A touch of magic: Gearing up for Social Entrepreneurship

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TA00777TA00776KUCHING: Malaysia’s businessfolk are evolving to a new level, incoporating a sense of online connectivity and uniqueness of identity as they evolve from the traditional for-profit, non-profit, and public segments.

Today’s breed of entrepreneurs are, as some describe to be as more driven, more “social” – and thus bringing us to social entrepreneurship.

Social entrepreneurship is a rapidly growing sector due to its ability to develop social innovations that are financially viable to private sector investors.

Technological advances have also catalysed social entrepreneurship through affordable design and its ability to transcend geographic boundaries as a channel to connect with beneficiaries. According to the Malaysian Global Innovation Centre (MaGIC), social entrepreneurship is a unique development – one currently without a succinct, accurate description of what a ‘social enterprise’ is.

“This lack of a definition has led to confusion among stakeholders and potential entrepreneurs – but it has not hindered their growth as examplified by actions of countries worldwide.

“Countries like the UK, US, South Korea, Vietnam, Thailand, Singapore, Myanmar and Australia regard social entrepreneurship as a key national agenda and have set up agencies to champion the growth of social enterprises in the country,” it said in its Malaysian Social Enterprise Blueprint report.

“For example, in Thailand, there are now over 120,000 social enterprises. In the UK, there are over 70,000 social enterprises. They employ over a million people and contribute more than five per cent to national gross domestic product (GDP).”

In Malaysia, MaGIC estimated that there are 100 social enterprises operating mostly in the areas of education, poverty, rural development, environmental sustainability, employment for the marginalised, and at-risk youth.

 

Presence in Malaysia

The Malaysian social enterprise sector is currently in its infancy, MaGIC said, as the sector has been largely driven by isolated communities in a specific geographic region or a particular theme.

However, there is a common recognition among key stakeholders that social enterprise has the potential to solve many social challenges by utilising the best of for-profit and non-profit sectors.

Recognising this potential, Malaysia hosted the Global Social Business Summit in 2013, the very first time the summit was held outside of Europe.

At the summit, the Malaysian Prime Minister, Datuk Seri Najib  Tun Razak committed RM 20 million to set up a Social Entrepreneurship Unit under MaGIC.

Even though there is an increasing number of supporting intermediary organisations for social enterprises, including British Council, myHarapan, iM4U, Scope Group, Tandemic, and Social Enterprise Alliance, only 0.02 per cent of Malaysians are working in social enterprises.

In comparison, 1.5 per cent of China’s working population is working in social enterprises (Global Entrepreneurship Monitor 2013).

Although the intermediaries in this sector have actively generated awareness and supported the community, these initiatives alone are inadequate to fully realise the potential of this sector.

 

Enter the Social Enterprise Blueprint   

In May this year, Prime Minister Najib launched the Malaysian Social Enterprise Blueprint 2015-2018, a three-year strategic roadmap for developing a social enterprise ecosystem.

The aim is to empower the Malaysian social enterprise sector to be self-sustaining, equitable and people-centric, and to create more impact-driven entrepreneurs by the year 2018.

“The role of social entrepreneurship in promoting sustainable and equitable economic growth has been a focus of many governments around the world,” Najib said in the foreword of the blueprint, which was unveiled at the Cyberjaya headquarters of MaGIC.

“The Government recognises the potential of social entrepreneurship in not only addressing our country’s pressing, issues but in also redefining how business should work in order to achieve a people-centric economy,” he added.

MaGIC set up a Social Entrepreneurship unit (MaGIC SE) as a result of a RM20 million fund announced by the prime minister back in 2013.The unit has been mandated to spearhead the growth of the nation’s social enterprise sector via a strategic and pragmatic approach.

It is MaGIC SE’s role to build cross-sector partnerships which would tap into the strengths and resources of each sector. This would in turn spur growth of social entrepreneurship in Malaysia.

The Blueprint outlines the strategic thrusts needed to accelerate the development of the social enterprise sector in Malaysia and identifies three main building blocks: Social enterprises and social entrepreneurs; the ecosystem itself; and institutions including public and private players.

It is hoped that these three strategic thrusts would in turn inspire the social enterprise movement, create an enabling ecosystem and affect systemic changes in the society, MaGIC said in its statement.

