Geographies in Depth

Three reasons to be optimistic for the future of Asia

A Vietnamese vendor walks past a shoe shop in Ha Noi, Viet Nam.

Human rights due diligence and gender pay parity are moving front and centre. Image: Reuters/Kham

Lilian Mercado
Regional Director, Asia, Oxfam International
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ASEAN

This article is part of: World Economic Forum on ASEAN

The challenges that South-East Asia faces are emblematic of the major global issues that world leaders have agreed to act on. Despite consistent economic growth over last few decades, the region is facing rising income inequality and wealth concentration, discrimination, food insecurity, ongoing human rights challenges and environmental degradation.

On the surface this paints a gloomy picture, but there’s a lot to be positive about. The region’s leaders have agreed that inclusive growth is a priority and that inclusive economies need inclusive businesses.

While at a nascent stage, we’re witnessing the potential for business model transformation in the region. From initiatives to promote social and environmental sustainability in the Cambodian agriculture and garments sectors to inclusive businesses working with poor communities in Thailand and Laos, to fair trade social enterprises whose profits are ploughed back to producers, a vibrant spectrum of more equitable business models is emerging.

Oxfam is working with entrepreneurs in the region, helping them structure their businesses so that people and planet sit ahead of, or alongside, profit. Here are three reasons why we’re excited to be promoting fairer business models in South-East Asia.

Closing the gender gap

Pervasive gender inequality means that, on average, women in Asia earn only 70-90% of what men earn and are more likely to be paid below the minimum wage.

Yet in the social enterprise sector, South-East Asia is leading the way on pay parity and leadership opportunities for women.

A female gardener waters flowers in Nay Pyi Taw, Myanmar.
A female gardener waters flowers in Nay Pyi Taw, Myanmar. Image: Reuters/Damir Sagolj

A study by the Asian Development Bank estimates that, if female workforce participation rose from 57.7% to 66.2%, the Asian economy could see a 30% growth in income per capita in just one generation. Promoting fairer business models could help unleash economic growth and contribute to a fairer society.

Ethical consumers

Businesses who develop market-based solutions to social and environmental challenges are pushing against an open door – South-East Asian consumers are more concerned about these issues than their neighbours (especially the richest ones). They’re putting their money where their mouth is: 64% of consumers in the Asia-Pacific region are willing to pay more for products from companies “committed to positive social and environmental impact” – more than 20 points higher than in Europe and North America.

Customers and NGOs are often cynical of PR exercises. To be successful, responsible practice must be an integral part of doing business, not a bolt-on. Merely sticking a green label on a product is likely to attract accusations of “greenwashing”.

Image: Oxfam’s calculations based on MasterCard survey (2015). South-East Asian countries in the sample are Thailand, Malaysia, Philippines, Indonesia, Vietnam and Singapore
Pulling public-policy levers

Governments in South-East Asia are increasingly working to support and enable social enterprises, co-operatives, fair trade and inclusive business to thrive through public policy. Examples already underway in the region include:

• In Viet Nam, there is a new legal form designed specifically for social enterprises.

• In Singapore, the Ministry of Social and Family Development has developed support, advice and guides for social enterprises.

• In Thailand, the government has created a Social Economy Office and masterplan. There are tax exemptions for some social enterprises.

• In March 2017, the Malaysian government launched a Social Outcomes Fund designed to provide finance for social enterprises to deliver preventative interventions and social services that support marginalized communities.

While there’s a long way to go, efforts by ASEAN governments to promote social entrepreneurship are considered among the world’s best.

Image: Oxfam’s calculations based on Thomson Reuters Foundation survey (2016). South-East Asian countries in the sample are Indonesia, Malaysia, Philippines, Singapore and Thailand
The bottom line

While there is a lot to get excited about, we can’t ignore the tremendous challenges in the region. Inclusive and fairer business models are still the exception rather than the rule. Social enterprises often work at a small scale, with little leverage to influence big business.

Too many businesses in local Asian or global supply chains, especially in the garment and agriculture sectors, are reliant on paying poverty wages and abusing labour rights to make a profit. This is a flawed model from the start.

Have you read?

With our report which accompanies the World Economic Forum’s annual ASEAN meeting in September, Oxfam aims to inspire business leaders to transform their organizations using more socially and economically inclusive models. Whether their starting point is human rights due diligence, ensuring fair value and wages to small producers and workers or switching to a model that puts people and planet before profit, we’re there to support companies committed to fairer ways of doing business.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Geographies in DepthEconomic Growth
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