Social enterprise in the Asia-Pacific

Social enterprise can be promoted by government as a means of achieving better social outcomes without heavy-handed government intervention. Social entrepreneurs are often highly motivated by not only the prospect of profitability, but by achieving social outcomes that build pride in local communities. Many social entrepreneurs are young, and have stepped up to develop financially self-sustaining solutions to address social and environmental challenges in their communities. These leaders operate across the public, private and third sectors and balances the imperative of creating social impact with the need for financial sustainability. Although the idea that business can and should play a positive role in the community has deep roots in many ESCAP member States, the contemporary social enterprise business model is less well established.

In Malaysia, for example, high levels of economic development and a large, well-educated, socially conscious middle class have fuelled a well-developed social enterprise sector. Enterprises receive strong support, and a number of organizations exist throughout the country, which are dedicated to supporting social entrepreneurs and their businesses, many of which receive government support and funding.

However, similar to other countries in the region, there are no specific legal provisions for social enterprise in Malaysia, and those wishing to set up such a business must make sure they are well-informed about the legal structures available to them under the law. Malaysia recently produced a Social Enterprise Blueprint 2015–2018³⁴⁰ to develop a social enterprise ecosystem which outlined a variety of policy measures, including building human capital by including social entrepreneurship in national education systems. Box 24 provides an example of Malaysian social enterprise.

In the Philippines, social enterprise is a well-established economic sector, and is dynamic, vibrant, and innovative. University degrees in social enterprise are available from some of the leading Philippine universities, and well- established formal support networks prop up the sector and those seeking to enter it. There is also a drive to provide significant support for social enterprises through formal legislation, with a bill currently being considered by the Senate which, if passed, would create a statutory Social Enterprises Development Council to promote, grow, and develop the social enterprise sector. Social enterprises therefore already benefit from a supportive and beneficial environment, and appear to have an increasingly bright future ahead.

Thailand also has experienced some success with social enterprise, with governments proving to be very supportive of this sector since around 2011. Companies that meet the legal criteria are entitled to a raft of favorable benefits including, as of 2016, substantial tax exemptions. In addition, the National Reform Council is pursuing a number of other initiatives related to social enterprise, including education, research, and funding programs. While qualifying as a social enterprise is not necessarily easy, for those businesses that meet the criteria, the benefits can enable them to grow and fulfil their mission of doing social good while doing business. The example of Doi Tung in Thailand is provided in box 25.

In 2015, the concept of social enterprise was introduced into Vietnamese law and is applicable to businesses which invest at least 51 percent of their profits in accomplishing a registered social or environmental objective. They typically operate as either single-member limited liability companies, multiple-member limited liability companies, or shareholding companies, and are entitled to be “considered for special treatment,” in a number of administrative and regulatory processes. In addition, being classified as a social enterprise in Vietnam can entitle companies to a number of funding options that would otherwise be unavailable.

In North-East Asia, the Republic of Korea announced its Social Enterprise Promotion Act in 2007. The Act provides social entrepreneurs with management consultation and access to professional services, technical assistance and even provides subsidized rentals and reduced taxes. The metropolitan Government of Seoul also opened a Social Economy Support Centre that acts as an incubator for social enterprises. This initiative, in tandem with other strategies, has resulted in a 353 per cent growth in the number of social enterprises in Seoul between 2012 and 2015.³⁴¹

In South-Asia, the Governments of India, Pakistan and Bangladesh have taken steps to create an innovation ecosystem to support social enterprises. India’s entrepreneurship policy framework recognizes the emergence of social enterprise as a model for addressing social and environmental challenges through economic business models and has a focus on social entrepreneurship education through courses delivered by universities and academic institutions.³⁴² A key objective of the Government of Pakistan’s Vision 2025 Plan,³⁴³ is to promote innovation and enterprise. To support this objective, the Government is establishing a Centre for Social Entrepreneurship to function as an incubator for social enterprises.³⁴⁴

The policy mixes highlighted above include subsidies and tax incentives to encourage more social forms of enterprise, the provision of business support services and physical infrastructure to development high potential social enterprises, and a focus on social enterprise education to develop the next generation of more socially-minded entrepreneurs. Alongside the objective of developing more social forms of enterprise, the ambition of these policies is also that they will provide a pipeline of investible opportunities for impact investors.