The Malaysian Social Enterprise Blueprint is a three-year roadmap that describes the strategic thrusts needed to accelerate the development of the sector.

By the year 2018, we aim for the Malaysian social entreprise sector to be self-sustaining, equitable, and people-centric in order to empower impact-driven entrepreneurs.

 

Cultivating social entrepreneurs in East Malaysia

The role of the social enterprise sector is not to replace existing sectors, rather it aims to connect and unite traditional sectors in order to deliver economic, social, and environmental value for all stakeholders involved.

As such, the role of social enterprises is to leverage on the opportunities and synergies existing within the traditional sectors in order to fulfil their social or environmental missions. East Malaysia is not left out in MaGIC’s journey towards social entrepreneurship. There are several key forces at play among the traditional sectors that are creating an ecosystem of opportunity for social entrepreneurs. These forces stem from the need of the non-profit, for-profit, and government to meet their objectives in a new and complex environment.

The private sector, for example, is reacting to more ethical and transparent ways of doing business in order to grow and meet shareholders’ imperatives.

For-profit enterprises are looking into social entrepreneurship as a demonstration of commitment to go beyond the traditional corporate responsibility programs to deliver more business and social value.

As more and more businesses turn to social entrepreneurship as form of conducting business, opportunities for cross-sector collaboration are being created with government and the non-profit sector. This cross-sector collaboration has created a new need for non-profits to be more transparent, accountable, and most importantly, adopt sustainable means of operating their organisations.

Social entrepreneurship is also an avenue for the government to be more proactive and focused in meeting the public’s demands and expectations for public services and goods. Government ministries, agencies, and proxies which are inundated by the strict procurement and processes are slowly transferring responsibility to social enterprises through a social-public-private partnership model based on performance incentives and rewards for social enterprises.

As government seeks to reduce its operational expenses and channel more funds towards goods and services which are directly impacting the public, forward-thinking ministries and agencies are already looking into social enterprises to deliver public services and goods on government’s behalf while simultaneously achieving the goals of increased operational and cost efficiencies.

The SE team at MaGIC spearheaded by Sarawak-born executive director Ehon Chan spoke to BizHive Weekly on its various objectives, challenges and opinions about the East Malaysian ventures.

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BIZHIVE WEEKLY: MaGIC strives to encourage entrepreneurship from all corners, including Sabah and Sarawak. Can you tell us how feedback has been like from East Malaysia from your observations and dealings with East Malaysian prospects? What are some unique qualities that you see East Malaysians having that others don’t?

CHAN: The MaGIC Social Entrepreneurship team has conducted several workshops and roundtables in East Malaysia, and the reception has been overwhelming. We have one of the highest attendance (outside of Klang Valley) in East Malaysia.

The challenges and opportunities faced by entrepreneurs as well as social entrepreneurs in East Malaysia are slightly different than in Klang Valley. This also translates to the focus and industries these entrepreneurs tend to get into.

West Malaysia has an easier connection to the ecosystem and hub in Klang Valley (Central) and also Singapore (South). Meanwhile, Sabah and Sarawak rely on a small and tight group of like-minded individuals, so the sense of community amongst Sabah and Sarawak social entrepreneurs are stronger.

 

BIZHIVE WEEKLY: What are some of the key challenges that MaGIC currently faces in achieving its goals?

CHAN: From a social entrepreneurship point of view, our biggest challenge is also our biggest opportunity, that is the current ecosystem for social entrepreneurship is still in its infancy. This means that the supply and demand is currently low and a lot of education is needed.

So, every effort we put into building the sector has to be smart and strategic. This means that we need to invest in both short-term and medium-term gains, and we have to develop a comprehensive approach in collaboration and partnership with other players.

 

BIZHIVE WEEKLY: Prime Minister Datuk Seri Najib Tun Razak recently launched the Social Enterprise Blueprint aimed at developing a social enterprise ecosystem. This step represents Malaysia’s move in the right direction towards encouraging businesses on a modern-day scale.

What are your thoughts on social entrepreneurship in Malaysia?

CHAN: As mentioned, social entrepreneurship is a new concept in Malaysia but we’re seeing very resourceful and creative social entrepreneurs who are tackling some of our most pressing social issues. Take for example, electricity coverage in rural and remote areas of Sabah and Sarawak has resulted in untapped potential of the local people.

