Vietnam Climate Innovation Center: CIC

A Business Plan for the financing and implementation of a CIC in

Vietnam.

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To cite this publication: Climate Innovation Center Business Plan: Vietnam. An infoDev publication, April 2012. Available at: www.infoDev.org/climate

Cover photo: Anthony Lambkin

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About infoDev infoDev is a global partnership program in the Financial and Private Sector Development Network of the World Bank Group. Its mission is to enable innovative entrepreneurship for sustainable, inclusive growth and employment. infoDev manages a global network which includes over 400 business incubators in more than 107 developing countries. This network has assisted more than 25,000 companies and helped create close to 250,000 jobs worldwide. infoDev‟s value-add is building global entrepreneurial and SME communities of practice, sharing best practices and facilitating collaboration.

About AusAID The Australian Agency for International Development (AusAID) is an Executive Agency within the Foreign Affairs and Trade portfolio and reports to the Minister for Foreign Affairs.

AusAID supports developing countries in adapting to climate change, including the poor in least developed states and small island developing states. It also assists developing countries with high carbon emissions to pursue cleaner development.

About the Ministry for Foreign Affairs of Finland In its development policy, Finland emphasizes the rule of law, democracy, human rights and sustainable development. Poverty reduction and the achievement of the UN Millennium Development Goals (MDGs), placing an emphasis on partner countries‟ needs and ownership, are the first priorities of the development policy.

Finland builds on its strengths in the educational sector, health promotion, communications and environmental technology, and good governance to promote education, decent work, reducing youth unemployment and improving the status of women and children.

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Contents

1.0 Executive Summary ...... 6 1.1 Context ...... 6 1.2 Barriers to Climate Innovation in Vietnam ...... 7 1.3 Climate Innovation Center (CIC) ...... 7 1.4 CIC Programs ...... 8 1.5 Operational Plan ...... 9 1.6 Indicative Impact and Results ...... 10 1.7 Financial Plan ...... 10

2.0 Climate Innovation Centers ...... 11 2.1 infoDev Goals ...... 11 2.2 The Climate Innovation Challenge ...... 11 2.3 Gaps in Existing Initiatives and Institutions ...... 11 2.4 Incubators, Accelerators and Innovation Centers ...... 12 2.5 Climate Innovation Centers ...... 13

3.0 Climate Technology Market Landscape: Vietnam ...... 17 3.1 Defining Climate Technologies in the Vietnamese Context ...... 17 3.2 Technology Prioritization ...... 20 3.3 Stakeholder Analysis ...... 34

4.0 Climate Innovation Analysis: Vietnam ...... 48 4.1 Gaps along the Value Chain ...... 48 4.2 Technology Gaps ...... 49 4.3 Company Gaps ...... 50 4.4 Finance Gaps ...... 51 4.5 Market Gaps ...... 52 4.6 Policy Gaps ...... 53

5.0 Vietnam Climate Innovation Center Model ...... 54 5.1 Program Tracks ...... 56

6.0 Operational Plan ...... 62 6.1 Project Timeline ...... 62 6.2 Governance ...... 63 6.3 CIC Host Selection ...... 63

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6.4 Fund Manager ...... 65 6.5 infoDev ...... 70 6.6 Donors ...... 71 6.7 Safeguards ...... 72 6.8 Other Issues to be Addressed during Implementation ...... 73 6.9 Exit Strategy ...... 73 6.10 East Asia Regional Engagement ...... 74 6.11 Organizational Structure ...... 74

7.0 Financial Plan ...... 77 7.1 Budget for Years 1 to 5 ...... 77 7.2 Sustainability ...... 79 7.3 Co-investment and leverage ...... 82 7.4 Fundraising Plan ...... 83 7.5 Second round funding: Years 5+ ...... 85 7.6 Additional Funding ...... 85 7.7 Global Network Participation: ...... 86

8.0 Indicative Impact and Results ...... 87 8.1 Highlights ...... 87 8.2 Spillover Effects ...... 87 8.3 Monitoring and Evaluation ...... 88 8.4 Indicative Results Framework ...... 89

9.0 Risks ...... 92

10.0 Conclusion ...... 95

11.0 Stakeholder Support ...... 96

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1.0 Executive Summary infoDev is establishing Climate Innovation Centers (CICs) in a number of developing countries. CICs provide a country-driven approach to climate change, thereby assisting countries in achieving their green growth objectives. Each Center provides early-stage financing and other services to enable local enterprises to pro-actively and profitably develop innovative climate technology solutions that meet local needs. This not only helps a country address climate change challenges, but also creates economic development, job creation and industrial competitiveness.

This business plan outlines a required investment of USD 17.95 million to establish a CIC in Vietnam over a five-year period which includes implementation, launch and operations. The CIC will deliver technology commercialization funding to up to 40 climate technology entrepreneurs and equity investments to 25 companies, generating more than 3,500 direct and indirect jobs after 5 years and over 13,000 long-term jobs. With investment returning a 12% IRR, the Center aims to cover 71% of its yearly operating costs and 100% of yearly investment costs after 7 years. The CIC will be aligned with Vietnam‟s National Strategy on Climate Change as well as the Green Growth Strategy anticipated in 2012.

1.1 Context Vietnam is characterized by the following challenges, which intersect directly with the global climate change and green growth agendas. These issues underscore the critical need to stimulate climate innovation and promote new local climate technology industries in Vietnam:

. Vietnam is one of the world‟s most vulnerable countries to the effects of climate change with its markedly rising sea levels and fluctuating rainfall, which include destructive typhoons. . The national economy remains dependent on agriculture, which provides a quarter of export revenue and 70% of employment. . Vietnam is expected to become a net oil importer by 2015, given that its energy consumption has tripled in the last decade. . Vietnam‟s economic development requires expansion of industrial activities. Vietnam needs to boost its overall annual labor productivity growth by 40% (from 4.1% to 6.4%) in order to sustain the government target of 7-8% annual growth by 2020.

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1.2 Barriers to Climate Innovation in Vietnam Over a 6-month process, infoDev engaged with over 200 local climate technology stakeholders to evaluate five core areas and identify the major gaps hampering climate innovation in Vietnam:

. Technology: The main perceived barrier to the development of suitable climate technologies in Vietnam is the lack of coordination between research and industry. Secondary gaps concern the availability and quality of information, as well as the ability to test technologies for commercial application. . Company: Prospective innovators view financial support as the most pressing need, followed by human resource development. . Finance: Predominant gaps involve access to flexible, early-stage risk capital. Overall, prospective investors in Vietnam would benefit from a greater understanding of how to evaluate opportunities in the climate sector. . Market: There is a need for stronger demand generation and consumer confidence to support climate innovation. In a developing country such as Vietnam, price is also a barrier to mass market adoption. . Policy: Limited and uncoordinated policy in Vietnam inhibits the creation and adoption of new technologies; additionally, more robust regulatory support is needed around access to finance and quality standards.

1.3 Climate Innovation Center (CIC) Over the course of 6 months, infoDev engaged with Vietnamese stakeholders from relevant sectors and backgrounds. They represented R&D, universities, incubators, industry, government, entrepreneurs, investors, NGOs and international institutions operating in Vietnam. This multidisciplinary group gave a wealth of feedback and inputs which translated into the outcomes of the business plan. The process also confirmed that Vietnam has the required innovation capabilities to deliver the CIC‟s programs, would significantly benefit from hosting the Center, and has the market size to attract adequate deal-flow and demand for the Center‟s financing and services. infoDev identified the most critical gaps in climate innovation across several areas: technology, company, finance, markets and policy. Energy efficiency and sustainable agribusiness were identified as priority technologies in which the Vietnam CIC should develop core competencies, followed by technologies for adaptation, transportation technologies, and water management and purification. Based on these, the mission and goals of the CIC were designed:

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Vietnam CIC Mission

The Vietnam Climate Innovation Center will provide a targeted suite of early-stage financing, technology commercialization, business development and capacity building services to Vietnamese private sector innovators. The Center will work to incubate, commercialize and grow technology solutions that support Vietnam's low-carbon development, resiliency and adaptation to climate change while creating jobs and promoting domestic competitiveness.

Vietnam CIC Core Objectives 1. Providing catalytic seed-stage risk capital to local climate technology companies and assisting companies to secure additional financing through investor match-making and facilitation of debt financing. 2. Building a pipeline of high-impact climate solutions by supporting the localization, commercialization and transfer of relevant technologies through access to innovation grants, industry partnerships and facility providers.

3. Supporting the accelerated growth of climate ventures and entrepreneurial capacity by providing a holistic set of business development services, mentoring and training programs.

4. Identifying and developing local and international market opportunities for new climate solutions through providing key sectoral information, supporting policy transformation and creating linkages with regional and international markets.

1.4 CIC Programs The CIC‟s services and programs can be categorized as follows. It is important to note that leveraging and coordinating existing institutions and initiatives in Vietnam will form a key component of the CIC‟s approach to implementation and service delivery. Furthermore, the programs and services offered by the CIC only address a subset of the needs identified by private sector innovators during consultations. Navigating complex regulation, business-enabling environments, market and political risks will be outside the scope of the Center. The below programs were those identified through extensive stakeholder consultations and will be ramped up over the life of the program based on demand and impact.

1.4.1 Access to Finance 1.4.2 Technology Commercialization . Providing risk capital through highly flexible . Offering proof-of-concept grants (USD 20-50k) that first-loss equity investments (USD 100K - enable local innovators to demonstrate and scale 750K). This fills the gap between micro-loan their climate technologies and business models. amounts and those offered by existing fund Promoting collaborative industry partnerships, managers. . supported by a comprehensive technology . Catalyzing investment syndication and database (components, sourcing, certifications, debt facilitation between CIC companies costs, user guides, and intellectual property). and private financers, state development banks, and the Vietnamese Diaspora to . Linking local innovators to facility providers for build local investment capacity. prototyping, testing, production and other logistical needs (e.g. office space, equipment).

1.4.3 Venture Acceleration 1.4.4 Market Development

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. Training individuals who are eligible for CIC . Producing market studies, cases and analytical financing on basic business planning and reports on climate technology sectors and financial management, in addition to opportunities at a local, regional and global level. offering a fund for out-sourcing other . Encouraging dialogue between government and advisory services. the private sector to strengthen Vietnam‟s policy . Organizing seminars and university framework around R&D, innovation, green growth, partnerships to promote professional taxation, and exports. development, business . Supporting the growth and establishment of climate administration/entrepreneurship, and sector business associations in Vietnam. aware-ness of climate technology issues. . Networking Vietnam‟s climate innovators to their . Networking SMEs with angel investors, regional and global counterparts by hosting an business mentors, and technical experts at annual CIC Forum and facilitating trade or the national, regional and global levels. capacity-building relationships.

1.5 Operational Plan Programs will be launched and operate over a five-year period. A preparatory implementation phase of 6-9 months will be required for sourcing and selection of (i) a host institution and consortia partners and (ii) a fund manager with the capabilities and capacity to deliver on the CIC business plan. Additional institutional capacity building, expertise and oversight will be provided by infoDev. The implementation and operation of the CIC will include the following key elements:

1.5.1 Governance: The CIC will be housed in a local organization and supported by a consortium of local and international partners. infoDev will manage and oversee implementation including the provision of ongoing technical assistance, performance evaluation and importantly, linking the Center with global level activities.

1.5.2 Fund Management: A fund manager will also be appointed to independently screen, structure deals, make investments, provide relevant technical assistance, and secure additional leverage from private sector co-investors.

1.5.3 Organizational Structure: The CIC management team will require the full-time equivalent of 19 individuals (in a combination of in-house and out-sourced roles) to oversee the center‟s daily operations. In addition, an advisory committee of up to 7 members will support the CIC host organization and facilitate linkages with external bodies.

1.5.4 Implementation Issues: After implementation partners for the CIC, further negotiation will occur to determine matters such as (i) board membership and ownership, (ii) investment structuring and mechanisms, (iv) staff sourcing, (v) intellectual property agreements, and (vi) performance metrics.

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1.5.5 Exit strategy: After year 5, the CIC will seek direct financing and in-kind contributions from local stakeholders to supplement its investment revenues. The Government of Vietnam and the private sector will assume primary funding responsibility for the CIC at this time.

1.6 Indicative Impact and Results In carrying out its mission, the Center will measure performance against aggressive impact and outcome targets. A comprehensive results framework will be designed during implementation to establish a baseline and actively track outcomes. The CIC will support 65 climate technology ventures, generating 3,500 direct and indirect jobs at a cost of approximately USD 5,000 per job and close to 15,000 jobs within 10 years costing about USD 1,200 per job. The total economic impact of these firms is projected at USD 150+ million beyond 10 years.

The accelerated growth of CIC-supported technologies will also deliver social, economic and environmental impacts. These include carbon mitigation (1.3m tCO2), access to renewable or more efficient sources of energy (190 MW installed capacity), access to water (391m kL) and increased agricultural efficiency. Overall, the CIC will empower close to 1 million Vietnamese, including women, youth, and the poor, to be less vulnerable to climate change.

1.7 Financial Plan The USD 17.95 million budget for the establishment of the CIC over a five-year period will include 53% for financing, 31% for programs, and 15% for staff and central costs. The Center is expected to cover at least 70% of its costs by the end of Year 7, including full replenishment of the annual investment fund.

At this level of funding, investors will see concrete economic, environmental and social returns as outlined above. Through private sector co-financing, more than 8 times leverage will be achieved for each donor contribution. Further, investors will benefit from:

1. Exposure to an on-going pipeline of climate technology innovations. 2. Considerable knowledge generated and disseminated through the CIC‟s market information, policy best-practice, analytical products and global benchmarking. 3. Access to a complete local network of CIC partners and stakeholders. 4. A primary point of contact for establishing international linkages that can facilitate technology transfer, as well as trade and business-to-business opportunities in Vietnam.

These are the types of long-term impacts in Vietnam that a well-resourced and holistic institution like the CIC can provide.

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2.0 Climate Innovation Centers

Over an six-month period, infoDev assessed the feasibility of establishing a locally owned and operated Climate Innovation Center (CIC) in Vietnam through an intensive stakeholder engagement process. The process concluded in April 2012 with over 200 stakeholders from varied backgrounds and experiences providing input into the conceptualization, design and development of a CIC in Vietnam.

2.1 infoDev Goals 1. Assess the feasibility for establishing a CIC in Vietnam and develop a full business plan that addresses market failures preventing domestic innovation in climate technologies. 2. Based on the business plan, mobilize investment to implement the CIC to execute the Center‟s programs, services and financing via suitable in-country partner institutions/consortia. 3. Network the Vietnam CIC regionally and internationally to promote technology collaboration, business linkages and support local and international trade opportunities for Vietnam‟s climate technology sector.

2.2 The Climate Innovation Challenge New technologies are essential to reduce the long-term cost of climate change and achieve Green Growth. Developing countries want to build their own capacity to innovate to (i) ensure energy security and increased energy access, (ii) address climate change mitigation and adaptation and (iii) create competitive domestic industries in clean tech for job creation and other benefits.

However, barriers to innovation in climate sectors are especially high and even more pronounced in developing countries. These barriers often include gaps in appropriate financing, lagging technical and business capabilities, entrepreneurial and human capacity constraints and uncertain regulatory environments. Moreover, many developing countries lack the public and private sector bodies that support innovation, and as a result support for locally appropriate climate innovation is often weak or absent.

2.3 Gaps in Existing Initiatives and Institutions infoDev commissioned a report by Bloomberg New Energy Finance that surveyed and analyzed hundreds of government, private and public-private initiatives that support climate and clean energy innovation. These included centers of excellence, seed funds, technology accelerators, business incubators, advisory centers and other programs. Of the 500 that were analyzed, 70

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were mostly focused on climate technologies and only 25 dedicated all of their operations to climate – a small number relative to the gravity of the challenges and immense market opportunities.

The report found gaps in the existing institutions which prevented them from addressing the broad range of barriers associated with climate innovation. Some focused only on financing or business advisory while others concentrated efforts solely on technical development – few advocated policy reform or standards. Only a few institutions addressed most barriers including China‟s Baoding New & High Tech Industrial Development Zone, China, The UK‟s Carbon Trust and Brazil‟s CIETEC at the University of Sao Paulo. Geographic coverage was also sporadic with a majority of centers located in either in developed or highly industrialized developing countries – Locations of institutions supporting climate innovation few were located in Africa.

2.4 Incubators, Accelerators and Innovation Centers infoDev supports innovation in developing countries through facilitating a global network of over 400 business incubators. These incubators act as hubs to aggregate financing and shared services to accelerate innovative companies, helping them overcome market barriers that are particularly high in developing countries. Experience has shown that these centers dramatically increase the survival rate of new enterprises with over 75% being operational after 3 years of exiting the incubator.

As a policy tool, incubators are a highly effective form of public spending, resulting in lower long- term employment costs when compared with infrastructure projects1. Incubation experience also has shown that for every USD 1 of government subsidy, a Return on Investment (ROI) of USD 30 tax revenue can be generated in the long-term through corporate and income taxes from the spun out companies2. With infoDev‟s business incubator network expanding to over 400 centers in more than 100 developing countries, supporting over 20,000 enterprises and creating 250,000 jobs, such programs form an important component of developing country economic growth and employment strategies.

1 Grant Thorton Report on Incubation: Source: EDA 2 NBIA (National Business Incubation Association) data

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Brazil’s CIETEC

CIETEC, or Centro de Inovacao, Empreendedorismo e Tecnologia, is the largest incubator in Latin America and one of the most successful in Brazil. Although it covers a range of sectors, CIETEC‟s focus has shifted recently, and now hosts some 20 climate technology companies, more than any other incubator in Latin America. With many renewable energy success stories in its portfolio - including wind, hydro, solar hot water and fuel cells - CIETEC offers valuable insights for the Climate Innovation Center in Vietnam.

Founded in 1998 with funding from government microfinance program SEBRAE, CIETEC is a „full-service‟ incubator that provides assistance to companies at all stages of innovation - from R&D through demonstration and deployment to diffusion and transfer. The center provides incubatees with office space, laboratory use, and consultancy services at heavily discounted prices. It also helps to arrange financing from public and private sources, and is thinking about creating its own investment fund.

The CIETEC model is proving successful on a wide range of measures. In its first decade, the number of companies under incubation has grown from 15 to 140. CIETEC also helps its companies secure private sector equity investment – rising to USD5M in the past few years. CIETEC‟s success rate is also impressive: while 75% of Brazilian start-ups fail within three years, for CIETEC companies, that rate is just 30%. The center‟s work also represents value for money: according to its 2008 annual report, for every USD 1 the government furnished CIETEC companies, it received USD 3.40 in taxes. A total of 90 innovative companies have already graduated from CIETEC, of which some 30 continue to be associated with the center, achieving revenues of USD12M per year and creating thousands of jobs.

2.5 Climate Innovation Centers As multilateral, national and local solutions are being structured to address the issue of climate technologies, infoDev‟s Climate Technology Program is rolling out Climate Innovation Centers (CICs) in a number of countries in Africa, South East Asia and the Caribbean and assisting developing countries achieve their green growth objectives. CICs support innovation by offering a full suite of financing and capacity building services to technologists, entrepreneurs, and SMEs that address challenges to starting and scaling their climate technology ventures. In addition to incubating promising start-ups, CICs provide dedicated proof-of-concept and seed funds to entrepreneurs to bridge local funding gaps.

In parallel to investments, CICs also provide business advisory and training services, market intelligence products, access to product testing facilities, and government engagement on policy. In this way, a Center acts as a national focal point, coordinating efforts in promoting the growth of locally relevant climate sectors. CICs also provide a platform to create international business-to-business linkages, enhance knowledge sharing and facilitate trade.

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Services provided by Climate Innovation Centers

The Kenya Climate Innovation Center (CIC)

The Kenya Climate Innovation Center (CIC) will provide an integrated set of services, activities and programs that leverage and expand existing innovation capacity and support the accelerated scale and deployment of climate technology solutions. In the first five years, the CIC is expected to create more than 70 sustainable climate technology businesses, generating some 4,600 direct and indirect jobs. Over the next decade, it is estimated that 1.74m tCO2 will be mitigated from CIC supported technologies.

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The Kenya CIC will become operational in July 2012. The host selection process included:

. 23 Expressions of Interest with 87 Organizations as Lead or Supporting Partners . Countries: Kenya (49 organizations), Germany, Denmark, UK, USA, Holland, Sweden, Tanzania, Uganda, India, Belgium, South Africa, Finland, Switzerland, Austria . Organizations: Public and Private Universities, Research Institutes, Consultants, Nonprofits, Tech Accelerators, Incubator Associations, Centers of Excellence, Industry Associations. . Strathmore University, PwC, GVEP and KIRDI have been selected for the implementation of the CIC.

Kenya CIC funding breakdown - CIC Revenue Model USD 15.2m $5 CIC Cost 5% SME finance 7% $4

Business advisory 8% $3 Training, Invesment

9% Millions $2 education cost Market 60% $1 11% information Government $0 advisory Revenue Year 1 Year 4 Year 7 Year 10 Networking, trade

2.5.1 Complementarity with Ongoing and Future Programs Each CIC is being designed and developed, leveraging the experiences and expertise of hundreds of local stakeholders representing R&D, academia, entrepreneurs, NGOs, private sectors and host government ministries such as water and energy, environment, commerce, finance and science and technology. This is to ensure that existing local initiatives are complemented and coordinated without duplication. It is also to secure local participation and ownership that will increase the success of the CIC‟s implementation and operations. infoDev is also coordinating efforts at the global level including existing and future programs designed to support climate technology development and deployment. This includes ongoing efforts at the UNFCCC, multilaterals such as The World Bank & IFC and bi-lateral organizations including development partners and donors.

2.5.2 Stakeholder Engagement Process The Center‟s business model and associated services are dependent on, and tailored to, the local market. To identify market needs, opportunities and challenges from a local perspective, infoDev developed a business plan via detailed analysis and an extensive in-country, multi- stakeholder engagement process. Stakeholders were convened for a series of workshops, focus groups, surveys, and interviews to explore the key barriers to climate technology

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commercialization and assist in the development and design of appropriate solutions to overcome barriers. This gaps-needs analysis formed the basis for the Vietnam CIC business model.

