Social enterprises in Malaysia – an emerging employment provider

By Jason Loh

Social enterprises in Malaysia should be seen and included by the government as part of the strategy to tackle the rising unemployment in the country even if on a short- to medium-term basis because these have the potential to be an emerging employment provider on the back of sustainable support and backing from government and society.

But firstly, what exactly are social enterprises or entrepreneurship?

They could be defined as not-for-profit (and hence social) enterprises performing economic activities like any private sector enterprise such as small and medium-sized enterprises (SMEs).

Their activities could range from handicrafts (Heart Treasures) and the production of reusable sanitary pads (Blubear Holdings Sdn Bhd) to aquaponic for home and urban farming (Poptani) and modular homebuilding (EPIC Homes).

In Malaysia alone, our social enterprises number some 20,000 including those on a voluntary basis. Approximately 64% of our social enterprises are based in the Klang Valley.

The momentum for the growth and exposure for social enterprises took off after 2009, according to Ellynita Lamin, founder of Social Enterprise Alliance Malaysia.

“There are three characteristics that distinguish a social enterprise. They directly address a social need, their commercial activity is a strong revenue driver and the primary purpose is to ensure that there are positive outcomes… in short, for the common good,” she added.

Hence, there needs to be a concerted and coordinated effort by the government working with the relevant stakeholders to provide support and a conducive eco-system for social enterprises to fulfil their role in this regard, particularly in the provision of employment which is definitely a social or common good too.

Attention and focus should also be given towards nurturing and developing our social enterprises to be at the forefront of entrepreneurship that complements and supplements the private sector.

Entrepreneurship, of course, breeds employment. The more social entrepreneurs there are, the more employment there will be in the social enterprise sector.

It is very heartening, therefore, to note that the latest stimulus package by the government in the form of Penjana is timely under the theme of “Propel Businesses” where the need for “support to be given to social enterprises to diversify economic activity” was mentioned. Although unstated, this is no doubt an implicit recognition that social enterprises play a crucial role in providing employment in the country.

In this, the Penjana stimulus package provides for the Social Enterprises Elevation via “a matching grant through the Malaysian Global Innovation & Creativity Centre (MaGIC) totalling RM10 mil to social enterprises who are able to crowdsource contributions and donations to undertake social projects that will address the challenges faced by targeted communities through innovative ways”.

When conceptualising their role and function in addressing unemployment, we note that social enterprises help to balance and temper the profit-making ethos of the private sector including the gig economy which can sometimes result in sustainability and social welfare issues.

They can be regarded as the conscience of the economy at a time when governments are under pressure to blur the distinction between the competencies of the public and private sectors.

At the same time, social enterprises would also be supporting the SMEs as the leading employer in the country, either directly (as part of the supply chain) or indirectly (as part of the transition for employees which cuts both ways from the SMEs to social enterprises and vice-versa).

Going forward, EMIR Research would like to recommend the following proposals to advance the cause and role of social enterprises in Malaysia by the government:

– Matching grants to social enterprises that will enable them to expand their business and incentivise the employment of more youth and graduates;
– Promoting and encouraging both public and private sector investments in social enterprises (as the third sector) where the returns are fixed to performance or outcome;
– The establishment of a Social Enterprise Agency or Commission by an Act of Parliament whose role is to provide technical advice and reduce entry barriers for social entrepreneurs in the country as well as to promote social enterprises as employers in the country;
– Employment opportunities for people with special needs through government-linked social enterprises and in collaboration with other social enterprises following a UK model where the establishment of Remploy as a government-linked company that specialises in providing employment and skills support “for disabled people and those with health conditions”; and
– Wage Subsidy Programme & Employment Retention Programme should apply to social enterprises too.

Not forgetting too that the government could provide additional focused support for social enterprises to women entrepreneurs, as they are critical employers of their fellow gender compatriots, especially those from the B40 groups.

Last but not least, social enterprises are also key in our poverty eradication programmes, as they provide the disadvantaged, especially women, with the skills and experience to transition into micro-businesses.

In other words, a new breed of micro-enterprises – as key to lifting the B40 – could arise from social enterprises. – June 17, 2020

Jason Loh Seong Wei is Head of Social, Law & Human Rights at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

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