TONIBUNG, a social enterprise in Penampang, Sabah trains remote villagers to build micro hydro so they can then build, install and maintain their own microhydro in their village to generate power. Through a hire purchase model, the villagers will progressively repay the turbine over 36 months.

In Penang, a group of social entrepreneurs saw the gaps in our current education system and also opportunities brought by digital technologies and started Arus Academy.

The Academy provides meaningful learning experiences through applying their knowledge in making or creating – this includes DIY, programming, coding and building. They employ a cross-subsidisation model where by children from privileged backgrounds pay a fee to attend the Arus Camps which subsidises the training program for underserved communities. These social enterprises are the future of business and is the only way we can build an economy that’s equitable and sustainable. The social enterprise model ensures that profit is not generated in isolation to the people. Social entrepreneurship ensures that when the people prosper, the economy prosper, in that order.

 

BIZHIVE WEEKLY: What role will MaGIC play in developing the ecosystem with this blueprint in place?

CHAN: MaGIC Social Entrepreneurship will act as the catalyst to the ecosystem. Our strategy is to ensure that we meet immediate needs and gaps in the current sector and provide thought-leadership to drive involvement of other players to advance the sector.

Hence, we have three teams focusing on Community & Outreach to raise awareness and legitimacy of the sector, Academy to build the human capital for the sector and Ventures to support the growth of new social enterprises and scaling of existing social enterprises.

In the mean time, we’re engaging in conversations and providing advisory to corporations and government ministries and agencies on ways they can support the ecosystem.

 

BIZHIVE WEEKLY: Looking ahead, what are MaGIC SE’s end-goal for the people? What lies ahead for players?

CHAN: We want to ensure that Malaysia is the regional-leader for a people economy. We want to see an economy that’s equitable and sustainable. In order to achieve that, we want to see encouraging aspirations from the rakyat to either start or join a social enterprise, more intermediaries and supportive structures in place to build the human and financial capital for the sector, and ultimately we want to see systemic changes like policies and legal frameworks that supports social entrepreneurship.

 

What lies ahead?

Apart from MaGIC’s myriad of courses, sessions and programmes, one of its key initiative is the upcoming MaGIC Accelerator Programme (MAP) dubbed the largest accelerator in Southeast Asia which will enable companies to be investment-ready within four months.

Pegged as the largest accelerator programme in Southeast Asia, MaGIC explained that the accelerators give companies access to expert advice, vital connections and a community that knows what it is like to build something from nothing.

The applications for MaGIC Accelerator Programme (MAP) opened on April 1.

For the first batch, MaGIC the application would be opened for 50 early stage startups under its Asean Startup Track (AS Track) and 25 early stage social enterprises from its Social Enterprises Track (SE Track).

The AS Track and SE Track are parallel programmes run under MAP, which will start from July to November this year.

“For AS Track, the early stage startups are currently defined as those under three years and have validated their ideas or launched a prototype/product,” MaGIC said in a statement.

MAP is designed to grow a community of regionally-focused startups and build a community of social enterprises, whereby this community will develop and grow ideas to address the nation’s social issues and create significant social impact.

Producing more entrepreneurs by year end

MaGIC hopes to produce 200 social entrepreneurs nationwide through its social entrepreneurship programme by year-end.

Chief Operating Officer Norita Ja’afar said MaGIC is conducting roundtable discussions at 10 places nationwide to enlighten the target groups on its role in developing social entrepreneurs.

“The first session was launched in Kota Kinabalu involving 25 social entrepreneurs, lawyers, university lecturers and owners of entrepreneurial incubators. A second session was held in Kota Belud, she said reporters after calling on Sabah Deputy Chief Minister Datuk Raymond Tan Shu Kiah, who is also State Industrial Development Minister.

 

What goes beyond?

While the blueprint focuses on a three-year time horizon, what happens beyond 2018 still remains a question.

While some countries prefer to have a more national focus such as South Korea, Thailand and Vietnam, there is a precedent in regards to a country that has taken social enterprise to a regional focus – which is the United Kingdom through its presidency of the G8.

The question will continue to be at the forefront of those involved in this sector. While social entrepreneurship does have the immense potential to effect systemic change in Malaysia, there is a larger Asean population of 600 million that could also benefit from a strong regional champion of social entrepreneurship.

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