Boost for social enterprises

SOCIAL enterprises, which are defined as not-for-profit (and hence social) organisations carrying out economic activities to improve financial, social and environmental well-being, are emerging as important employers in Malaysia.Their activities range from production and sale of handicrafts (Heart Treasures) and reusable sanitary pads (Blubear Holdings Sdn Bhd) to development of aquaponic systems for home and urban farming (Poptani) and modular home-building (EPIC Homes).

Currently, there are about 20,000 social enterprises in Malaysia, including those operated on a voluntary basis, with about 64% based in the Klang Valley.According to Social Enterprise UK, “Social enterprises trade to tackle social problems, improve communities, people’s life chances, or the environment. They make their money from selling goods and services in the open market, but they reinvest their profits back into the business or the local community. And so when they profit, society profits.” (See

Social enterprises in Malaysia need the government’s help to enable them to achieve their aims more effectively. In this aspect, efforts should be taken to nurture and develop them so that they can be propelled to the forefront of entrepreneurship alongside the private sector. Entrepreneurship creates employment, hence the more social entrepreneurs there are, the more employment opportunities there will be.It is heartening to note that the Short-Term Economic Recovery Plan (Penjana) includes the “elevation of social enterprises” as part of the government’s strategies to “Propel Businesses” in the wake of the devastating health and economic impacts of the Covid-19 pandemic. This is no doubt an implicit recognition that social enterprises play a crucial role in the economic well-being of the country.

Penjana would provide “a matching grant through the Malaysian Global Innovation and Creativity Centre (MaGIC) totalling RM10mil to social enterprises that are able to crowdsource contributions and donations to undertake social projects that will address the challenges faced by targeted communities through innovative ways.”

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 SMEs, the leading employers in the country, either directly (as part of the supply chain) or indirectly (as part of the transition for employees from SMEs to social enterprises and vice-versa).

To advance the role of social enterprises in Malaysia, the government should:> Provide matching grants to social enterprises that will enable them to expand their business and provide employment for more youths and graduates;

> Encourage both public and private sector investments in social enterprises (as the third sector) where the returns are fixed to performance or outcome;

> Establish a Social Enterprise Agency or Commission, 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;

> Work with social enterprises to provide employment for people with special needs;

> Extend the Employment Retention Programme and Wage Subsidy Programme to social enterprises; and

> Provide additional and focused support to women entrepreneurs in social enterprises, as they are critical employers of their compatriots especially those from the B40 groups.

JASON LOH SEONG WEI , Head of Social, Law and Human Rights EMIR Research

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