East Asia and Pacific
Find below updates to relevant Inclusive Business policy developments in the East-Asia and Pacific region. A particular focus is on ASEAN member states as there has been significant traction in a number of its member countries over the past years. Further below you will also find information on progress made in non-ASEAN member states.
In November 2017, the ASEAN Chairman’s statement called on member states to foster an enabling environment for Inclusive Business through conducive rules and regulations, enhanced access to financial resources, awareness raising and education, and capacity building for businesses and the populations they engage.
Following this call to action, a momentum unfolded among ASEAN Member States to develop specific policies and to set up promotion institutions and programmes to develop an enabling ecosystem for inclusive businesses. ASEAN also provided a common framework of Inclusive Business. In addition, there is growing awareness among member states about the potential of inclusive business companies to reduce poverty and foster inclusive and sustainable economic growth. The latest advancement in the region is the endorsement of the “Guidelines for the Promotion of Inclusive Business in ASEAN” by the ASEAN Economic Ministers in August 2020. These Guidelines provide the member states with a framework on how IB development can be supported at the national and ASEAN-regional levels. The Guidelines were also referred to in the Chairman’s Statement of the 37th ASEAN Summit in November 2020.
ASEAN Member States are at very different stages in the promotion of Inclusive Business. The country snapshots below provide an overview of existing measures of thirteen different states with regards to Inclusive Business. The information was researched in cooperation with iBAN’s partner United Nations ESCAP and is published in the 2019 report Advancing Enabling Policy Environments for Inclusive Businesses in the Association of Southeast Asian Nations (ASEAN).
Information from ASEAN Countries
- Brunei Darussalam
Brunei Darussalam is one of the richest economies in ASEAN. While poverty is marginal, Brunei Darussalam also faces social challenges that require attention, especially those affecting vulnerable populations, such as people with disabilities and widows.
While awareness on inclusive business (IB) is low, corporate social responsibility (CSR) initiatives are common. Recently, an increasing number of CSR activities are focussing on promoting start-ups and entrepreneurship. Social enterprise (SE) initiatives are new and, while the concept may be often unknow to the general public, there is strong interest from youth and the government. Several entrepreneurs have adopted/experimented with SE models over the last few years. In par with these developments, a start-up ecosystem is developing with support from the government.
Government support to IB
Efforts to increase the private sector role in Brunei Darussalam have focused mostly on promoting entrepreneurship, SMEs and start-ups. Brunei Darussalam has not yet developed policies directed towards the promotion of inclusive business. Social entrepreneurship is an emerging topic in Brunei Darussalam and a working committee to help SEs tackle unemployment and poverty has been established. In addition, a white paper on social enterprise development has been published.
The ongoing process offers an opportunity to generate awareness on inclusive business in the country. Given the strong CSR awareness among companies, there are also opportunities to reorient companies’ traditional CSR into more strategic IB activities.
Currently, Brunei Darussalam has not announced the intention to introduce specific measures to support inclusive business in in the country. The Government is the midst of developing its entrepreneurship ecosystem to create an environment where business, especially SMEs, start-ups and social enterprises can thrive.
Cambodia is the leading country in adopting inclusive business policies in the region. The Government of Cambodia seeks to make economic growth more inclusive and diversified, as envisaged in the National Strategic Development Plan 2019-2023. Inclusive businesses are trusted to help meeting the needs of 1.7 million poor and low-income Cambodians. The SME Development Policy and Action Plan also calls for promoting investments in such businesses.
In 2019 and 2020, the government – through the Ministry of Industry, Science, Technology, and Innovation (MISTI) – undertook a landscaping process on Inclusive Business in Cambodia with support of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Inclusive Business Action Network (iBAN). Read the landscape study here.
In addition, Cambodia has one of the most vibrant social entrepreneurship environments in the region. However, many SE operate at a very small scale or have NGO-driven business models. There is an opportunity to transform high-potential social enterprises into IB initiatives, which can generate larger social impact. CSR activities are common in Cambodia, although very few companies adopt strategic CSR as part of their core business. In August 2021, the first eighteen companies were accredited as IBs by the Cambodian government.
