Unlocking untapped markets for female go-getters

Sarah Galeski, legal vice-chair of EuroCham’s Women in Business Sector Committee, and co-chair Roos IJsendijk

What is the current situation of the gender lens investing (GLI) ecosystem across Vietnam?

GLI is gaining greater recognition in Vietnam. The APVN, a pan-Asian network for social investors, launched a series of events earlier this year to attract great attention to this issue, in collaboration with the Investing in Women initiative, supported by the Foreign Ministry of Australia.

Research has demonstrated that gender-balanced investment funds perform better than others and that companies with gender-balanced portfolios receive higher valuations than those with less diversity. The International Finance Corporation (IFC) urges private equity and venture capital in Vietnam to consider the financial rewards of investing with a gender lens.

A 2020 report by UN Women Asia-Pacific, under the umbrella of WeEmpowerAsia, highlights the main reasons for GLI: gender diversity improves financial outcomes for investors and enterprises; female entrepreneurs tend to default less (lower non-performing investments); and applying a gender lens unlocks a large and untapped market and opportunities with products and services that cater to women’s needs.

What are the toughest barriers facing female entrepreneurs?

Female entrepreneurs face difficulties in obtaining credit. The IFC issued a recent report showing that most female-owned businesses are at the microscale, while 42 per cent are small- and medium-sized enterprises and only 1 per cent were classified as large. The microscale of many of these firms, coupled with general prejudice against women, impedes their access to loans.

The IFC states that of the 96,000 female-owned businesses in Vietnam, only 65 per cent have applied for bank loans – and only one-third obtained them. Those who did qualify for bank loans usually received less than the amount they requested, and lower amounts than men. The IFC surveyed banks and it appears that prejudice is at least part of the reason for women’s difficulty in accessing credit.

Some banks view women less business savvy and needing more support, and so less profitable and more burdensome customers. Banks also believed they would be more risk-averse and have a lower level of financial skills compared to men.

Female entrepreneurs also struggle with a lack of access to market data. In Vietnam, this data must either be purchased for a relatively high cost, or market research must be conducted by the entrepreneurs themselves. Most female entrepreneurs lack the funds and resources for either of these options, which thereby contributes to a vicious circle of decreased ability to obtain credit or funding.

Women also reported more difficulties building up business networks, and obtaining business training. Many stated that they did not have enough time to engage in networking and business training since, in addition to managing their businesses, they also had to shoulder significant household responsibilities.

Despite the relatively high and equal participation of men and women in the labour force, the burden of unpaid care and domestic work is disproportionately higher on women than on men in Vietnam.

How does GLI help address these challenges and support female entrepreneurs?

Access to credit is the most significant obstacle to female entrepreneurs, so GLI can potentially transform female-owned businesses. With greater financial resources, female entrepreneurs can access market data. Access to credit is essential to growing a business; more resources are required to reach more customers, increase inventory, and diversify a business’s product line.

Applying GLI as affirmative action is necessary to reduce the impact of gender discrimination and increase women’s access to opportunities and help them act as innovators or act as market for the enterprise.

How can the Women in Business Sector Committee (WIB SC) support female entrepreneurs in Vietnam?

It provides a platform for female entrepreneurs to advocate for legislative changes to support the growth of their businesses. For example, the WIB SC advocated in EuroCham’s Whitebook for the decree implementing the Law on Support for Small- and Medium-Sized Businesses to provide special support for female entrepreneurs, which the decree issued in August includes.

The WIB SC also provides a supportive environment, helping female entrepreneurs to expand and grow their business networks as well as providing training and mentoring for members. Participation in the WIB SC and EuroCham can ameliorate prejudices about female entrepreneurs, as their involvement in the business community disproves biases. At WIB SC, female entrepreneurs can shine.