November'11: December '11: September '11: October '11: Sector Workshop - Expert Quantitative Local stakeholder mapping and panels & working analysis and identification research groups surveys

March '12: April '12: Focus February '12: In- May '12: Delivery of Development of group on model depth interviews business plan CIC business model design

The flow chart shows the process of the business plan development

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3.0 Climate Technology Market Landscape: Vietnam

3.1 Defining Climate Technologies in the Vietnamese Context In the last quarter century, Vietnam has transformed itself from a war-torn country into one of Asia‟s success stories, with annual per capita growth of 5.3% since 1986. China is the only Asian economy to have grown faster than Vietnam since 2000.

According to UNDP forecasts, Vietnam is one of the five most vulnerable countries to climate change. The country‟s unique attributes and rapid development are causing increased pressure to implement a locally driven, globally responsive climate change strategy.

. In the last 50 years, sea level in Vietnam has risen by 50 cm. Vietnam is a low-lying coastal country whose food supply comes from two deltas: Mekong Delta in the south and Red River delta in the north. If the sea level rises by 1 meter, 40% of the Mekong Delta and 11% of the Red River Delta will be inundated. 20% of Ho Chi Minh City will be underwater, causing an estimated loss of 10% of national GDP3. . Vietnam has 60% of its population working in agriculture and 20% of its export revenue coming from agricultural products4. Agriculture, the livelihood of more than 63 million Vietnamese, will be severely affected by the rise in temperature and changes in rainfall patterns caused by climate change. From 1951-2000, the average annual temperature in Vietnam increased by 0.5 - 0.7 OC5. Rainfall has showed a tendency to increase in the rainy season and decrease in the dry season, leading to more floods and water scarcity. The rise in temperature affects crops and increases the risk of crop diseases and pest plague. The Mekong delta has already been affected by more frequent droughts and saline intrusion caused by rising sea level and reduced river flow during dry season. . Vietnam already suffers 5 to 7 typhoons a year. Increasing frequency of extreme climate events as a result of climate change will take a significant toll on the nation. From 2001-2010, extreme climate events (typhoon, flood, landslide, drought, saline intrusion, etc.) have cost the country 9,500 human lives and approximately 1.5% of GDP each year. 3 . Energy consumption in Vietnam tripled in the last decade6. In the last five years, Vietnam has started to import steam coal and oil products for its energy needs. Though oil is currently its largest source of export revenue, Vietnam is expected to become a net importer by 2015 due

3 Vietnam National Strategy on Climate Change 4 http://www.fao.org/countries/55528/en/vnm/ 5 Vietnam's second national communication to the United Nations Framework Convention on Climate Change. 6 World Bank - Asia Sustainable and Alternative Energy Program – Vietnam Expanding Opportunities for Energy Efficiency March 2010

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to its rapidly rising energy demand. This growing reliance on imports worsens the country‟s chronic trade deficit and is exacerbated by the global context of dwindling fossil fuel supply and increasing energy cost. Meeting Vietnam‟s needs through alternative sources and/or energy efficiency has become vital to sustain the country‟s growth and its competitiveness. In addition, this would reduce emissions to mitigate climate change, generate cost savings, and help to ensure affordable access for the poor. . Emission rate per capita in Vietnam, though relatively low compared to developed countries, is rising rapidly as the country is on a rapid path of urbanization and transitioning to a more manufacturing economy. Between 2020 and 2025, it is expected that 50% of the population

will be living in urban areas.7 The per capita emission rate has increased from 0.3 tons CO2e in

1990 to 1.2 tons CO2e in 2007. The total greenhouse gas emissions in Vietnam in 2000 were

150.9 million tons CO2e and reached an intensity of 4.48 tons of CO2e for every USD 1 million

of GDP. It is forecasted that total emissions will reach about 500 million tons CO2e by 2030.

Two of the main drivers behind Vietnam‟s recent success are its young and low-cost labor force and the upgrading of skills from agriculture into manufacturing and services. However, Vietnamese exports remain concentrated in low-value-added products compared to other countries in the region. In a 2012 report on sustaining Vietnam‟s growth, McKinsey & Company pointed out that Vietnam needs to boost its overall annual labor productivity growth by 40% (from 4.1% to 6.4%) in order to sustain the government target of 7-8% annual growth by 2020. Without this boost, Vietnam‟s 2020 GDP would be 30% lower than the target. The ability to adopt, innovate, and master new technologies is critically needed for the nation‟s next phase of growth.

Climate technology, in particular, would address the country‟s many overlapping challenges. Local climate technology innovation would enable Vietnam to adapt to climate change, mitigate emissions, meet energy needs, boost productivity, maintain competitiveness, reduce the trade deficit and minimize dependence on fossil fuel imports.

Investing in climate technology will also help the country capture more benefits from carbon markets and climate finance. As of June 2012, Vietnam has 283 registered clean development mechanism (CDM) projects. Though only a few of these projects have received money from selling Certified Emission Reductions (CER), Vietnam still ranks third in number of registered projects after China and India. This shows the potential of emission reduction activities in the country. Because Vietnam is not a Least Developed Country, its new CDM projects will not be

7 World Bank: Vietnam Urbanization Review Technical Assistance Report, November 2011

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eligible for European markets after the end of 2012. However, there are new markets being developed around the world, as well as new market mechanisms that would very likely enable companies who invest in climate technology in Vietnam to sell carbon credits and participate in carbon markets.

Climate-specific development finance is another promising sector. In 2009, the Climate Technology Fund approved USD 250 million for Vietnam to co-finance energy efficiency, renewable energy and mass transit projects by ADB, IBRD and the IFC. A number of development partners are working with Vietnam‟s government to develop NAMAs (Nationally Appropriate Mitigation Actions) for the country. These sector-wide emission reduction efforts present a significant funding source and market for climate technology and carbon credits.

Vietnam has demonstrated that it recognizes this multi-faceted potential of climate technologies. The country is developing a Green Growth Strategy that will be issued within 2012; this is a coordinated effort by the central government and various ministries, spearheaded by the Ministry of Planning and Investment. This strategy is emphasized as a key to the country‟s sustainable growth and an important step to restructure the country„s economy. The most recent draft of the strategy proposes that Vietnam decrease energy use per unit of GDP to 3% per year (a 2.5% reduction) and reduce greenhouse gas emissions by 15% by 2020.8 The strategy draft outlines actions to reform the policy and fiscal environment and to create investment flows that reduce greenhouse gas emissions, thereby stimulating green growth as measured by GDP and jobs. The strategy asserts that by 2050, “clean energy and clean technology will be widely used in Vietnam”.

For Vietnam, innovating and restructuring toward a low-carbon economy is for the lives of its citizen and also an obligation to the global community. In March 2012, the Vietnam National Strategy on Climate Change was signed by the Prime Minister. This lays out priority projects to be implemented from 2011-2015, plans for 2016-2025, as well as objectives for 2050 and a long- range vision to 2100. One of the strategy‟s two overall targets is “to develop low-carbon economy to protect and improve the quality of life of Vietnamese people, the security of the nation and its sustainable development in the context of global climate change, and to contribute actively with international community to protect earth's climate system”.

8 Base year: 2010.

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3.2 Technology Prioritization The Vietnam CIC must address the country‟s most pressing concerns, maximize impact, and use its resources efficiently. To this end, it will focus primarily on two priority climate technology sectors: energy efficiency and sustainable agribusiness.

Technology Prioritization Process Prioritized Sectors

1. Energy efficiency 2. Sustainable agribusiness Other important sectors: . Technologies for Evaluation Stakeholder Vietnam's Priorities Criteria Feedback adaptation . Transportation . Water management and purification

The process of prioritization involved three key components:

1. A long-list of almost 50 relevant climate sectors was identified in Vietnam, including key priority areas for the government based on secondary research. 2. The infoDev team consulted local experts to evaluate these 50 sectors against 13 criteria of market opportunity, business viability, and potential impact. See Table 3.2.6 for the detailed evaluation criteria and Annex 2 for full analysis9. 3. Over 130 stakeholders ranked sectors most suitable for the CIC via a quantitative survey.

The weighted average of this process resulted in two focus areas for the Center including energy efficiency and sustainable agribusiness. Other immediate areas of importance for Vietnam included adaptation technologies, transportation and water management and purification. Other areas such as hydro and wind were identified as “already on track”; these sectors were either already attracting enough investment or were not seen as areas were the Vietnamese SME sector could be competitive.

The in-depth consultations with climate sector experts and stakeholders have provided infoDev with clear indicators on which sectors the CIC is most likely to create the greatest positive impact in Vietnam‟s context. These impacts are measured along three dimensions: 1) economic impact 2) greenhouse gas mitigation and climate resiliency impact and 3) social impact.

9 Adapted by infoDev: Nortech

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For emission impacts and economic impacts, the infoDev team cross-checked findings with the Vietnam Second National Communication to the UNFCCC, a quantitative analysis of potential emission savings and cost savings of different sectors. The CIC-identified sectors of priority aligned well with the sectors identified in the national communication as having the most emission reduction potential and lowest cost to mitigate.

The top two priority sectors identified by GHG emissions by sector in 2000 in CO2e stakeholders were energy efficiency and 10% 5% sustainable agriculture. As shown in the Energy 35% Industrial processes chart to the right, agriculture accounted 43% Agriculture for the largest share (43%) of GHG LULUCF emissions in 2000. Energy compares at 35% 7% Waste of GHG emissions for that year; however, it has since overtaken agriculture and will increase faster in 2020 and 2030. Focusing on these sectors would likely result in the largest impact in terms of emission savings.

Greenhouse gas emission by different sectors in Vietnam in 2000 (thousand tons)

Sector CO2 CH2 N2O CO2e Percentage

Energy 45,900.00 308.56 1.27 52,773.46 35 Industrial processes 10,005.72 0 0 10,005.72 6.6 Agriculture 0 2,383.75 48.49 65,090.65 43.1 LULUCF 11,860.19 140.33 0.96 15,104.72 10 Waste 0.00 331.48 3.11 7,925.18 5.3 Total 67,765.91 3,164.12 53.83 150,899.73 100.00

The Vietnamese national GHG emission projections 2010-2030 communication also identified the Energy Agriculture LULUCF Total economic costs (or savings) of different

600 emission mitigation measures. It can be 500 seen that most of the negative cost 400 (profitable) measures are those of 300 200 energy efficiency (efficient public 100 lighting, electric motor, air conditioner) 0 or agriculture (switching feed for cattle) -100 Million tonnes of tonnes CO2e of Million 2010 2020 2030 or transportation (switching from

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traditional fuel to CNG and LPG for vehicle). Transportation is another identified sector of priority for the Vietnam CIC.

Mitigation potential and cost of 27 options10

Mitigation Potential Mitigation Cost Option (million tCO2e) (US$/tCO2e)

Replacing coal with LPG in household cooking 22.0 23.80

Wind Power replacing coal-fired thermal power 14.2 16.20

Switching from coal-fired to LNG thermal power 16.0 15.10 High-efficiency refrigerators 7.3 12.30 Biogas replacing cooking coal in mountain areas 5.2 9.70 Rice paddy field water drainage in South Central 4.1 7.00 Coast Rice husk power replacing coal thermal power 6.9 6.60 Rice paddy field water drainage in the Red River delta 21.9 5.20 Biogas replacing cooking coal in lowlands 17.4 4.10 Planting short-rotation pulpwood forest 176.0 1.38

Protection and sustainable management of existing 904.0 1.36 production forest area

Planting short-rotation trees for lumber 296.0 0.81 Conservation of existing protection forests 1,153.0 0.77 Planting melaleuca forest on alkaline wetlands 25.0 0.59 Planting long-rotation large timber trees 271.0 0.55 Growing long-rotation non-timber-product forest 117.0 0.48

Reforestation of large timber forests in conjunction with 80.0 0.38 natural regeneration

High-efficiency air conditioner 9.9 -4.40 Innovative bricks / kilns 14.2 -5.10 Solar water-heating appliances 13.9 -6.20 Small-scale hydropower replacing coal thermal power 15.3 -7.20 Energy-saving compact fluorescent light bulbs 23.4 -8.20 MUB cattle feeds 7.9 -10.90 LPG-fuelled cabs 3.3 -11.00

10 Vietnam's second national communication to the United Nations Framework Convention on Climate Change.

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Switching from DO to CNG in transportation 2.1 -14.10 Innovative coal stoves 25.3 -17.40 High-efficiency electric motors 15.5 -24.90

Identifying priority sectors is intended to help the CIC develop core expertise and to provide guidelines for resource allocations over the life of the program. While the Center will primarily target funding and support to energy efficiency and sustainable agriculture sectors, it will not neglect other promising and high-impact companies operating in other areas. In the start-up phase, it is particularly important the CIC remains receptive to a more diverse range of climate tech solutions to ensure robust deal-flow and demonstrate quick success.

After cross-checking with official government quantitative analysis in the National Communication to the UNFCCC, infoDev researched low carbon development policies in Vietnam. The draft Green Growth Strategy, though not yet official, provides a good snapshot of the country‟s preferences for low carbon development options. The three prongs of the strategy are: (i) greening production (which includes industrial production and agriculture); (ii) reducing greenhouse gas emissions, increasing low-carbon technologies (new and renewable energy), and saving energy; and (iii) greening lifestyles and sustainable consumption. These are reinforced by the CIC-selected priorities. Furthermore, the draft strategy identifies an immediate action for the period 2011-2020 which is fully aligned with the CIC mission: to promote research and development of appropriate green technologies and selective purchase of green technology patents with anticipated broad applicability and high effectiveness in Vietnam.

The remainder of this section presents the scoring for each prioritized sector. in addition to outlining key opportunities. The combined score is the average of the expert evaluation and stakeholder surveys, while the matrix displays the aggregated results of the expert interviews.

Evaluation criteria for priority sectors

Code Evaluation Criteria Description

Potential of the technologies to enter the market in the TR Technology Readiness near future Market pain-point, product subsidies, consumer MD Market Demand orientation, competing technologies, affordability etc. Near-term fund for R&D, commercialization and AF Availability of Funding expansion Stakeholders able to affect the likelihood of adoption of RS Clear, Ready Stakeholders a given technology

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How viable is the business model today? Includes supply BM Business Model chain, distribution, consumer access.

Leverage of Indigenous Ability to utilize and/or leverage natural resources and IR Resources endowments

Existence or ability to develop/recruit talent to make the EC Entrepreneurial Capacity technology companies successful Current or potential workforce capabilities necessary to WF Workforce commercialize and scale given technology Regulations, incentives and policies impacting a given PO Policy technology Impact of a given technology on local economy EI Economic Impact including the creation of jobs

GI GHG Impact Impact of a given technology on emission reduction

Impact on rural areas, specific demographics (e.g. SI Social Impact Women) and base of the pyramid markets MULTIPLIER: There is good traction in the market for these Already on Track technologies as barriers are low - therefore further AT innovation or intervention is not required

(H) High (M) Medium (L) Low

3.2.2 Priority Technology 1: Energy Efficiency Combined Score: 3.39/5.0

TR MD AF RS BM IR EC WF PO EI GI SI AT M M H M H L L L L M M L M

Main applications: Lighting, appliances (e.g. cook stoves), metering, HVAC, energy efficient manufacturing, transmission and distribution, green ICT, building design and materials.

Opportunities in energy efficiency: During the nine-year period from 1998 to 2007, commercial energy use in Vietnam grew at an average rate of 12.1% per year, while household energy use grew at 10.7%. Both outpaced the country GDP growth of 7.3% per year. As such, the energy intensity of Vietnam‟s economy grew from 387 kilograms of oil equivalent (kgoe) per US$1,000 of GDP in 1998 to 573 kgoe per US$1,000 in 2007 (in constant 2000 prices).

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Vietnam‟s energy demand is expected to triple in the next decade. Satisfying this demand is a daunting task since Vietnam has already been importing coal and oil for its energy needs in recent years. According to a World Bank report on energy efficiency in Vietnam in 201011, if Vietnam took further advantage energy efficient technologies, it could meet a significant portion (20%-30%) of business as usual energy demand at about 25% of the cost for developing additional energy supply.

The CIC is being established at an important time to help drive energy efficiency technology and business opportunities in Vietnam. In 2006, the government put in place the first comprehensive national program for energy efficiency (Vietnam‟s National Energy – Efficiency Program or VNEEP) with the support of the Netherlands government, EU, SIDA and UNDP. The 2006-2010 phase of the program has done considerable work in research (notably, an energy use survey of 500 large scale industrial enterprises), capacity building, awareness raising and formulating the Law on Energy Conservation and Efficient Use.

The Law on Energy Conservation and Efficient Use was adopted by the 12th National Assembly on June 17th 2010. The law requires intensive energy consumers (energy intensive enterprises, public constructions, transportation establishments, groups that use government funds, e.g. office buildings, road lighting, and public lighting) to conduct energy audits and prepare specific action plans to increase energy efficiency. The plan must also cover implementation management and compliance with reporting requirements. Residential entities and SMEs are encouraged but not required to implement these practices.

The Law on Energy Conservation and Efficient Use also requires labeling products in terms of energy efficiency to educate the market, encourage consumption of energy efficient products, and gradually eliminate their energy intensive counterparts. This could be done on a voluntary labeling of electronic appliances up to July 1st 2011, after which the labeling was made mandatory. The deadline for industrial equipments (electric motors, small and medium-sized boilers, three-phase transformers, etc) was January 1st 2012; for construction materials such as insulation, glass, windows, roofing, sheeting materials, it will be on January 1st 2015.

These legal requirements signal an upcoming surge in market demand for energy efficiency products and technologies in Vietnam, bolstered by escalating energy demand and costs. Responding to this market development poses certain challenges due to the necessary level of technical specialization and complexity. Vietnam will need not only reliable and affordable

11 World Bank - Asia Sustainable and Alternative Energy Program – Vietnam Expanding Opportunities for Energy Efficiency March 2010

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energy efficiency services and products, but also qualified energy auditors and energy service companies (ESCOs). Considerable innovation and ingenuity will be needed to develop new products/services for Vietnam or to introduce and customize existing products/services from the international market. The CIC can provide effective technological support by leveraging its expert network and its experience from other CICs in developing countries, such as India and South Africa, which are moving ahead with energy efficiency efforts.

Energy efficiency presents good opportunities for the CIC to make a significant economic impact. As mentioned in the table of emissions mitigation potential (page 23), most of these technologies have a negative cost; that is, they can be profitable versus business as usual.

Among the five prioritized sectors, energy efficiency is considered the most private sector ready, with a significant number of new companies, initiatives and innovators. In the course of designing the Vietnam CIC, the infoDev team has met with multiple SMEs and entrepreneurs in this sector: energy efficiency centers, private ESCO companies, Vietnam Green Building Council, green architecture club, energy auditor, manufacturers and innovators of energy efficient products (LED lighting, ventilation, building materials, industrial boilers, transmission, telecommunication, etc.). The three common challenges faced by stakeholders in this sector are a) difficulty in obtaining loans, or prohibitively high interest rates b) weak implementation of government policy supporting their products12, and c) consumer hesitance to spend the upfront cost for a new product that promises to save cost in the long run.

These issues can also be addressed by CIC service offerings. Difficulty in access to lending is common to all climate technology sectors; Vietnam‟s commercial lending rate is extremely high, reaching 18%-24% in the last two years as a result of government policy to contain inflation. Access to loans is further complicated for climate technology businesses as banks are often unfamiliar with their business models. The CIC can help with providing technical due diligence training to banks, offering credit guarantees, or facilitating access to more favorable loans from overseas. To strengthen the implementation and realization of government support policies, the CIC can provide technical advisory to the corresponding ministries and agencies. To address customer unfamiliarity and resistance to upfront cost, the CIC can initiate customer awareness raising programs, subsidize technology pilots in test markets, or work with the government and donors to establish end-user financing programs.

12 Example: Despite the general policy for favorable treatment for import of efficient lighting product components, the custom import code does not yet have specific code for efficient lighting,. As a result, these components are still taxed as normal lighting.

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Energy efficiency is also a sector that has good potential to generate carbon credits for CDM or future carbon markets, as more and more methodologies to calculate emission reduction for energy efficiency projects are approved by the UNFCC CDM Executive board. The sector also attracts attention from many of Vietnam‟s development partners; by June 2010, multilateral development banks committed USD 40 million and the Climate Technology Fund committed USD 50 million for industry energy efficiency in Vietnam13. This can engender support for CIC investment efforts, particularly those targeted at the sector‟s chronic challenges of low electricity price and fossil fuel subsidies.

The average electricity tariff was estimated to be USD .07/kWh in 2010, which is below the ASEAN regional average of USD 0.10/kWh. To become financially sustainable, an estimated increase of power tariffs above inflation by 15-30% of the current price will be needed. Low power tariffs act as a disincentive for users to invest in more efficient energy technology. International Energy Agency estimates that (indirect) fossil fuel consumption subsidies in Vietnam in 2007, 2008, 2009 and 2010 were USD 2.1, 3.56, 1.2 and 2.93 billion respectively, and were allocated especially to electricity, i.e. fluctuating between about 1 and 4 percent of GDP in current USD. These challenges are of macroeconomic nature and not within the capacity of CIC to tackle.

There are nevertheless signs of improvement, notably the country‟s road map to a more competitive electricity market. Currently, the market is monopolized by the state company EVN; the government has given EVN permission to gradually increase the electricity price. The CIC can help its investee companies to prepare for entry into a more open market.

3.2.2 Priority Technology 2: Sustainable agribusiness Combined Score: 3.21/5.0

TR MD AF RS BM IR EC WF PO EI GI SI AT M H M M L L L L L H H L M

Main applications: new resilient crops and seeds, fertilizers and compost, water/energy efficient machinery and equipment, water/energy efficient irrigation systems, climate friendly/energy efficient food processing, bio-pesticides, waste management, waste-to-energy. livestock and byproduct management, afforestation and sustainable land use practices.

13 Update on CTF investment plan for Vietnam, 2011

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Opportunities in sustainable agriculture: 70% of the Vietnamese population works in agriculture and 25% of its export revenue comes from agriculture; thus, the negative impacts of climate change on agriculture will have a sizable and widespread impact on the country. By prioritizing sustainable agriculture, the CIC will likely create significant impacts in terms of job creation, reduced vulnerability, and improved livelihoods.