Government support to IB
The Cambodian government has developed a national strategy for a better enabling environment for Inclusive Business promotion (the IBeeC strategy). In 2020 MISTI approved the strategy and is currently preparing it for MEF and Cabinet endorsement. It is closely aligned with the Guidelines for the Promotion of Inclusive Business in ASEAN and contains 8 key points:
- linking IB to SME promotion policies, as well as institutionalizing IBeeC implementation;
- IB awareness raising (mainly implemented by business associations) and further knowledge work;
- IB accreditation and IB awards;
- offering IB business coaching to potential companies interested in transitioning towards IB;
- prioritizing IB and social enterprises in public procurement;
- exploring tax and other incentives for IB companies under the new investment law;
- establishing an IB risk reduction facility for impact investors;
- doing impact monitoring and reporting as well as regional exchange on results with ASEAN.
MISTI created an institutional framework to support IBeeC implementation, consisting of an IB Secretariat in MISTI headed by the Permanent Secretary, IB Focal Points in six government agencies and four business associations, a network of IB stakeholders and a formal IB Board to guide IBeeC implementation.
In 2021 MISTI started the implementation of the strategy and is in the process of summarizing commitments from various stakeholders on its action plan. This also includes attracting possible financing for a $2.3 million technical assistance and a $22 million investment facility from development partners, philanthropy and investors.
MISTI is seeking IBeeC endorsement by the Supreme National Economic Council – the highest-level government coordinating body – and, subsequently, by the Council of Ministers as a broad government strategy. As chair of ASEAN in 2022, the Kingdom plans to organize the 5th ASEAN Inclusive Business Summit and support the 3rd ASEAN Inclusive Business Awards. Read more.
IB is not a widespread concept IBs but good examples do exist in the country. A 2013 study assessing the potential for IB in Indonesia found strong evidence for IB and highlighted existing IB companies, mostly in agribusiness. In a follow up, ADB organized a series of workshops to discuss how to best promote IB support in Indonesia. Development and private sector actors have actively advocated for IB, and the Government is making progress in promoting an enabling ecosystem.
Government support to IB
Establishing conducive rules, regulations and definitions: Since the 2013 IB landscape study, an enabling policy ecosystem to promote IB has slowly started to take shape. In April 2016, the government set-up the IB and Innovation Task Force under the Coordinating Ministry for Economic Affairs to promote IB in the country. Since 2016, the task force has focused on exploring the promotion of IB in the agribusiness sector. However, no specific IB support program has been implemented yet. There is no IB law or targeted policies current in Indonesia. In 2019, the government has indicated interest to explore the potential of IB in the wellness tourism sector and an IB study is being planned.
In 2019 CMEA together with the Ministry of Cooperatives and SMEs, the Ministry of Health and the Ministry of National Development Planning/National Development Planning Agency (Bappenas) developed a roadmap for IB in the wellness tourism sector in view of becoming the role model for Indonesia to further promote IB in other sectors. The proposed roadmap suggests promoting IB through 4 strategic intervention areas:
- Strategic commitment and coordination: nomination and assignment of key government champions for IB promotion
- Information and awareness: awareness raising around the opportunities and positive financial, social and environmental impact of IB models in wellness tourism among government stakeholders,industry players and investors
- Capacity building and market linkages: provision of technical assistance and capacity building support to increase the quality of IB models and capacity of low-income people to engage with the private sector
- Incentives: identification of incentives that encourage the replication and scale of existing IB models and facilitate traditional wellness companies to become more inclusive.
Enhancing access to financial resources and providing financial incentives: No specific IB fund exist, and so far, very few banks have shown interest in supporting IB. In the recent attempts to promote Health and Wellness Tourism among Indonesian financial communities, a number of financial organisations representing public and private entities were approached.
Initial discussions on the potential of IB in the health and wellness tourism sector have been initiated. The Coordinating Ministry of Economic Affairs requested ESCAP/iBAN – in the context of its IB capacity building work for ASEAN member countries – to assist in preparing a study on IB in Wellness Tourism in Indonesia to help design a roadmap to support IB in wellness tourism, including pilot suggestions. This will include:
- The profiling of at least 5 businesses in wellness tourism with potential to be IBs in tourism;
- An analysis of the enabling environment for IB in wellness tourism;
- A roadmap towards IB in wellness tourism in Indonesia.
- Lao PDR
There have been no specific public initiatives to promote IB, but the government has expressed interest in responsible business. In addition, the government has begun promoting CSR and there is some reference to NGO-driven social enterprises. SE is a fairly new phenomenon in the Lao PDR, for which there is no official definition yet. The awareness level of IB is low and the market for impact investors to engage on a larger scale is very small.
