Asia Pacific: Inclusive Business in the Association of Southeast Asian Nations

Asian Development Bank, May 2018
Policy and Government
East Asia and Pacific
19. Jun 2018

Asia-Pacific: Inclusive business in the association of Southeast Asian Nations

• 91 pages • Asian Development Bank (ADB)

In 2017, the Government of the Philippines chaired ASEAN, and made inclusive business (IB) one of its deliverables toward the ASEAN vision of a region that is “outward-looking, living in peace, stability, and prosperity, bonded in partnership in dynamic development, and in a community of caring societies.” This study, addressed to policymakers of ASEAN and the ASEAN Business Advisory Council, describes the markets for IB in ASEAN economies, and recommends further actions by ASEAN, the ASEAN Business Advisory Council, and ASEAN members to promote IB.

This study aims to provide understanding of the current state of Inclusive Business (IB) and IB policies in the ASEAN region. Directed towards ASEAN policy makers, it describes IB as an innovative way to increase economic growth in an inclusive and sustainable fashion, in line with future development goals of ASEAN. It further provides recommendations to promote IB. This study was initiated by the Department of Trade and Industry of the Philippines, the Asian Development Bank and the ASEAN Secretariat.

Key recommendations:

  •  ASEAN should continue building a global IB framework by engaging with other multi-national organizations like G20 and the Asia-Pacific Cooperation.
  • ASEAN needs expand and intensify coordination within ASEAN and with external development partners for IB support
  • ASEAN should support micro and SMEs by promoting IB as part of its inclusive growth agenda as well as by developing an IB framework.
  • ASEAN should integrate business associations to promote best practices

Importance for businesses

  • Different IB business models and their characteristics are introduced
  • Finance and Investment structures for IBs are illustrated

Importance for policymaker

  •  IB supports the development agendas of ASEAN

The report describes the state of IB policies and distribution as case studies for all member states of the ASEAN individually and offers advice on areas of improvements

Inclusive business (IB) aims to engage those living at the base of the pyramid (BOP) on the supply and/or on the demand side of business, providing better income opportunities and affordable products. The Association of Southeast Asian Nation (ASEAN) is promoting IB as a method to offset their countries low-income levels through inclusive growth, centred on the improvement of the conditions of poor and low-income people.

Agribusiness provides high-impact examples of IB across ASEAN, but IB business models exist in all major industries to varying degrees. The study differentiates between IB core business models, IB activities and social enterprises. By 2016, IB created 500000 new jobs and included 21 million people in the BOP, with projections estimating increase to 70 million people served by 2025.

Investment and financing for inclusive Business is a challenge, particularly for deals of more than $ 1 million. While funding from development finance institutions exists, impact investment is estimated to only contribute to about 3% of most banks’ investment portfolio. The study argues that IB investment is well suited for development banks, as it is in line with their mandate and their cost of capital.

IB is in line with the development goals of ASEAN. It can support all four characteristics of the ASEAN Economic Community Blueprint 2025, by increasing the involvement of the private sector in inclusive growth. It further is aligned with the five strategic goals of the ASEAN Strategic Action Plan for Small and Medium-Sized Enterprises Development 2016-2025: Promote Productivity, Technology and Innovation, Increase Access to Finance, Enhance Market Access and Internationalization, Enhance Policy and Regulatory Environment and Promote Entrepreneurship and Human Capital Development.

The article end with country profiles, which describe the state and growth potential of IB in the ASEAN region.