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 new movement started to unfold among ASEAN Member States to develop specific policies and to set up promotion institutions and programmes to develop an enabling ecosystem for Inclusive Businesses. A common definition of Inclusive Business has been provided by ASEAN. In addition, there is a growing awareness among Member States of the potential of inclusive business companies to reduce poverty reduction and foster inclusive and sustainable economic growth.
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 were researched in cooperation our partner United Nations ESCAP and are 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. The ongoing process offers an opportunity to generate awareness on inclusive business in the country.
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.
The Government of Cambodia has identified IBs as an area for policy development and is conducting a landscape study to assess IB in the country. While awareness on IB is still relatively low, the landscape study work is generating greater understanding among public and private sector actors. There is increasing interest in transforming larger companies into IB models and smaller enterprises into IB initiatives, while fostering new IB activities. 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.
Government support to IB
Establishing conducive rules, regulations and definitions: Cambodia has not yet adopted specific IB policies. However, the country is finalizing a landscape study on IB in partnership with ESCAP and iBAN and may adopt targeted policies soon. The landscape study mapped IB cases and analysed the enabling environment for IB in Cambodia and provided recommendations for policy support. Eight strategic areas are being considered for promoting IB for Cambodia through a national strategy, the Inclusive Business Enabling Environment for Cambodia (IBeeC) strategy. Approval and institutionalization of the strategy is expected to take place in 2019. The strategy will be reflected in the new SMEs Development Policy and its five-year implementation plan, thereby also being reflected in the new National Strategic Development Plan (NSDP 2019-2023).
Enhancing access to financial resources and providing financial incentives: Discussions are ongoing to include a risk reduction facility for IB investors under the new SME Bank. Access to finance in Cambodia has strong potential and there are several channels that could support IBs.
Providing information and raising awareness: As part of the IB strategy, business associations (including YEAC, CCC, CWEA, and FASMEC) have agreed and started to promote awareness on IB. Government institutions (Line Ministries are key champions) have also committed to provide information on IB. With the support of technical assistance, workshops, a national website, media coverage, brochures and other information material could be developed. In August 2019, Cambodia will hosted its first IB Forum in Phnom Penh, where the IBeeC Strategy was discussed.
The Ministry of Industry and Handicrafts is committed to approve an IB promotion strategy and encourage its 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. Cambodia is reporting fast and strong progress on IB policy setting. Under the strategic framework, the following 8 key points are in discussion:Establishing focal points in government agencies and business associations, and a multi-stakeholder steering committee (that will also include impact investors and selected development partners). Raising IB awareness through seminars, a national website and other information materials. Creating an IB accreditation system jointly implemented by government and business associations.
- Including IB as a cross-cutting theme in the new investment law and opening incentives for IB models.
- Prioritizing IB companies and social enterprises in public procurement.
- Establishing a technical assistance facility that a) helps companies revising their business models (business coaching) and doing impact assessment, and b) supports further policy actions.
- Creating -under the new SME bank - a risk reduction fund for investors in IB models.
- Establishing an IB reporting system as part of private sector reporting to the SDGs.
IB is not a widespread concept IBs but good examples do exist in the country. A 2013 study assessing the potential for IB in Indonesia114found strong evidence for IB and highlighted existing IB companies, mostly in agribusiness. 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.
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. Social enterprises are fairly new in the Lao PDR. There is no formal definition of SE in the country.
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.
CSR and SE are common in Malaysia, however IB is not yet a familiar concept in the country. Malaysia offers incentives for companies to practice CSR, including tax breaks and a fund of RM50 million to promote CSR activities. Increasingly, more companies are adopting CSR as part of their strategy and core values. This can be leveraged to develop IB models.
Social enterprises are a recognized and growing concept in the country. SE can receive benefits such as tax incentives or government-led buy-back agreements.127The government is encouraging the formation of a strong, supportive SE ecosystem and several for-profit SEs would qualify as IBs. Malaysia’s focus on social innovation is unique. Its support for SE could further expand to help scale up some of those SE into IB models, and further increases in strategic CSR activities would be a source for generating further IB models
Government support to IB
Establishing conducive rules, regulations and definitions: There is currently no consolidated policy action on IB in Malaysia. However, the government is highly interested in exploring how it could best promote IB. In June 2019, SME Corp. Malaysia, received approval from the Ministry of Entrepreneur Development to undertake the IB Landscape Study in Malaysia, in partnership with ESCAP and iBAN. The IB study commenced in July and policy recommendations will be derived from the exercise.
Enhancing access to financial resources and providing financial incentives: As part of its effort to stimulate social innovation, in March 2017, the Social Outcome Fund was launched by the Malaysian government amounting to MYR3 million (USD 690,000) and is being managed by the Agensi Inovasi Malaysia (AIM). The 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.
The SME Corporation Malaysia (SME Corp. Malaysia), Ministry of Entrepreneur Development Malaysia (MED) is conducting, in collaboration with iBAN and ESCAP, a landscape study on IB. Opportunities exist for the development of targeted policies after completion of the study. The study will help identify existing and potential IB and how public policies can promote IB. The study has three key components:
- Mapping of inclusive businesses (including IB company assessments);
- Analysis of the enabling environment for IB in Malaysia and;
- Recommendations for policy support towards IB.