Government support to IB
There are currently no formalised measures in place to support IBs in the country, but the government has expressed an interest in joining regional initiatives supporting IB.
There are current no measures foreseen to enhance policy development for IB in the Lao PDR. However, the country has started to engage in IB forums and discussions. At the 3rd ASEAN Inclusive Business Summit in September 2020, the Government of the Lao PDR formally requested support for a landscape study on the potential of the IB sector in the country and the development of policy recommendations for IB promotion.
Malaysia places a deliberate emphasis on inclusive economic development. The inclusion of the B40 is seen as necessary in its transition from a middle to high income country in the near future. CSR and social entreprises (SE) are common in Malaysia, while IB is not a familiar concept yet. Unlike in other ASEAN economies, there are very few small IB companies here, which have mostly transitioned from social enterprises. The strong government involvement in caring for the B40 and the focus on social enterprise promotion limits market opportunities for IB companies.
Malaysia has a unique focus on social innovation. Social enterprises are a recognized and growing concept in the country. The government is encouraging the formation of a strong, supportive SE ecosystem. SE can receive benefits such as tax incentives or government-led buy-back agreements. Malaysia also offers incentives for companies to practice CSR, including tax breaks and a fund of RM50 million to promote CSR activities. Companies are increasingly adopting CSR as part of their strategy and core values. This broad-based support for SE could expand to transform some of them into IBs, and further strategic CSR activities would be a source for generating further IB models.
Government support to IB
At the 2021 APEC Summit, Malaysia stated “that Inclusive Business is key to build back the economy better and stronger. Therefore, the Government is promoting IB as avenue for addressing the needs of the B40 at scale," adding that “collaboration would be the driving factor for IB models as we bring together private and public sector entities as well as civil society to address today’s global challenges which requires creative approach about how best they can work together.”
The government is highly interested in exploring how it could best promote IB. As part of its effort to stimulate social innovation, it launched the Social Outcome Fund in March 2017, amounting to MYR3 million (USD 690,000). The Fund is being managed by the Agensi Inovasi Malaysia (AIM). This pay-for-success vehicle is designed to ‘crowd-in’ funding from foundations, social investors and corporates into high-potential SEs and other social purpose organisations to implement positive social change. This fund can support IBs in the country.
In 2019 and 2020 the government of Malaysia - through the Ministry of Entrepreneur Development and Cooperatives of Malaysia (MEDAC) and in partnership with ESCAP and iBAN - engaged in a landscaping process on Inclusive Business in Malaysia. The study examined the IB business environment with 127 companies, of which it showcased 12 implemented and potential IB business lines. By 2025 there is a potential to develop up to 100 IB business lines in the country. The resulting document is currently being finalized for publication.
The landscaping report also assessed the enabling environment for IB and identified SME Corp. Malaysia, an agency under the Ministry of Entrepreneur Development and Cooperatives (MEDAC), as the ideal agency to promote IB in Malaysia. It also included 7 recommendations for IB support in Malaysia:
- incorporating IB in strategic plans: The IB agenda is included in the national policy, 12th development plan (RMKe-12), and the Action Plan for National Entrepreneurship Policy (DKN2030).
- institutionalizing IB support in SME Corp and other agencies,
- facilitating IB advocacy and knowledge,
- conducting IB accreditation and awards,
- promoting IB business coaching under existing programs,
- establishing an IB risk reduction facility for impact investors,
- targeting IB in existing SME promotion and B40 development programs.
IB has also been incorporated in Malaysia’s National Entrepreneurship Policy 2030. The new development model is all about the goal of a ”Shared Prosperity” with an involvement of all segments of society. To achieve a more equitable and inclusive economic distribution, the government aims to improve access to finance and financial inclusion for enterprises as well as further promote social entrepreneurship.
In 2018 the government of Myanmar – through the Directorate of Investment and Company Administration (DICA) under the Ministry of Planning and Finance (now under the Ministry of Investment and Foreign Economic Relations) – engaged with DaNA Facility, a UK Aid funded program, to prepare a landscape study on Inclusive Business in Myanmar. The study assessed 176 business cases from different sectors and identified 56 companies with potential IB models, 21 of which had innovative models, initiatives and activities with a scale potential.
CSR is also not widespread in Myanmar but there are organisations dedicated to promoting CSR. Companies investing in Myanmar must now submit business plans that include commitments to CSR. SE is a fairly new concept and very few firms recognize themselves as SEs.
