KEYWORDS:

social entrepreneurship; social enterprise; Southeast Asia; British Council

IDEA:

What is a Social Enterprise?

The term ‘social enterprise’, though often heard, is used rather loosely, and its definition continues to be debated even in societies such as the UK or USA, where the so-called ‘Third Sector’ has enjoyed a long and active history. In general, the term is typically used to describe a business set up with the goal of addressing specific challenges in a community, society or on a larger scale. The most frequently-cited definition comes from the Office for Civil Society in the UK to refer to “… businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximize profit for shareholders and owners.”

Impact Investment Exchange Asia, which focuses on regulating trading platforms for social enterprises and investors, explains that companies must meet key criteria to be recognized as social enterprises. For example, the primary reason for the entity’s existence must be to accomplish a specific positive social impact (not as an ancillary or secondary development, such as a company’s Corporate Social Responsibility program). Also, the company’s business model should reflect responsible entrepreneurship and growth for staff and overseers, beneficiaries/customers, overall community/environment. And finally, the company must retain a market orientation. We might note that the success of IIX itself is an early indicator of the rise of social enterprises.

Scenario:

Social Enterprise in Southeast Asia

The goals and modalities of social enterprises in Southeast Asia naturally tend to reflect their economic and social contexts, and so we find for example in Indonesia that social entrepreneurship not only covers civic innovation but also reaches out to traditional as well as modern approaches. In contrast, social enterprises in Singapore tend to use innovations and modern technologies to ‘do good’.

In Asia, social enterprises often need to be operated as for-profit organizations in order to generate cash flows required to maintain sustainability and growth. Social enterprises do not rely on handouts to survive; entrepreneurs in this region are often able to run their business to fulfill their objectives without support from government and funding from philanthropists. In this region, there are many issues – social, financial, environmental and educational – and there are also many NGOs running activities to tackle those problems. Those NGOs have often struggled and competed with one another to gain funding from those organizations in order to survive and help others at the same time.
In addition, the concept of social enterprise has only recently gained momentum in Southeast Asia. Pham Kieu Oanh, Director of the Centre for Social Initiatives Promotion (CSIP) observes that “Social enterprises as well as social entrepreneurs are new concepts in Vietnam.” Existing social enterprises and entrepreneurs who want to step into this field therefore must surmount new challenges, including lack of funding, weak capacity, lack of government support and lack of networks.

Nevertheless, there are signs that social enterprise in Southeast Asia is growing and evolving on a sustainable trajectory. Young people have shown strong interest in becoming social entrepreneurs and are working innovatively to tackle issues in their own communities and societies. Governments have begun to recognize that SE might be the answer to solve problems such as poverty, education, social problems, etc. In Thailand, Prime Minister Abhisit Vejjajiva commented in his keynote speech to the Regional Social Enterprise Knowledge & Partnership Symposium in October 2010, “Social enterprise is a solution to social challenges…It [social enterprise] is a combination of entrepreneurial spirit with the social soul.”

In Malaysia, social entrepreneurship is to be harnessed as a new strategy in government affirmative programs that encourage private involvement. In this region, we may take note of some emerging trends in social entrepreneurship that we may expect to witness over the course of the coming decade.

The Philippines government launched the Philippines-Australia Community Assistance Program (PACAP), aiming to reduce poverty and achieve sustainable development partly through social entrepreneurship. The program was set up as a grant and mentoring program to help community entrepreneurs develop their community development projects. PACAP has worked with over 500 NGOs and grass-roots organizations to support over a thousand community-based projects, benefiting 250,000 poor people. During its last phase (2005 – 2010) PACAP funded almost 500 more projects.

Agencies such as the Asian Development Bank and the British Council are also keen to unlock the potential of social enterprise in addressing socio-economic problems. The British Council’s Skills for Social Entrepreneurs program aims to raise awareness of the experiences of social entrepreneurs in the UK in the Asian region, and also to act as a focal point for social entrepreneurs from UK and the region to learn from each other and find new ways of doing business for social purposes. The program operates in China, Indonesia, Japan, New Zealand, the Philippines, Thailand and Vietnam.