The Mekong delta, the food basket of the country, is ranked as one the three river deltas most vulnerable to sea level rise (alongside Egypt‟s Nile and India‟s Ganges deltas). The Mekong delta already suffers from saline intrusion making water unsuitable for agriculture and drinking at certain times of the year. During high tide, saline intrusion can be found 200 km upstream. In one extreme climate change scenario, it is estimated that as much as 40% of the Mekong delta could be lost underwater.

Different scenarios project that the annual average temperature in Vietnam will increase 2-3OC by 2100. In all scenarios, the evapotranspiration rate of crops will increase significantly, resulting in a two- to threefold increase in agricultural water demand in 2100 compared to 2000. This will be compounded by a projected decrease in dry season rainfall and increased saline intrusion from rising sea levels. This triple change poses a serious risk of severe water shortage and threatens Vietnam‟s food security.

The government has put in place programs oriented toward a more “climate smart” agriculture. In 2008, the Ministry of Agriculture issued the Action Plan Framework for Adaptation to Climate Chang in the Agriculture and Rural Development Sector Period 2008-2020. This framework set out preliminary steps for research, communication awareness raising, strengthening international support, allocating human resources and importantly, developing a policy system and integrate climate change in all development programs for the sector. In March 2011, the Ministry announced its “Action Plan on climate change response of agriculture and rural development sector in the period 2011-2015 and vision to 2050” in which it outlines activities and expected output for each sub sector (agriculture, forestry, fishery, water resource management, salt production and rural development) to facilitate climate change adaptation and mitigation. Each subsector has been tasked to develop further programs along these outlines.

In Vietnam, many of the technology subsectors in Sustainable Agriculture are managed and operated by the state. These include crop breeding, fertilizers, and irrigation. New resilient breeds are researched and introduced by state research institutes, though major international crop research companies such as Monsanto or Croplife are also present in Vietnam. Fertilizer

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manufacturing is invested and run by state companies, most notably the Vietnam Chemical Corporation (VinaChem) and Petro Vietnam. Irrigation infrastructure is developed and managed by the state, while irrigation schemes and schedules are managed by local authorities. Promoting climate innovation in these subsectors means collaborating with state research centers to introduce climate resilient products. More importantly, the Vietnam CIC can facilitate the integration of SMEs along the supply chain of these subsectors (such as in logistics, services, and after- sale). In these state-dominated subsectors, there remain some promising niche segments for SMEs, such as organic fertilizers, compost, small scale drip irrigation, and site specific fertilizer/nutrition management. Although there have been fertilizer/nutrition management pilots between farmers and scientists in the North and the Mekong delta, current fertilizing practice sill relies heavily on farmers‟ anecdotal experience. Companies providing services in nutrient monitoring and site specific nutrient applications would benefit from this current market gap.

Sustainable agriculture subsectors with a relatively more established presence of SMEs include food processing, agro-forestry, organic vegetable, fair trade agricultural products, and livestock waste management (biogas). During the infoDev team‟s discussion with a number of these businesses, their challenges were revealed to be as follows: a) difficulties in getting certification (either organic or fair trade certification) and internal quality control, due to the fragmented supply base, b) lack of market information and technical training, and c) difficulties in access to loans. The CIC can support these subsectors by providing technical training, facilitating certification, and connecting them to international markets.

Since agriculture is one of the largest contributors of greenhouse gas emission in Vietnam, this sector presents opportunities for the Vietnam CIC to achieve results in emission savings. In November 2011, the Ministry of Agriculture and Rural Development approved the Ministry‟s Proposal to Reduce Green House Gas Emission in Agricultural sector. The proposal lists mitigation measures14 to be implemented throughout the sector and estimates CO2 savings from each measure. The approval of this proposal means that the Ministry will allocate funding (including international climate change finance) and other resources to implement these measures, thereby stimulating demand for climate smart agribusiness. Working closely with the Ministry of Agriculture and Rural Development will enable the Vietnam CIC to capitalize on this opportunity.

14 These measures include changing feed for 30% of livestock, providing 190,000 Molasses Urea Block as feed for dairy cows, planting 2.6 million hectare of forest, increasing energy efficiency in irrigation, reducing emission in fishing fleet, and switching household fuel from coal and wood to more sustainable fuels such as biomass and biogas

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3.2.3 Other Technology Areas:

Technologies for adaptation Combined Score: 3.18/5.0

TR MD AF RS BM IR EC WF PO EI GI SI AT H M L M M M L M L H M H H

Main applications: Green houses/shade materials, Waste harvesting & storage, Irrigation & distribution technologies, Afforestation products, Weather services (warning systems, insurance), Disaster prevention, Biodiversity and agriculture, Health care, Integrated coastal management, Transportation and construction.

Opportunities in Technologies for adaptation: Vietnam‟s government has indicated in the National Strategy on Climate Change that adaptation should take precedence over mitigation in the near future. Adaptation efforts of the country during this period will focus on the following: a) monitoring and early warning system for disasters, b) improvement of disaster response and recovery, and c) food security and water security for all regions. Vietnam experiences significant losses every year to natural disasters, especially tropical typhoons and flooding. The country knows the extreme costs of increasing frequency of extreme climate events. As such, Vietnam is prepared to allocate significant budget to adaptation. The country has developed a major plan to build sea dikes to protect against storm surge and erosion from rising sea levels, as well as irrigation structures to prevent saline intrusion. Vietnam is actively seeking international support for these massive infrastructure undertakings.

In the 2011 yearend review of the National Target Program in Response to Climate Change, the National Steering Committee of the Program, headed by the Prime Minister, issued the following instructions to relevant ministries: a) rapidly finish projects to prevent flooding in five vulnerable cities (Ho Chi Minh, Hai Phong, Can Tho, Ca Mau and Vinh Long), b) finish the irrigation planning for the Mekong Delta with financial and technical support from the Netherlands, c) develop plans to relocate people from areas at extreme risk of sea level rise, and d) complete the Green Growth Strategy of Vietnam. The CIC can support technology transfer in this area and help SMEs to leverage private sector resource. For example, it can support SMEs in construction to build expertise and experience as sub-contractors in large adaptation infrastructure projects. Water resources planning, weather modeling, and crop/fishing insurance all require complex technical

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or financial skills which the CIC can help provide to research institute and private consulting companies.

Interviews with several enterprises and entrepreneurs involved in climate change adaptation, particularly disaster response, revealed their most pressing challenge: the lack of real market demand for adaptation products and services and thus the need to rely on government purchasing. For example, one entrepreneur piloted a vehicle that can quickly clear paths of forests to contain forest fires. He subsequently found out that there are few clients willing to purchase his product, beyond a number of state national parks. He notes that institutions are unwilling to set aside a budget for such new products, although some are likely to do so in the event of a major forest fire. Another entrepreneur sells low cost mobile houses (similar to trailer homes) for flooding adaptation. Demand for his products spikes after large flooding events, but it this demand is primarily from the government and his company does not have the manufacturing capacity to fulfill these orders at short notice. Many households in frequently flooded areas cannot secure mortgage loans to purchase his products, because banks do not consider his mobile houses as real estate property. For the above cases, the Vietnam CIC can help with demonstrating these products to the right audiences (government and donor institutions) and advocating for disaster readiness financing.

Transportation technologies Combined Score: 3.17/5.0

TR MD AF RS BM IR EC WF PO EI GI SI AT M H M M L L L L L H H L M

Main applications:, Alternate fuel and electric vehicles, bicycles and motorbikes (biodiesel/ethanol, batteries, energy efficiency, fuel cells), advanced materials, recycling/green supply chain, public transportation, urban planning and related infrastructure.

Opportunities in transportation technologies: Vietnam‟s growth in transportation and its related emissions are reflected in the steadily increasing number of registered vehicles - 15-25% a year since the mid 1990s. Registered vehicles in Vietnam grew from 9 million in 2001 to 17 million in 2005, over 23 million in early 2008, and over 28 million in mid 2009.

As of 2007, transportation accounted for 25% of final energy consumption in Vietnam. Use of transport fuel grew from 3.6 million ton of oil equivalent (toe) in 1998 to 7.9 million toe in 2007. A

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little over half of fuel use was diesel oil, while gasoline accounted for about 39%, and jet fuel and fuel oil combined accounted for about 7%.

Vietnam is a densely populated country with close to 90 million inhabitants. Congestion is chronic in cities; gasoline prices increased by 30% in the last 3 years. According to the Environmental Performance Index report in 2011 by Yale and Columbia University, Vietnam ranks among the top ten countries with the most polluted air. The Vietnam Environmental Administration estimated that 70% of air pollution in Vietnamese cities is caused by vehicle exhausts.

Mass transit, alternative fuels and electric vehicles are needed in Vietnam to facilitate trade, improve quality of life and alleviate pollution. Both Hanoi and Ho Chi Minh City, the two largest cities, have a large and frequently running bus fleet. Both cities have planned for years to develop underground transport, but these massive investment projects are yet to be initiated. As part of a Nationally Appropriate Mitigation Action (NAMA) pilot for the transport sector, the Japanese government is helping Ho Chi Minh City to reduce emissions from public transport by retrofitting buses and modifying bus routes.

Petro Vietnam, the state petroleum company, has built 3 large cassava ethanol plants in the north, south and center of the country, one of which has already begun operations. Petro Vietnam started selling E5 gasoline (gasoline with 5% ethanol) in August 2010. Offtake has been slow, with only 140 gas stations throughout the country offering E5 at present. Petro Vietnam is asking for a government price subsidy to make E5 competitive with traditional gasoline. There is also concern that the full-scale operation of the three power plants will cause a shortage of cassava in the country, which will in turn drive up livestock feed price and cause other environmental problems related to land use. Since late 2011, there have been many incidents of spontaneous vehicle fires caused by low quality gasoline. This has further hindered consumer adoption of E5 gasoline.

Though climate technologies in transportation are being gradually introduced in Vietnam, many market and policy barriers remain. Opportunities being taken up by SMEs in transportation are vehicle retrofit, environmental friendly vehicle components and parts, biodiesel from waste vegetable or fish waste. The Vietnam CIC can liaise between the private sector and different government departments, aggregating issues at the industry level and advocating for policy changes to address the most important barriers. For example, one small business assembling electric vehicles for city use currently can sell only to golf courses, resorts and airports because

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there is no license for four wheel electric cars to be operated on public roads. The CIC can assist with piloting, demonstrating, facilitating policy changes and implementing standardization to accelerate the adoption of electric vehicles.

Water management and purification

Combined Score: 2.85/5.0

TR MD AF RS BM IR EC WF PO EI GI SI AT L L L M M M L M L H L L L

Main applications: Waste Water Treatment, Potable water, Water Use Efficiency, Waste Water Recycling, Desalination, Rain water harvesting, Efficient Irrigation.

Opportunities in water management and purification: In all water basins of Vietnam, the projected impacts due to climate change are a) increased flow in wet season, resulting in greater flooding risk, and b) decreased flow in dry season, increasing the frequency of drought and severity of saline intrusion. Negative impacts from drought and saline intrusion already have been observed in the drinking water supply, notably in the central highland and the Mekong delta.

. In the Mekong river delta, over 2,500,000 hectares will have over 1% salinity concentration by 2050. Increased flooding projected in the mid-21st century will inundate over 3,500,000 hectare, or nearly 90% of the Vietnamese Mekong delta. . In Dong Nai River Basin (home to Ho Chi Minh City and surrounding industrial provinces) the water flow decreases significantly with the impact of rising sea level. It is estimated by the end of the 21st century, up to 300,000 ha downstream will be flooded and saltwater encroachment will come more than 10 km inland. These impacts will profoundly affect the economic engine of the country - Ho Chi Minh City and surrounding provinces. . In Red-Thai Binh River Delta in the north, saltwater intrusion into land ranges from 3 to 9 km by 2100. Upstream floods will be more severe. The flood peak of 1% chance will increases to 8% - 10% chance in 2050 and possibly up to 11% - 25% chance by 2100. This greatly affects the safety of all upstream reservoir systems and nearly 2700 km of dike system protecting the whole delta. . Thu Bon and Ba Rivers in the centre are already under strong pressure from water exploitation and growing density of hydroelectric power plants. With the onset of climate change, conflicts between water users grows more intense and water shortage downstream will occur

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more frequently in the dry season. Salinity intrusion is threatening downstream plains with deeper saltwater encroachment (about 3 km from the sea in Ba river catchment and possibly up to 8 km in some branches of Thu Bon River in 2100).

Given these threats to water resources across multiple regions of Vietnam, there is an urgent need for technologies and innovation in water management and water purification to meet irrigation and drinking demands. Though irrigation is still much a state-managed operation, domestic water supply has been picked up by the private sector. In recent years, there has been much privatization of state water companies. Some private companies have invested in building brand new water supply systems for rural towns. In the Mekong delta, there are a good number of village-scale water supply systems built and operated by local communities, or built by the government and operated by the community. Technologies and innovative business models are still needed for these private/community water supply systems in order for them provide better quality water, to become more efficient and affordable, and to serve more of the rural poor.

As salinization renders more surface and groundwater undrinkable, many rural households are paying for potable drinking water at price about 10-15 US cents per liter. Potable drinking water is made available through a large number of small businesses in water purification and logistics. In this fragmented market, opportunities exist for ingenious solutions for on-site and pro-poor water purification and desalinization.

Water management and purification do not have obvious emission reduction benefits, yet they are significant for climate adaptation and development. Choosing this sector is a way for the CIC to strike a balance between mitigation and adaptation, given the importance of adaptation to a climate-vulnerable country like Vietnam.

3.3 Stakeholder Analysis Through its stakeholder engagement process, infoDev conducted a landscape analysis of the climate innovation stakeholders in Vietnam across the climate innovation value chain and in the five priority technologies. We found a significant number of institutions already working on these sectors. The CIC will engage collaboratively and take advantage of existing efforts, knowledge and synergies, rather than to offset or compete with existing activities. The following section outlines in detail the current climate technology stakeholder landscape in Vietnam, including:

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. R&D . Business Incubation . NGOs . Government . Industry – Large . International Inst. . Universities . Industry – Small . Financiers

3.3.1 Sector Mapping Matrix The table below presents a sample of institutions operating in prioritized sectors in Vietnam: Water Sustainable Technologies Transportation Energy Efficiency Management and Agribusiness Adaptation Technologies Purification R&D VNCPC, CSD, VESDI, ICARGC, MIT Institute GOI/Policy MONRE, DWRM, NISTPASS, MOST,CIEM, VCCI, TBC, MOF

Universities HUSTECH, CRES-VNU Incubators HCMUT-TBI, SHBI, CTBI-NLU Redsun Energy Solar Serve BIWASE Bio-fuels and Ha Long Waste Industry - VECO Vietnam Petrochemical of Vinh Thanh Ltd Pte. Wow Car Treatment SME SITTO Vietnam the South of VN Quoc Minh E.C.M Hoang Huynh Corp

Industry – Crop Life, General Philips, Schneider Large Monsanto Electric PanNature, VESDEC, VUSTA, HBA, Vietnet-ICT, Vacne, Habitat for Humanity Vietnam, VNGO&CC, MCD, Green Ha NGO Noi, AFEO. Consulting BK-CONTECH, Gratia Environment, TECOS, ENTEC, GEC Group, GLT Corp.

Internation World Bank, GIZ, Embassy of Finland, SPIN, Innovative Partnership Programme, William J. Clinton Foundation, FVG al Group, Royal Norwegian Embassy, UNIDO, UNDP, SNV, Embassy of Australia, AusAID, DFID Indochina Capital Mekong Renewable Resources Fund, Dragon Capital Clean Development Fund, IFC Energy Financiers Efficienty Credit Line, Clean Development Fund – Green Credit Trust Fund

3.2.6 Technology vs. Business Model Innovation: Importance for Vietnam It is important to note that while the Vietnam CIC‟s mission is to support the commercialization and scale of emerging technologies; much of the „innovation‟ opportunity in Vietnam will be a result of new business models. This will involve addressing non-technical related barriers to deployment of existing and adapted technologies. Such interventions could include innovation in distribution models, marketing and business development, cost structures, consumer financing and production processes. With a stronger focus on financing and support to business model innovation and the localization of existing technologies, the CIC can have a greater impact on rapidly deploying new products and services that will address the challenges faced by the under-served rural and low income households in Vietnam.

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3.3.2 Stakeholder Mapping Matrix The below graphic illustrates ongoing activities of various stakeholders mapped to the innovation value chain. Gaps highlight areas of CIC focus. Overlap is indicative of potential partnerships and collaboration.

Commercialization Stages Stakeholder Basic and Applied Research Development and Demonstration Scale-up Commercial NGOs R&D Provide technical assistance WWF Vietnam, Oxfam Great Britain, SNV, Care International, Provide financial assistance IUCN, ActionAid Vietnam. 350, SRD, GRET,RECOFTC , Live and R&D on policies and regulations Policy Advice Learn, East Meet West, Clinton Foundation,AMDI, PanNature, Promotion of clean energy: Awareness creation Capacity building: BDS Incubation Centers IBK Holdings: Hanoi University of Technology,HCM City Provide equipment Provide working space & consultancy Unveristy of Technology, Business Incubator,,Topica Education Provide networking Group,University of Agriculture and Forestry (HCM),Hoalac Hi- Tech Park,Hanoi Hi-Tech Business incubator,NANO TECHNOLOGY LABORATORY - HCM high tech Business software consultancy , Entrepreneurship & Business training park,Semiconductor laboratory Vietnam National University – HCMC ,Institute of Applied Technology,School of Science and Financial Institutions Development of the financial market Vietnam Environment Protection Fund,Dragon Capital Clean Microfinance Equity finance, Debit financing, Venture capital Development Fund,Indochina Capital, Vina Capital Green Fund advisory services Credit Trust Fund, IFC, Vietnam Development Bank, VietinBank, Financing projects Techcombank, Sacombank, Business services Investment advisory

International Institutions World Bank, ADB, IFC, DFID, AusAID, Embassy of Denmark, Funding - Grants CIDA, GIZ, Netherlands Development Organization, SDC, Funding - Loans SECO, Spanish Agency of Int‟l. Cooperative for Development, R&D on policy and regulation regarding the financial sector Financial sector development EDCF, Kfw CIC Focus Universities & Academia University of Agriculture and Forrestry,Technology Teacher Provide some facilities College,Institute of Energy, MOIT,Institute of Water Resources Workforce development and Planning (MONRE),Institute of Strategy and Policy on R & D Natural Resources and Environment (MONRE),Research Center for Energy and Environment,Research Center for Forest R & D on policies Ecology and Environment,

Industry Bach Khoa Solar, Red Sun Energy ,Solar Material R & D on product/service Pilot production, testing and demonstration,Integrate new technologies new technologies, manufacture / for productionLaunching expansion Incorporated,Trung Nam Group,RCEE,Brilliant Chip, Hoang Generate IP Marketing researchIdentification DD & SS of target market , marketing channel development, reaching target and expanding marketAdvertising, Product promotion Huynh Corporation,REE Corporation,VNEEC,PHILIPS,Holcim Identify sources of financeAcquire finance and maintain balance sheet Acquire additional finance ,Grassroof ,EBLOCK - ,Green-Consult Asia,Viet Vmicro, Policy research Develop interest on policies that affects the sector Influence policy and regulation, advocacy Enerteam Vietnam,Biofuel and Petrochemical Joint stock Company formation Expansion, Human resource development, production efficiency company, Earthwise HVAC,Gyproc Drywall System,,,Systech Co.,Ltd,ECC HCMCDantherm Filtration Co.,Ltd.,,Comin Asia Vietnam Contracting Service Power Trading,Kim Dinh Green Energy JSC,Dong Xanh Joint Stock Company, Solar Server, Government Minitry of Natural Resources and Environment Finance ( Conduct and support R & D Provide facilities like laboratories and libraries MONRE), Ministry of Agriculture and Rural Development Issue IPR (MARD), , Ministry of Finance (MoF), Minostry of Education and Awareness creation/promotion of environmental products/services Traninning (MoET),National Target Programme response to Loan, Financing projects , Coordinate international funds Climate change., R& D on policy , sector policy development, implementation and control

Technology Company Finance Market Policy Generate IP

36 Source: Nortec, Adapted by infoDev Vietnam CIC Business Plan

3.3.3 Leveraging existing initiatives Government of Vietnam (GoV) The following table outlines previously mentioned initiatives and other relevant activities in summary form: Initiatives Description Agency in charge Green Growth Strategy (in The Strategy draft outlines actions for policy and fiscal Ministry of Planning development) reforms, for creating investment flows to and Investment reduce greenhouse gas emissions, for increasing green GDP and creating green jobs. It is to be signed by the Prime Minister and issued in 2012 National Target Program Five year program covering 2009-2014; to assess climate Ministry of to Respond to Climate change impacts on sectors and regions in specific periods Environment and Change and to develop feasible action plans to effectively Resources respond to climate change in the short term and long (MONRE) term. It will be governed by a National Steering Committee chaired by Prime Minister and comprised by Ministers of five ministries, with MONRE as the focal point. Vietnam National Strategy Announced in March 2013, with six major parts: climate Ministry of on Climate Change change challenges and opportunities for Vietnam; Environment and strategic viewpoint; vision to the year 2100; goals by 2050; Resources strategic tasks and implementation during 2011-2015, (MONRE) programs will be prioritized, including programs on water resource management and response to climate change implemented in the Mekong river delta and the Red river delta, program to respond to climate change in Vietnam's big urban areas, and others. Vietnam’s National Energy First phase 2006-2010: research, survey, capacity building, Ministry of Industry – Efficiency Program awareness raising, formulating the Law on Energy and Trade VNEEP Conservation and Efficient Use. Second phase: 2010-2015 – further implement phase 1 components, while promoting energy efficiency activities in the manufacturing, trading and activities of society as a whole. Overall program target 2011-2015: reducing 5-8% of the total energy consumption of the country by 2015 Law on Energy Issued July 2010 - requires intensive energy consumers to Ministry of Industry Conservation and Efficient conduct energy audits and prepare specific action plan and Trade Use to increase energy efficiency and to report to authorities- also requires labeling products in terms of energy efficiency Promoting Energy Targets its activities in SMEs in five industrial sectors: Brick Ministry of Science Conservation in Small and manufacturing, Ceramic and Pottery, Textile and and Technology Medium Scale Enterprises Garment Paper and paper pulp, Food processing (MOST) (PECSME) Co-financed by UNDP/GEF and some Ministries, Sectors Program finished in 2011 and Agencies.