The landscape study also assessed the enabling environment and made eight recommendations as the Strategic Framework for IB promotion:
- establish a steering group for the IB agenda and mobilize support from development partners;
- broaden awareness on IB and related branding of companies;
- provide technical assistance for developing IB cases, as well as IB coaching and impact monitoring;
- set up IB support desks in various government agencies and business associations;
- set up an IB accreditation and certification system (through DICA);
- prioritize IB in industrial policies (esp. for SME promotion) and incorporate IB in incentive structures;
- strengthen demand for IB products and services through public procurement; and
- establish an IB and social enterprise investment fund.
Government support to IB
Establishing conducive rules, regulations and definitions: The eight strategic recommendations were endorsed by the Myanmar Investment Commission (MIC) and the Private Sector Development Committee of the government. The Directorate of Investment and Company Administration (DICA) as secretariat to MIC is preparing an action plan and coordinating implementation of IB promotion in Myanmar. In 2018, DICA, and the DaNa Facility, published the study “Inclusive Business in Myanmar: An Agenda to Catalyse Social Impact”. The study proposed a framework for IB to guide reforms. In 2019, the Inclusive Business and Impact Investing Steering Group was formed according to the Strategic Framework. It actively guides IB development, engaging various government agencies, such as the Department for SME Development (DISI) under the Ministries of Industry, and the Myanmar Young Entrepreneurs Association (MYEA), as well as development partners, private sector, impact investors and other agencies in the IB discussion.
Enhancing access to financial resources and providing financial incentives: Access to finance is key for Myanmar and the country is drafting several frameworks aimed at regulating the sector and fostering investment. Several programmes have also been implemented by the Myanmar Government and development partners. Efforts, however, have focused on financial inclusion, access to finance for MSMEs and microfinance. Limited access to finance is still a major barrier for social and inclusive entrepreneurship. The recent Responsible Business Fund (RBF), implemented in Myanmar as part of the Danish Development Assistance to the country, provided MMK 12.5 billion for (3 years) ‘Challenge Fund’ to “increase the competitiveness and responsible behaviour of Myanmar enterprises” by providing partial grants to SMEs for the implementation of innovative projects. The DaNa Facility, a private sector development programme, also opened a grant window called “IB Ecosystem Window” and provided grant funding to two organisations to help accelerate the growth and amplify social impact of 20 potential IB.
Providing information and raising awareness: The IB in Myanmar Report has formed the basis for several activities, including capacity building and ASEAN IB sessions. At the Myanmar Entrepreneurship Summit in December 2018, DaNa presented the IB idea. DaNa supports and collaborates with key government agencies and business associations to build the IB ecosystem in Myanmar. In 2019, the Inclusive Business Award event of the Myanmar Young Entrepreneur Association (MYEA) was held. Other awareness raising activities, such as the Inclusive Business in Myanmar online bootcamp, were carried out until the end of 2020.
The Directorate of Investment and Company Administration (DICA) aims to explore the possibility of setting up IB desks in DICA and other agencies, and eventually developing accreditation criteria and investment incentives for IB. Proposed measures in support of IBs include:
- Ongoing activities of the Inclusive Business/Impact Investing Steering Group
- Wide-ranging capacity development activities for key players to further promote IB
- Awareness raising activities on inclusive business
- Setting up IB support desks in key government agencies and business associations
- Explore setting up an IB accreditation system and social impact measurement programmes
- To conduct research on appropriate incentive structures to further stimulate the growth of IBs
- To catalyse greater impact investing activities in Myanmar, including through an investment portal
- The Philippines
The Philippines has recognized the potential of inclusive business as innovative and effective strategy for poverty alleviation. The government has taken a leading role in devising policies to promote awareness and practice of Inclusive Business since 2013 when the first IB landscape study was prepared for the country with support from the Asian Development Bank. The study identified over 70 IB cases and made recommendations on promoting a better enabling environment for IB in the country. The Philippines has also been active in promoting IB on the regional level through the G20 and various fora in APEC.
Government support to IB
Philippines is the first country in ASEAN that institutionalized IB policy promotion, set up IB registration, and granted IB investment incentives under the Investments Priority Plan (IPP). The IB policy is embedded in the government's approach to poverty alleviation through micro, small and medium enterprise (MSME) development by linking it to the core business processes of medium and large enterprises (MLEs). The IB approach was also mentioned in the Philippines Development Plan 2017-2022.
