; and the farmers receive
stable income from the contract sale of their
seeds to the company.
VBCF INVESTMENT
5.38BNVND 13%
of total
investment
RESULTS
The model was very profitable and had a
strong impact on jobs and incomes, due to
higher yield and higher selling price. Farmers
were very happy with the collaboration.
Community
CREATED JOBS FOR
1,924
5,544PEOPLE, INCLUDING 4,712 LIP
SERVICES FOR
238,010
SCALABILITY AND
SUSTAINABILITY
The project requires a high level of technical
know-how. This must be retained by the
company for competitive advantage so the
project cannot be replicated or scaled-up by
other businesses.
Sustainability is high for the model thanks to
the firm’s experience in the project area and
expansion to overseas markets.
LESSONS LEARNED
Key success factors
•• The company was bought by a foreign
company leading to expansion, increased
technical know-how and increased crops
•• In addition, there was a focus on the
quality of seeds, backed by a strong
brand name
SALES OF
100.72BNVND
Business

32
TraphacoSapa: Sustainable
Medicinal Plant
Production with Northern
Ethnic Minorities
The northern mountainous area of Vietnam,
home to many low-income and ethnic
minority communities, has favourable climate
and soil conditions for the cultivation of high
quality pharmaceutical plants that meet
GACP-WHO standards.
The demand for herbal medicine extracted
from plants such as Cynara scolymus
(Artichoke), Angelica sinensis (Duong Qui
Root), and Ampelopsis cantoniensis (Dried
Tea Leaf) is a source of millions of dollars per
year in revenue for a leading pharmaceutical
company in Vietnam. The current domestic
supply has met only a third of the
company’s demand.
THE INCLUSIVE
BUSINESS MODEL
TraphacoSapa, a leading pharmaceutical
company, has seized this market opportunity
while including low-income communities in
their core business operations as producers.
The farmers are provided with seed inputs,
fertilizers, technical support and cash
advances in order to grow pharmaceutical
plants. In return, the farmers increase their
income by selling products with prices
guaranteed by the company.
VBCF INVESTMENT
4.26BNVND 20%
of total
investment
RESULTS
TraphacoSapa successfully implemented
an IB model with LIP and ethnic minority
as contracted suppliers. They secured high
quality, GACP-WHO standard supplies
resulting in more stable quality and have
expanded to a new processing factory in Lao
Cai to produce other medicinal products.
SCALABILITY
Project is scalable and sustainable. Although
demand for artichoke has been met so cannot
be increased, purchase of duong quy and che
day will continue to increase. Also, a new
factory has been built.
LESSONS LEARNED
The key lesson learnt for this project is
that the duration of the project needs to be
long enough to test the processing facilities
invested. The company would also benefit
from diversifying its market: not only selling to
the mother company but also direct
to customers.
“The company uses part of VBCF to run
a revolving fund to provide farmers with
seed money to buy fertilizer and pay for
labour. This revolving fund will be running
for many years. After the VBCF supported
programme ends the revolving fund will
support the development of other crops.”
Do Tien Sy, TraphacoSapa Director
Environmental
•• GACP-WHO certified cultivation is an environmentally
friendly farming practice thanks to proper use of
chemical fertilizers and pesticides
Business
SALES OF
72.73BNVND
Community
CREATEDJOBSFOR
517
INCREASED INCOME
695

34
Howaco: Centralised
Water Treatment,
Purification and
Distribution
Long An, a southern province, is one of
many regions in Vietnam that lacks access
to a sustainable source of drinkable tap
water. Local people have instead been using
saline water that is often contaminated
with chemicals discharged from factories in
surrounding areas. They are forced to choose
between paying high prices for clean water
supplied by vendors from other provinces, or
using untreated surface or underground water
that comes with serious health risks.
The rapidly growing population also adds to
the pressing need for water treatment facilities
in the area to comply with water safety
regulations. This presents a market opportunity
for the development of business models that
meet the growing local demand in peri-urban/
suburban and rural areas in Vietnam.
THE INCLUSIVE
BUSINESS MODEL
Howaco, a water supply company, developed
a centralised water treatment facility and
distribution system that effectively supplies
clean drinking water that meets quality
standards at an affordable price. The company
has designed an inclusive business model
that engages the low-income population of
Vietnam at two points:
1. As producers: Howaco creates new
jobs for workers involved in installation
and operation, as well as long-
term employment for its agents and
distributors.
2. As consumers: Howaco sells clean
drinking water at an affordable and
regulated price and provides 24/7 water
supply service to local low-income
households and wholesaler.
VBCF INVESTMENT
8.9BNVND 38%
of total
investment
RESULTS
This was a successful project achieving all key
of beneficiaries, business, scalability and
sustainability, with appropriate co-investment
from VBCF. After 12 months, 3,205 users
have better access to quality clean water
supply at affordable prices. The project has
created positive changes in the market and
more competition on quality and price for the
benefit of the end users.
SCALABILITY
Statistics show that only 40% of the rural
population in Vietnam has access to safe
water. This indicates high potential to scale
up the inclusive business model to meet the
market demand for clean water in rural and
suburban areas of the country.
LESSONS LEARNED
Key success factors
•• Innovative operation model and modern
water treatment technology making it a
cost effective investment
•• Innovative distribution strategy through
agents, enabling Howaco to reach clients
who live far away from the main water
supply network
•• Using SCADA and GIS to manage water
supply and inefficiencies such as water
loss/leakage
•• Strong inclusive business model using
modern technology to deliver affordable,
quality products and services
“We don’t use any chemicals, it’s all
natural. That’s why we try to keep costs
as low as possible so the price can still be
low for the beneficiaries but the company
still has a margin that we can reinvest in
water meters, the pipelines and upgrade
of the water treatment systems. In 10
years we will supply to 6,000 households
talmost double the current capacity.”
Ngo Xuan Vinh,
Howaco Deputy Director
Environmental
•• Utilises a non-chemical water treatment process that is
safe for human health and the environment
Social
CREATEDJOBSFOR
125
INCREASED INCOME
500
BENEFICIARIES INCLUDING 460 LIP
SERVICES FOR
12,820
MADE SAVINGS FOR
12,820
•• Lower price for clean water: average saving of
32,462VND / month / household
Business
SALES OF
9.3BNVND
Other achievements:
•• Increased water treatment and supply capacity of the
two plants from 3000m3/day to 6000m3/day.