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Action Plan Framework for Sets out preparatory steps e.g. research, communication Ministry of Adaptation to Climate awareness raising, strengthening international support, Agriculture and Change in the Agriculture allocating human resources and importantly, developing Rural and Rural Development a policy system and integrating climate change in all Development Sector Period 2008-2020 development programs for the sector Action Plan on climate Outlines activities and expected output for each sub Ministry of change response of sector (agriculture, forestry, fishery, water resource Agriculture and agriculture and rural management, salt production and rural development) to Rural development sector in the adapt and mitigate climate change. Each subsector will Development period 2011-2015 and develop further programs along these outlines. vision to 2050 Proposal to Reduce Green Issued in 2012, lists mitigation measures to be implemented Ministry of House Gas Emissions for throughout the sector and estimated CO2 savings from Agriculture & Rural the Agricultural sector each measure Development National Strategy for Issued in 2007; outlines Vietnam‟s approach for disaster Ministry of Natural Disaster mitigation and management, particularly focusing on Agriculture and Prevention, Response and floods, storms and drought. Rural development Mitigation to To date, all 63 provinces have developed their action 2012 plans to implement the Strategy. Most Ministries have developed action plans for the mainstreaming of disaster risk reduction in their sectors. In the past two years, some activities have been implemented in the provinces or by sectors (e.g. dike construction, relocation, embankments, training, awareness-raising, risk mapping, etc.). Pilot Program on Issued in March 2011, aims to support farmers to actively Ministry of Agriculture Insurance for recover and compensate for financial losses caused by Agriculture and the period of 2011-2013 natural disasters and diseases, will be piloted for crops, Rural development livestock and aquaculture products in 21 selected provinces; targeting poor, pro-poor farmers and farmers with different supports for insurance fee National Platform for The Platform will be a national mechanism that will Ministry of Disaster Risk Reduction promote better coordination and implementation of Agriculture and and Climate Change disaster risk reduction and climate change adaptation Rural development Adaptation in actions. It aims to support the implementation of relevant And Ministry of Vietnam (in development) policies and strategies, provide a solid basis for action at Environment and the national level and be guided by evidence-based Resources activities at the local level National REDD+ Program Expected to be presented to the Prime Minister for Ministry of (in development) consideration of promulgation as a Decree. This would Agriculture and allow Vietnam to formally engage in an international Rural development REDD+ mechanism if/when it is implemented under the UNFCCC. Agency for SME Under the Ministry of Planning and Investment, ASMED is Ministry of Planning Development (ASMED) the central government agency that is responsible for and Investment coordinating policy formulation and policy implementation for the development of SMEs in Vietnam. SME Development Advises the Prime Minister on mechanisms and policies to Ministry of Planning Promotion Council encourage development of SME. Chaired by the Minister and Investment of Planning and Investment with representatives of different ministries and major cities.

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National Agency for Newly established under Ministry of Science and The Ministry of Technology Technology, promotes the technology market and Science and Entrepreneurship and supporting the establishment and development of Technology Commercialization science and technology enterprises. Development Vietnam Chamber of Established in 2001, represent business enterprises, Stand alone Commerce and Industry promote business trading and networking of enterprises organization

This list demonstrates that the government of Vietnam has proactively put in place a number of policy frameworks (strategies, action plans, national programs) related to climate change, with a number of other strategies and programs are in development. Under these policy frameworks, more specific action plans, projects, and initiatives will be implemented. The Vietnam CIC will track these policy developments and work with closely with the government to:

. Bring the private sector to policy makers‟ attention – raising awareness among policy makers about the potential of private sector in tackling climate change, and any private sector impact of proposed policies . Create forums, dialogues using the CIC resources for the private sectors to participate and provide feed backs into policy making process, feedback into the implementation of policies, programs, initiatives. . Advocate for policies, programs to support climate innovation, commercialization, and climate technology market . Utilize/channel resources from the above programs to create business opportunities, create market demand for climate enterprises, to prime/facilitate private sector participation and climate technology innovation . Leverage private sector funding to sustain and multiply these efforts‟ impact.

In addition to climate change initiatives, Vietnam government has created several mechanisms and organizations to support the development of SMEs, which are also listed in the table above. These organizations are highly relevant to the CIC‟s work in Vietnam, especially the newly created National Agency for Technology Entrepreneurship and Commercialization Development. The CIC will work to make sure that the benefits, resources, and support available from these government entities are captured by climate technology entrepreneurs.

R&D Institutes and Universities Listed in the following table are a number of research institutes and universities that are active in climate change research. Large organizations include Vietnam Academy of Science and

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Technology (VAST) and major universities in Hanoi and Ho Chi Minh cities. Major universities typically also have their own subsidiary institutes, which are included in the list.

Institute / University Location Vietnam Academy of Science and Technology (VAST) Hanoi Vietnam National University, Hanoi Hanoi Vietnam National University, Ho Chi Minh City HCMC Hanoi University of Science and Technology Hanoi Ho Chi Minh city University of Science and Technology HCMC University of Agriculture and Forestry, Hanoi Hanoi University of Agriculture and Forestry, Ho Chi Minh city HCMC Can Tho University Can Tho Vietnam Institute of Meteorology, Hydrology and Environment- (IMHEN), under MONRE Hanoi Institute of Strategy and Policy on Natural Resources and Environment (ISPONRE) under MONRE Hanoi Institute of Energy, under MOIT Hanoi Institute of Water Resources and Planning (under MONRE) Hanoi Chemical and Industrial Safety Technology Institute (under MOIT) Hanoi National Institute for Science and Technology Policy and Strategy Studies (NISTPASS) Hanoi Institute of Environmental Technology, under Vietnam Academy of Science and Technology - Hanoi

VAST

Institute of Biotechnology, under VAST Hanoi Institute of Ecology and Biological Resources, under VAST Hanoi Institute of Energy Science (IES), under VAST Hanoi Environment and Sustainable Development Institute Hanoi Institute for Environmental Science and Technology, Hanoi University of Science and Technology Hanoi Centre for Environmental Engineering of Towns and Industrial Areas, National University of Civil Hanoi Engineering Vietnam Academy for Water Resources, under MARD Hanoi Institute of Oceanography, under VAST Nha Trang Ecological Economy Institute Hanoi Forest Inventory and Planning Institute, under MARD Hanoi

Centre for Natural Resources and Environmental Studies (CRES) Hanoi Forest Science Institute of Vietnam, under MARD Hanoi Institute of Resources, Environment and Biotechnology (IREB), under Hue University Hue Institute for Environmental Science and Development (VESDEC) Hanoi Institute of Environment and Resources , Vietnam National University, Ho Chi Minh City HCMC Institute of Environment and Resources, HMC Department of Science and Technology HMC

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Some institutions are more focused on policy research, such as Institute of Strategy and Policy on Natural Resources and Environment (ISPONRE) under MONRE that conducts research and advises the government on policies related to resources and environment management. Another example is the Institute of Meteorology, Hydrology and Environment- (IMHEN) - the focal point for research on climate change scenarios and mitigation options – or Institute of Energy research and advises the government on energy policy. The CIC will need to work with these institutions if it is to participate in policy formulation. The CIC can present a voice of the climate technology sector to these think tanks, or provide data and information to these think tanks, in order integrate the need and opinion of the climate sector early in the policy making process.

Other institutions are more toward applied sciences and technologies such as Institute for Environmental Science and Technology under Hanoi University of Science and Technology, Institute of Environmental Technology, Institute of Energy Science, Institute of Biotechnology under VAST. These institutes are where the CIC can leverage existing infrastructure, labs and equipments as well as expertise for climate entrepreneurs.

One major concern raised by the CIC stakeholders is that climate R&D in Vietnam is not practical and not well suited to the commercial world. This is a challenge for the Vietnam CIC to address and prioritize following its establishment.

NGOs other Civil Society Partnerships International and local NGOs working in climate change in Vietnam have come together to form a Climate Change Working Group for information sharing, capacity building and coordination among NGOs in Vietnam and between NGOs and government in relation to climate change responses. This working group meets once a month for information exchange, coordination and prepare feedback/responses to government and donor initiatives.

Climate NGOs in Vietnam have been the pioneers in awareness raising and community based climate change efforts. The CIC can collaborate with these NGOs on policy advisory, or more importantly, on promoting small businesses to engage in and be beneficiaries of these NGO‟s projects, such as community based projects that are also market led or projects that pilot business models at village level.

Other infoDev activities in Vietnam Vietnam is the focal point of infoDev‟s mobile innovation agenda in East Asia, with a mobile applications lab (mLab) in Ho Chi Minh City and a mobile social networking hub (mHub) in

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Hanoi. The SHTP consortium is collaborating to host the mLab, with consortium partners including Saigon Hi-Tech Park, Vietnam National University, FPT University, and Elcom Ltd. For the mHub, CRC Topica will support preexisting or establish new social networking hubs and complementary online communication channels to foster collaboration among developers, entrepreneurs, mentors, partners, investors and other technologists working in the mobile field. The mHub will provide vital support for the creation of content for a mobile applications community of practice, along with other mentoring and concept incubation activities.

Under its Creating Sustainable Businesses in the Knowledge Economy program, infoDev is developing a pilot to test virtual incubation in Vietnam as a tool for reaching growth oriented entrepreneurs outside the major cities. Important objectives of the pilot are to assess the impact and cost‐effectiveness of virtual incubation and, by way of a strong Monitoring & Evaluation (M&E) component, to derive the necessary lessons for potential future potential future scaling‐up in Vietnam and/or replication in other countries. infoDev and Emerging Markets Consulting (EMC) inaugurated the Mekong Women’s Entrepreneurship Challenge (MWEC) on International Women's Day, March 8, 2012. The challenge tackles problems that women in developing countries identify as major impediments to female-led firms, namely: lack of relevant business information and knowledge, lack of supportive networks, and lack of self-confidence, in addition to cultural barriers. The MWEC primarily targets later-stage women-led enterprises with growth potential.

The goal of the program is to facilitate the expansion of women-owned businesses. For this purpose, MWEC provides qualified women the necessary tools to improve and grow their businesses, including financing, one on one support, peer-based learning, training workshops and seminars. The program focuses on highly motivated women who are small business owners or managers eager to expand their businesses.

International Aid Agencies and Multilaterals The following table lists a selection on-going or in pipeline programs /initiatives from donors relevant to the Vietnam CIC. In recent years, international development partners of Vietnam have approved significant amount of support specifically for climate change or for climate change technology subsectors such as energy efficiency or disaster management. Many of these programs/initiatives have a component to support private sector, which represent important opportunities for the CIC in Vietnam.

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Agency / Program Description Multiple donors (JICA, AfD, Growing as a national financing mechanism for coordinated donor CIDA, DANIDA, WB) climate change investment in Vietnam with over USD 300 million Support Program to Respond committed to date. SPRCC support the implementation of climate to Climate Change in Vietnam change related policies and strategies based on the “National Target (SP-RCC) Program to Respond to Climate Change (NTP-RCC)” World Bank Vietnam Climate Operations are structured around four pillars Change Development Policy  Climate-resilient development: Improving the resilience of water resources  Lower carbon intensity: Exploiting Vietnam‟s energy efficiency potential  Strengthening capacity and preparedness to formulate, prioritize and implement climate change policies  Strengthening the financing framework to support climate change action World Bank- Clean Production Strengthen the capacity of Vietnam government and other key & Energy Efficiency stakeholders for the effective delivery of the national energy efficiency program in key industrial sectors World Bank Vietnam Credit support through commercial banks to hydropower projects Renewable Energy under 30 MW; technical assistance to banks and project developers; Development Project support the development of renewable energy regulatory infrastructure World Bank Urban water Increase access to sustainable water services and environmental supply and wastewater sanitation in selected urban areas in project provinces. One component to support Ministry of Planning and Investment (MPI) to develop policies on applying wastewater tariffs and on promoting the role of the private sector. World Bank Natural Disaster Support post-disaster reconstruction financing; reduce a financing Risk Management Project gap in public resources available to fund post-disaster reconstruction costs ADB - Support for the National Support MOIT, MOT, and the People's Committees of Thanh Hoa Target Program on Climate province, HCMC and Da Nang in developing and/or instituting action Change with a Focus on plans for effective implementation of the government's National Energy and Transport Target Program on climate change. ADB Energy Efficiency Pipeline project: Support Ministry of Finance, Ministry of Industry and Improvement Program Trade and manufacturing establishments for energy efficiency IFC Vietnam Energy Efficiency Works with selected banks to build their sustainable energy portfolios and Cleaner Production and tailored financing products, provides energy efficiency credit Financing Program lines to banks, supports enterprises with knowledge, tools, financing, and training to unlock sustainable energy‟s cost saving potential. AusAID Community-based supports the roll-out of community-based activities for disaster risk disaster risk management management in around 63 communes across two provinces in (CBDRM) – in development Vietnam‟s Mekong Delta region AusAID Strengthening Australia‟s Department of Climate Change and Energy Efficiency Vietnam’s household energy (DCCEE) is currently exploring a possible partnership with Vietnam‟s standards and labelling – in Ministry of Industry and Trade (MOIT) to strengthen Vietnam‟s development household lighting and appliance labeling standards for improved energy efficiency. DIFD - trilateral partnership on Enhances the Government‟s technical expertise and coordination climate change between capacity, mainstream climate resilience (in World Bank/ Government

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Government and World Bank projects) and develop a low-carbon strategy. DFID work plan 2011-2016 Ensures 10 million rural poor people benefit from enhanced climate Climate Change pillar resilience in rural development and natural resource management by 2016 DANIDA – Business Partnership supports commercial ideas and projects originating from Vietnamese Programme (DBP) and Danish enterprises, with a focus on green growth, within prioritized sectors such as renewable energy and waste management Denmark – Climate change supports the Vietnamese National Target Programme to Respond to initiatives Climate Change from 2009 to 2015, supports Vietnam's efforts to combat global warming and improve energy efficiency

As the Vietnam CIC is also a multi-donor initiative, it will be in a good position to interface between the donor community and SMEs/entrepreneurs. The Vietnam CIC is anticipated to complement donor initiatives in the following manner:

. Help SMEs/entrepreneurs to tap into the resources offered by donor projects. In many cases this means helping them to overcome the final hurdles to be qualified as beneficiaries of donor funding. . Provide data/information on gaps, needs, challenges and opportunities from the climate technology sectors to the donor community – this will provide feedback and insights to donors who are formulating their pipeline projects or reviewing the ongoing implementation of existing projects. . Matching donor‟s funding with existing private sector initiatives

Financiers The most important financiers for climate technology sectors are banks and technology funds. Vietnam Development Bank and Vietnam Bank for Social Policies are the two banks that give favorable loans for projects which help reduce poverty, build rural infrastructure, loans for export financing, for projects that protect the environment. The Bank of Agricultural and Rural Development is another major player that lends to agricultural sector and rural development projects. Some development assistance lending is implemented through these banks. A number of projects in CIC sectors can seek loans from these banks (such as agro business and hydropower). However, the majority of climate technology businesses still need to seek loans from commercial banks.

The most common challenges of accessing bank loans, as reported by stakeholders, are prohibitively high interest rates and banks‟ unfamiliarity with climate business models. The situation is worsened by government policies which have restricted credit growth in the last two

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years, making banks more hesitant to accept new borrowers and prone to focus on existing long term and large clients. The Vietnam CIC can support commercial banks and development banks by providing due diligence, technical training, and credit guarantees, or by consulting with them to create innovative financing services.

Fortunately for climate technology businesses, several commercial banks have been given credit lines for energy efficiency or clean technology projects in recent years. Techcombank, Sacombank and VPbanks have received credit line for energy efficiency from the IFC. Techcombank, VIB, and ACB have received credit guarantees from the Vietnam Green Credit Trust Fund (supported by the Swiss government), which will be partially earmarked for loans to SMES for cleaner production projects.

Besides banks, some private equity funds have been established in Vietnam that invest in clean technology:

. Dragon Capital Clean Development Fund - US$45m to invest in projects in the Mekong River Region that have positive impact on the environment and contribute to sustainable development. . IDG Ventures Vietnam - technology venture capital fund, currently has $100 million under management, with investments in over 40 companies in the technology, media, telecommunications, and consumer sectors . VinaCapital - invests in early and growth-stage technology businesses, focusing investment in four sectors: Internet, telecommunications, media and clean energy . Indochina Capital - Mekong Renewable Resources Fund (MRRF) - targeting to raise US$150 million to invest in projects and companies focused on renewable energy generation, energy efficiency, environmental infrastructure and natural resources preservation in Vietnam, Cambodia, and Laos.

The infoDev team has met with all four of the above investors and found good synergies for the future of the Vietnam CIC. These funds can provide follow-up financing or private sector co- investment into the CIC‟s technology businesses. The Vietnam CIC can present deal flows to these funds and vice versa. Potential partnership has been discussed where these funds can pass on the investment candidates that are almost ready for their investments for Vietnam CIC convertible loans/grants that address the last remaining gaps. Provided that the conditions are met, the commercial funds can commit to supporting the companies for their next level of financing.

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3.3.4 Private sector companies seeking support: The following table describes a representative subset of Vietnamese companies interviewed by infoDev who are seeking the various kinds of support and financing that the CIC will provide. They furnished detailed information on the constraints they were facing and their required needs to overcome these challenges. These companies highlight the demand for the Center‟s services in Vietnam and will form part of a ready pipeline of investable projects that the CIC can initially support. Names of the companies have been removed for confidentiality.

Sector Product Founded Needs

1 Wind power Wind farm developer 2008 . Advocacy assistance for feed- in tariff policy

. Matchmaking with sources of equity and debt . Insight/input into government wind power planning 2 Sustainable Organic vegetables 2009 . Financial assistance/access Agribusiness . Land acquisition assistance . Technical support . Brand development 3 Energy Efficiency Energy saving microchip 2006 . Domestic market development . Financial assistance/access 4 Building and Materials Autoclaved aerated 2007 . Market development Concrete . Sales and business development assistance 5 Solar Energy Manufacture solar 2006 . Internationalization of sales panels . Technical due diligence support for financing banks . Talent pool of skilled engineers 6 Building and Materials PET recycling 2001 . Finance to move up the supply chain (produce plastic fibers from plastic chips) 7 Biomass Rice husk biomass fuel 2009 . Machinery to diversify products for export . Access to finance to enable scaling up of operations 8 Energy Efficiency Energy Service, 2009 . Financial resources. Energy Auditing . Advisory/ capacity building on business skills 9 Transportation Electric car 2009 . Market development . Policy support e.g. road certification . Finance to scale up production 10 Biofuels Jatropha farming, 2007 . Access to land to scale up Jatropha biomass farming capacity/production

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processing to oil . Productivity improvement 11 Building and Materials Glucosamine from 2007 . Supply chain development recycling shrimp skins 12 Solar energy Solar cook stoves and 2007 . Sales and distribution assistance Water heater . Machineries for mass production 13 Biofuels Industrial steam services 2010 . Financial assistance to support from biomass company expansion . Marketing and sales support 14 Wind energy Wind farm developer 2004 . Financing for wind farm extension . Government price support 15 Sustainable Sustainable bamboo 2006 . Supply chain development Agribusiness flooring . International market development 16 Adaptation Tech Mobile houses for flood 2008 . Consumer loan prone areas . Government disaster readiness programs 17 Biofuels Fish oil to biodiesel 2008 . Reliable input . Finance to scale up 18 Hydro power Developer of small scale 2008 . Matchmaking with sources of run of river hydro power equity and debt at reasonable plants cost 19 Water management Developer of small town 2007 . Financial management and purification scale water supply . Equity investment systems 20 Biofuels Power generation from 2008 . Pricing support rice husk . Financing for equipment

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4.0 Climate Innovation Analysis: Vietnam

4.1 Gaps along the Value Chain Countries must progress through five core areas15 in order to successfully develop and deploy local innovation: . Technology: Supporting technology creation and adaptation. . Company: Building a pipeline of human capital and sustainable ventures. . Finance: Ensuring access to flexible risk capital. . Market: Creating new and expanding local and Five core areas of innovation development where gaps were identified global markets. . Policy: Informing, linking and transforming innovative policy mechanisms.

Over a 6-month process, infoDev engaged with over 200 local climate technology stakeholders to identify the gaps in each core area that hinder climate innovation in Vietnam. 120 participants at the „CIC Model Design Workshop‟ working groups identified the relevant gaps in each Gaps Needs Solutions area and proposed solutions to these challenges. To quantify the Programs and services of the CIC are formulated as solutions to results from the workshop, 130 stakeholder’s needs. respondents completed an online survey which was accessible in both English and Vietnamese. These activities were further supplemented by in-depth interviews and focus groups.

Survey respondents were given a set of gaps hindering Vietnam‟s progress in each innovation core area.16 Each set of gaps suggested interventions needed in Vietnam, which in turn informed the design of CIC activities, programs and services.

15 Adapted by infoDev: Carbon Trust 16 The tables in Sections 4.2-4.6 rank these gaps by the total percentage of respondents who answered “Agree” and “Strongly Agree”. For more detailed survey results, see Annex 3

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4.2 Technology Gaps The largest perceived barrier to the development of suitable climate technologies in Vietnam is the lack of coordination between research and industry. 84% of survey respondents affirmed this, with about half indicated strong agreement. Secondary gaps concern the availability and quality of information, as well as the ability to test technologies for commercial application.