Establishing conducive rules, regulations and definitions: In 2014, the Board of Investments (BOI) made inclusive businesses a part of its Investment Priorities Plan (IPP) and offered specific tax incentives for companies with IB models. Through the BIO, it created the IB Management Office (IB PMO) to pilot IB models in agribusiness and tourism sectors, which were preferred areas for the 2017-2019 IPP.
Under the IB policy, IB models are defined as business activities of medium and large enterprises in the agribusiness and tourism sectors that provide business opportunities to micro and small enterprises as part of their value chains. The IB policy has two components: reach and depth, and innovation. Reach and depth focuses on the companies’ engagement of the marginalized sectors and the socioeconomic impact of such engagement. Companies applying for IB incentives are expected to engage marginalized individuals as employees and/or micro and small enterprises as suppliers. Income increases of the individuals engaged are monitored to prove that the businesses indeed provided sustainable livelihoods and decent jobs. The policy is designed to stimulate businesses to go beyond business-as-usual and spur innovation by providing market linkages and assistance in capacitating low-income communities. Incentives are given based on actual performance. Some DTI regional offices (e.g. Region 12) have started their own MSME-IB linkages programs (e.g. Maximizing Investments by Leveraging Enterprises). Linking MSMEs to markets is one of the key activities of the regional and provincial offices.
Enhancing access to financial resources and providing financial incentives: The IB tax incentive provided by the BOI has been in place since early 2018. Currently, there are five registered IB projects which can provide a valuable contribution to the BoP, estimated at 55 million dollars. The current incentives are aimed at businesses in the agribusiness and tourism sectors.
Providing information and raising awareness: The Philippines has taken a leadership role in promoting IB policy making in ASEAN and APEC, including as Chair of APEC in 2015 and ASEAN in 2017. Since 2017, the country has released three publications: Business+ The Philippines: IB awareness and engagement among companies in The Philippines; IB in the Asia-Pacific Economic Cooperation (APEC); and Impact Catalysts: IB Models in the ASEAN. Together with the ASEAN Business Advisory Council, it created the ASEAN IB Awards to recognize successful IB models in ASEAN and to create a pipeline of IB projects. The BOI operates an IB Centre that provides information and carries out awareness raising activities. BOI, in collaboration with The Philippine Business for Social Progress and the Department of Trade and Industry, held the IB Leaders Conference on 28 November 2018 in Pasay City.
Following the roll-out of the IB policy in the country, the BOI is reviewing its current policy to increase the number of firms availing incentive and to expand its sectoral reach to manufacturing. To finetune the design and enhance the implementation of IB policy in the Philippines, work in three parallel strands is foreseen:
- Establishing IB framework and an implementation roadmap for the current IB policy
- Reviewing the current IB policy to increase the number of accredited projects and expand IB
- Ensure executive and legislative anchoring
In 2021, legislative measures were introduced to support IB in form of the House Bill No. 9316 or “An act to promote Inclusive Business to support and accelerate inclusive development at the national and local levels through private sector involvement” and the Senate Bill No. 2242: Inclusive Business Act or “An act to promote women’s economic empowerment through Inclusive Business to support and accelerate inclusive development at the national and local levels through private sector involvement”. The bill proposes a newly created National Inclusive Business Steering Committee (NIBSC), attached to BOI, which will be mandated to lead the drafting and implementation of the National Action Plan and Strategy for Inclusive Business (NAPSIB). Furthermore, the NIBSC shall establish a system and criteria for IB accreditation considering the social value, innovation, and sustainability of the companies. The bill also presents several tax incentives that IB projects can profit from for 5 consecutive years.
Singapore has a highly developed and successful free-market economy with a very high GDP. There is a broad view of IBs classifying them as companies with strong environmental, social and governance practices, contributing to the SDGs with the potential to generate both social and environmental impact, along with business profits.
The country has a limited number of companies with IB models, and many companies consider “inclusivity” as being inclusive of people with disabilities. There are currently 11 identified companies with existing and potential IB models. Most are regional headquarters of multinational corporations. IB models are implemented outside of Singapore, with the majority in the agribusiness sector engaging the BOP as suppliers.
Singapore is known for its innovative and strong start-up culture, actively promoted by impact and angel investors and the government. However, most business models are not aimed toward solving BOP issues and are not implemented in neighboring ASEAN developing economies.