36
M-Service: Mobile
Banking Platform for
Migrant Workers
In Vietnam, cash-based transactions dominate
the market as tens of million of people have
little or no access to basic financial services.
Most banks and their branches are located
in big cities and urban areas that have high
population densities. As a result, millions of
migrant workers do not have access to basic
financial services for their primary needs such
as remittances to their families in rural areas.
THE INCLUSIVE
BUSINESS MODEL
M-Service developed a “mobile money”
solution to provide these financial services
to migrant workers and rural populations
using their cell phones. By co-branding with
Vinaphone (a mobile network operator) and
Vietcombank (a local bank), the company
set up a network of agents in 45 provinces to
provide payment and money transfer services
using existing mobile network infrastructure.
The business model is inclusive of the low-
income community at two points:
1. As consumers: Low-income migrant
workers and rural population are able
to store money and send it to their
families in rural areas more cheaply and
conveniently that with the post office or
other money transfer services.
2. As distributors: The company’s agents
earn a commission by acquiring
customers and acting as service providers
of the money transfer service in rural
areas.
VBCF INVESTMENT
8.5BNVND 10%
of total
investment
RESULTS
The VBCF grant had helped M-Service
upgrade its infrastructure and attain a large
number of agents and users (380,000 users)
to form a solid foundation for the company to
continue expand services to be provided to
Momo users nationwide.
SCALABILITY
M-Service is working on further expansion of
the suite of services offered.
LESSONS LEARNED
For future success M-Service should consider
the following:
•• Improve its sales and aftersales capability
to satisfy and retain customers
•• Expand the reach of its sales agents to
improve access
•• Develop its services
Key success factors
•• Partner with Vinaphone and Vietcombank
•• Strong marketing team with clear vision
•• Strong technical and marketing team
“VBCF’s funding has enabled us to invest
in new technologies and in marketing
development, getting fast access to low
income customers in Vietnam.”
Nguyen Ba Diep, M-Service JSC
Executive Vice Chairman
Business
Community
SALES OF
1,827BNVND
CREATEDJOBSFOR
240
18,228
SERVICES FOR
388,255
CREATED SAVINGS FOR
1,553,020
BENEFICIARIES, INCLUDING
1,009,463 LIP
Other achievements:
•• Established a network of agents and increase revenue
of all agents
•• Obtained E-Wallet license from the State Bank
of Vietnam

38
M-Pay: E-Wallet and
Mobile Payment Services
In Vietnam, a large percentage of the
population has little or no access to basic
financial services. Most LIP, university students
and migrant workers in industrial zones fall
into this “unbanked” category, as they do
not have access to basic payment services.
However, demand from these consumer
segments is significant.
This presents a market opportunity for the
development of financial and payment
services to meet the growing demand of the
unbanked populations of Vietnam.
THE INCLUSIVE
BUSINESS MODEL
M-Pay developed a business model that
addresses this market opportunity. In doing
so the company has made inclusivity a core
aspect of its operations, engaging low-income
workers as consumers. M-Pay provides
e-wallet payment services for thousands of
migrant workers and students in eight selected
industrial zones and universities. Users benefit
from an easy access to basic payment services
by mobile phone with very low transaction
fees.
VBCF INVESTMENT
7.44BNVND 35%
of total
investment
RESULTS
M-Pay is one of the few pioneers in Vietnam
exploring the use of latest mobile applications
to serve the underserved population. Thanks to
its 95,265 e-Monkey users, M-Pay has formed
successful partnerships with major merchants,
suppliers, banks and investors so it can further
upgrade and enrich e-Monkey and expand to
other market segments.
SCALABILITY
M-Pay already has a large bank of customers.
If they continue to introduce products and
services they will be able to retain and grow
this customer base. They have already scaled-
up their services to meet the needs of the other
sectors.
LESSONS LEARNED
•• To diversify value-added services to
incentivise users to continue to use the
e-wallets
•• To develop the Apps for not only users but
also the sellers (merchants)
Key success factors
•• Strong ownership of technology: in-house
expertise to develop systems
•• Core competence providing a unique
selling point (competitive advantage)
•• Competency of management team
Business
SALES OF
37.18 BNVND
Community
CREATEDJOBSFOR
56
INCREASED INCOME
1,452
SERVICES FOR
71,690
CREATED SAVINGS FOR
286,760
BENEFICIARIES,
INCLUDING 93,197 LIP