Technology : Supporting local and adapted technology innovation

Gaps % Agree Needs

Lack of linkages between Vietnamese Incentives that tie academic pursuits to universities and industry. Researchers do not 84% current market developments follow business needs and trends

Information on climate technologies is Access to knowledge databases and best unavailable/unreliable. Businesses have low 77% practice understanding of the sector in Vietnam Original Vietnam-specific research Lack of funding for technologists to test Greater public awareness/interest 77% Appropriate testing environment and facilities products at industrial scale Research in Vietnam remains stuck at the Support from government, private sector, and laboratory scale and not suitable for industry 67% international community to enable transfer commercialization

Clean technology components and Market linkages to cost-effective regional or equipment are expensive in Vietnam making 60% international suppliers final products uneconomical Tariff reductions for clean tech sector

Difficulty in importing material (custom Platform or venue to address industry level clearance, product database outdated, 47% concerns with government and regulatory material confiscated) bodies

Case Study: Technology Gap

Systech Eco - City: Founded 2009 Systech Eco is an energy audit and energy service (ESCO) company, one of the first of its kind in Vietnam. Systech Eco offers energy saving services for industrial and commercial clients. The company invests in energy saving equipments for clients and clients pay pack monthly with cost lower than they would have not using Systech Eco equipments. Systech Eco is looking into waste heat recovery technology for potential clients in cement and steel manufacturing. They have difficulty finding technology suppliers, the few suppliers they found required expensive deposit and guarantee for technology transfer and acquisition that were costly prohibitive for Systech Eco.

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4.3 Company Gaps Holistic support is required to grow and sustain activity in the Vietnamese climate technology sector. Prospective innovators view financial support as the most pressing need, followed by human resource development. Gaps in the policy environment and business advisory are also contributing factors, in addition to the market information identified in the previous section.

Company: Building workforce capacity and a pipeline of sustainable new ventures Gaps % Agree Needs Lack of financial support to entrepreneurs to Targeted finance instruments and investor make ideas into marketable products and 88% networks services Business plan development assistance

Difficulty in finding and hiring adequate talent Workforce capacity building and skills and human resources for climate technology 78% enhancement sectors Ability to attract international talent pool Inconsistent policy to support new business Analysis of policy trends and outreach to 76% creation and growth government on priority issues Limited availability of advice and expertise on Business advisory services business development, accessing financing Mentorship networks and relationships 76% and intellectual property rights laws Guidance on legal frameworks governing commerce and research

Limited access to information on technologies Knowledge and information sharing at par 71% and technology markets with global best practice Resistance to innovation and Stronger connections and expansion of the entrepreneurship. Culture of creativity and 62% innovation ecosystem (academic, business, risk-taking is still evolving government, social sector)

Case Study: Company Gap

Solar Serve – Danang City: Founded 2007 Solar Serve manufactures solar cook stoves and solar water heaters targeting low income rural customers. Each cook stove is priced at 1.8 million Vietnam Dong (around 90 USD), or 2 million Vietnam Dong (100 USD) if transported to a distant customer. The company is producing the cook stoves and water heaters manually. It lacks finance to acquire machineries or at least get access to machineries to mass produce components and scale up its production. Manufacturing with machineries will help reduce price of its cook stoves up to 40%, making these products even more affordable to the poor.

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4.4 Finance Gaps Stakeholder feedback strongly suggests that the one of the predominant gaps involves access to flexible, early-stage risk capital. More than 50% of the 87% who pointed to prohibitively high interest rates on small business loans as a barrier indicated strong agreement. In addition, 88% agreed that overseas funding is difficult to access from Vietnam. Overall, prospective investors in Vietnam would benefit from a greater understanding of how to evaluate opportunities in the climate sector.

43% of stakeholder survey respondents agreed that the largest funding gap is faced by businesses requesting between USD 1-3 million, followed closely by USD 250,000-750,000 (38%).

Finance : Ensuring access to flexible risk capital Gaps % Agree Needs Difficulty in accessing regional and Enhanced ability to compete for global 88% international sources of funding green growth financing Prohibitively high interest rates on small Facilitation of bank financing through 87% business loans providing appropriate guarantees Financial institutions lack technical expertise Advise financing sector on appropriate and knowledge for evaluating climate 80% techniques technology projects Offer flexible start-up financing Limited risk appetite for the financing of early- Investment funds that target higher-risk 74% stage technology ventures profile companies Lack of evidence for financial viability for Case studies profiling successful investments 66% climate technology projects in other countries

Case Study: Finance Gap

Vinh Thanh Mobile Housing – Ho Chi Minh city: Founded 2008 The company founder makes mobile houses (trailer homes) for low income customers in frequently flooded or disaster hit areas. Many customers wanted to buy his houses in preparation for flood but could not get mortgage loans because banks do not see his mobile houses as permanent real estate property. Currently the company can only sell to the customers who can afford to pay the whole house. The company founder hopes to have special credit programs to support his customers.

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4.5 Market Gaps Stakeholders emphasized the need for stronger demand generation to support climate technology innovation. Among the market-related constraints presented in the survey, consumer confidence received both the highest response rate (78%) and agreement rate (85%). In order to successfully induce trial and switching, there is a need for businesses and consumers to understand the value proposition behind different climate technologies. In a developing country such as Vietnam, price is also a barrier to mass market adoption.

Markets : Creating new and expanding local and global market opportunities Gaps % Agree Needs Lack of trust on new products. Consumers are 85% Information on and promotion of climate cautious trying new technologies, especially technology sector market advancements those produced by small companies Support of opinion leaders and influencers Businesses incur high switching costs to use 84% Raise awareness about new technology more efficient technologies benefits (profit, CSR/sustainability, etc.) Access to commercialization grants to pilot new technologies Consumers stick to habits and usually follow 81% Communication about growing adoption of mass-market buying behaviors and trends clean technologies in overseas and nearby countries The price of climate technologies is too high 81% Provide support for inclusive innovation especially for low-income users technologies and approaches Challenges in linking entrepreneurs to global 74% Facilitate supply chain linkages and import- markets export relationships

Case Study: Market Gap

ASEM LED – Ho Chi Minh city: ASEM LED is a LED lighting manufacturer. The company is having difficulty marketing its products to mass consumers. There have been good awareness raising programs in Vietnam on efficient lighting, but all focused on compact florescent lamps, thus not many consumers are aware that LED lights are even more energy efficient than compact florescent. As a result, the company is targeting commercial clients who are financially well. It hopes to get support in winning more mass customer‟s trust and acceptance to its LED products which have higher cost but longer life.

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4.6 Policy Gaps The stakeholder feedback reveals that limited and uncoordinated policy in Vietnam inhibits the creation and adoption of new technologies. Government should engage with climate industry practitioners and the international community in order to develop a policy framework favorable to innovation. In relation to findings from the other core areas, regulatory support is needed regarding access to finance and quality standards.

Policy : Informing, linking and transforming innovative policy mechanisms Gaps % Agree Needs Limited coordination across ministries within 87% Advocacy on behalf of industry-level issues the government on climate technologies. Focal point to help coordinate policy issues Difficult for entrepreneurs to navigate within different ministries Lack of knowledge of different climate 87% Provide a channel for dialogue between technology sectors innovators, SMEs and government Lack of government incentives for private 84% Demonstrate effectiveness of effective policy sectors to adopt and deploy climate approaches to green growth from other technologies (e.g. feed-in-tariffs) countries Taxation policies and incentives do not favor 80% Facilitate dialogue on taxation issues with new climate technology industries Ministry of Finance. Consumers and enterprises have limited 67% Outreach, awareness and information on interest and understanding of environmental positive impacts of conducive environmental policy policy

Case Study: Policy Gap

Trung Nam Group – Ho Chi Minh city : Founded 2006 Trung Nam Group started as real estate developer and recently expanded into developing renewable energy. The company created 3 members companies to develop 3 hydro power projects and one wind power project. Trung Nam‟s Dong Nai 2 hydro power project is near operation and is the largest hydro power invested by a private company in Vietnam. Trung Nam has been having difficulty with its wind project due to the lengthy and uncertain national and provincial wind power planning. The planning issue has been solved, however Trung Nam is now facing the fact that even with tariff support, tariff for wind power set by the government is not enough to make its project feasible given the price and exchange rate escalation in recent years.

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5.0 Vietnam Climate Innovation Center Model

Stakeholders have custom-designed the CIC model to respond to the numerous gaps illustrated in Section 4. The model will address the majority of the needs of each priority sector through the following initiatives:

1. Providing catalytic seed-stage risk capital to local climate technology companies and assisting companies to secure additional financing through investor match-making and facilitation of debt financing. 2. Building a pipeline of high-impact climate solutions by supporting the localization, commercialization and transfer of relevant technologies through access to innovation grants, industry partnerships and facility providers. 3. Supporting the accelerated growth of climate ventures and entrepreneurial capacity through providing a holistic set of business development services, mentoring and training programs. 4. Identifying and developing local and international market opportunities for new climate solutions through providing key sectoral information, supporting policy transformation and creating linkages with regional and international markets.

The Vietnam CIC model has been developed with the above objectives based on an extensive gap analysis in consultation with local stakeholders and beneficiaries. The vision for the Center is to provide a holistic range of programs and service that ensure local challenges to climate innovation are addressed, while also coordinating and leveraging related activities in Vietnam.

Based on these objectives, 4 main pillars have been designed as the major programs of the Vietnam CIC model. Each pillar supports a number of programs and services that are outlined in the diagram below. While there are numerous service offerings that have been included in the model, it is important to realize that these programs will remain targeted to the Center‟s core objectives and positioning. There are also a number of functions that the CIC will not offer outside of its scope, scale and sectoral focus. The Vietnam Center will therefore be a catalytic program designed to produce medium-term impact, and contribute to longer-term market transformation.

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CIC Model: Vietnam

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5.1 Program Tracks The following section provides further detail of each program within the Vietnam CIC model. These four „pillars‟ outline the specific activities, their functions and what needs they address as identified in chapter 4 of the business plan.

5.1.1 Finance

Finance

Program Activity Needs Addressed

. First-loss Seed Equity ($150K -750K): Seed financing . Targeted finance to address the financing gap for start-up and instruments and investor growth-oriented companies. Funding is available as networks a first-loss instrument to incentivize co-investment. . Offer flexible start-up The fund should invest in businesses that address financing climate change challenges either through . Investment funds that target Investments mitigation or adaptation to changing climate higher-risk profile companies conditions. This would include but not be limited to . Facilitation of bank prioritized sectors. Investments will be placed via a financing through providing local fund manager in partnership with the CIC. appropriate guarantees . Access to commercialization grants to pilot new technologies . The CIC will facilitate additional sources of both . Targeted finance debt and equity financing for co-investment and instruments and investor follow-on investment in portfolio companies. This will networks be achieved through: . Offer flexible start-up . Investor match-making: Establish and grow local financing investor networks including relationships with high- . Stronger connections and net-worth individuals, angel investors and existing expansion of the innovation Investment fund providers to secure co-investment and follow- ecosystem (academic, Syndication on financing rounds. business, government, social . Debt facilitation: Build relationships with banks sector) including institutions with IFC credit lines to facilitate . Enhanced ability to debt financing for working capital. compete for global green growth financing . Advise financing sector on appropriate techniques

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5.1.2. Technology Commercialization

Technology Commercialization

Program Activity Needs Addressed . Proof of Concept (US$ 20K -50K): – Funding for . Incentives that tie academic researchers, entrepreneurs and/or new projects pursuits to current market within existing organizations, to assist the developments localization, commercialization and transfer of . Targeted finance technologies for local markets. Funding in instruments and investor grants delivered upon achievement of networks milestones. Uses include prototype . Stronger connections and development, product design, demonstration expansion of the innovation and field testing, measurement, market ecosystem (academic, research, company formation. business, government, social Innovation sector) Fund . Investment funds that target higher-risk profile companies . Facilitation of bank financing through providing appropriate guarantees . Access to commercialization grants to pilot new technologies . Provide support for inclusive innovation technologies and approaches . Technology/IP Database: The CIC will provide . Access to knowledge access to information on sourcing climate databases and best technology products and components practice including local intellectual property information . Original Vietnam-specific . Industry partnerships: Technology collaboration research Technology programs will include the facilitation of R&D, . Appropriate testing Collaboration technology development and joint ventures environment and facilities with Vietnamese industry including utilities. . Support from government, Partnerships will enable CIC companies and private sector, and affiliates to conduct joint product development international community to of technologies, facilitate market need enable commercialization

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identification and allow access to industry . Market linkages to cost- knowledge and know-how. effective regional or international suppliers . Stronger connections and expansion of the innovation ecosystem (academic, business, government, social sector) . Raise awareness about new technology benefits (profit, CSR/sustainability, etc.) . Facility Provider Agreements: The CIC will . Appropriate testing partner with existing facility providers to provide environment and facilities access to: Facilities . Equipment for testing and prototyping. . Industry facilities for first-run production and small-scale manufacturing.

5.1.3 Venture Acceleration

Venture Acceleration

Program Activity Needs Addressed . Advisory Services Fund: The CIC will house a . Appropriate testing fund for access to out-sourced specialized environment and facilities advisory services such as business planning, . Support from government, investment preparation, product design, private sector, and engineering support, legal, HR and IPR international community to assistance. While the CIC will provide basic enable commercialization Business business planning advice for interested . Business plan development Development companies, funds will only be available to assistance Services companies eligible for CIC financing. As part of . Workforce capacity building investment due-diligence, entrepreneurs eligible and skills enhancement for CIC financing will be offered access to funds . Ability to attract international for financial planning services to ensure talent pool companies are investment-ready. The CIC‟s due . Guidance on legal diligence services will be also offered to frameworks governing companies seeking investment from other commerce and research

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sources of financing. . Business advisory services . Diaspora-Mentor Network: The Center will . Mentorship networks and establish a broad network of serial relationships entrepreneurs, technical advisors and . Stronger connections and professional service firms (accounting, legal, expansion of the innovation marketing) that are locally based. A mentor ecosystem (academic, program will be established to ensure each CIC business, government, social invested company is assigned a mentor for the sector) duration of the funding cycle at both grant and equity stages, as applicable. The advisory service fund will be used in combination with the mentor network to modestly compensate mentors for their involvement in the program. . Virtual Incubation: CIC supported companies will be provided the physical space, services and infrastructure needed via partnerships with Vietnamese incubators, science parks, labs, universities and industry facilities. . University Partnerships: The CIC will build . Incentives that tie academic partnerships with various universities in Vietnam pursuits to current market to: developments . Fund specific courses and workshops on . Greater public climate tech entrepreneurship for students awareness/interest . Be a focal-point for university-industry . Support from government, partnerships private sector, and . Advertise project opportunities international community to . Facilitate access labs and equipment enable commercialization Education & . Seminar Series: General business training . Workforce capacity building Training seminars targeted at individuals and university and skills enhancement students interested in starting or growing a . Enhanced ability to technology-based business. Seminar series will compete for global green include guest speakers and cover a range of growth financing business and technical issues relevant to climate . Information on and technology. The Centre will also hold training promotion of climate programs for women on management, finance, technology sector market negotiation, business leadership and handling advancements harassment.

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5.1.4. Market Development

Market Development

Program Activity Needs Addressed

. Market and Sector Trend Reports: The . Original Vietnam-specific Center will research and produce original research analytical products including reports on . Greater public various climate tech sectors and detailed awareness/interest information and data on local and regional . Knowledge and information Market Analytics market trends and opportunities. The sharing at par with global Center will also deliver periodic reports with best practice data and lessons learned from CIC . Information on and beneficiaries to share knowledge and promotion of climate experiences with the broader network. technology sector market advancements

. Association support and advocacy: To . Support from government, promote industry collaboration within a private sector, and number of sector verticals, the CIC will international community to provide financial support to build the enable commercialization capacity of existing business associations . Greater public and/or create new associations where awareness/interest necessary. These will be coordinated by . Access to knowledge the Center and form part of the CIC‟s databases and best practice industry network, The CIC will also provide . Original Vietnam-specific awareness raising and communication on research the CIC and incubation activities in . Market linkages to cost- Policy Advisory Vietnam more generally to further effective regional or knowledge and public understanding. international suppliers . Policy advisory board: The CIC will form an . Tariff reductions for clean advisory board of relevant public and tech sector private sector stakeholders and host . Platform or venue to address regular roundtables on pertinent policy industry level concerns with implications for issues including innovation, government and regulatory R&D, intellectual property rights, private bodies sector development, taxation, . Guidance on legal environmental, and export policy. The frameworks governing policy advisory board will aggregate the commerce and research issues of CIC invested companies and . Support of opinion leaders

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affiliates and aim to influence positive and influencers policy reform through direct dialogue with . Advocacy on behalf of Vietnamese ministries. The advisory board industry-level issues will also promote coordination between . Focal point to help various ministries. coordinate policy issues . Expert Fellowship: The Center will host a 6- within different ministries month rotating international or regional . Provide a channel for fellowship position. The policy fellow will be dialogue between tasked with organizing roundtable events innovators, SMEs and and producing analytical products government, e.g. dialogue highlighting global best practice on policy on taxation issues with and regulation on topics related to climate, Ministry of Finance. energy, private sector and innovation. . Knowledge and information sharing at par with global best practice . Case studies profiling successful investments in other countries . Regional CIC Forum: Vietnam will host an . Outreach, awareness and annual event on climate innovation to information on positive bring together relevant stakeholders from impacts of conducive the country and region. environmental policy . Company Internationalization: The CIC will . Demonstrate effectiveness of form linkages with regional and Regional effective policy approaches international organizations and initiatives to Networking to green growth from other promote global technology development, countries joint venture and trade opportunities with . Enhanced ability to compete Vietnamese firms. The Center will also be for global green growth linked to CICs in other countries including financing India, Kenya and South Africa to assist . Communication about companies in accessing foreign markets. growing adoption of clean technologies in overseas and nearby countries . Facilitate supply chain linkages and import-export relationships

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6.0 Operational Plan

6.1 Project Timeline

6.1.1 Implementation phase: 9 Months The diagram below shows the staged roll-out plan for the Vietnam CIC based on infoDev‟s implementation experience with the Kenya CIC, Mobile Application Labs and other enterprise acceleration and incubation programs. The first year of implementation activities will be a critical time of securing requisite funding, identifying and contracting partner institutions, establishing the Center‟s structure and making key hires. The majority of the CIC programs will begin with the opening of the CIC in the fourth quarter of 2012 and scale-up over the first years of CIC operations, as described in the 5-year budget projections.

6.1.2 Five-year operational timeline It is anticipated that the CIC‟s services will operate on predominantly annual cycles from years one through five, although this may require adjustments based on initial institutional capacity constraints and hiring of staff. In order to maximize the value of revenue streams of CIC supported ventures and to generate „quick wins‟, the finance programs will be front-loaded in Years 1-3. Other programs will be phased and prioritized according to their importance. Based

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on the stakeholder survey, each activity line was ranked according to priority. These have been identified in the operational summary timeline below. To avoid capacity constraints, the CIC‟s host should allocate resources and concentrate hiring efforts specifically for those services considered „integral‟ to the Center‟s operations. Those that are „high priority‟ should follow with „ideal‟ activities being implemented once all other programs are successfully in place. This will avoid overreach and ensure efficient ramp-up of the CIC over time.

6.2 Governance The Climate Innovation Center will be housed in a local organization selected through a competitive bidding process. The governance of the CIC will be fully defined at the time of negotiation with the host organization and partners in adherence with local regulations. The selected organization and associated consortium partners will be responsible for all aspects of the CIC establishment and operations including securing appropriate facilities, identifying a world-class management team, providing the services and programs described in the business plan, and ensuring effective monitoring and evaluation (M&E) of programs. The host will report to infoDev and the infoDev Climate Innovation Steering Committee to ensure effective and successful execution of the program in accordance with required fiduciary and financial management practices.

6.3 CIC Host Selection The Center‟s host and consortium will be identified via a request for proposal (RFP) process. The lead partner must be Vietnamese; therefore, local legal registration may be needed. Applicants will be encouraged to consider partnerships with other organizations, inside and outside Vietnam in order to best provide the range of capabilities necessary to establish and operate the CIC. Short-listed organizations or consortia will be required to provide full technical proposals indicating that they are qualified to perform the services outlined in this business plan.

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Important evaluation criteria for consortia partners will include:

. Capabilities to build and manage complex organizations, including strong internal governance frameworks and a track record of fiduciary responsibility and accountability. . Proven ability to attract and build a strong team of individuals including a senior management team for project implementation. . Understanding of the needs of climate technology SMEs in Vietnam or similar contexts, including experience evaluating climate technologies and incubating early-stage businesses. . Strong local and international links with potential partners including climate technology firms, investors, technical and business experts, policy experts, and leading research and development organizations. . Ability to leverage existing and additional sources of funding, both cash and in-kind, such as space, equipment, and staff. . Ability to implement and maintain procurement and financial management processes and a comprehensive M&E strategy. . Physical presence, including relevant experience, partners and networks in both Hanoi and Ho Chi Minh City with the ability to engage rural and regional areas.

6.3.1 Sample of possible CIC host organizations in Vietnam17:

Institution/Organization Type Partners/Funders TOPICA Founder Institute Business incubator Private

John Von Neumann Institute Education Vietnam National University, HCMC

Dragon Capital Clean Development Fund Equity fund Private

Indochina Capital Infrastructure Fund Equity fund Private

BK Holdings Semi private Company under Hanoi University of Science and Technology

Saigon Hi-Tech Business Incubator (SHBI) Incubator - Government Government Saigon Hi-Tech Park at Saigon Hi-Tech Park (SHTP) is under the management of People‟s Committee of HCMC

17 Note selection will be made via competitive bidding process following World Bank Group procurement guidelines. Above list is informational only and is in no way indicative of selection.

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6.4 Fund Manager In addition to the CIC host, a separate contract for the investment funds will be established with a suitable fund manager via a competitive selection process. It is expected that the CIC investment fund will be framed on the key principles outlined below. The framework for this fund may evolve and may be determined in discussion and negotiation with the selected investment fund manager. More details of the fund will be outlined in the Request for Expressions of Interest for hosting the CIC‟s funds.

Fund manager will place investments alongside CIC host activities

6.4.1 Investment philosophy and approach . The fund should aim to address the financing gap for start-up and early stage business models and growth-oriented SMEs.

. The investment fund should be managed as a „seed investment fund‟ addressing the financing gap below the radar of the current set of impact and private equity investors in Vietnam.

. The fund manager should expect to take a hands-on approach to support investee companies, working closely with senior management to advance each company‟s viability and commercial success.