In general, the CSR culture is strong, with the government emphasizing it as well. However, the number of CSR initiatives that count as IB activity is small and the scaling up of potential IBs is limited by the small size of the domestic market.
Government support to IB
Establishing conducive rules, regulations and definitions: There is currently no policy targeting IBs in general in Singapore. Both the country’s policies on SMEs and Social Entrepreneurship support provide a base for the development of IB. Enterprise Singapore, under the Ministry of Trade and Industry, is the government agency championing enterprise development.
The government supports social enterprises with funding and capacity building through the Singapore Centre for Social Enterprise (raiSE). This support enables social enterprises which are in the growth stage of their business lifecycle to accelerate their development and potentially scale them into IB models.
Enhancing access to financial resources and providing financial incentives: There are existing mechanisms that can be leveraged by IBs. Enterprise Singapore’s Enterprise Financing Scheme (EFS) encourages financial institutions such as banks to lend to SMEs. Examples of such loans include the SME Working Capital Loan.
Singapore as a regional impact finance hub saw many impact investors setting up base in the country. Building on Monetary Authority of Singapore’s (MAS) Green Finance Action Plan, which was introduced in 2019, the Singapore Green Plan 2030 was launched in February 2021. It includes concrete steps to catalyse green finance in the region, including a focus on Environmental, Social, and Governance (ESG) factors in the financing decision-making process. These policies have spurred the establishment of numerous ESG funds, which could in turn seek investments in companies with IB models.
Strengthening the capacity of the BOP and of Inclusive Businesses: The PACT programme, jointly managed by Enterprise Singapore and Economic Development Board, encourages larger enterprises to work with SMEs to co-innovate/ internationalize/ improve productivity.
The Government of Singapore is making efforts to facilitate impact investment regionally.
Thailand has achieved remarkable progress in recent years moving from a low-income to an upper-income country in less than a generation. Nevertheless, some regions remain better off than others, and income inequality remains a persistent problem. The recent National Economic and Social Development plans have seen growing significance in human and social development with the Sufficiency Economy Philosophy as the overarching framework.
While the level of awareness of IB models is low, the country has a long history with social enterprises, first dating back to the 1970. However, there is growing interest from corporations and the government to invest in, transition and scale-up SE and CSR to inclusive business initiatives and IB activities.
According to previous assessments, there are about 20 companies with IB models in Thailand. More enabling legislation and awareness of IB models could enable a significant rise of IB in Thailand, especially given that the country is already focused on making growth more inclusive.
Government support to IB
Establishing conducive rules, regulations and definitions: There is currently no policy targeting IBs in Thailand, although important advances in SE policy are ongoing. Since 2009 the Thai government has been promoting social enterprises through SE accreditation, financing and incentives. It created a dedicated Thai Social Enterprise Office (TSEO) under the Prime Minister to coordinate the implementation of the various programs under the 2019 Social Enterprise Promotional Act, which paves the way for the scaling of SE towards IB models.
The Office of Small and Medium Enterprises Promotion (OSMEP) is the government’s primary agency formulating policies and strategies and supporting SMEs in Thailand. It also coordinates with different agencies to create a suitable ecosystem for entrepreneurship building for growth and development, which could benefit companies with IB models.
Enhancing access to financial resources and providing financial incentives: In 2015, the Thai Social Enterprise Office collaborated with two state-owned banks to set up a social enterprise loan program of USD 57 million. Despite this programme, there is insufficient funding for SEs seeking to move from the validation to the growth stage.
Providing information and raising awareness: Thailand is also engaging in regional conversations around the potential of inclusive business, especially in the context of ASEAN. As the Chair of ASEAN in 2019, Thailand hosted two major IB events: the Third IB Policy Forum and the Second ASEAN IB Summit.
The Office of Small and Medium Enterprises Promotion (OSMEOP) could consider conducting a landscape study on Inclusive Business in the country.
- Viet Nam
Viet Nam has experienced steady economic growth over the past decades and managed to decrease the poverty rate of its population immensely. Yet the country continues to face social challenges such as poverty, unequal access to public health and education, and the need for environmental sustainability. Although the general awareness level of IB is quite low in the country, there is a growing interest from the public and private sector in it.