40
Liem Duyen Hai: Toll
Bridge to Connect Vibrant
Communities
A survey on the transportation needs of local
people from Thoi Binh and U Minh districts
in Ca Mau province showed that more than
1,500 people and approximately 1,000
vehicles cross the Trem River by ferry each
day. These ferries, which operate from 5am to
7pm, don’t offer professional 24-hour service
or meet safety standards.
Khanh An Industrial Park in U Minh district,
which is planned to start operation in 2020,
will attract thousands of workers who need to
cross the river to come to work. The improved
roads in both U Minh and Thoi Binh will also
contribute to the increased number of heavy
vehicles.
THE INCLUSIVE
BUSINESS MODEL
Liem Duyen Hai developed an innovative
business model called “Bridging the Blessings”
that addresses this market opportunity. It
aimed to construct and operate a 24-hour
toll bridge that had capacity to service 1,200
people daily. It made inclusivity a core aspect
of its operations, engaging LIP as consumers,
and set the toll fee at an affordable level.
VBCF INVESTMENT
3.81BNVND 28%
of total
investment
RESULTS
The traffic flow of the bridge, after two weeks
of operation, has exceeded LDH’s initial
target. This demonstrated the acceptance of
the new bridge by local people and illustrated
positive impacts on their life and livelihoods.
SCALABILITY
There is a high potential for scaling up this
inclusive business model and the company
plans to invest in similar IB models.
LESSONS LEARNED
Strategic investment in the internal capacity
and knowledge of the company should
be improved to facilitate scalability and
implementation.
The project highlighted the need for policy
advocacy to be taken into account with
project: good advocacy capacity is needed to
get approvals and avoid delays to the project.
Business
SALES OF
63.7BNVND
Other achievements:
•• Increased company credibility
“It was a consensus among local people
that the new bridge has brought enormous
benefits to people of Khanh An and
Ho Thi Ky communes from time-saving
benefit for daily commuters to more
business opportunities for potential
entrepreneurs.“
MCG Consultancy, Evaluation Report
Community
CREATEDJOBSFOR
49
INCREASED INCOME
9,406
SERVICES FOR
9,210
Other achievements:
•• Reduced travel time and cost and reduced risk
•• Opportunities for traders to expand their business
CREATED SAVINGS FOR
9,210
BENEFICIARIES INCLUDING
7,829 LIP

42 43
Rang Dong:
Affordable LED Light
Productions
In 2013, Vietnam officially banned the
production and distribution of 60W or above
incandescent bulbs. While high-quality LED
products are already popular in middle-
income communities, because of the cost and
energy savings and long life cycles, low-
income communities do not have access to
them because of the high initial investment
and lack of adequate information.
Low-income market segments account for
more than 50% of Vietnam’s population,
representing a large market opportunity for
low-cost LED lighting products.
THE INCLUSIVE
BUSINESS MODEL
Rang Dong, a leading lighting company,
developed a high quality line of LED
products that are affordable for low-income
communities nationwide. The inclusive
business model engages low-income
individuals from the rural and mountainous
areas of Vietnam at three points:
1. As employees: The company employs
low-income workers in its factories.
These employees would otherwise be out
of a job as the company has eliminated
its production of incandescent bulbs over
60W.
2. As distributors: Sale agents distribute the
new LED products and earn an income
from their product sales.
3. As customers: Low-income consumers
are able to purchase high-quality LED
products at an affordable price. They
will save money by reducing their usage
of electricity with the conveniently
purchased bulbs.
VBCF INVESTMENT
17.02BNVND 34%
of total
investment
RESULTS
This was the first time that Rang Dong had
developed a product and implemented
marketing activities specifically to reach LIP
and it was a successful project: sales were
1.7 times the target. Some of the results have
exceeded the set targets such as production
capacity, sales and number of jobs. Outreach
has helped enhance business and project
management skills for Rang Dong.
SCALABILITY AND
SUSTAINABILITY
There is a large market opportunity - the
market is over 20m households - supported
by a clear plan for continuing the project and
the opportunity to replicate to other market
segments.
LESSONS LEARNED
Key learnings
•• Mixed marketing approach is required to
reach the LIP market
•• Need a practical approach to track
outreach to LIP
Key success factors
•• Strong RD capacity for diversified and
innovative product offering various choices
for LIP users
•• Strong commitment and leadership from
the General Director
•• Proactive communication in project
targeted areas helped to improve the
awareness of the users
•• VBCF enforced business plan
implementation discipline, a breakthrough
for enhancing project execution capacity
“Since my family switched to LED lamps,
our electricity costs are half of what we
used to pay with other types of lamp.
We’ve been using this lamp for more than
a year now, but we haven’t had to replace
it. We used to replace older lamps once
za year. “
End User, Rang Dong LED Lights
Business
SALES OF
500BNVND
Other achievements:
•• Significant increase in production capacity: 3.4 million
products in 2014 and estimated 4.5 million in 2015,
including 3.56 million for LIP
•• 100 major sales points and 2,030 retail stores
•• Reduced RD time and reduced costs
Social
CREATED JOBS FOR
1,317
SERVICES FOR
4,029,571PEOPLE, INCLUDING 2,820,700 LIP
CREATED SAVINGS FOR
4,029,571
PEOPLE, INCLUDING 2,820,700 LIP
Environmental
The LED products are eco-friendly and energy efficient,
leading to a reduction in CO2
emissions.

