Social Enterprises Gain Momentum in Malaysia

Social Enterprises Gain Momentum in Malaysia
March 16, 2020

According to the World Economic Forum, consumers are becoming increasingly socially-conscious and want their purchases to solve social and environmental issues, even at a premium.

Enter social enterprises (SE). These are commercially viable businesses with a social objective to benefit the community, the public at large or the environment, rather than merely profiting shareholders and owners as with most conventional businesses.

Speaking to the Vulcan Post, Dzuleira Abu Bakar, the CEO of the Malaysian Global Innovation & Creativity Centre (MaGIC), broke down the three main criteria of a social enterprise:

  1. The ends: the social goal of the company must be measurable,
  2. The means: the company must be selling a product or a service,
  3. Have a sound financial approach.

“Even if their objective is to do good, they must operate a for-profit business and have clear and specific social or environmental goals,” Dzuleira said.

This is echoed by radio personality and long-time champion of SEs, Freda Liu.

“It’s about the three Ps: People, Planet and Profit. The more profitable they are, it means the more they are helping towards their cause.

“Being profitable is important because it’s sustainable,” explains Liu, who also noted that SEs have an important part to play towards hitting UN Sustainable Development Goals (SDGs).


Strong support

“Malaysia is a good place for social entrepreneurs because of the support we receive from the government and the corporate sector,” Anja Juliah Abu Bakar, founder of social enterprise Athena Empowers, told Thomson Reuters.

Through successive administrations, the Malaysian government has recognised the potential of SEs, and has provided support to encourage a dynamic and thriving ecosystem for social enterprises. Most prominent has been the establishment of MaGIC, which sits under the Ministry of Entrepreneur Development & Cooperatives (MEDAC).  

The agency coordinates between government departments and collaborates with private industry to provide help for SE entrepreneurs at every stage of their development, including advice on navigating the many grants and seed funding available in Malaysia, whether directly from the government, through public-private initiatives or via angel investors.

MaGIC also runs entrepreneurship capacity-building programmes, such as Knowledge Days and Bootcamps, and has developed an accreditation programme for SEs.

As a result, for the first time, 22 social enterprises were accredited by MEDAC in 2019. With the accreditation, social enterprises are expected to maximise impact in helping the nation enhance inclusiveness towards an equitable society, pursue green growth for sustainability, accelerate human capital development and improve well-being for all Malaysians, especially the B40.

Getting accredited also comes with a wide variety of benefits, including tax incentives, listing in a public directory and access to more support and growth opportunities.

The private sector’s reception has also been encouraging. Langit Collective, one of the SEs accredited by MEDAC, received DBF Bank’s DBSF x SIF Social Impact Prize 2019 for successfully promoting different varieties of heirloom rice, traditionally grown deep in Borneo forests, to larger markets in Peninsular Malaysia. Now able to fetch a higher price, the lives of small farmers in three distinct communities which use sustainable farming techniques, have been greatly improved.

Most recently, Standard Chartered Bank Malaysia Berhad collaborated with MaGIC on the SEtia (Transformation, Innovation & Acceleration) programme. The bank will contribute RM200,000 to cover the costs of approximately 50 homegrown social entrepreneurs for a 4-week capacity-building initiative.  


Women at the forefront

In a Thomson Reuters Foundation report last year, Malaysia was ranked second globally, along with Finland and Greece, for equal pay for women leading social enterprises. From the example of high-powered female champions like Dzuleira and Frida, perhaps this is not surprising in a region long-known for female entrepreneurship, traditionally in the shape of textile weaving, market stall trade and running businesses.

Today, Malaysian women are starting SEs in droves, often specifically to empower other women. PichaEats, run by Lee Swee Lin, Suzanne Ling and Kim Lim, serves food prepared by refugees, mostly women, and share the proceeds 50-50, while Athena Empowers offers feminine products that reduce menstrual poverty among marginalized girls.      

Freda, who is also an author and emcee, gives the example of the Batik Boutique, founded by Amy Blair, which started off as a way to help B40 women be more financially independent, thus ticking off SDG 1, reducing poverty.

“The positive side effects are that it touches on other SDGs along the way,” Freda explains, listing three other SDGs, namely gender equality, decent work and economic growth, and reducing inequalities.

The future looks bright for Malaysia’s social enterprises, each with their own unique character and purpose - from Muay Thai trainers for troubled kids (Discover Muay Thai) to blind people leading the sighted to experience life in the darkness (Dialogue In The Dark) to a bakery staffed by hearing-impaired staff which collaborated with Starbucks in their first “silent store” (Silent Teddies). In the country’s journey towards a high-income nation, SEs can be expected to play a significant role in achieving sustainable growth equitably.