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6.4.2 Investment targets

. The fund should invest in businesses that address Investment criteria: The CIC‟s climate change challenges either through mitigation investment term-sheets will be (reduction of GHG emissions) or adaptation to developed by the CIC‟s fund changing local climate conditions. This would include manager. The broad metrics upon prioritized areas of energy efficiency and sustainable which CIC will invest include: agribusiness. While the fund will be required to focus on investments in these areas, it will not be limited in . Level of Innovativeness its ability to invest in promising opportunities in other . Technology priority for country climate related sectors. In addition, there will be no . Management experience preferred investment based on demographic criteria . Competitive advantage (e.g. women-owned businesses), however the CIC will . Market & growth potential track gender involvement in investments and . Uniqueness of business model coordinate this with gender outreach activities. . Quantifiable environmental benefits . Portfolio companies would generally have a . Impact on gender and social proprietary advantage such as a unique technology inclusion development approach, intellectual property position or a difficult-to-replicate business model. Financing would be tied to achievement of agreed technology, financing or business development milestones to mitigate investment risk.

. The Fund would typically take minority positions, with typical consent and governance rights, including Board representation. It is anticipated that the Fund would play a strong role in developing good corporate governance practices in its portfolio companies.

6.4.3 Financing mechanisms . The investment size in each company will be between USD 150,000 to USD 750,000 based the company‟s funding requirements and appropriate due diligence. The fund will target early- stage companies with a clearly articulated business plan, in which the fund serves as a critical enabler of company growth. Generally, the fund is expected to invest in self- liquidating preferred equity or convertible debt instruments depending on existing regulations in Vietnam. Convertible debt may not be feasible within current financial regulations and therefore this will be established in negotiations with the selected fund manager.

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6.4.4 Leverage . The fund manager will be required to leverage the capital committed from the CIC investment fund by attracting additional investment capital from other investors. It is envisioned that fund will leverage up to twice the investment amount directly through private, commercial co-investors, IFIs, philanthropic organizations and angel groups. The CIC host will work to build a Diaspora network that will be invited to participate in funding opportunities. Similarly, infoDev will continue to engage policy makers, local banks and the IFC for potential partnerships on debt co-financing or credit-lines for CIC beneficiaries.

6.4.5 Fund structure: . The fund manager would require local legal registration in Vietnam, however funding maybe housed in a more politically and financially efficient jurisdiction in South East Asia (e.g. Singapore), that is governed and managed in line with best practice.

. Fund manager fees will come from the CIC grant to the fund manager. Based on the Kenya CIC lessons, fees will include (i) management fees, likely higher than the usual 2% to compensate for the additional costs associated with smaller, earlier stage investments, and (ii) profits from investments, with details such as first-loss provisions and the waterfall of returns to be determined in negotiation with the fund manager (see below graphic).

. infoDev will aim to coordinate the fund with existing investment initiatives including donor programs such as Finnfund, Vietnam-Finland Innovation Partnership Programme (IPP), and the recently announced AusAID-World Bank investment and advisory program18. To supplement locally available investment expertise, an established fund manager from outside Vietnam may be required to assist with investment management. In this case, the fund manager would be expected to place at least investment officer level staff to oversee and implement operations in Vietnam.

6.4.6 Foreign Exchange . Vietnam‟s ordinance on Foreign Exchange Control stipulates that investment capital in foreign currency must be remitted via foreign currency accounts established at an authorized credit institution. These funds must then be converted into Vietnamese dong for the implementation of the investment. Accordingly the CIC, through its investment fund, will

18 AusAID to fund WB program to effectively develop Vietnam, March 2012. http://www.thanhniennews.com/2010/pages/20120311-wb-to-use-ausaid-fund-for-vietnam-effective-development.aspx

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set aside funds in foreign currency for equity investments for firms, with a provision for exchange rate fluctuations.

. In addition, the CIC will liaise with the State Bank of Vietnam and facilitate foreign currency borrowing for firms whose outputs are export oriented. Foreign exchange issues will be discussed with potential fund managers during implementation.

6.4.7 Local presence and relevant experience: . The fund manager should demonstrate local presence and an understanding of the Vietnamese context, market opportunities, and challenges.

. The fund manager should demonstrate substantial in-country networks to ensure effective deal sourcing. Additional regional networks (e.g. East and Southeast Asia) are desirable.

. The fund manager should demonstrate relevant experience and track record in fund management and impact investing and a strong interest in clean-tech/renewable energy.

. At the proposal stage, the bidding firm will be required to present the specific profile and experience of the senior management team including the profile of the key senior investment officer(s) who would drive and be accountable for the fund.

6.4.8 Returns, expectations and exit value: . In negotiation with infoDev, the fund manager will set a target return of up to 5% to both investors in the fund and co-investors based on exit mechanisms and timelines, with a 20% carried interest for the fund manager. It is anticipated that the fund will be in operation 5 to 8 years from final closing subject to two one-year extensions with the consent of investors.

. Financial returns and exits including profit-sharing royalties, repayments, buybacks, acquisitions or public sale should be reinvested in the fund prior to allocating returns to investors, co-investors and partners. Once the CIC‟s fund has been replenished, if possible, returns should be allocated to the CIC host to ensure continued sustainability of the Center.

. The fund manager will define, in partnership with infoDev, supplementary targets and indicators to advance the CIC‟s overarching objectives within the context of Vietnamese capital market limitations. The CIC will collaborate closely with other funds, programs and development initiatives aimed at developing capital markets in Vietnam in order to facilitate successful exits.

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CICs Fund’s waterfall reflow provides 50% cushion to reduce financial risk to co-investors

6.4.9 Link to the CIC host: . While the CIC investment fund would be managed and governed independently from the CIC host, the two components are complementary and the investment fund must be linked to the CIC‟s other services, programs and grant activities, while still maintaining independence in funding decisions. Ways to ensure this link will be developed by infoDev in conjunction with the managers of the CIC and investment fund.

. One of a number of proposed linkages will be the establishment of the CIC host as a limited partner (LP) in the fund. After the first few years of operation, the CIC should be registered as its own legal entity, whereupon the LP shares would then be transferred to the CIC. The fund would likely have a 5 year investment period and a 7 to 8 year term. The fund manager will distribute profits to LPs according to the waterfall agreed in negotiations.

. To allow flexibility for the fund manager, technical assistance and other mentoring services provided by the CIC will not be a mandatory condition for receiving financing. The CIC will refer appropriate clients to the fund manager and vice versa, however both can support businesses that do not interact with the other.

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6.4.10 CIC investment pipeline: . infoDev has assessed market demand for the CIC‟s services and financings via extensive identification and consultation with potential private sector beneficiaries. These have been presented in chapter 3.

. To actively encourage the demand for the CIC fund‟s investment products, a dedicated „Innovation Fund‟ proof-of-concept (PoC) grant facility will be managed by the CIC host. The ticket size for the PoC funds ranges from USD 25,000 to USD 50,000 and will primarily fund technology development and company formation in order to build a robust pipeline for the CIC‟s equity investments. The equity investments will aim to invest in the most promising PoC grant recipients, but will not be limited to investing in these companies only. Coordination between the CIC host and the fund is mentioned above and will be further clarified in grant agreements with implementing partners.

. Significant outreach and promotional activities will be required in the first years to build awareness and encourage funding application The Center is also staffed with a number of Partnership Development Managers who will be working closely with affiliates to identify and source potential deal-flow for the CIC‟s fund. infoDev will also ensure that the CIC fund host has strong networks in Vietnam. In addition to this, a finders or promoters fee may also be negotiated with the fund‟s host firm.

6.5 infoDev The World Bank‟s infoDev will act as a trustee and implementation partner for the CIC. Financing for the CIC will be housed within a dedicated Climate Innovation Multi-Donor Trust Fund (CITF) which will have the fiduciary oversight of the World Bank. Implementation oversight, project management and monitoring and evaluation will be executed by infoDev‟s CIC Program Implementation Team to ensure timely and successful program delivery.

The project will be executed via contractual grant agreements between Dev and the CIC host institution and partners. infoDev will act as the administrator of the grant agreements and competitively source recipients based on their ability and capacity to deliver the CIC‟s services and programs as outlined in the business plan. Multiple grant agreements may be issued with various partners based on their capability of delivering a specific service.

The CIC host institution will also be tasked with sub-contracting specific services as appropriate. These services will include the capacity building components of the CIC including training, advisory services, market information, and policy support to the government. This will allow the

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CIC‟s services to be delivered by the most appropriate organizations, leverage existing expertise, networks and overheads while reducing duplication of existing activities.

Grant agreements will also be phased over two periods: a launch phase in years 1 to 2 and scale-up phase in years 3 to 5. This will allow infoDev and donors to maintain flexibility over contingencies including modifications to recipient executed activities.

Grant agreements will outline the following contractual arrangements with grant recipients:

. Project deliverables . Eligible expenditures . Monitoring, reporting and evaluation . Withdrawal conditions . Financial Management . Intellectual property rights/licenses . Procurement infoDev will coordinate all activities with local World Bank and International Finance Corporation (IFC) colleagues, to leverage existing in-country knowledge and expertise and link with complementary WBG projects and investments where appropriate. This governance is illustrated in the below diagram.

6.6 Donors Donors to the Vietnam CIC will form part of infoDev‟s Climate Technology Program Steering Committee (SC). The SC will meet at least once a year and will be responsible for: (i) providing overall strategic direction to the Program; (ii) endorsing the annual work plan and budget for CTP; and (iii) periodically reviewing overall progress of activities conducted under the Program and provide guidance to individual country CIC‟s. Decisions of the SC will be communicated to infoDev in writing. The Steering Committee will be chaired by the World Bank‟s Financial & Private Sector Development Vice President, or its designee.

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Governance structure of Climate Innovation Center

6.7 Safeguards As the implementation agency, infoDev strictly follows World Bank procurement guidelines and procedures. In addition, the CIC host and fund will also be subject to World Bank procurement guidelines. They will be required to display financial management and procurement capacity through the presentation of a „procurement plan‟ prior to receiving implementation funding by infoDev. Part of this process will include a safeguard assessment of the CIC host. Furthermore, safeguards will also be assessed at the CIC level for major programs and funding decisions that are higher than a pre-identified threshold (for example, any construction/renovations above $50,000 or investment decisions above $100,000) . Safeguard triggers will include:

. Natural habitats . Involuntary resettlement . Forests . Safety of dams . Pest management . International waterways . Physical cultural resources . Disputed areas . Indigenous peoples . Child labor

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6.8 Other Issues to be Addressed During Implementation . Outstanding governance questions including board membership, management structures and ownership of the CIC which will be addressed in detail when founding donors and hosts are identified. . Investment governance and structuring including design of fund structure, potential leverage amounts, term-sheets, management fees, and coordination with CIC host. . Staffing review including reassessment of in-house versus outsourced staffing requirements for each business line based on host‟s existing capacity. . Technology priorities including understanding which sectors have the greatest demand for the CICs services and how the Center‟s technology specializations and expertise will evolve over the first years of operations. . Intellectual property rights including addressing ownership issues amongst the Center, affiliates, partners and investees. . Performance metrics including the priority impacts and objectives the CIC will measure over the first phases.

6.9 Exit Strategy

6.9.1 CIC Host While donor money will be necessary to seed the CIC over the first five years, it is expected that the director and management team will raise additional contributions (both cash and in-kind) from local stakeholders for continued operations beyond the first five years. The objective of initial donor funding is to establish the CIC, generate successes and demonstrate the program‟s value for local public and private sector support in the longer term. Donors are expected to exit as major funders of the CIC after the first five years, with investment income and operational revenue, subsidizing a majority of the ongoing cost of the program. Further support to supplement the entire costs of the CIC will be sought from both the Government of Vietnam. Other funding sources from international climate finance, philanthropy and corporate sponsorships will also be considered to ensure the sustainability of the program after 5 years.

6.9.2 CIC Fund Distributions allocated from the fund‟s liquidation will either be transferred to the CIC host for budgetary support or reinvested in the fund on a revolving basis. The fund will operate for a period of five to eight years depending on the success of the investments. The sunset clause for the fund will be negotiation upon selection of an appropriate fund manager.

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6.10 East Asia Regional Engagement The Vietnam CIC will be a member of infoDev‟s CIC network, which will allow the Vietnam Innovation Center to be connected to climate technology markets in the region. Through the Climate Technology Program activities, infoDev will help facilitate access to markets, build capacity and promote south - south knowledge transfer and trade. The Vietnam CIC will also be linked with CICs in Kenya, Ethiopia, South Africa and India to assist entrepreneurs in accessing foreign markets and expertise. These linkages will also allow the Vietnam Center to benefit from knowledge generated from the implementation of CICs in other countries.

6.11 Organizational Structure In addition to the above governance arrangements, the CIC will have its own internal organizational structure which will comprise of an advisory committee, a management team and key staff.

6.11.1 Advisory Committee (AC) An Advisory Committee will advise the CIC host on technical elements related to planning, strategy and business development. It will include up to 7 members, to be composed of relevant private sector and government representation and will be nominated by the CIC in collaboration with infoDev and founding partners. To ensure involvement of the Vietnamese Government including alignment with relevant policy strategies, the AC will reserve 3 of the 7 committee memberships for representatives of different government ministries.

These memberships, which will be provided on a two-year rotating basis, will assist in forming linkages with various public and private partners to help achieve its mandate. The AC will also ensure appropriate coordination is made with existing initiatives of AusAID and the Foreign Ministry of Finland. The CIC will consult infoDev and funding partners on changes in the committee‟s structure over the duration of the program. The AC, once established, will set up separate bodies that, over time, may be grouped into specialties based on technology sectors. For example, the CIC may have an advisory sub-committee on „transportation technologies‟.

6.11.2 Management Team In accordance with the organizational design, program budgets will be managed by a management team led by the CIC Manager. The Manager will be responsible for the day-today operations of the Center, including oversight of programs, reporting to infoDev, the host and advisory committee, developing relationships, setting strategic objectives and fund-raising. The Manager will be supported directly by a Procurement and Financial Management Specialist to ensure appropriate fiduciary duties are enacted and procurement guidelines followed. The CIC

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Manager will also be supported by a Marketing and Communications Officer that will lead the promotion, branding and publicity of the Center‟s programs and services.

6.11.3 CIC Staff Other roles within the CIC include Case Manager/s who will manage the budgets for the POC investments, mentoring and other advisory service offerings as these activities are closely related. The Project Managers will manage the budgets for the various Access to Policy and Information activities, while the Partnership Development Managers will be responsible for the brokering and facilitating of local, regional and international relationships. An International Fellowship will be established to bring in a series of experts to manage the policy advisory and other related analytical products while an Energy/Environment Specialist will be on hand to oversee technical expertise requirements. Analysts and administrative staff will be responsible for supporting the above functions.

6.11.4 Fund Management In addition to the CIC staff, An Investment Officer will be part of the selected Fund Manager‟s team and will be responsible for overseeing investment activities including scouting, due- diligence, selection and advisory of investees. These activities will be coordinated closely with the CIC host and affiliates. In this way, the CIC‟s advisory, technical assistance and mentoring programs can support investees as needed. The Fund will however be operated independently to ensure no conflicts of interest arise and that investment decisions are made impartially. One mechanism to ensure coordination without conflict is for the CIC to act as a Limited Partner (LP) in the fund.

Proposed organizational structure of CIC

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6.11.5 Staffing requirements The illustration below outlines the staff requirements for the CIC, totaling the equivalent of 19 full time employees (FTE) per year. The CIC may choose to outsource many of these roles through contracts with service providers or through partnership arrangements with consortia members. Some of these positions and roles may also form part of the World Bank‟s implementation team for the Center based on the host organizations‟ capacity and capabilities. Salary assumptions for the different roles can be found in Annex 4.

Role Description FTE per year

Manager of center who reports to a board and CIC Manager oversees investments, enterprise development, (1) budgets and fundraising for center

Oversees proof of concept phase and supports Case Manager technologists, entrepreneurs and enterprises in (2) accessing technical assistance and mentorship

Part of fund management team. Scouts, screens, Investment Officer19 selects and advises investment and co-investment (1) opportunities.

Supports and oversees a range of programmatic Project Manager operations of the CIC (2)

Partnership Makes links between strategic national and Development international partners, builds network of mentors and (3) Manager develops regional programs

Tasked with conducting research for center's market Analyst information programs (4)

Experts and thought leaders affiliated or on Fellow assignment with center tasked with preparing reports, (1) articles and policy advisory

Marketing and Coordinates branding, marketing, communications Communications and outreach for center (1) Officer

Responsible for Center's procurement and financial Financial management obligations to meet World Bank group Mgt/Procurement (1) procedures and guidelines

Energy/Environment Supports all projects and is a source of technical Specialist expertise in energy and environment sectors. (1)

Administrative Responsible for the Center's administrative tasks Support (2)

19 The cost of the investment officer approximately constitutes the anticipated management fee of the fund (3-5%). This may not be the only staff member that the fund employs as they will be required to leverage other funding sources which would support the costs of further investment staff.

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7.0 Financial Plan

7.1 Budget for Years 1 to 5 The included graphics illustrate the budget allocation for the CIC‟s first five years of operations totaling USD 17.95 million which includes the preparation, implementation, launch and operation of the CIC over the first five years. This amount also includes linking the CIC with infoDev‟s global program activities and network. The first USD 17.95m Vietnam CIC budget year of the CIC‟s implementation will breakdown Investments primarily be dedicated to establishing Tech Commercialization 6% institutional capacity, including 15% Venture Acceleration establishment of the management team 2% Market Analytics 4% and the launch of major programs. The 53% 3% Policy support subsequent years will scale the CIC‟s 5% 12% Regional programs investment, mentoring, regional and Core staff & overheads other capacity building programs. Global Network Participation

The majority of the Center‟s funding will be allocated towards investments, Vietnam CIC Budget Breakdown which total USD 9.3 million including 6,000,000 Investments staff related costs. Core staff and 5,000,000 Core staff & overheads central costs is the second largest 4,000,000 Tech Commercialization allocation at just under USD 2 million. 3,000,000 Global Network Participation The CIC‟s overall staffing including 2,000,000 Venture Acceleration 1,000,000 Policy support programmatic staff represents USD4.6m - Regional programs or 23% of the budget; however, some Year Year Year Year Year Market Analytics of these roles are envisioned to be 1 2 3 4 5 outsourced.

The Innovation Fund is another significant budget item at approximately USD 1.8 million. This will provide proof-of-concept grants to deserving climate technology innovators, thereby contributing to the CIC‟s future investment pipeline. Approximately USD 1 million will be budgeted for the Vietnam CIC‟s participation in infoDev‟s global network, most notably to the CICs in other countries.

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7.1.1 Vietnam CIC Aggregated Budget in USD „000s The table below breaks down the CIC budget for Years 1-5; discrepancies in the total are due to rounding. A more detailed budget is available in Annex 5. Year 1 Year 2 Year 3 Year 4 Year 5 ACTIVITY PROG PROG PROG PROG PROG TOTAL STAFF TOTAL STAFF TOTAL STAFF TOTAL STAFF TOTAL STAFF TOTAL RAM RAM RAM RAM RAM Investments 100 2,200 2,300 100 2,800 2,900 100 3,800 3,900 100 - 100 100 - 100 9,300 Investment 35 8 43 35 8 43 35 8 43 35 8 43 35 8 43 215 Syndication Innovation Fund 50 240 290 50 325 375 50 320 370 50 335 385 50 335 385 1,805 Tech 20 15 35 20 15 35 20 11 31 20 6 26 20 6 26 153 Collaboration Facilities 10 14 24 10 14 24 10 14 24 10 8 18 10 - 10 99 Business devel- 76 96 173 76 96 173 76 106 183 76 59 135 76 9 85 749 opment services Education and 28 14 42 28 14 42 28 14 42 28 14 42 28 14 42 211 Training Market Analytics 20 90 110 20 90 110 20 90 110 20 90 110 20 90 110 550

Policy advisory 100 42 142 100 42 142 100 42 142 100 42 142 100 42 142 710 Regional 35 30 65 35 30 65 35 30 65 35 30 65 35 30 65 325 Networks Core Staff 330 64 394 330 64 394 330 64 394 330 64 394 330 64 394 1,968 Monitoring / 20 50 70 20 50 70 20 50 70 20 50 70 20 50 70 265 Evaluation Travel / other - 30 30 - 30 30 - 30 30 - 30 30 - 30 30 150 expenses Overheads - 72 72 - 72 72 - 72 72 - 72 72 - 72 72 360 (Office facilities) Subtotal 825 2,944 3,769 825 3,584 4,409 825 4,610 5,435 825 767 1,592 825 729 1,553 16,859 Global Network 118 100 218 118 100 218 118 100 218 118 100 218 118 100 218 1,094 Participation Total 17,953 *Project implementation and management costs are included in the above budget

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7.2 Sustainability The CIC will work for partial self sustainability, largely through its investment activities, which are anticipated to cover 71% of the CIC‟s operating costs and replenish the CIC‟s annual investment activities each year by year 7. The Center can aim to reach a higher level of sustainability by introducing other revenue streams, once a strong value proposition has been achieved in the early years. It is, however, envisioned that the Innovation Center will never be fully sustainable and will require continued public subsidy given its inherently higher risk versus established private sector initiatives. The detailed assumptions driving this revenue are shared in Annex 6.

Years Sustainability 4 5 6 7 8 9 10 CIC Total 0% 47% 47% 71% 71% 73% 73% Investments Only 0% 67% 67% 101% 101% 104% 104%

$6,000,000

$5,000,000

$4,000,000 CIC Budget $3,000,000 Investment Budget $2,000,000 Investment Revenue

$1,000,000

$0 4 5 6 7 8 9 10

Sustainability of CIC over time

8.2.1 Investment fund: Valuations of CIC invested companies were estimated based off investment levels of seed funding over both 5 and 10 years as outlined in the below schedules and detailed in Annex 7.

Ownership Investment Average $ yr 1 2 3 4 Total $ held by CIC PoC 30.500 Nil-grants 9 11 10 10 $1,220,000 Seed 352.000 30% 8 8 9 0 $8,800,000 Investments

Given the CIC is has been designed as a long-term capacity building initiative, it will realize much of its impact after the first 5 years. Therefore it is more realistic to calculate results using an investment schedule of 10 years which takes into account (i) continued investment in the CIC and (ii) investment returns that the CIC will use to replenish its own fund. Therefore investment

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returns and impact have been calculated on continued investment in the CIC beyond its first 5 years of operations under a budget scenario of USD17.95 million.