44
Green Generation:
Green and Affordable
Biomass Cook Stoves
With approximately 57% of the Vietnamese
population using firewood for cooking, there
is a large potential market for a stove that
uses an alternative fuel source that is more
environmentally friendly and less harmful to
health.
THE INCLUSIVE
BUSINESS MODEL
Green Generation developed an eco-friendly
biomass cook stove that burns agricultural
by-products and crop residues in addition to
firewood for a more cost-effective and efficient
cooking solution. The stove is top-lit so it
does not need to be fanned, it is mobile, and
convenient to use.
It engages low-income individuals at three
points:
1. As employees: Workers of the Company
earn an income producing the stove parts
in its factories.
2. As distributors: Sales agents in local
areas earn commission by assembling
and distributing the cook stoves.
3. As consumers: Low-income customers
can purchase the cook stove at an
affordable price. They will benefit from
low cost fuel and reduction in exposure
to harmful CO2
and particle matter (PM).
VBCF INVESTMENT
2.45BNVND 39%
of total
investment
RESULTS
Green Generation has been a successful
project achieving key project performance
indicators with modest co-investment from
VBCF. Green Generation has become a
growing business from a small start-up in short
period of time.
SCALABILITY
Current project outreach and spread across 16
provinces are clear signs of scalability. Green
Generation has also expanded its business
partners for RD and business expansion,
with Lao and Myanmar potential markets.
LESSONS LEARNED
•• New products should be tested first before
launching to markets
Key success factors
•• Innovative product with competitive
advantages offering various choices
for users
•• Innovation mixed sale forces employed to
improve accessibility to any potential users
•• Passion of the leader at Green Generation
•• Affordable price offering competitive
advantage
Business
SALES OF
3.63BNVND
Other achievements:
•• Established a distribution network of 250 agents and 16
sales staff
•• Capacity to produce 6,000 cook stoves / month while
lowering costs
Social
CREATED
65JOBS
71,072BENEFICIARIES INCLUDING
42,585 LIP
SERVICES AND MADE SAVINGS FOR
69,812
AVERAGE COST SAVING FOR FUEL =
87,000VND
PER MONTH
Environmental
The biomass cook stove is eco-friendly. It uses agricultural
by-products and crop residues, consumes less firewood,
and creates less smoke than traditional alternatives, and
therefore emits less CO2
into the environment.
EMISSIONS REDUCTION IS
ESTIMATED AT
22,712,860KGe

46 47
Hi Tech: Efficient Cook
Stoves Fuelled by Agro-
forestry Waste
In rural Vietnam, the use of traditional cook
stoves that burn firewood and fossil fuels that
pollute the air and endanger people’s health
is still popular. There is a pressing need for
efficient and affordable cook stoves for low-
income populations in rural areas where
agricultural residues are abundant. A market
opportunity also exists for innovative cook
stoves that address pollution, health risks,
energy scarcity, and affordability.
THE INCLUSIVE
BUSINESS MODEL
Hi Tech developed an innovative business
model that addresses this market opportunity.
In doing so it has made inclusivity a core
aspect of its operations, engaging low-income
populations in rural areas as consumers. The
company produces a biomass cook stove that
is fuelled by agro-forestry waste. The stove
is designed to be convenient, user-friendly,
energy efficient and affordable for LIP, and is
distributed through a network of low-income
individuals acting as agents. The company
also promotes sales by raising awareness of
the health and environmental benefits of
the stove.
VBCF INVESTMENT
2.52BNVND 21%
of total
investment
RESULTS
The project has achieved key performance
indicators despite experiencing difficulties in
personnel and project management and not
having an effective distribution chain.
The cook stoves are well appreciated by
the users for their higher energy efficiency,
cleanliness and reasonable prices. VBCF’s
investment in equipment and its role in
supporting Hi-Tech to make the product more
affordable and accessible to mostly LIP rural
users (68%) was effective.
LESSONS LEARNED
Key success factors
•• Innovative and quality product with low
production cost
•• Good understanding of business challenge
and user demand
•• Good targeting of promising market and
effective distribution channels
Business
Community
SALES OF
7.12BNVND
CREATED JOBS FOR
47
DIRECTLY IMPROVED ACCESS TO
EASY TO USE, CLEANER AND SAFER
ENERGY EFFICIENT SOLUTIONS AND
COST SAVINGS FOR
27,292
Other achievements:
•• Sold 6,823 stoves (up to 30 June 2015)
•• Enhanced production capacity and lowered
production costs
e
Environmental
ESTIMATED AT
8,879,267KG
THANKS TO THE USE OF 6,823
HI-TECH STOVES

