Impact Investment Funds for Frontier Markets in Southeast Asia (eBook)

Manuel Stagars is an economist and senior researcher at Singapore-ETH Centre (SEC), interested in the technological and institutional aspects of data and data policy. He is also a serial entrepreneur with more than a decade of global experience. Manuel has a particular interest in emerging and frontier economies in Southeast Asia. He is also the author of Impact Investment Funds for Frontier Markets in Southeast Asia (Palgrave Macmillan, 2015).

Cover 1
Half-Title 2
Title 4
Copyright 5
Dedication 6
Contents 8
List of Figures 13
List of Tables 16
Preface 17
About the Author 19
Disclaimer 20
Introduction 22
What is new in this analysis? 23
1 Impact Investment: Where Are We Now? 27
What is impact investment? 28
Mandates of impact investment 30
Impact investment and conventional investment 31
Impact investment and SRI 32
Philanthropy and donations 33
Separating impact investment into components 34
Social impact investing 36
Acumen Fund 36
Ashoka 37
Calvert Social Investment Foundation 37
Elevar Equity 37
Social entrepreneurship and social enterprise 38
Social entrepreneurship 38
Social enterprise 40
Characteristics of existing impact investment funds 41
Characteristics of impact investors 43
Making impact investible and measurable 45
Social impact bonds and development impact bonds 46
Challenges for impact bonds in the frontier markets in the ASEAN 50
Funds and funding mechanisms 51
Vertical funds 51
Future-flow securitization 51
Front-loading of aid 52
Impact investment fund setup 52
Diversified impact portfolios 55
Reducing risk 58
Diversified impact portfolio across the value chain 59
Selecting and managing investments 60
Positive and negative screens 61
Impact criteria 61
Experience and mind-set of entrepreneurs 63
Mission lock 63
Summary and outlook 64
Lack of focus on the frontier countries in the ASEAN 65
2 Emerging and Frontier Markets in Southeast Asia 67
Overview of the ASEAN member states 68
Wealth 69
Investment 71
Current account balance 71
Constraints 71
Overview of the frontier markets in the ASEAN 74
Investment and wealth 76
Capacity 81
Urbanization 82
Market size 82
Industry sectors 83
Summary and outlook 89
3 Currently Available Conventional Investment Options in Frontier Markets 92
Frontier market investment overview 93
Exchange traded funds (ETFs) and mutual funds 94
Private equity firms active in Southeast Asia 96
Summary and outlook 97
4 Areas of Potential Impact Investment Intervention in the ASEAN Frontier Markets 100
Bottom of the pyramid (BoP) 103
Inclusive development 105
Education and entrepreneurship 107
Higher education 108
Capacity building and entrepreneurship 109
Beyond formal education: incubators and accelerators 110
Sustainable transport 111
Financial infrastructure 113
Sustainable urbanization 114
City prosperity index 115
Urbanization trends: mega-regions, urban corridors, city regions 116
Cleantech and renewable energy 117
Disaster preparedness and water safety 119
Medical services 119
Health insurance 120
Subsidies and incentives for illness prevention 120
Improved health-system governance 120
Thailand as an example 120
Ecotourism 121
Sustainable farming and produce processing 123
Sustainable coffee 123
Large potential for sustainable farming 124
Summary and outlook 125
5 Concerns and Countermeasures 127
Perceived lower financial return of impact investment and SRI funds 128
SRI funds perform similar to conventional funds, outperform in bear markets 129
Risk, return, and correlation of impact investment 129
Size of the impact investment universe 131
Remittances and diaspora bonds 132
Foreign direct investment (FDI) 134
Complementing development assistance and conventional debt 135
Fiscal health of host countries 137
Current account balance 138
Balance of payments cycle 140
Transparency of frontier markets in the ASEAN 141
Fraud and victim mentality 142
Economic incentives and impact criteria promote transparency 143
Risks of frontier market investment 144
Political risk 145
Legal risk 146
Operational risk 146
Currency risk 147
Counterparty risk 148
Execution risk 148
Liquidity risk 149
Unquantifiable risk 149
Risk management strategies 150
Complicated asset sourcing and management process 151
Is there enough demand from investors? 152
Investors care for social impact 153
Change in investment thesis 154
Existing programs for sustainable development 154
Action plan for private investment 156
Summary and outlook 157
6 High Potential of Impact Investment to Catalyze Sustainable and Resilient Development in Frontier Markets in the ASEAN 160
Complementing existing sources of capital 162
Financial aid programs 162
Conditional aid and development loans 163
Foreign direct investment (FDI) 163
Impact investment as a complement to other capital sources 164
Less dependence on commodity price volatility 165
High-quality foreign direct investment 165
Attracting institutional capital 167
Proactive policy for sustainable development and impact investment 168
Summary and outlook 175
7 A Look into the Future: Building a Platform for Sustainability and Impact Investment 178
Platform thinking and network effects 179
Building a platform for sustainability and impact investment 180
Introducing economic motivators in sustainable development goals 183
A strategy to move forward 185
Conclusion 189
Notes 196
Selected Bibliography 212
Index 219