It takes time to realize investments in early stage companies, therefore 5 to 8 years will be required to achieve exits from investments made in the first 3 years, largely by trade sale or shareholder buy-back. Proof of concept investments would not generate revenue directly (however may be linked to a royalty mechanism for the CIC – See „7.2.2 Other revenue potential‟), however would help generate quality deal flow for future CIC investments. Using conservative assumptions, verified in the local context, returns would start to flow back to the CIC starting from the 5th year based on the below assumptions.

Key Investment Revenue Assumptions:

Average Years to Exit multiple Type of Investment Probability Investment exit/repayment (Equity only) POC Grants (no estimated revenue generation, however $30,500 N/A

royalties possible)

Seed investments $352,000 - -

Company fails or produces no 50% - * - realizable value

Company has low growth 20% 5 1.5

Company has modest growth 15% 6 2

Company has medium growth 10% 6 3

Company has high to very high 5% 8 7 growth * No realistic exit given the unlikelihood of management buy outs. If equity is converted to debt, additional revenue can be achieved through interest earned.

It is conservatively estimated that about 50% of the CIC‟s investments will fail or produce no realizable value. The remaining investments will include low-growth enterprises at 20% of the portfolio, modest growth at 15%, medium growth at 10% and high to very-high growth at 5%. These probabilities have been used in combination with assumptions on various exit multiples over a 6 to 9 year period. The investment returns from the CIC‟s fund will likely take many years to generate revenues given the high-risk and higher capital requirements of climate tech companies. Assuming continued investment in the CIC‟s fund, investment returns are predicted to grow from USD 800 thousand in year 5 to USD 3.8 million in year 7. This delivers an expected

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investment rate of return (IRR) of 3% on the CIC‟s portion of the funding, taking into account the first loss provisions in the fund‟s structure.

Years

Amounts In USD 4 5 6 7 8 9 Yearly _ $844,800 $2,534,400 $3,625,600 $2,886,400 $1,108,800 Investment Returns Cumulative - $844,800 $3,379,200 $7,004,800 $9,891,200 $11,000,000 investment returns

With USD 6.3 million of continued support to the CIC to continue investments in years 4-6, the projected returns from investments would allow the fund to become self-sustaining. After year 7, these returns can either be re-invested into CIC companies or invested in the CIC host to cover operating costs of non-investment services. The governance arrangement between the fund and the CIC host would need to be designed to facilitate such funding flows (See chapter 7) including establishing the CIC host as a limited partner (LP) in the CIC‟s fund.

The revenue model strategy has two distinct benefits for the CIC and companies it assists. 1. The ambitions of both are aligned, sharing the common objective of building a significant business. Actions that benefit the company also maximize the return to the CIC. 2. Importantly, the success-sharing model builds a sustainable future for the CIC, with a model that is scalable and replicable. Returns from company success can not only be used for reinvestment, but also incentives to management, investment officers and mentors who are providing critical advisory support.

7.2.2 Other revenue potential: infoDev has investigated other potential revenue sources, which may be developed over time. These revenue streams will be evaluated and developed in years 3 to 5, once a strong value proposition has been achieved. It is projected that via the below revenue mechanisms, the CIC can aim to cover a portion of the remaining 29% of the budget at year 8. It is assumed that management would periodically revisit the business model of the center to identify sources of funding where appropriate without compromising the objectives of the program. Such sources of revenue could include:

. Royalties: A royalty arrangement will likely be implemented as part of the proof of concept grants. If the company is successful and launches the product or services, the CIC would be entitled to up to 7% of annual revenue over a two to three year period.

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. Advisory services: A significant portion of the funding for mentoring and investment advisory could be paid back by beneficiaries over time. This has not been calculated in the current revenue model for the Center however it can be assumed that all monies repaid to the fund will be disbursed for additional advisory service support, even within the first 5 years.

. Carbon credits: The CIC and its beneficiaries will ideally apply for available carbon credits as a potential revenue source. The policy advisory and market information services of the Center should aim to identify such sources of funding.

. Promoter’s fee: By brokering finance as a service, the CIC can generate revenue as percentage of the finance secured. This may be taken in cash or re-invested in the investee‟s business. The revenue potential for such a service should be explored in the future when demand for the CIC‟s investments increases. This would not apply to investments made by the CIC‟s fund.

. Facilities leasing: The CIC will explore the adoption of a pay-per-use model to generate income from the Center‟s agreements with facility providers.

. Sponsorship: The CIC will recruit corporate sponsors that will attract private sector participation. Industry and the private sector will benefit from this affiliation by gaining, among others, access to SME activity, technology and market research.

. Tailored training: In later years, the CIC may be able to monetize its market and technical knowledge. The capacity building team will develop training models that can be provided to industry at a fixed fee. Charging for training will be explored in years 3-5.

. Consulting work: The center may in time, leverage in-house talent and resources to provide consulting services to third parties for a fee. Lessons learnt, relationships built and expertise accumulated by the CIC‟s work would provide a wealth of information for private sector, government and development partners.

7.3 Co-investment and leverage Leverage for all investments will be sought from affiliated investors contributing at the fund level as described in chapter 6. Leverage may also be sought at the company level where co- investors will be identified to invest alongside the CIC‟s fund. Leverage may also be achieved through follow-on investments in CIC companies. It is expected that this will amount to

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approximately 3 times the Center‟s total investment, or over 8 times each donor contribution20. Overall leverage on donor contributions is discussed in chapter 9.

7.4 Fundraising Plan For the CIC‟s operations in Years 1-5, infoDev is raising a cumulative USD 17.95 million. infoDev intends to secure commitments for at least half of the required capital in advance of launching the CIC. Securing this funding is important to ensure that the CIC remains adequately resourced throughout its implementation period. infoDev is targeting investors with an aligned mission to the CIC. The ideal investor base would consist of donors, foundations and potentially corporate sponsors. Discussions with the Government of Vietnam on contributions to the CIC are ongoing. This may be in the form of direct funding support to the CIC host organization or an in-kind allocation such as access to land and industrial parks. However it should be noted that funding solicited from the Government of Vietnam may compromise the ability to house the CIC in a non-governmental organization. This is a critical implementation issue that will be revisited when considering funding options.

Investment in the Vietnam CIC presents a clear value proposition to prospective investors:

. Pipeline: CIC donors will be exposed to an on-going stream of climate technology ventures that are screened through the finance and advisory services activities of the CIC. While the investment fund will use its own criteria to select beneficiaries, the CIC founders will have the opportunity to learn from and potentially collaborate with any enterprises that benefit from the Center‟s services. . Knowledge: CIC donors gain considerable knowledge from their association with the Center. In addition to published research and market analysis, investors will have access to in-depth R&D and technical activity, as well as cutting-edge information on Vietnam‟s green economy and business activity. . Partners: CIC donors gain access to the complete network of CIC partners and stakeholders from R&D facilities and universities to industry and government. These relationships will be strategically valuable to any investor with programs related to, among others, climate change, clean technology, green growth and private sector development. . Measured outcomes and impact: CIC donors will benefit from transparency concerning the outcomes of the Center‟s activities. In addition to providing funders with regular

20 Assuming that there will be three donors equally covering the CIC budget of USD17.9 million, or approximately USD6 million each.

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performance reports, the CIC will provide synthesized data and evidence on economic and social returns to the investors‟ contributions. . Development goals: In addition to directly measureable impact, CIC funders will be responsible for facilitating real transformation in Vietnam‟s green economy. It is expected that these impacts will be in alignment with donors‟ core mission of promoting sustainable green growth in Vietnam.

7.4.1 Current Support Various stakeholders have demonstrated enthusiasm and support for the CIC both in the form o funding and in-kind contributions.

International agencies and donors, such as AusAID and the Government of Finland, in addition to the United Kingdom, Denmark, Norway, have expressed interest in direct funding support as well as facilitating global interactions with potential international partners.

The private sector including Diaspora has played a leading role in the conceptual design and development of the CIC by providing its valuable time and expertise. The CIC will stand to benefit greatly from the commitment and ingenuity of the Vietnamese private sector both as supporters and beneficiaries. In addition, financial institutions such as Dragon Capital Clean Development Fund and Mekong Renewable Resources Fund have shown interest to collaborate on financing bankable projects.

Government agencies like the Ministry of Natural Resources and Environment (through its International Cooperation Department) and Ministry of Science and Technology (MOST) are willing in principle to provide funding for the CIC and advocate for the program within other ministries. In addition, the Ministry of Finance, National Institute for Science and Technology Policy and Strategy Studies (NISTPASS), Ministry of Planning and Investment and National Target Program to Respond to Climate Change, among others, have shown support for the Center. Throughout the CIC‟s implementation phase, in-kind partnerships with the Government of Vietnam will be pursued to facilitate access to high-tech industrial zones for CIC companies requiring preferential tax treatment, land and facilities and access to international talent.

Academic and research institutes such as Ha Noi University of Science and Technology (HUSTECH), Nonglam University (CTBI-NLU), and Vietnam National Cleaner Production Center (VNCPC) have all voiced their support to the CIC. Institutions like these are willing to work with the CIC in providing technical and material support such as coordinating training and use of their equipment and facilities.

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7.5 Second round funding: Years 5+ The Vietnam CIC‟s second round of funding will depend on institutional performance and results generated in Years 1-5. Assuming that the CIC meets or exceeds performance expectations, infoDev is projecting an additional capital requirement of approximately USD 9 million in a business-as-usual scenario from years 6 through 10. This funding assumes continued operating cost of the CIC fund at years 4 & 5 at USD 3.8 million per year and continued overall support for the CIC (host and fund) at USD 5.4 million per year from years 6-10. This amount totals approximately USD 34.8 million over 7 years; however with projected returns from investments, the overall capital requirements would be significantly less at USD 14 million. Realistically, the CIC will go through a rigorous reassessment in Years 4-5 to refine the strategy to understand future funding requirements.

Years

Amounts (In USD ‘000) 4 5 6 7 8 9 10 Total CIC budget years 5+ $3,800 $3,800 $5.435 $5.435 $5.435 $5.435 $5.435 $34.775

Investment Revenue $0 $2,534 $2,534 $3,837 $3,837 $3.960 $3,960 $20,662 Additional funding $3,800 $1,266 $2,901 $1,598 $1,598 $1,475 $1,475 $14,113 required

7.6 Additional Funding Pending any additional funding for the CIC, beyond current projected requirements, the Center would increase in both scale (size of current programs) and scope (additional programs). Additional programs to be considered include:

. Strategic Applied R&D Funding: The CIC could make grants available up to USD 2m for international collaborative research projects to solve highly specific technical barriers to technologies that have a wide-reaching impact for the Vietnamese people.

. Demonstration Project Funding: The CIC may provide larger-scale financing than currently offered to assist in the financing of demonstration projects and field tests. Such activities would involve highly innovative technologies that require large capital injections to prove a concept at a large scale and are often highly risky.

. Workforce Capacity Building: The center could look to expand its current capacity building courses to sponsor and fund larger workforce development activities within Vietnamese universities.

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. Physical Facilities: The CIC would build its own facilities and open the use of such facilities to the wider community based on a „membership model‟. Such a facility would house a range of prototyping and manufacturing equipment, including office and networking space.

. Expansion of regional programs: The CIC would build regional satellite offices in other Vietnamese provinces to better deliver programs and services to beneficiaries in remote and rural areas.

7.7 Global Network Participation: In addition to country level activities, the Vietnam CIC will also participate and benefit from infoDev‟s Global Climate Technology Program. The CTP focuses on a number of global activities to coordinate national CICs, drive learning for developing country innovation in climate technologies, and collaborate with related initiatives. These programs include: (i) CIC Design & Oversight, (ii) Global Financing, (iii) Learning and Analysis, (iv) Global Networking and Collaboration, and (v) Monitoring and Evaluation. These five global programs will serve the needs of Vietnamese climate innovators in developing countries by helping them access the latest technologies, information, financing and expertise to participate in growing international climate sector opportunities.

While the global CTP activities will be operated by the infoDev‟s Washington DC-based expert team, country CIC‟s will be implemented through the local World Bank offices. This will ensure that World Bank and IFC knowledge, systems and funding can be leveraged at the country level.

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8.0 Indicative Impact and Results

The CIC‟s economic, environmental, and social impacts will be determined by the technologies the center supports. These have been estimated using a comprehensive model based on the CIC‟s budget breakdown and investment rationale, which generates targets for the CIC program goals and maps them to dimensions of the results chain: inputs, outputs, outcomes and impacts. Inputs and outputs are shared across the whole CIC, while outcomes and impacts are categorized accordingly. Due to the differing needs of climate technology innovators in Vietnam, several technology-related outcomes and impacts are presented as ranges. The center will aim to support innovations across this spectrum of risk and sophistication, depending on market opportunity and deal flow.21

The principal input to the CIC is the total USD 17.95 million 5-year program cost. The model assumes that this will be shared equally by three donors, resulting in a USD 6 million (33%) contribution and a 3x value for money multiple per donor at the project level. Additional private sector leverage will sort over the five-year period; the CIC is expected to attract up to USD 1.2 million in proof-of-concept grant matching, USD 17.6 million in equity investment co-finance and USD 20.7 million in follow-on investments and later-stage funding. Ten year outputs, outcomes and impacts have been calculated based on a „business as usual‟ scenario to take into consideration the anticipated continued operation of the CIC beyond 5 years.

8.1 Highlights After 5 years, the revenues of 65 CIC-assisted companies will generate the equivalent of USD 40 million in economic impact and help close to 1 million Vietnamese increase their resiliency to climate change. This corresponds to 2.2x leverage on the 5-year budget, 26% economic rate of return, and a cost of $5,079 per job generated. After the tenth year, with continued financial support, the CIC‟s economic impact will have grown to over $151 million. This will deliver 8.5x economic leverage on the 5-year budget, generate 60% economic rate of return, and reduce cost per job to $1,220. The price of CO2 mitigated will be as low as $14/ton, which compares favorably against the planned price of USD 25 for the Australian carbon market22. The Center‟s equity investments will yield an estimated conservative 3% internal rate of return.

8.2 Spillover Effects In addition to the measurable parameters outlined in the results framework, the CIC programs and activities will produce numerous beneficial spillover effects to the Vietnamese economy. It is

21 More in-depth calculations are shown in Annex 8. 22 http://www.eastasiaforum.org/2011/07/12/australia-s-carbon-price/

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envisioned that the CIC‟s example will encourage increased innovative activity in universities and communities. This can lead to higher commercialization rates of domestic R&D, better access to the infrastructure necessary for technology development, and increased workforce capacity of business and technical skills.

The direct and indirect creation of higher-paying, sustainable jobs by CIC-supported companies will boost economic output in surrounding communities and provide more Vietnamese citizens with access to innovative products and services. This more active market will be further accelerated by the wider availability of information, which includes new products launched, companies created, industrial activity and export and trade. In parallel, the CIC will facilitate the creation of new investor networks, enabling Vietnam to capitalize on increased investment opportunities and access to follow-on funding.

Via its coordination, networking and outreach efforts, the CIC will endeavor to increase local and regional R&D cooperation and strengthen industry linkages. This will ensure greater transfer of knowledge, know-how and experience among Vietnamese climate technology companies, in addition to their increased internationalization and competitiveness. Mentor and advisor activities provided by the CIC will also boost entrepreneurial opportunity and the success rates of invested companies. Marketing and outreach for CIC technologies will also increase awareness of the industry. This will in turn encourage favorable policy in support of innovation, entrepreneurship and the accelerated scale-up of new technologies.

8.3 Monitoring and Evaluation The CIC will budget USD 265,000 per year for rigorous monitoring and evaluation of the both direct and spill-over effects that the center‟s programs and services are having on beneficiaries and surrounding communities. M&E will be achieved through the following means of verification:

. Internal databases and data collection . Customer satisfaction surveys . Vietnam CIC annual reports . Government interviews . Focus groups and stakeholder follow-up . Website usage statistics . Surveys and other quantitative . Annual investor focus groups and measurements where possible. interviews . infoDev CIC M&E Framework

The full set of results indicators will be developed in accordance with donor requirements. This will form a comprehensive results framework which will be used to monitor the CIC‟s performance on a quarterly basis.

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8.4 Indicative Results Framework

Inputs Investments $9,515,000 53% Programs $5,595,425 31%

Core Staff & Central Costs $2,742,500 15%

Total $17,852,925 100%

Value for Money Amount Multiple Notes CIC Investment Leverage

a. Proof of concept Matching $1,220,000 1.0 Based on $1.2m PoC Grants budget

b. Equity co-finance $17,600,000 2.0 Based on $8.8m Equity Investments budget

c. Follow-on investments $20,662,400 2.4 Based on $8.8m Equity Investments budget

Total project leverage

a. Per donor Investment $17,852,925 3.0 Based on $6m equal share of each donor

b. Economic Impact – 5 years $40,037,905 2.2 Based on $17.95 m CIC budget

c. Economic Impact – 10 years $151,110,667 8.5 Based on $17.95 m CIC budget

5 Years 10 Years

Economic Rate of Return 26% 60%

IRR on investment portion 3%

Cost per Job $5,079 $1,220

Carbon price ($/ton) $14 - 43

Goals Year 5 Year 10

Outputs Outcomes Impacts Outputs Outcomes Impacts

Economic  Provide business  The equity in-  Total economic  Provide business  The equity in-  Total economic advisory services and vestments will yield impact (cumulative advisory services and vestments will yield impact (cumulative Supporting the financing to 65 19 sustainable revenues) will be $40 financing to 188 66 sustainable revenues) will be $151 accelerated Vietnamese enterprises. Of these, million. Vietnamese enterprises. Of these, million. growth of climate companies. 6 will experience low companies. 22 will experience ventures and  Creation of new  Creation of new growth, 9 will exhibit low growth, 31 will

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entrepreneurial o 40 will receive modest to medium investor networks - o 100 will receive exhibit modest to investor networks - capacity by proof-of-concept growth, and 4 will increased investment proof-of-concept medium growth, increased investment providing a holistic grants1 for technol- have high to very opportunities, success grants for technol- and 13 will have opportunities, success set of financing, ogy commer- high growth. rates, and access to ogy commerciali- high to very high rates, and access to business cialization through follow-on funding zation through the growth. follow-on funding  Higher commer- development the CIC‟s Innova- CIC‟s Innovation cialization rates of  Creation of higher  Higher commer-  Creation of higher services, mentoring tion Fund Fund domestic R&D paying sustainable cialization rates of paying sustainable and training o 25 will receive jobs which increase o 88 will receive domestic R&D jobs which increase programs. equity investments2 economic output equity investments economic output  Carbon price per to use as catalytic to use as catalytic  Internationalization of donor contribution  Internationalization of early stage risk early stage risk Vietnamese climate will have a $43/ton Vietnamese climate capital. capital. tech companies threshold and a best tech companies  Vietnamese climate  Vietnamese climate case price of

tech innovators will tech innovators will $14/ton have access to a have access to a Environmental network of 50  CIC firms generate  87k-260k people will network of 100  CIC firms generate  325k-985k people will mentors. 74-222m kWh3 (17- be less vulnerable to mentors. 280-840m kWh (64- be less vulnerable to Building a pipeline 51 MW installed climate change. 192 MW installed climate change. of high-impact  Finalize 5 facility capacity4) from  Finalize 10 facility capacity) from climate solutions o 8-24k provided o 30-90k provided provider agreements cleaner and/or provider agreements cleaner and/or by supporting the with power from with power from at the rate of 1 per renewable energy at the rate of 1 per renewable energy localization, cleaner and/or cleaner and/or year, ensuring access sources, improve year, ensuring access sources, improve commercialization renewable energy renewable energy to facilities and tech- water access by 34- to facilities and tech- water access by and transfer of sources 8 sources nical assistance for its 103m kL5, reduce or nical assistance for its 130-391m kL, reduce relevant supported supported avoid the equivalent o 36-108k given or avoid the o 135-410k given technologies companies. companies. of 113-340k tons6 of better water equivalent of 425k- better water through access to CO2, and protect/ supply9 1.3m tons of CO2, supply innovation grants,  Produce 4 Market  Produce 4 Market summaries, 2 Trend avoid the loss of 1.6- summaries, 2 Trend and protect/ avoid industry o 11-34k with access o 40-130k with reports, and 1 Annual 5.3k hectares of reports, and 1 Annual the loss of 6.5-20.2k partnerships and 7 to cheaper/ better access to report per year for a forest report per year for a hectares of forest facility providers. quality food10 cheaper/ better five-year total of 35 ten-year total of 70 quality food analytical reports. o 2-5k smallholder analytical reports. farmers with o 7-20k smallholder  Facilitate 20  Facilitate 40 increased yield11 farmers with partnerships with partnerships with increased yield industry and the  Innovation and industry and the private sector, 10 of entrepreneurship private sector, 20 of  Innovation and

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which should be with contributes to which should be with entrepreneurship regional and/or Vietnam's climate regional and/or contributes to international partners. resilient growth and international partners. Vietnam's climate development resilient growth and  Organize the  Organize the development following events: following events:

Social o 60 business  Create 3.5k jobs  Increased transfer of o 120 business  Create up to 15k  Increased transfer of (703 direct and 2.8k knowledge, know- jobs (3k direct and knowledge, know- Improving seminars on seminars on indirect)12, including how and experience 12k indirect), how and experience Vietnamese various topics various topics 1.7k for women13 including 7k for livelihoods through relevant to climate  Increased work-force relevant to climate  Increased work-force and 637 for youth14. women and 2.7k for climate innovation tech SMEs capacity of business tech SMEs capacity of business youth. and fostering a o 5 international  Increased inno- skills, knowledge and o 10 international skills, knowledge and culture / events (1 per year) vative activity in know-how events (1 per year)  Increased innovative know-how environment universities and activity in universities centering on the  Strengthened legal/ centering on the  Strengthened legal/ supportive to the communities and communities CIC Innovator organizational CIC Innovator organizational industry‟s long-term Awards. Each environment Awards. Each environment growth and event should be event should be competitiveness. attended by 20 attended by 20 international and international and 150 Vietnamese 150 Vietnamese participants. participants.

