Malaysia’s Social Enterprise Landscape
“The bulk of social enterprises in Malaysia serve urban areas” – Ellynita Lamin, Developmental Strategist & Mentor. Photo: Maya Tan
Once a buzzword, we take a look at the growth and evolution of impact-driven enterprises in Malaysian cities with Developmental Strategist and Start-up Mentor, ELLYNITA LAMIN
What’s the current state of the social enterprise landscape in Malaysia?
Here are my general thoughts, from an overview perspective of the SE ecosystem in Malaysia.
Culturally, SEs in Malaysia have always had a strong presence (from the days of cooperatives and religious/community centres). However, in 2009, there was a louder call for structure in sustainability and scale. In a year of H1N1, 1Malaysia, the passing of Yasmin Ahmad, the increased social consciousness against corruption and more, Malaysians looked towards models that could fill in voids for impact. Social Entrepreneurship became one of these models. There was so much hunger for it that it then became a buzzword. More SEs were established (such as EPIC,an inititative that aims to build relationships through building homes for underprivileged communities) and earlier established SEs (such as SOLS24/7, an award-winning NGO engaged in education, technology, health and renewable energy) became more prominent. This was the first wave of formal social enterprises in Malaysia.
It is still a word that has more than 30 definitions worldwide as the third sector (non-governmental and non-profit-making organisations) evolves across industries and borders. As such, there are still lots of questions regarding the structural and legal limits of SEs. As the more mature SEs are understanding impact measures and pivoting their fit in the market, the struggle for early stage SEs are more inclined towards formulating business models that can sustain the founders’ visions and communities’ expectations.
How do we compare to SEs in other parts of the world?
Korea, UK, Taiwan and the US began their waves of social entrepreneurship in the 80s & 90s. They experienced various legal standardisations that have had negative implications but drove greater awareness of the third sector. They’ve learnt a lot since then and in return, I hope Malaysia and our neighbouring countries will too.
Closer to home, Indonesia and Philippines are growing SEs more rapidly due to their urgent socio-economic challenges.
Malaysia’s second wave of social entrepreneurship was in 2013, when the government announced an allocation of MYR20 million in funds and the development of MaGIC.
What are the intentions and objectives of our SE founders? Are their hearts in the right place?
It varies. Intentions are not easily measured and I do not think, should be judged.
Many enter the world of impact, SE or not, for many reasons. Be it selfish or otherwise, it’s the outcome of their impact that should be used as lessons and insights. It is often said that the wounded ones are the ones that are more passionate about delivering their conscience through their organisations, for the good and bad.
Is it easy to get grants and funding? If so, how are SEs dealing with funding and what happens when they’re out of the startup phase?
In general, Malaysia is less grant-rich this year compared to the years before. However, the good news is that with increased awareness of social entrepreneurship, there is more private sector funding for SEs in comparison to public funding. There are also more avenues for alternative funding such as crowdfunding, competitions, awards, impact investments, and so on that are picking up traction in the country. The challenge is more on the founders – knowing how to strategise business models and pitches, analyse markets and build relationships that would help them understand which fund and approach would serve them best.
On the growth topic, I strongly feel that SEs need to be mindful of scale & sustainability, especially when scale can become an enemy of sustainability. If you scale too fast, you may not be able to sustain yourself. Scale and Sustainability don’t always have to go together but rather, should be led by looking into the needs and the growth of communities.
What industries are Malaysian SEs involved in? Is it diverse or is there a direction that everyone’s drawn to?
In terms of industry, there is heavier inclination towards education, poverty alleviation, welfare for persons with different abilities, women and youth empowerment but we are seeing more and more in healthcare and financial literacy now.
The diversity of teams matter too. In a homogenous culture, diversity in SEs would often draw out one main concern – that although SEs focus on diversity, the leadership team of the SEs themselves do not reflect the diversity of the population they serve.
In Asia Pacific, the sectors and leadership teams of SEs are diverse – and this definitely pays off in highlighting ‘missing voices’, inspiring and enhancing creativity through different perspectives as well as healthy debates, innovation cooperation, as well as discovering different barriers of experiences for others to learn from and appreciate. The bigger concern of diversity tends to be the lack of focus in addressing the root of social issues systematically and cohesively within its relevant ecosystems. With greater diversity in sectors and issues, it is easy to overlook the imbalance of efforts/energy on root problems versus symptomatic problems.
SEs oftimes are required to be more dynamic and creative as they have more variables to consider than non-SEs. Their biggest and highest risks are often in navigating the fluctuations in the social, economic and political environments in the communities they serve. Customer markets are more agile than they are and beneficiaries/community partners are more volatile than they are too.
SEs in Malaysia tend to be inclined towards personal financing, with funding support from the traditional charity donors, government-linked companies and foundations. As the new political axis is seeing reduced availability of grants and greater call for the private sector to be more accountable and engaged, it would be interesting to continue to monitor how our SEs would innovate in their business models.
What are the gaps you observe?
One of the biggest mistakes our local SEs do not take enough time to do would be to discover opportunities and gaps with deeper understanding that can be done in mapping out various value chains of their service and sources in relevant markets — this usually helps with product-value-market fit. Doing this would allow them the mental bandwidth to structure validation exercises to test their business models and learning what impact measures suits them and the communities they serve; pivoting when and where necessary, accordingly.
What are the common issues/challenges SEs in Malaysia have and how do these contrast with those in other parts of the world?
The challenges experienced in 2014/15 are still relevant today. In comparison to other parts of the world, impact investors regard Malaysia as a middle income country, and that SEs in our country do not necessarily present a critical position to them.
In other aspects, it is similar to their counterparts in other countries ie. having an honest understanding of social issues, the root problem in communities (not symptomatic ones) and balancing the selection of targetted impact measures, revenue models and distribution as well as delivery of value.
What do SEs need to be empowered for success and also for them to be sustainable in the longterm?
The principles of entrepreneurship applies for SEs as with any other businesses. For me, the greatest concern when discussing sustainability and impact would be the longevity of the SE and the generational impact and empowerment effects in communities. Again, as mentioned above, growing too quickly can be a threat to sustainability.
The concept of social entrepreneurship has been around for a long time – it’s the formal and academic awareness of it that has us in a frenzy; new recognitions of the sector have made it a fashionable space to be in. It is very tempting to buy into its hype, without the understanding of its core. Many activists have fallen victim to this, when they are not equipped with the appropriate knowledge and skill of what’s needed to sustain the evolving nature of social entrepreneurship.
Additionally, the romanticism surrounding social entrepreneurship definitely does not do anything to debunk some of the myths of SE ie. they’re automatically sustainable, or that solving poor people’s problems, operating only in health or social care, as a non-profit organisation means that they are do-gooders and not real entrepreneurs, etc.
My final point and perhaps wishful thinking on my side would be that SEs look to their peer organisations within the relevant ecosystems for partnerships, collaboration, knowledge sharing, thought leadership and support. Whilst governments, funders, investors, community partners, institutions, customers and many more are crucial to the growth of SEs, it is invaluable that we learn from one another’s successes and mistakes.