At the same time, the social enterprise sector in Viet Nam is diverse and expanding. Recognizing the role that SEs play in the country’s growth, Viet Nam’s Enterprise Law was revised in 2014 to provide a legal definition of SEs, and the government promised to “encourage, support and promote the development of social enterprises”. Viet Nam was the first Southeast Asian country to legally recognize SEs. Social Enterprise Thailand Association (SE Thailand) was established in 2019 as a membership-based organisation made up of social enterprises.
Government support to IB
Establishing conducive rules, regulations and definitions: At the APEC Summit 2021, Viet Nam stated its commitment to support companies that expand their markets towards the base of the income pyramid through inclusive business models as they promote social transformations and have a large and deep social impact.
The Agency for Enterprise Development (AED) under the Ministry of Planning and Investment (MPI) has been coordinating Viet Nam’s efforts on IB promotion. In 2019 and 2020, Viet Nam undertook the Landscape Study on Inclusive Business in the country in cooperation with ESCAP and iBAN, who worked together with the Agency for Enterprise Development (AED) under the Ministry of Planning and Investment (MPI). The study was launched during an online event in September 2021.
It includes a market study of current inclusive businesses in Viet Nam and an assessment of the enabling environment. It also provides recommendations for promoting inclusive businesses. The analysis of 160 business cases identifies 19 implemented and potential IB cases, which benefited 2.6 million people in 2018 and created a revenue of US$126 million. The 19 IB companies have successful and growing business models mainly in agrobusiness, crafts and industries, energy, microfinance and health sectors.
Seven key areas for promoting IB and the indications of interest were discussed with government, business associations, IB facilitators, IB investors, IB companies, and development partners:
- Indicating a strategic commitment to the IB agenda by including IB in the implementation plan of the Sustainable Private Sector Development Strategy 2020-2025;
- Institutionalizing IB support through a national IB advisory board, an IB unit in the government (Agency for Enterprise Development under the Ministry of Planning and Investment), and IB focal points in various government agencies and business associations;
- Promoting IB awareness raising under strong involvement of business associations, and further knowledge work;
- Setting up an B accreditation system at regional level and doing IB accreditation and IB awards jointly with government and business associations;
- Providing IB coaching to support companies transitioning into IB;
- Establishing an IB risk reduction facility for investors to unleash financing of IB companies; and
- Promoting IB in the ASEAN 2020 agenda chaired by Viet Nam.
For the future, the study also proposed implementing IB accreditation, creating a technical assistance facility in the amount of USD 1.6 million and setting up an IB risk reduction fund of $25 million for initial 4 years implementation.
Information from non-ASEAN Countries
- People’s Republic of China (PRC)
People’s Republic of China has few IB specific investments although the market potential is huge. IB investments were encouraged earlier, especially for agribusiness, under the “dragonhead approach” and the go west strategy of the government. The government championed the IB agenda as 2016 chair of the G20. In June 2018, ADB, IFC, IADB and WBCSD published a market scoping study on IB in China. The report explains the current state of inclusive business (IB) models from the PRC, drawing from domestic and international company examples and practices. Key characteristics of IBs in terms of sector, size, and business model, and challenges facing these IBs are discussed. It also presents opportunities for IB to build on existing government programs, and proposes actions various stakeholders can take to promote the growth of IB in PRC.
From 2017 to 2023, the ADB engages in a project introducing the inclusive business approach in the agricultural sector in the PRC by providing a 90 million USD loan and a technical assistance special fund of 300 million USD. The project is based in Shanxi, China’s second-largest coal producer and one of the poorest provinces in the country. As a response to low coal prices, the government is taking steps to diversify the Shanxi economy. With 45% of the province’s population relying on agriculture as a source of income, the government aims to improve the agriculture sector by promoting value addition to locally specialized agricultural products including fruits, vegetables, and meat. The Inclusive Agricultural Value Chain Project supports poverty alleviation in the region and narrows the rural-urban income disparity. As of June 2020, 388 jobs have been created, of which 43.44% were taken by poor and low-income people and 45.87% by women.
Japan has a social enterprise and CSR focus. Very few IB investments have taken place although companies have expressed an interest in the concept. The 1st IB bond in the world has been established here under the IFC. The government promotes IB through its agencies JIBSC, JETRO and JICA.
There is a strong CSR focus amongst companies. While there is an increasing interest amongst large conglomerates in strategic CSR, there is so far barely any IB investment of large Korean companies in developing Asia. No investors exist and there is no active government promotion so far, however interest is emerging. The Korean government implemented a social problem-solving R&D policy in order to counteract social, economic and environmental problems.