To support the private sector in Vietnam to develop innovative, inclusive business models, the Vietnam Business Challenge Fund (VBCF) will focus on supporting three fields defined as vital to sustainable development and growth of inclusive business, namely agriculture, low-carbon growth, and small-scale infrastructure and basic services. VBCF challenges businesses to put forth innovative business solutions which can generate profits and address challenges in the three abovementioned fields. Joining VBCF, low-income people will have the opportunity to increase the value of their products not only in the domestic market, but also in foreign markets.
In fact, the outstanding economic achievements have turned Vietnam into a middle-income country, but the income gap and inequality are increasingly pressing challenges. Agriculture plays a very important role in the economy as it accounts for 20 percent of the country’s GDP, performs an average annual growth rate of 4 percent in the 2007 - 2011 period, and generate jobs for nearly a half of Vietnam's labour force who, however, benefit very little from this sector. A lot of Vietnamese people, especially in the countryside, do not have access to market opportunities, income and basic services. Therefore, supporting low-income people, especially those involved in agriculture, becomes very important in the current difficult period.
In addition, existing challenges in Vietnam's agricultural sector are slow restructuring and the low income of farmers. Particularly, the biggest challenge is the competitiveness of agricultural commodities when there is a shift from quantity to quality because agricultural production is typically segmented, vulnerable and dependent on direct supports. The main focus is to increase the value of agricultural products and bring benefits to farmers.
VBCF has deployed Inclusive Business initiatives to generate profit and attract the participation of people into the business chain and benefit from economic growth. The purpose of this innovative approach is to raise incomes and the welfare of low-income people while creating growth, sustainable development and other benefits for businesses.
In agriculture, people have the opportunity to improve quality and increase crop productivity, enhance the sustainability of agricultural production and accessibility to international markets by applying environment-friendly production methods and technological standards, increase competitiveness by creating value-added products to make long term differences for them. VBCF will award grants to provide partial technical, consulting and financial support, up to 49 per cent of accepted proposal budgets.
Ms Fiona Louise Lappin, Head of the Department for International Development (DFID) in Vietnam, said VBCF can help private enterprises turn their ambitions into real business initiatives. The fund also creates job opportunities and raises income for the poor as it states in the slogan “VBCF: Rich for business, good for community." Development benefits include employment, income increase and access to basic goods and services for low-income people, because accepted agricultural projects must prove the ability to create added values for the agricultural product value chain and bring benefits to society.
Previously, the first Vietnam Challenge Fund (VCF) was established and has showed the great creativity and innovation of the private sector in Vietnam. The fund has supported 11 projects, seven of which have been implemented successfully. The initial results show that 16,900 people have improved incomes and livelihoods and more than 2,100 jobs have been created by VCF-funded projects. The impacts can be even greater if this model continues to be expanded and implemented. VFCF-funded projects are expected to bring better results.
Speaking of practical results that VBCF will generate, VBCF Managing Director Javier Ayala said VBCF will focus on three key areas of Vietnam’s sustainable development and pro-poor growth, namely agriculture, low-carbon growth, and small-scale infrastructure and basic services. The projects will create stable jobs and income for people, protect the natural environment and increase the value of products. Especially, if successful, these agricultural products can be exported to many foreign markets, even high standard ones. These will help assert the quality and brand name of Vietnamese agricultural products. He also stressed that the fund’s activities will help transit the Vietnamese rural market from an agriculture-based economy to an economy based on value added products.
VBCF has organised the second phase of investment proposals in some provinces and cities such as Ho Chi Minh City, Dak Lak, Hue, Nam Dinh and Tuyen Quang. The total maximum pledged capital for the two phases is US$8 million. In the first phase, 150 companies have submitted proposals and 14 proposals are being considered for the final round.
VBCF was officially established in November 2012. The fund is financed by the British Government via the Department for International Development (DFID) and is administered by SNV Netherlands Development Organisation, an international organisation of sustainable business models for low-income people. VBCF is supported by the Vietnam Chamber of Commerce and Industry (VCCI), the Vietnam Business Council for Sustainable Development (VBCSD), and the Spark Business Development Centre (SPARK Centre).
Thu Ha
Vietnamese
