An Duong Craft Cooperative provides jobs and vocational training for women who are disabled, poor or HIV-positive in Vietnam's third largest city, Haiphong. Unemployment is high and job choices limited for the city's women and 27,000 disabled residents, so the salaries and training An Duong has given its 500 current and former employees have often provided a significant boost to their family incomes and social status.

Founded in 2004, this social enterprise produces traditional handicrafts, furniture and fashion for the domestic and export markets. An Duong's revenue reached £113,000 in 2012, up 38% year-on-year, and turnover is expected to reach £180,000 in 2015. As part of its growth strategy, it plans to invest £108,000 to build a new factory and retail stores, train workers, and build housing for its disabled staff. It can cover 40% of this total expenditure but seeks investment funding to cover the balance.

The challenge An Duong faces is how and where to obtain such funding. In this, it is not alone. All the social enterprises that participated in a recent investment needs survey will seek external capital in the next three years, but 95% believe that securing investment will be a challenge. Conducted by Centre for Social Initiatives Promotion (CSIP), Vietnam's leading social enterprise intermediary, and LGT Venture Philanthropy, a Lichtenstein-based social investor, the survey found a number of barriers to securing investment. These include the modest amount of external funding sought by Vietnamese social enterprises, which falls well below the USD $1m minimum threshold that most impact investors apply (given the cost of due diligence and legal fees). Other reasons include uncertainty among social enterprises about available funding sources, funding requirements, and standards for financial statements and operation plans.

Seeking to create a more favourable investment environment and connect successful social entrepreneurs with investors, CSIP Vietnam, British Council and Central Institute for Economic Management (under Vietnam's Ministry of Planning and Investment) co-organised Vietnam's first Social Investment Forum in late August, in partnership with Vietnam Chamber of Commerce and Industry, LGT Venture Philanthropy and several intermediary organisations. The event drew over 150 policy-makers, investors, social entrepreneurs and representatives from aid agencies and intermediary organisations.

Participants heard that social investment, much like the social enterprise movement, is in its early stages in Vietnam. In 2012, social investment totalled a mere USD $2m and there were only 200 self-identified social enterprises and another 165,000 organisations which could become social enterprises. This ambiguity in part reflects the absence of a legal structure in Vietnam for social enterprises, so many organisations that could be deemed social enterprises self-identify as either charities or businesses. Like early stage social enterprises around the world, most social enterprises in Vietnam depend on grants, personal loans and then income to get their businesses up and running. But as they mature and look to the future, they increasingly seek out investment capital.

"The participation of high level stakeholders from different institutions, particularly government, investors, and international aid agencies, is an indication of the powerful role that social investment could play in addressing entrenched social problems," said Oanh Pham, the founder and chief executive of CSIP Vietnam. According to an social enterprise research report conducted by the British Council and several partners (Social Enterprise in Vietnam: Concept, Context and Policies, 2012), 28% of Vietnam's population of 88 million is 'in need' (defined as 'poor households, people with disabilities, children in special circumstances, former prisoners, people living with HIV/ AIDS, and the elderly'). And there are a number of sectors which are ripe for social enterprise solutions, including health care, waste recycling, pollution, sustainable energy, education, and cultural preservation.

Meanwhile, Vietnam is emerging from its longest spell of slow growth since its landmark economic reforms of the 1980s. Government has imposed fiscal tightening at a time of declining grants from international donors who have been shifting resources to poorer countries ever since Vietnam became a middle income country in 2010. Traditional NGOs and community development projects are struggling to make up for the aid shortfall, and the state recognises that it cannot solve all social problems. Increasingly, therefore, social enterprises are seen as a model that suits the economic and social context because they are sustainable, tackle social problems and foster economic growth.

The Social Investment Forum made a number of recommendations that will sound familiar to veterans of the UK social enterprise movement. Speakers called for the establishment of a legal structure for social enterprise similar to the UK's CIC (Community Interest Company), for tax relief to attract investors, and for procurement policies that would incorporate and value social impact (thereby making it easier for social enterprises to win public contracts to deliver services). Participants also spoke of the difficulty of measuring social impact and outlined the skills that Vietnamese social enterprises need to develop to meet investor requirements.

"The event generated a number of recommendations to foster the healthy expansion of the Vietnamese social investment market over the next five years," said Bao Cao, assistant director of British Council Vietnam. She added, "It also illustrated the fact that countries like Vietnam don't have to reinvent the wheel – they are learning from the successes and failures of other countries, notably the UK which is seen to have one of the world's most fertile environments for social enterprise and social investment."

Dr Mairi Mackay, who heads the British Council's nine-country social enterprise programme in East Asia, noted that Vietnam is one of four Asian markets in which the British Council is launching social investment programmes this year.

She said: "The social enterprise movement is at a different stages of development in different countries, but across the region there is a growing number of established social enterprises like An Duong with the capacity to absorb mezzanine investment. There is also interest among investors in investing for social impact as well as profit.

"We've trained social entrepreneurs and advised policy makers on creating supportive eco-systems since 2009 and the conditions are now propitious to more actively promote social investment in the region by drawing on UK expertise."

The launch of these British Council initiatives, Mackay noted, will support British Government efforts, announced by David Cameron at the G8 Social Impact Investment Forum, to promote social investment around the world and make London the global hub for social investment. These efforts will be supported by a new Social Impact Investment Taskforce and a Global Learning Exchange to share best practice on social investment.

By Adam Pillsbury with content managed by the British Council - The Guardian - October 7, 2013