48
Green Environment:
Biogas Digester Made
From Recycled Plastic
Vietnam’s livestock industry has been growing
steadily at a rate of 5-6% per year. This has
created a need for the management of animal
waste, and biogas digesters are considered an
effective solution.
A biogas digester is a mechanism that
manages and processes manure into a
source of clean energy for cooking, lighting
and powering home appliances at farm
households. There is a market opportunity
for biogas digesters that are environmentally
friendly and low-cost.
THE INCLUSIVE
BUSINESS MODEL
Green Environment developed an innovative
business model that addresses this market
opportunity. In doing so it has applied a new
technology - plastic injection pumping into
a sealed mould - to the production of biogas
digesters from recycled plastic. This is the
first time that this technology has been used
to produce biogas digesters in Vietnam. The
digesters are assembled with interchangeable
modules that can be expanded if needed.
They also have a self-discharge function that
will reduce maintenance cost and are 20-30%
cheaper than digesters made from
other materials.
Green Environment has made inclusivity
a core aspect of its operations, engaging
low-income populations in rural areas as
consumers and employees.
VBCF INVESTMENT
4.79BNVND 19%
of total
investment
RESULTS
Although the project was considered
successful, sales were limited by the poor sales
and marketing strategy. Green Environment
has overcome technical challenges to optimise
the product for the target consumers.
“We received funding to invest in market
development and we located 20 agents
across many provinces and cities. Serving
agents across the country is a challenge.
Without VBCF I am sure this factory would
never have been developed in Vietnam.”
Ngo Duy Dong,
Green Environment Director
SCALABILITY
The project promises great scalability thanks
to huge market demand. Sustainability is also
high as the project has been lucrative for the
company. It plans to expand production to all
of its workshops by 2019.
LESSONS LEARNED
The following may have improved the project
results:
•• Get technical advice from experts in the
field before implementation
•• Invest in building capacity of management
and staff
•• Out-source marketing to a specialist
company
Key success factor
•• Established a network of sales agents at
commune level in the targeted market
•• Using recycled plastics to reduce costs led
to reduce prices
Business
Social
SALES OF
54BNVND
CREATED JOBS FOR
126
11,384
IMPROVED ACCESS TO BIOGAS
DIGESTERS FOR
10,880
CREATED FUEL COST SAVINGS FOR
10,880
Other achievements:
•• 2,720 biogas digesters installed by 15 September 2015
•• New production line installed, producing 30 units
per day
•• Trained 100 production workers, installers
and technicians
Environmental
•• Using recycled plastic as a primary input and applying a
closed production process reduces pollution significantly.
The company’s technology also creates renewable
energy through effective waste treatment.
EMISSIONS REDUCTION OF
9,209TONS
OF CO2
e PER HOUSEHOLD / YEAR
e

5150
Discontinued Projects
Five of the 21 initiated projects did not
continue.
1. FRESHWATER FARMING OF
SEA BASS
The Market Opportunity
Farm-raised sea bass is a high market value
seafood. The fish is in demand in both the
domestic and export markets for its good taste
and high mineral content.
Thai Binh, a northern coastal province of
Vietnam with a long history of producing
sea and freshwater products, has favourable
natural conditions for freshwater fish farming.
This presents a great market opportunity for
the adaptation of sea bass to a freshwater
farming environment.
The Inclusive
Business Model
Through a rigorous research and development
processa company successfully domesticated
sea bass in freshwater.
The company has made inclusivity a core
aspect of its operations, engaging LIP as
producers. It provides these farmers with bass
fingerlings and technical assistance in sea
bass farming in freshwater and committed to
buying back the fish that the farmers produce.
VBCF Investment
1.45BNVND 36%
of total
investment
Results
The project experienced an unexpected
termination after 10 months
2. ORGANIC RICE FARMING IN U
MINH AREA
Vietnamese producers don’t have enough
capacity to address the global market
opportunity for organic and healthy food
products. This is partially due to difficulties in
obtaining organic certification.
The buffer zone of U Minh Ha nature reserve
in Ca Mau province has favourable conditions
for organic farming. Isolation from other
intensive farming areas has left U Minh Ha
rice producers unfamiliar with the use of
chemical fertilizers and pesticides.
The Inclusive
Business Model
A company developed an organic farming
complex and made inclusivity a core aspect
of its operations, engaging LIP as producers.
The company supports their suppliers in
the improvement of irrigation systems and
provides organic rice seeds, organic fertilizer
and bio-products.
The farm owned by the company is the only
one in Vietnam that has been certified as
organic and the improved irrigation system
helps farmers increase their rice production
from one to two crops per year. The company
also trains farmers in organic farming
techniques that meet international standards
and is committed to buying back the organic
rice they produce.
VBCF Investment
1.58BNVND 16%
of total
investment
Results
The project was terminated by VBCF as the
market growth was slower than expected.
3. DECENTRALISED
WATER PURIFICATION
There is an urgent need for clean water in
Vietnam, especially in rural areas. Statistics
show that only 11.7% of the rural population
has access to tap water and that 85% of
common diseases in rural areas are attributed
to the use of unhygienic water. A water filter
market in rural areas exists, but there are
not many trusted decentralised clean water
providers. Many rural locations are too remote
for connection to centralised water facilities,
and for others the service is too expensive.
The Inclusive
Business Model
A water supply companydeveloped an
innovative business model related to
the development of decentralised water
purification technology. The mechanism
uses an environmentally friendly and patent-
protected technology and a distribution
network that brings it to low-income markets
at an affordable price.
VBCF Investment
1.43BNVND 28%
of total
investment
Results
The project was terminated by VBCF as the
company failed to fulfil the committed 2nd
and 3rd milestones.

