How can Malaysia boost social enterprise?

Until they started to build micro-hydro dams, many of the indigenous people living in remote rainforests of Malaysia’s Sabah state did not have access to electricity, forcing them to resort to costly ways of generating power through diesel generators.

With the help of social enterprise Tonibung they learned how to build, repair and maintain the dams, a small-scale version of the big hydroelectric dams that help power large cities.

Tonibung’s work is one example of how Malaysia’s nascent social enterprise sector is working to address social and environmental issues, said Ehon Chan, head of social enterprise at the Malaysian Global Innovation and Creativity Centre (MaGIC).

Malaysia’s rapid economic growth has reduced poverty rates but social challenges remain in Southeast Asia’s third largest economy, providing opportunities for social enterprises to tackle unequal access to education, environmental sustainability, rural development and poverty, said Chan.

“There is a lot of scope for social entrepreneurs in Malaysia to work among marginalised communities or on environmental issues to make our society more equitable,” Chan told the Thomson Reuters Foundation at MaGIC’s headquarters.

As other examples, he cited Epic Homes which works with indigenous communities by building easy-to-assemble houses for the Orang Asli people and ARUS Academy which provides students from low-income groups with computer and coding skills.

As public funds around the world come under increasing pressure from shrinking economic growth, governments have become more aware of the potential of social enterprise to promote a more equitable and sustainable society.

In Britain, for example, the government has invested heavily into the sector and there are now more than 70,000 social enterprises, employing more than 1 million people.

Malaysia is hoping to tap into this growing sector, loosely defined as businesses that aim to address social and environmental problems while making a profit.

Vibrant sector

Prime Minister Najib Razak in May announced a plan to grow the sector by allocating 20 million ringgit ($4.5 million) to MaGIC to increase the number of social enterprises to 1,000 by 2018 from around just over 100.

Compared to its neighbour Thailand, Malaysia is still in the early stages of building up its social enterprise sector.

Thailand now has some 120,000 social enterprises, helped by government through the creation in 2010 of the Thailand Social Enterprise Office, which provides support and advice.

MaGIC aims to fill the gap in Malaysia by providing training in setting up a business, how to access funding and networking opportunities, along with competitions and outreach.

“It’s a very vibrant sector. Lots of young entrepreneurs are keen to start a social enterprise,” said Chan.

MaGIC last year introduced its annual Amplify Awards, a prize aimed at allowing social enterprises to expand their operations and boost their impact.

“We already have made contact with a lot of corporates interested in strategic partnerships with social enterprises, which could be a huge boost.”

The lack of a legal definition often causes confusion as many people think a social enterprise is the same as a charity.

But it would be too restrictive at this stage to come up with a legal definition of a social enterprise, Chan said, a step only South Korea has taken so far among East Asian countries.

“As long as they are a registered entity with a social or environmental mission we’re happy to support them,” he said.

This article is published in collaboration with Thomson Reuters Foundation. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Astrid Zweynert is an award-winning journalist, editor and social media specialist with a passion for online storytelling.

Image: The peaks of the Petronas Twin Towers is seen in central Kuala Lumpur, August 16, 2014. REUTERS/Olivia Harris