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Inclusive business the future of ASEAN

Released at: 14:37, 10/09/2018

Inclusive business the future of ASEAN

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Business models are needed that look beyond the bottom line to promote prosperity for all.

by Ms. Lan Mercado –Asia Regional Director, Oxfam International.

We, the people of ASEAN, our leaders, governments, businesses, and activists, want an Asia that works for all of us.Ms. Lan Mercado –Asia Regional Director, Oxfam International.

Mr. Le Luong Minh, former Secretary-General of ASEAN, said it wants to advance towards inclusive growth and sustainable development and its Economic Community Blueprint 2025 works for all - a resilient, inclusive, and people-oriented, people-centered economy.

We’ve seen remarkable economic growth in our region over recent decades. In less than five decades, GDP has climbed from $37.6 billion in 1970 to $2.6 trillion in 2016, because of growth in private sector enterprises. In the past two decades, over 100 million people have found jobs and millions have overcome poverty.

So, then, what’s the problem?

Despite this economic boom, millions of citizens are struggling in poverty. Here’s an interesting contrast: while the Asia-Pacific is home to more billionaires than anywhere else, more than 70 million of people in Southeast and East Asia don’t have enough food to eat. The economic gains of businesses in ASEAN almost exclusively focused on maximizing profits and have resulted in an ever-widening gap between the rich and the poor.

According to the UNESCAP, income inequality increased 20 per cent in Southeast Asia in the last 20 years. The evidence is telling: the four wealthiest men in Indonesia have more wealth than 100 million people; in Vietnam, the country’s richest man earns more in a day than the poorest person earns in ten years; and in Thailand, 56 per cent of national wealth belongs to the richest 1 per cent.

Women and girls are behind. They earn up to 30 per cent less than men do for the same work, while performing two and a half times more household chores and other forms of care work. This is despite their enormous economic potential. A study by the Asian Development Bank estimates that if women’s workplace participation rose from 57.7 per cent to 66.2 per cent in just one generation, Asia’s overall economy could grow 30 per cent.

We have an issue that we all care about, but where can we find a solution? Given that both growth and inequality seem to be a result of businesses, we believe they have the strongest potential to change the dynamics of how prosperity is shared - by being more inclusive and responsible.

Not only because it’s the right thing to do, but also because that’s where the future and demand are.

Increasingly, consumers across the globe are saying that they want to buy from ethical companies who develop market-based solutions to social and environmental challenges. Sixty-four per cent of Southeast Asians say they’ll pay more to companies who care, and our consumers are more welcoming of inclusive and sustainable businesses than those in many developed regions and nations, including Europe, North America, Australia, and New Zealand.

It’s not only consumers. Investors and governments are calling for change, demanding and promoting ethical and socially-responsible business. Environmental, Social and Governance (ESG) investing is growing, and social or impact investing is grabbing ever more attention, with already $3.6 billion in Southeast Asia.

Our governments are actively promoting equitable business models, especially social enterprises, by establishing regulatory, financial, and soft incentives. For instance, Thailand has a Social Economy Office and tax exemptions for social enterprises. Malaysia has a Social Outcomes Fund financing those serving the needs of the poor and marginalized, and Singapore provides support and guidance. While there is still a long way to go, government efforts to promote social entrepreneurship in the region are leading the world, second only to North America.

So, what defines an inclusive business? At Oxfam, we believe they have three key features.

First, they improve the living conditions of poor people by creating jobs and opportunities to enjoy a decent living, providing them with skills, access to markets and infrastructure, or delivering goods and services they need and can afford.

Second, companies integrate communities in value chains in mutually-beneficial partnerships where producers can earn a decent and resilient living while creating more robust and competitive business processes.

Third, business will reap commercial success through better productivity and quality, market differentiation and expansion, including poor people, to create sustainable economic value.

From initiatives that promote social and environmental sustainability in the Cambodian agriculture and garment sectors and businesses working with poor communities in Thailand to Fair Trade social enterprises whose profits go back to producers, a vibrant spectrum of more equitable, inclusive, and sustainable business models is emerging. In the social enterprise sector, Southeast Asia is leading the way on pay parity and leadership opportunities for women.

These social businesses are the result of partnerships between unlikely allies - entrepreneurs, communities, and civil society organizations like Oxfam - and as such are crucial in building inclusive businesses.

Today, all businesses have a primary and universally-recognized duty to respect human rights and pay a decent living income. On top of that, there is an opportunity for them to stand out and be more appealing to consumers by adopting practices that make them more people- and environmentally-friendly.

However, the real rewards can only be reaped by working in ways where business and society can benefit together by integrating social and environmental factors at the core of business operations. The future of business lies in models such as the social enterprise, which pursues dual visions of financial sustainability and social wellbeing beyond just profit maximization.

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truongvansang1485

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so long.