52 53
4. DECENTRALISED UNBAKED
BRICK MACHINE PRODUCTION
Vietnam is undergoing a transition from
traditional construction materials to lower-cost
and environmentally friendly alternatives. The
government has begun to remove traditional
brick kilns while supporting the proliferation
of unbaked bricks.
While there is a growing demand for unbaked
bricks in both the domestic and international
markets, the required production technology
has not previously been developed.
Unbaked bricks in Vietnam are currently
made manually, which means there is low
productivity and high production costs. A huge
potential market exists for the economical
production and distribution of unbaked bricks.
The Inclusive
Business Model
A companydeveloped a standardised unbaked
brick machine that it will sell to entrepreneurs
who will use it to make bricks for sale to
consumers. The machine is user friendly and
can product bricks in different sizes that are
suited to the customer’s need. The company
has made inclusivity a core aspect of its
at two points:
1. As producers: The company sells
brick moulding machines to producers
(entrepreneurs and trade groups) that
employ low-income workers.
2. As consumers: Producers sell unbaked
bricks to low-income people for an
affordable price.
VBCF Investment
222.7MVND 30%
of total
investment
Results
The project was terminated due to
incompliance with VBCF procedures.
5. WATERPROOF LIGHTING FOR
OFF-SEASON DRAGON FRUIT
FARMING
Dragon fruit producers in the southern
provinces of Vietnam are increasingly using
electric lighting to enable production during
the off-season. However, the use of 60-75w
incandescent bulbs for this practice has
drastically increased power consumption and
is harmful to the national power grid.
It is estimated that millions of energy efficient
light bulbs are needed for off-season dragon
fruit production in Vietnam. Small farmers
who use incandescent bulbs and own less
than 1 ha of farmland represent more than
60% of this market need and would
benefit most from a high quality and low
priced alternative.
The Inclusive
Business Model
A leading lighting company in Vietnam
developed a compact bulb specifically for
dragon fruit farming. It is energy efficient,
waterproof, and certified by international
standard IP65.
The IB project engages low-income dragon
fruit farmers as their primary customers. These
farmers benefitfrom a marketing programme
that aims to educate farmers to use the
products in farming dragon fruits, ultimately,
increased productivity during the off-season
and improved income.
Results
This project was terminated due to delays
in implementation.

56 57
Summary
The 16 completed projects were all aligned
with VBCF mandates and met most of the key
performance indicators at the beneficiary,
business and environment levels, as well as
being scalable and sustainable.
At the business level, companies also
benefitted from enhanced project
management skills and the opportunity to
expand production and processing facilities.
When farmers were involved in the model, as
well as increased income, they learned new
skills and farming practices and benefitted
from improved cooperation with other farmers
and access to credit and quality inputs.
Tangible systemic changes were evident in
many of the projects. This included changes
in farming and fishing practices, access to and
use of basic goods and services, and changes
to market systems.
VBCF’s role extended beyond financing:
among other things, their support helped
shape project design, facilitated equal access
to credit, enhanced product design, helped
commercialise products and improve project
management skills.
Importantly, VBCF helped and incentivised
all projects to engage low-income people
in the value chain of their companies. For
example, in the agricultural portfolio, farmers
were engaged as suppliersand incentivised
with funding, seedlings, inputs, technologies,
etc. When low-income people were buyers
or users of services and goods provided, as
was the case in both the basic services and
infrastructure portfolio and the low carbon
growth portfolio, VBCF offered co-funding
to share risks with companies in their
development of goods and services targeting
low-income users and buyers.