Implications:

Young Social Enterprise: New Hope for the Region

• In many Southeast Asian countries, the younger generation is paying increasing attention to social entrepreneurship. This new trend lends new hope that the solution to many problems faced by Southeast Asia’s disadvantaged will be tackled by those young social entrepreneurs.
• In Thailand too, many competitions for young social entrepreneurs over the past two years have helped encourage young people to participate and develop their social business plans along the principles of social enterprises e.g. the Social Enterprise Business Plan Competition, arranged in collaboration with Chulalongkorn Business School, CYPN, British Council, Change Fusion and others.
• In Singapore, competitions and training programs have been set up to provide opportunities for the younger generation to develop their capacity in social entrepreneurship. For example, the Youth Social Entrepreneur Program was launched by the Singapore International Foundation, aiming to build and foster a regional network of Asian youth interested in this field. The startup and ongoing support for young social entrepreneurs will encourage the younger generation to step into this field.

More government support for social enterprises

• Given the increasing complexity of social and environmental issues nowadays, governments in Southeast Asia are starting to recognize the significance of social enterprises as a potentially potent mechanism to address some of these problems. In Thailand, the government developed a Social Enterprise Master Plan 2010-2014 in the hope that it will contribute towards sustainable development. The Master Plan will be implemented through more supportive regulations when the National Social Enterprise Act, which is now in process, comes into force. In Singapore, the government realizes that social enterprises can add value to society, and established the Social Enterprise Association to foster social entrepreneurship in the country, and offer various kinds of support to social enterprises.
• For social enterprises in this region, these are encouraging signals that they will probably not have to walk alone to pursue their social and environmental concerns but will also be able to seek government support to facilitate their work in some ways e.g. through specific financial regulations for social enterprises such as tax exemptions and other incentives. If such governmental support for social enterprises results in visible and more effective solutions to social, economical and environmental concerns, it is likely to be adopted as a model of best practice by other governments across the region.

Early indicators:

• In Malaysia a survey distributed to 6,488 young Facebook users showed that 75 per cent of youths considered themselves as social entrepreneurs aiming for both profits and social objectives (people and environment).
• In the Philippines, one of most well-recognized social enterprises in the country – Rags2Riches (R2R) – was set up by a group of students and young professionals.

Drivers and inhibitors

Drivers:

• Social enterprise networks Driven by ICTs and social networking tools, more networks are emerging among social enterprises, investors and government departments. Social Enterprise Network Asia (SENA) is a good example, with SE members from various Asian countries. SENA was conceived as a way to foster further collaboration in the region, and emerged after the British Council facilitated a trip to the UK for SE professionals in the region to learn from the UK’s own experiences. According to the UK Office for Civil Society, the UK has 62,000 registered social enterprises generating turnover of US$45 billion, representing five per cent of UK revenues.
• SENA and similar networking initiatives will enable social enterprises and related sectors to share knowledge and experiences and support each other in addressing problems e.g. through peer support for capacity building and funding issues. Networking will also stimulate more widespread and rapid adoption and diffusion of effective ‘best-practice’ approaches, business models and technical solutions to social and environmental problems at all levels (community, city, country and regional).
• In addition, social-entrepreneurship-related collaboration can provide excellent opportunities not only for social enterprises to network and share experiences, but also as the first port of call for investors, CSR and social venture funds interested in the latest trends. Clearly, this can lead to closer levels of collaboration and funding for social enterprises.

Inhibitors:

• Social enterprises as well as their partners will have to develop in several respects in order to work effectively to address issues in a sustainable way. Judging from past experience in the sector, social enterprises will need to acquire and develop their fundraising skills in order to secure startup and venture capital funds in an increasingly competitive fund-raising environment.
• They will also need to build capacity in traditional areas such as business management in order to operate their enterprise professionally and sustain a secure financial footing.
• Networking among social enterprises and related sectors is still at a relatively nascent stage, and will need further strengthening to realize the potential that such networks can unleash in terms of collaboration in information sharing, problem-solving, establishment of stable and sustainable business clusters, peer-to-peer groups and Communities of Practice (COPs).

From the examples above, we may anticipate much greater interest and participation by future entrepreneurs in this rapidly evolving field. The increasingly more intense networking among social enterprises, together with growing public sector support offers the prospect of new and unexpected alliances, new business models and new approaches to enable social entrepreneurs to work more effectively. This carries strong and encouraging implications for solving issues at community, country and regional levels, and of course, to give a boost to the goal of sustainable development. Dare we wish for a kinder, more caring world?