The Landscape for Impact Investing in Southeast Asia
The Landscape for Impact Investing in Southeast Asia report provides a comprehensive analysis of impact investing activity and trends between 2007 and 2017 in 11 countries: Brunei, Cambodia, East Timor, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The report also outlines challenges and opportunities for impact investors and analyses political and economic factors that may inform investment decisions in each country.
The following is provided for each country:
- an overview of the country’s social and economic context;
- the activities of impact investors, including the volume of investment activity;
- the characteristics of organisations and enterprises receiving impact investing capital;
- information on the supporting ecosystem, including the roles played by accelerators, incubators,
- networks, and policymakers;
- gender lens investing awareness and activity; and
- a discussion of key challenges and opportunities for growing the market.
This report presents impact investing activity in Southeast Asia between 2007 and 2017. Building on existing research, the report uses deal-level data to provide first-of-its-kind quantitative analysis of the impact investing landscape in Southeast Asia. Findings are based on primary research conducted with over 100 stakeholders, a thorough review of existing research, and aggregate analysis of 514 impact deals between 2007 and 2017. Only direct capital deployments made into enterprises or projects were included; indirect deployments were excluded to avoid double counting. Investors’ capital commitments and liquid assets were also excluded.
- The report finds that Southeast Asia’s impact investing ecosystem has developed significantly over the last decade, with USD 904 million deployed to the region by private impact investors and around USD 11.3 billion deployed by Development Finance Institutions since 2007.
- Despite overall regional growth, Southeast Asia’s impact investing market remains highly fragmented. Countries in the region are at vastly different stages of economic development and have entrepreneurial ecosystems with varying maturity levels facing context-specific challenges.
- Development Finance Institutions have deployed most of the impact capital in Southeast Asia to date, while private impact investors have increased their activity and interest since 2013.
- While some early-stage private impact investors are active in the region, major gaps in seed-stage impact capital remain. Deals below USD 500,000 in most countries are rare, with most impact investors investing in deals larger than USD 1 million. Since most investors have no local presence, the investment process is expensive, which leads investors to defray these sourcing costs by making larger, later-stage investments.
- Investors have primarily deployed capital to sectors that promote financial inclusion, expand access to basic services, and create livelihoods: financial services, energy, and manufacturing. Together, these three sectors account for 82% of total capital deployed in the region and 63% of total deals.
- Some investors apply a gender lens to their investments, but broader awareness of the concept remains limited. Five active PIIs investing in the region have explicit gender lens investing (GLI) mandates. These impact investors have made more than 30 deals in Indonesia, the Philippines, and Vietnam using a gender lens, amounting to USD 40 million of capital deployed since 2007. Most other investors that consider gender impact do so only after investment, rather than using gender impact to inform investment decisions.
- Over the past few years, new intermediaries have begun to provide enterprises with much-needed mentorship and support. However, only a few have an impact focus, and demand for such support far outweighs its availability.
- Executive summary
- Introduction, report structure, and methodology
- Background on the Southeast Asian region
- Impact investing in Southeast Asia
- Availability and deployment of impact capital
- The broader ecosystem
- The supply of impact capital in Southeast Asia
- Private impact investors
- Development finance institutions
- Gender lens investing in Indonesia, the Philippines, and Vietnam
- Challenges and opportunities
- Supply-side challenges
- Supply-side opportunities
- Demand-side challenges
- Demand-side opportunities
- Ecosystem challenges
- Ecosystem opportunities
- Recommendations for further research
- Appendix 1: List of interviewees
- Regional overview