58 59
Changes and Outcomes
The impact of the VBCF has far exceeded expectations. Nearly 11,000 people have new jobs,
including over 8,000 LIP; 262,469 people have seen increases in their incomes, including
166,518 LIP; and over 5 million people have gained access to basic goods and services,
including 4 million LIP.
IMPACT RESULTS ACHIEVED UNTIL SEPTEMBER 2015
10,899 243,949 5.7million 6million
467.4
5000
2,786
BILLION
112.9
BILLION
VBCF
INVESTMENT
116
3.3M (55%)
3m (52%)123,715 (51%)
4,263 (39%)
NEW JOBS PEOPLE -
INCOME
INCREASE
PEOPLE -
ACCESS TO
GOODS
SERVICES
DFID Targets Female Percentage %
VND
INVESTMENT
COMPOSITION
PEOPLE -
CREATED
SAVINGS
VND SALES
billion
4.2
million
LIP
157,570
LIP
LIP
4
million
0,06
0,2
8,224
LIP
AT THE BENEFICIARY LEVEL
The largest number of new jobs and highest
additional income was created in the
agriculture portfolio. VBCF funded IB projects
provided poor and ethnic minority farmers
with a way to improve their livelihoods
sustainably. Thanks to training, technical
advice and supply of quality inputs, in most
cases, farmers’ income increased.
Although the number of jobs created was not
as high in the basic service and infrastructure
portfolio, these projects provided access to
goods and services to a substantial number
of people and, in some cases, a significant
number of working days were created for
seasonal workers. For example, 10,440
working days created for seasonal workers
for land clearance and installation of a pipe
network by the Howaco project.
The low carbon growth portfolio provided
users with more choices to select products
and goods that reduce energy costs while
preserving the environment.
AT COMPANY LEVEL
Project management tools and knowledge
provided by VBCF proved extremely useful
for the management of the IB project and
also for business operations in the longer
term. Capacity of the managers and staff who
worked closely with VBCF was also found to
be improved.
“It is interesting to witness the
improvement in capacity of my staff.
This is an unexpected outcome for the
company. My staff is now applying what
they had learnt from VBCF colleagues in
their daily work. I believe that as they
understand the tools and work on VBCF
requirements, they have become master of
what they are doing now.”
Director of TraphacoSapa
Most firms achieved brand building through
increased awareness and sales. This was
supported by positive recognition and
enhanced credibility among communities and
local authorities.
All companies gained valuable experience
working with LIP as suppliers and users
and developed models that improved their
sustainable operations.

60 61
AT MARKET AND INDUSTRY
LEVEL (SYSTEMIC CHANGE)
VBCF specifically emphasises the expected
systemic change through the replication of
innovative business models of IB firms and
new market structures in production and
service delivery that benefit more
low-income people.
Several projects across all three portfolio
showed signs of systemic change including
behaviour of farmers, new types of services
available, large outreach, collaborative
management and shared benefit, and policy
endorsement.
Solid systemic change results are evident in
the portfolio, including cases that developed a
robust inclusive ecosystem for their operations
such as Rang Dong, Hai Nam and M-Service.
Many are pioneers and game changers in
their own industries, avoiding the operation
of integrated business models and instead
applying an open approach, leveraging
the capacities of other stakeholders in their
ecosystems, specialising and maximising
efficiencies and outreach.
These cases are the drivers for inspiration
and change which are been expanded and
replicated.

6362
Scalability
The majority (80%) of completed projects
have scaled the IB models either within the
project scope or in other areas/levels or both.
Of the 16 partners, 11 were able to introduce
new products or services and 10 entered
new local consumer markets. To a lesser
extent, they connected with new local
suppliers,export markets, business partners or
investors. Four companies (BioSpring, Rang
Dong, Ecofarm and Howaco) were awarded
extra funding for scaling up activities due to
their good performance. This is a significant
result given the very short project timeline.
Sustainability
There is clear evidence of sustainability for all
16 completed projects. They all have a clear
plan for continuation of the IB model, targeting
new markets, new products or services. Signs
of scalability as mentioned in previous section
are indications of sustainability of the projects.
In September 2015, the VBCF portfolio
companies participated in the first Inclusive
Business Match Making Marketplace in
Vietnam. The inclusive entrepreneurs
had an opportunity to pitch to 12 impact
and commercial investors, which reacted
positively to these potential deals. There are
several on-going investor-investee discussions
which are expected to result in actual
investment agreements and expansion of these
successful inclusive business models.
SCALING UP ACTIVITIES CONDUCTED BY THE 16 COMPANIES
10
20
40
60
80
100
%
New products
or services
New local
suppliers
New local
consumer markets
New export
markets
New business
partners
New investors Imitators
6%
65
24 24
59
29 29
06
Value for Money
In 2014, Ernst Young conducted a Value for
Money assessment of VBCF for the period 1st
October 2012 to 31st March 2014.
It was assessed against the “4Es” of the Value
for Money Framework defined by DFID, based
on surveyed samples and data analysis.
THE 4ES
Economy Efficiency
Are inputs of appropriate quality
being bought at the right price?
How well does the project
convert inputs into outputs?
Effectiveness
How well are the outputs achieving
the desired outcome?
Equity
Are the development results targeted at
the poorest and do they include
targeting of women and girls?
VBCF was rated at 4.5 out of 5. This means the project has maintained effective mechanisms,
processes and capability to monitor the project.
IN ITS ANNUAL PERFORMANCE REVIEW, 2015, DFID AGREED THE
FUND HAD “EXCEEDED TARGETS”.

