More businesses in the ASEAN are now contributing to economic growth by providing income opportunities and relevant, affordable services and goods to low-income communities. These types of businesses, called inclusive business (IB), go beyond traditional corporate social responsibility (CSR) by integrating the poor in the core business as suppliers, distributors, consumers, and retailers.
The ASEAN currently has 332 million people living in poverty and IB companies have the opportunity to tap into a majority of these people.
"Because inclusive business creates jobs with the goal of bettering our quality of life, especially for low-income communities, they help us realize the ASEAN Community Vision 2025's goal of building a people-centered and people-oriented ASEAN," said Philippine Trade Undersecretary and Board of Investments (BOI) Managing Head Ceferino Rodolfo.
IB companies are currently less than one percent of all registered companies outside ASEAN's informal sector, but they are increasing fast and attracting nearly 60 percent of impact investors in Southeast Asia. These companies have made a positive social impact on millions of people for sectors like health, water, energy, and housing.
Highest impact models
The highest impact models and scales in the ASEAN are found in the agribusiness sector. Thailand's Urmatt Group, for example, engages over 3,000 smallholder farmers producing organic rice, chia and coconut products. The Philippines' Kennemer Foods International (KFI) equips 10,000 cacao farmers with high-quality planting materials, training, and agri-technologies.
Most IB models in the ASEAN are implemented by medium to large-sized companies. They can emerge, however, from CSR programs and social enterprises (SE), which are businesses that need more capital to grow and deliver social impact on a smaller scale.
Thailand, Indonesia, and Malaysia have strong CSR laws and requirements on the disclosure of corporate Environmental, Social and Governance (ESG) performance, which offer potential templates and stepping stones for IB policies.
Vietnam also implements existing policies and programs for small and medium enterprises, which can be potentially tied to IB models and practices. Both Singapore and Thailand actively support social enterprises that can later scale up as IB companies.
According to Rodolfo, increasing access to relevant information and financial resources, as well as the provision of financial incentives, are the next steps that ASEAN members can do to create an economic climate that encourages IB investments.