Although no dedicated policy exists to support IBs and awareness on the topic is still low, there is interest from the government and local actors in IB models and progress has already been achieved. A 2018 study found that IB is a relevant and growing concept in the country; 56 companies with potential IB models were identified and, of these, 21 had innovative models, initiatives and activities with 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.
Government support to IB
Establishing conducive rules, regulations and definitions: Myanmar is promoting IB through the Directorate of Investment and Company Administration (DICA), a government agency under the Ministry of National Planning and Economic Development. 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. Also in 2018, Myanmar launched the IB/Impact Investing Steering Group – a public-private activity to promote and guide IB/impact investing development. The group is expected to provide a strong platform to roll out the various elements of the Framework for IB.
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 agenci es and business associations to build the IB ecosystem in Myanmar. In 2019, the IB Steering Group and DaNa, as its secretariat, will reach out to different regions, potentially through the Myanmar Young Entrepreneurs Association, to raise awareness on IB.
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
Although still at the early stage of development, IB is a recognized concept. Companies and the government have been actively engaging in IB development since 2013. An IB market-scoping study identified more than 70 companies with IB models in the Philippines.There are many well-known examples, especially from the agribusiness sector. The major business organisations in the country also actively support the IB concept.
Government support to IB
Establishing conducive rules, regulations and definitions: In 2014, the BOI and ADB came together to pursue IB approaches. The government made IB a part of its investment priorities plan (IPP) and offered specific tax incentives for companies with IB models in the agribusiness sector. While IB was included as a cross-cutting theme in the IPP 2014–2016, in the IPP 2017–2019, IB models are now part of the priority sectors eligible for incentives. IB is seen as one of the pathways in the government’s poverty reduction strategy to reduce poverty.
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 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 market 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 been active in promoting IB in ASEAN and APEC, including as chair of APEC 2015 and of ASEAN 2017. Since 2017, the country 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 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
Singapore 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.149Most 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 neighbouring ASEAN developing economies. 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.
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.
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. raiSE’s various capacity building and financing support enable social enterprises who are in the growth stage of their business lifecyle - to accelerate their development and potentially scale them into 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.
Future measures could include, on the demand side:
- Leverage certifications to identify, build and encourage the growth of a pipeline of impact driven companies.
- Develop platforms to connect angel investors for pre or post investment activities and building a pipeline of early stage Venture Capital impact funds which can provide early stage financing for these companies.
On the supply side:
- Explore the introduction of relevant tools with the aim to encourage the growth of green, sustainable and impact lending or investments in the region.
To create a more enabling ecosystem for impact investments:
- Promote proper measurement frameworks for Impact and Sustainability criteria and measurement. This will help address the lack of a harmonized approach or common benchmarking standard to impact measurement.
- Partner with multipliers (e.g. AVPN and raiSE) and other private sector partners to further encourage the growth of inclusive businesses.
According to previous assessments, there are about 20 companies with IB models in Thailand.144More 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. The Social Enterprise Promotional Act was published to the Government Gazette on May 2019, indicating its implementation as roadmap and framework for the promotion of SE in Thailand.
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.
Thailand is engaging in regional conversations around the potential of inclusive business, especially in the context of ASEAN. As the Chair of ASEAN in 2019, Thailand is hosting two major IB events; the Third IB Policy Forum and an 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
The private and public sectors, development agencies, and investors have significant interest in IB. However, in general, the level of awareness of IB models is low. Viet Nam has seen a few IB investments so far, but there is potential.
Government support to IB
Establishing conducive rules, regulations and definitions: There are currently no specific policies to support IB in the country. However, Viet Nam – preparing for being the chair of ASEAN in 2020 – is interested in setting up its own IB promotion policies and sharing – in the context of the ASEAN 2020 agenda – further policy work to promote IB in the region.
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, under the collaboration with ESCAP/IBAN, a landscape study to explore strategic recommendations for promoting IB in Viet Nam is being developed. Policy recommendations are expected to focus on accreditation of IBs, the engagement of focal points for advocacy and capacity development among government actors and could further include technical assistance, tax incentives and access to finance.
IB efforts in Viet Nam are expected to build in the revision of Decree 96/2015ND-CP Detailing the Law on Enterprises, which currently defines incentives and support to Social Enterprises. IB could be included as a new area of support in the revised rule.
Viet Nam is conducting in 2019 a scoping study on IB, let by AED, to help identify existing and potential IB and how public policies can further promote IB investments. The study, currently under implementation, has four key components:
- Mapping of inclusive businesses (including IB company assessment);
- Analysis of the enabling environment for IB in Viet Nam;
- Strategic recommendations for promoting IB, including on awareness raising, establishing multistakeholder focal points and a steering committee, and accreditation at national and provincial level;
- Suggestions to include IB in the 2020 ASEAN discussions chaired by Viet Nam.
Opportunities exist for the development of targeted policies after completion of the study.
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.
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.