64 65
Additionality: mid-2014
It is important to try and assess how much of
the observed impact can be attributed solely
to VBCF activities. One approach to doing this
is through the concept of additionality.
This is difficult to measure: it is not enough
to compare the situation at the start with the
situation after the intervention as that does not
take into account other potential influences
on the outcomes. Comparison companies
therefore need to be identified and in the
case of VBCF, an aggregate, programme-level
approach was used.
Six partner companies and 13 companies that
applied but were not successful were selected
at random. Conclusions were drawn based
on the partner company’s self-report on what
would have happened if they had not been
funded, comparison between the two groups,
case studies, interviews with VBCF staff and
further analysis.
“Without this funding it would be
considerably harder for us to bring the
products to the market and it would take
much longer for our company to grow.”
CEO, BioSpring
RESULTS
Overall, VBCF as an organization and through
its programme, demonstrated various forms
of additionality. There were positive as well
as less positive aspects of this additionality.
Although this assessment did not quantify
the net additionality the evidence suggest
that on the whole VBCF created net positive
additionality.
Its strongest contribution to additionality was
probably in the form of financial and agency
additionality, and from subsidising risk and
encouraging innovation. The systemic changes
that will result from this programme will only
be observed in its full spectrum in the future.
The weakest contribution to additionality from
VBCF is probably the displacement it may
have caused. Since creating additionality
is one amongst other goals for VBCF, its
performance on this aspect seems sufficient.
Whether it should have placed more or less
weight on additionality with respect to other
goals is a larger debate to be had.
Applying the concept of additionality through
every stage of the programme would help
create more of it. Making it a part of processes
of planning, establishing criteria and targets,
selecting projects, monitoring the portfolio
and finally assessing impact, allows for a more
holistic and integrated approach to creating
and measuring additionality.
Additionality = The total value
created that would not have
been created without VBCF
Low Moderate High VeryHigh
SOURCEOF
ADDITIONALITY
FINANCIAL
WILLINGNESS
TO IMPLEMENT
SCALE
SCOPE
TIME
DISPLACEMENT
RISK AND
INNOVATION
AGENCY
Relative level of additionality

6766
Lessons Learned
1. A large part of the success of VBCF was
due to having a capable independent
investment panel in place.
2. The governance structure employed
proved to be much more effective than
VCF-M4P2. Public Officers tend to be
risk adverse, contradicting the nature
of a Challenge Fund, so processes were
often distant from what is required by
challenge funds and low in
risk appetite.
3. Many businesses were unaware or
sceptical about the funding opportunity.
Directly approaching potential partners
was hugely successful, increasing both
the quality and quantity of applications.
4. Challenge funds of short duration need
to set lower impact and outcome targets
and select innovations that can be
realised within a shorter timeframe.
5. The main barriers businesses need
to overcome in order to generate and
implement innovative and inclusive
solutions are skills, capacities, funding,
BoP knowledge and access to markets.
6. Challenge funds need to be more than
a fund manager and should equip
themselves with sector specific expertise
to support the IB firms if needed.
7. Key factors for project success are
business size and the presence of a
“champion” within the company who
commits to the task and is an advocate
for change.
8. Major barriers during implementation:
a. Mis-timed calls with short deadlines
limited the number of quality
applications received
b. Underestimating the time required and
complications to be faced to obtain
licenses, land clearance, etc.
c. Non business friendly procedures
d. Enforcement of Intellectual property is
not optimal, so confidentiality and low
profile must be a valid alternative
e. Climate disasters occur
f. Lack of specialised service providers
g. Non compliance with procedures
9. Challenge Funds can deliver systemic
impact if there is a solid market systems
analysis and the challenges are
well defined.
10. For systemic change:
a. Large/medium companies should be
prioritised
•• 40% of partners were large
enterprises
b. Time is required
•• The VBCF ran for only three years
c. An ecosystem perspective must be
adopted
•• Different actors must be engaged

6968
Conclusion
The results from the VBCF
programme have been positive but
limited, as the programme only ran
for three years and and due to its
limited resources could only support
some companies. With hundreds
of thousands of entrepreneurs in
Vietnam, and a new generation
that are not only interested in
maximising profit but also want to
have a positive impact on society
and the environment, the scope
for businesses to get involved in
Inclusive Business is still huge.

7170
The Final Word
“The outcomes of the Vietnam Business Challenge Fund are very much in
line with the efforts to facilitate more sustainable and equitable growth by
the Government and Private Sector organizations of Vietnam. Following
the success of the Inclusive Business models funded by VBCF, we would
like to share the potential to grow of these models, as they are pivotal for
sustainable development and poverty reduction. We want to get other
people interested in it: government, other donors and a wider range
of private sector partners. We hope the donors will have more similar
Challenge Funds. We also hope that the models supported by the VBCF
will inspire other businesses to do inclusive businesses. Together, we will
deliver at scale and unleash the potential of the private sector in ways that
haven’t been seen before in Vietnam”
- Ann Freckleton -
Head of UK Department for International Development in Vietnam

72
c/o SNV Vietnam Office
3rd Floor, Building D
La Thanh Hotel
218 Doi Can Street
Hanoi, Vietnam
Tel +84 (0) 4 3846 3791
Fax +84 (0) 4 3846 3794
Website www.vbcf.org.vn

VBCF Final report_EN

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