Notes and 1 Each direct investment will create 10 jobs plus additional employment in each subsequent year depending on its projected level of growth. Assumptions 2 Each proof of concept grant will create 3 jobs in the year that it is disbursed 3 Using $0.27/kWh as average cost of wind and solar energy in Vietnam (South Asia Regional Initiative for Energy) 4 Conversion assumes daily energy production at 50% capacity factor. 5 $0.29 average cost per kL of water (Vietnam Ministry of Finance) 6 Based on biomass CO2 emissions at 1.22 kg/kWh. Includes +25% from water and agricultural products that also mitigate CO2 7 Based on hectare of forest required to offset carbon by 2.6 tons per year (http://www.coloradotrees.org/benefits.htm) 8 Based on 918 kWh per capita energy use in Vietnam (Harvard Kennedy School) 9 96 kL water usage per person per year (FAO) 10 $888 food expenditure per household (Vietnam GSO) and 3.8 people per household in Vietnam (World Bank) 11 $4,700/ha cost for sprinkler irrigation (FAO) 12 Indirect jobs are created at 4 times the rate of direct jobs. (Source: comparative data of high-growth technology sectors in other countries) 13 Women represent 49% of employment in Vietnam (ILO) 14 Youth aged 20-29 represent 18% of employment in Vietnam (ILO)

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9.0 Risks

Along with expected successes, there are a range of risks associated with establishing an innovative program such as a CIC in Vietnam; in terms of (i) Operational Risks, (ii) Market Environment Risks and (iii) Implementing Agency Risks. The stakeholder outreach conducted provides an indication of the major risks that will be encountered and potential management strategies. However, a key role of the Center‟s advisory committee and management team will be to examine, evaluate and manage risks over time. Included below is an overview of the key risks identified and their associated rating, description and mitigation strategy:

Risk Risk Category Risk Description Proposed Mitigation Measure Rating 1. CIC Operational Risks . Locally based infoDev staff will maintain relationships with key . Stakeholders including stakeholders throughout beneficiaries, partners, implementation period government and . Center will be staffed with private sector that 1.1 Stakeholder support L „partnership development‟ manager were involved in design . Board will include seats for key process are not stakeholders supportive of the CIC‟s . infoDev will monitor implementation implementation. to ensure stakeholders‟ design is followed . There is a risk that . Throughout the design phase, infoDev potential host has assessed the capacity of existing institutions/ institutions and identified such risks implementation . Grant agreement/s will encourage 1.2 Host institution/ partners for the CIC do consortia and partnerships to implementation M not have the strengthen bids partners adequate capacity, . The project implementation team will skills and resources to provide ongoing support and successfully bid and technical assistance throughout the host the center. implementation phase. . There are risks . Salaries of CIC management have associated with the been calculated at competitive unavailability or lack of market rates to attract required talent talent to manage the . Identification of management and center staff will follow WBG procurement 1.3 Management team M . Other risks include the guidelines and competitive selection and staff selection of a manager procedures and/or staff who are . Local advisory committee will oversee ineffective at delivering performance of management and the CIC‟s expected staff and set required metrics to results monitor management results.

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. infoDev and the CIC board will monitor the results of the Center to ensure grant agreement milestones are being met. This will be achieved through the establishment of a . CIC does not achieve thorough M&E framework. adequate . In coordination with donors, infoDev performance results as will retain the flexibility of reallocating agreed in the grant budgets based on the performance 1.4 Performance M-H agreement of specific budget items of the CIC. . Investments do not Grant agreements will be canceled generate required and reissued if milestones in the M&E returns to achieve CIC framework are not achieved. sustainability objectives . The Center‟s first 5 years of funding are not contingent upon returns on investment. Expectations for ROI are long-term and will be monitored regularly to adjust CIC‟s future funding requirements. 2. Market Environment

Risks . CIC has been designed in close coordination with Vietnamese government including multiple ministries . Political support for the . Center is not contingent on CIC weakens and/or government funding political opposition to . Government has minority role on CIC the CIC board . Introduction of 2.1 Country L . CIC is aligned with Vietnam National perverse subsidies Strategy on Climate Change and/or decrease of . CIC investments will not be made conducive policies to based on speculative or short-term support climate policy measures. technologies . CIC‟s policy advisory business line will conduct outreach to government decision makers to ensure such risks are fully considered. . Assessment of market demand has been incorporated into the design . Poor demand for CIC‟s phase by interviewing and analyzing services potential CIC beneficiaries 2.2 Market demand L . Lack of quality deal- . Center continually adapts to market flow for center‟s gaps and reallocates budgets as investments necessary . Emphasis on customer feedback, quality control and M&E. . Overlap with other . Close coordination with existing 2.3 Competition L initiatives. initiatives and focus on center . Other visibility.

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donor/development . Demonstrable support from program/company stakeholders and local government plans to implement a to ensure CIC is aligned with national CIC. goals 3. Implementing Agency

Risks . More than 50% of budget current secured and ongoing discussions with . Risks that full initial a number of donors & investors. financing for center‟s . Project still viable at lower levels implementation in first 5 although not ideal. Various scenarios years is not secured. have been planned and accounted . Budget outlined in 3.1 CIC financing/donor for. L business plan is support . Financial sustainability as an explicit insufficient to execute aim of the Center post year 5 with a current model. clear focus on revenue generation. . Additional risk of . Close monitoring by infoDev of financing beyond year financing decisions including flexibility 5 not being secured. in reallocating program budgets as needed. . As part of project preparation, infoDev will ensure that the staffing . Risk that the infoDev‟s arrangements and project project implementation management procedures are team lacks adequate adequate to implement the CIC. staffing, processes . Through review of relevant financial 3.2 Capacity & and/or systems management capacity of the Governance L sufficient to allow for host/implementing partners,

successful necessary training will be provided to achievement of the equip infoDev‟s project results envisaged by implementation team with the the project. required skills to ensure sufficient financial management and procurement capacity of the CIC.

. Host institution/s and implementing . Grants provided to partners will adhere to World Bank 3.3 Fraud & Corruption implementing partners Procurement Guidelines. Financial L and host institution/s management and technical progress will be mismanaged. will be routinely supervised during implementation.

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10.0 Conclusion

The global transition to low-carbon growth holds tremendous economic opportunities for Vietnam. The country‟s thriving private sector, young labor force, and abundant natural resources present an exciting opportunity to locally develop technologies and business models addressing climate change. However, clear gaps in institutional support, market readiness, and financing hinder the growth of the Vietnamese climate innovation ecosystem.

The establishment of the Climate Innovation Center in Vietnam will be a targeted yet holistic mechanism to overcome these gaps and accelerate the domestic development, deployment and transfer of climate technology solutions. The CIC‟s service and programmatic offerings will include: access to finance, technology commercialization support, venture acceleration services and market development assistance. In addition to stimulating innovation and market linkages within Vietnam, the CIC will be able to deliver regional and international collaboration, knowledge exchange, and value chain partnerships through infoDev‟s global Climate Technology Program.

The projected cost to implement, launch and operate a CIC as designed by Vietnamese stakeholders is USD 17.95 million over a five year period, of which 52% will be for financing, 33% for programs, and 15% for staff and central costs. Donor funding will be initially required for the Center; however, it is anticipated that the CIC investment activities will cover more than 70% of operating costs each year by year 7. In addition, the Center will aim to reach a higher level of sustainability by introducing other revenue streams once a strong value proposition has been achieved in the initial years.

The stakeholder engagement process has already built a strong coalition of partners and identified a pipeline of potential investees that will allow the CIC to hit the ground running and produce tangible impacts over the first five years. Pending the success and outcomes of the CIC‟s programs, the direction, scope and scale of the Center (and business plan) will evolve over time with guidance from infoDev, a strong management team and advisory committee.

The timing is right to capitalize on local and global market momentum by establishing the CIC in Vietnam. The CIC will serve as a catalyst for long-term transformative impact in Vietnam‟s climate technology sectors, thereby helping to develop new industries, create jobs and produce products and services that equip the country and its people to prevail over the challenges of climate change.

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11.0 Stakeholder Support infoDev would like to acknowledge the following stakeholders for their guidance, support and input through the conceptualization and development of this business plan for a Climate Innovation Center (CIC) in Vietnam:

ORGANIZATION NAME CONTACT PERSON LOCATION PRIVATE SECTOR/FINANCIAL INSTITUTIONS Ha Long Waste Treatment JSC Vu Quynh Quang Ninh Systec ECO Luu Thi Viet Hang Hai Phong Systec ECO Vu Ngoc Tuyen Hai Phong Entec AG Hoang My Linh Ha Noi TECOS Le Khac Minh Tam HCM Entec AG Vu Thoa Ha Noi Systech Co.,Ltd Kieu Tuan Kien Ha Noi Mekong Renewable Resources Fund, Indochina Capital Nguyen Dang Anh Thi Ho Chi Minh Solar Serve Nguyen Tan Bich Da Nang Bach Khoa Consultancy and Technology Transfer Kieu Van Hai Ha Noi Bach Khoa Consultancy and Technology Transfer Hoang Van Thu Ha Noi Bach Khoa Consultancy and Technology Transfer Hoang Sinh Truong Ha Noi Bach Khoa Consultancy and Technology Transfer Nguyen Trung Dung Ha Noi Genova Fashion Duong Linh Ha Noi Entec ESCO Vietnam Vu Thi Kim Thoa Ha Noi Green Apple Hoi An Hans van der Broek Hoi An Green Apple Hoi An Tran Linh Hoi An Indochina Capital Hai Hoang Ha Noi Indochina Capital Nguyen Thi Ha Noi Bitexco Bui Thi Nguyen Thao Binh Duong BIWASE Lam Minh Ky Binh Duong BIWASE Duong Hoang Son Binh Duong Net-com Vietnam Mai Duy QUang Ha Noi Ho Chi Minh Metal JSC Nguyen Phong HCM C3 Vietnam Consultant and Communication Ltd Pte Dinh Thi Thu Huyen Ha Noi C3 Vietnam Consultant and Communication Ltd Pte Wellard Jeremy Ha Noi Phu Vinh Bamboo and Rattan Training Center Le Truong Son Ha noi COMPETIS Vu Huong Tra Ha noi COMPETIS Hoang Anh Tuan Ha Noi Freelance Dao Thu Hien HCM Red Sun Energy JSC Huynh Kim Tuoc HCM Bio-fuels and Petrochemical of the South of VN JSC Nguyen Le Hieu Lang HCM Passion Zone Pham Ngoc Thang Ha Noi Aerogie Plus. Solutions VN Le Simon Vietnam Hoang Huynh Corp. Le Hoang Huynh HCM Taknet Systems Pte Ltd Cao Thai Hung HCM

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GreenHiTek Co. Ltd. Nguyen Khanh HCM Konia Company Limited Phung Khoi HCM MEET-BIS Vietnam Do Van Anh Ha Noi Global Energy Company (GEC Group) Tran Ngoc Uynh HCM TNT Media JSC Duong Hong HCM ASEAN Consultant, Management and Development Tran Huong Ha Noi Co.Ltd ASEAN Consultant, Management and Development Nguyen Khoa Ha Noi Co.Ltd ASEAN Consultant, Management and Development Dao Tung Ha Noi Co.Ltd Thu Duc Electronic JSC – ASEM LED Duong Minh Thu Duc ASIA PETROLEUM ENERGY CORPORATION Dang Quoc Toan HCM TRU-E Truong Tri Ha Noi TRU-E Dang Hanh Ha Noi TRU-E Nguyen Toan Ha Noi Global Electrical Technology Corp. - GLT Corp. Nguyen Thi Lien Chi HCM Quoc Minh E.C.M Quoc Minh HCM Vinh Thanh Ltd Pte. Ho Van Tho HCM Trung Nam Group Dinh Cong Chuan Ha Noi, HCM SITTO Vietnam Co.,Ltd Theerapong Dong Nai Wow Car Tuan Ly Randy HCM Vietnam Semiconductor Manufacturing JSC Vo Huu tai HCM ECOLIFE Ecological Services Company Ho Thu

DHVP Research & Consultancy Tran Tri Dung

Economic and Environment Online Magazine Vu Huong Ha Noi Advance Communication Company Ha Le Phuong Linh Ha Noi Nhan Dan Online News Le Nu Hang Nguyen Ha Noi Gratia Environment Pham Phuong Linh HCM RCEE NIRAS JSC Phan Minh Thao Ha Noi FED Software Join stock Company Nguyen Van Huy Ha Noi, HCM Anh Minh Chau Trading & Service Co., LTD Bui Phuong Thao HCM Dragon Capital Group Limited Gavin Smith HCM VinhThanh Ltd Pte. Ho Van Tho HCM Electrical engineering technology global stock company Huynh Minh Hai HCM Enerteam Huynh Thi Minh Trang HCM Vietnam minerals resources power and emvironment corporation Le Tuan Anh Ha Noi Nguyen Chi Trading Co., Ltd Nguyen Chi Hung HCM International Projects Nguyen Hoang Tu Ha Noi SUNMARK Production Co. Ltd. Nguyen Hong Khuc Ha Noi Minh Phat Boiler Company Nguyen Quang Ngoc HCM Phu An Phat trading, service and produvtion Co., LTD. Nguyen QuocKhanh HCM Nguyen Thi Phuong QuangTrung Software city development company LTD. Dong HCM

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The SHcons Co., Ltd Nguyen TrongHao HCM Operations Officer – Sustainable Energy Finance Romel M. Carlos HCM NGOs PanNature To Bich Ngoc Ha Noi Actions for Environment Organization (AFEO) Doan Viet Tien Ha Noi Northwest Cooperation Development Center Dinh Thi Huyen

Development Initiative for Community and Environment Tran Hoan Ha Noi Center (C&E) Institute for Environmental Science and Development Nguyen Hong Vu HCM (VESDEC) VNGO&CC Vu Van Trieu Ha Noi VUSTA Nguyen Manh Don Ha Noi The Center for People and Forest (RECOFTC) James Bampton Ha Noi Hanoi Business Association – HBA Le Thi Van Ha Noi Hanoi Business Association – HBA Nguyen Hong Kien Ha Noi Vietnet-ICT Ngo Minh Trang Ha noi Vietnet-ICT Pham Hoang Ngan Ha Noi Association of Vietnam Retailers Tieu Quang Khanh Ha Noi Association of Vietnam Retailers Nguyen Thi Cam Tu Ha Noi Vietnam Association for Conservation of Nature and Nguyen Gia De Ha Noi Environment (Vacne) Vietnam Association for Conservation of Nature and Pham Khanh Toan Ha Noi Environment(Vacne) Habitat for Humanity Vietnam Tang Phuong Ha Noi HMC Nguyen Phong Ha Noi Green Ha Noi Ha Noi

Centre for Marine life Conservation and Community Nguyen Thu Trang Ha Noi Development (MCD) GOVERNMENT MONRE Pham Vinh Phong Ha Noi MONRE Tran Hong Ha Ha Noi Health Center for working Environment – Ministry of Nguyen Viet Dong Ha Noi Industry and Trade International Cooperation Department, Ministry of Natural Tran Thi Minh Ha Ha Noi Resources and Environment National Centre for Hydro – Meteorological Forecasting – Nguyen Quoc TRinh Ha Noi Ministry of Natural Resources and Environment (NCHMF) Ministry of Finance Vu Thi Luyen Ha Noi Tax Policy Department, Ministry of Finance (MOF) Ngo Huu Loi Ha Noi Le Thi Kim Oanh Department of Water Resources Management (DWRM) Ha Noi Trinh Thu Van National Institute for Science and Technology Policy and Dang Lan Huong Ha Noi Strategy Studies (NISTPASS) SME Promotion Center – VCCI Le Thi Hai Yen Ha Noi Vietnam Chamber of Commerce and Industry, Branch in Tran Thi Phuc Duyen Can Tho Can Tho – VCCI

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Ministry of Science and Technology (MOST) Nguyen Thuy Hien Ha Noi Ministry of Science and Technology (MOST) Pham Hong Quat Ha Noi Ministry of Science and Technology (MOST) Nguyen Hong Nhat Ha Noi High Tech Department, Ministry of Science and Do Van Loc Ha Noi Technology CIEM – the Ministry of Planning and Investment Nguyen Manh Hai Ha Noi Vietnam General Confederation Labor – Legislation Nguyen Trong Nghia Ha Noi Department National Target Program to Respond to Climate Change Pham Vinh Phong Ha Noi National Target Program to Respond to Climate Change Phan Thanh Trung Ha Noi Kien Giang Industry and Trade Department Lam Thanh Hung KienGiang RESEARCH INSTITUTIONS/EXPERTS Management training Institute (MIT) Nguyen Thi Kha Ha Noi Management training Institute(MIT) Dinh Thi Phuong Loan Ha Noi Management training Institute(MIT) Hoang Van Thu Ha Noi Management training Institute(MIT) Khuong Nguyen Ha Noi Management training Institute(MIT) Tran Cong Yen Ha Noi Management training Institute(MIT) Le Vu Toan Ha Noi Management training Institute(MIT) Hoang Thu Hien Ha Noi Management training Institute(MIT) Vu Van Khiem Ha Noi Management training Institute(MIT) Nguyen Tuan Hung Ha Noi Management training Institute(MIT) Vu Ngoc Hai Ha Noi Institute of Energy and Environment Pham Khanh Toan Ha Noi Vietnam Environment and Sustainable Development Nguyen Duc Tung Ha Noi Institute (VESDI) Research & Communication Centre for Sustainable Nguyen Thanh Tuyen Ha Noi Development (CSD) Saigon Hi-tech business incubator (SHBI) Tran Tuan Anh HCM Research & Communication Centre for Sustainable Nguyen Diem Anh Ha Noi Development (csd) Climate Change Resilience Centre Vu Trung Kien

Climate Change Resilience Centre Nguyen Ngoc Quynh

Vietnamese- Germany University Vo Viet Cuong HCM Union of Science and Technology of Dong Thap Nguyen Van Dung Dong Thap Department of Science and Technology of Ba Ria - Vung Nguyen Van Anh Vung Tau Tau Vietnam Commercial University Nguyen Nguyet Nga

Nguyen Tat Thanh University Vu Ngoc Hai HCM Technology Business Incubator-Ho Chi Minh City University Mai Thanh Phong HCM of Technology (HCMUT-TBI) Institute for Defense International Relations Ngo Xuan Truong Institute for Defense International Relations Le Trang Center for Development of Community Imitative and Tran Kim Hoan Ha Noi Environment Center for Environmental Research and Community Tran Xuan Phong Ha Noi Development

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Nacentec - National Center for Technological Progress Nguyen Thi Huong Ha Noi Center Quynh Vietnam University of Commerce Dang Thi Dieu Thuy Ha Noi Vietnam University of Commerce Nguyen Nga Ha Noi NIICS Khanh Duong Ha Noi EME Taravilla Eva Cambodia Vietnam Cleaner Production Centre (VNCPC) Ta Huong Thu Ha Noi TOPICA Education Group Pham Tuan Ha Noi TOPICA Education Group Cao Cong Minh Ha Noi TOPICA Education Group Tran Cong Ha Noi TOPICA Education Group Dang My Chau HCM TOPICA Education Group Tran Manh Cong Ha Noi Institute for Defense International Relations Ngo Xuan Truong Ha Noi Hanoi National University of Education Tran Duc Tuan Ha Noi International Center for Advanced Research on Global Luong Huong Ha Noi Change (ICARGC) Ha Noi National University Nguyen Tuyet Ha Noi Ha Noi National University Phan Quoc Nguyen Ha Noi Centre for Natural Resources and Environmental Studies – Hoang Van Thang Ha noi Hanoi National University ( CRES-VNU) Technology business Incubator, Nonglam University (CTBI- Nguyen Tien Thanh HCM NLU) Technology business Incubator, Nonglam University (CTBI- Bui Van Mien HCM NLU) Ha Noi University of Science and Technology (HUSTECH) Nguyen Bich Huyen Ha Noi Ha Noi University of Science and Technology (HUSTECH) Tran Van Binh Ha Noi Ha Noi University of Science and Technology (HUSTECH) Nguyen Tien Dong Ha Noi Jon Von Neumann Institute Duong Nguyen Vu HCM INTERNATIONAL The World Bank Group Ari Huhtala Washington D.C. The World Bank Group Nguyen Le Thu Ha Noi The World Bank Group Dihn Thuy Quyen Ha Noi IFC Vu Tuong Anh HCM DFID Alan Duncan Ha Noi DFID Nguyen Van Kien Ha Noi Innovation Partnership Programme Chu Van Thang Ha Noi Innovation Partnership Programme Kokko Hannu Ha Noi Innovation Partnership Programme Tuomas Pollari Ha Noi Embassy of Denmark Tran Hong Viet Ha Noi Embassy of Finland Sykko Janne Ha Noi Embassy of Finland Mac Le Thu Hong Ha Noi Embassy of Finland Giang Thi Thanh Mai Ha Noi William J. Clinton Foundation Benny Tran HCM GIZ Wasielke Angelika Ha Noi The IDL Group Vu Phuong Ha Noi

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IUCN Vietnam Nguyen Thuy Anh Ha Noi JICA Truong Thi Quynh Trang HCM Swedish CENTEC Vietnam Nguyen Viet Hung Ha Noi Swedish CENTEC Vietnam Nguyen Duc Vinh Ha Noi Royal Norwegian Embassy Vu Minh Duc Ha Noi SAVVi Investors Forum Christopher Zobrist HCM Sustainable Product Innovation Project (SPIN) Ho Thi Thanh Huong Ha Noi Sustainable Product Innovation Project (SPIN) Nguyen Hong Long Ha Noi

Sustainable Product Innovation Project (SPIN) Vu Chi Cong Ha Noi Sustainable Product Innovation Project (SPIN) Ta Huong Thu Ha Noi Fidelity Ventures Group (FVG Group) Ho Phuong Ha Noi Fidelity Ventures Group (FVG Group) Nguyen Thanh Son Ha Noi Technology Development Board Mittal Harkesh Delhi UNIDO – United Industrial Development Organization Lalique Marine Ha Noi UNIDO – United Industrial Development Organization Yves Januel Ha Noi UNDP Johan Kieft Ha Noi UNDP Koos Neefjes HCM UNDP Daniel Buckley New York SNV Netherlands Development Organization Dagmar Zwebe Ha Noi

Background of Vietnam CIC Stakeholders

20% Private Sector/ Financial Institutions

37% NGOs

Government

23% Research Institutions/Experts

10% International 10%

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