Appendix 5: Country Report

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Appendix 5: Country Report APPENDIX 5: COUNTRY REPORT: MALAYSIA CONTENTS ACRONYMS ............................................................................................................................... 1 1. COUNTRY PROFILE - STATISTICS ................................................................................... 3 2. OVERVIEW OF COUNTRY AND SOCIAL NEEDS ............................................................. 4 2.1. OVERVIEW OF COUNTRY .......................................................................................................................... 4 2.2. SOCIAL ISSUES IN COUNTRY .................................................................................................................... 5 2.3. SOCIAL ISSUES TACKLED BY SOCIAL ENTERPRISES ................................................................................. 6 2.4. POTENTIAL AND ECONOMIC VALUE PROXY OF SOCIAL ENTERPRISES ................................................. 6 3. OVERVIEW OF SOCIAL ENTERPRISE SECTOR AND HISTORY ....................................... 7 3.1. OVERVIEW .................................................................................................................................................. 7 3.2. TIMELINE OF MAJOR EVENTS .................................................................................................................. 8 3.3. GOVERNMENT POLICIES ........................................................................................................................... 9 4. ECOSYSTEM .................................................................................................................... 12 5. SOCIAL ENTERPRISES .................................................................................................... 14 5.1. SECTOR OF ACTIVITIES ........................................................................................................................... 14 5.2. BENEFICIARIES ......................................................................................................................................... 14 5.3. GEOGRAPHICAL REACH, URBAN/RURAL .............................................................................................. 14 5.4. TYPES OF SOCIAL ENTERPRISES ............................................................................................................ 14 5.5. REVENUE STREAM AND MARKETS ........................................................................................................ 15 5.6. LEGAL FORMS ......................................................................................................................................... 16 5.7. BUSINESS LIFE CYCLE .............................................................................................................................. 16 5.8. SIZE OF SOCIAL ENTERPRISES ................................................................................................................ 17 5.9. SOCIAL FINANCE ..................................................................................................................................... 17 6. CHALLENGES AND OPPORTUNITIES ........................................................................... 18 6.1. CHALLENGES ........................................................................................................................................... 18 6.2. OPPORTUNITIES ...................................................................................................................................... 19 7. RECOMMENDATIONS ................................................................................................... 21 ANNEX 1: MAIN PLAYERS OF THE SOCIAL ENTERPRISE ECOSYSTEM ............................. 22 ANNEX 2: DESCRIPTION OF THE TYPES OF LEGAL ENTITIES ............................................ 26 ANNEX 3: PROMINENT SOCIAL ENTERPRISES ................................................................... 29 ACRONYMS AIM Agensi Inovasi Malaysia ASEAN Association of Southeast Asian Nations AVPN Asian Venture Philanthropy Network GDP Gross domestic product IDEA Impact-Driven Enterprise Accreditation MaGIC Malaysian Global Innovation and Creativity Centre masSIVE Malaysia Social Inclusion and Vibrant Entrepreneurship (masSIVE) NGO Nongovernmental organization SE Social enterprise UNDP United Nations Development Program UNESCAP United Nations Economic and Social Commission for Asia and the Pacific 1 1. COUNTRY PROFILE - STATISTICS 3 2. OVERVIEW OF COUNTRY AND SOCIAL NEEDS 2.1. Overview of country Malaysia is a Southeast Asian country occupying the Malay Peninsula and the islands of Borneo with a total land and sea area of 329,847 square kilometers. Its strategic location along the Straits of Malacca and southern part of the South China Sea establishes the country as a significant hub in sea trade. While around half of its total population are Malays, Chinese and Indians make up a significant proportion of the population as well, together amounting to almost 30 percent (Central Intelligence Agency 2017). The Federation of Malaya, which consisted of nine Malay States and the British Straits settlements of Penang and Malacca, attained independence from its British colonial masters in 1957. The Federation of Malaya formed Malaysia together with Singapore, Sabah, and Sarawak in 1963; however, Singapore was expelled from the Federation in 1965, forming modern Malaysia. Shortly after, Malaysia experienced a communist insurgency until 1989, delaying efforts to restructure the economy in a period of chaos. Malaysia’s economic development took off effectively after the insurgency was quelled, with the signing of a peace agreement with the Malayan Community Party. From 1990 to 2016, Malaysia’s gross domestic product (GDP) increased around seven times and GDP per capita increased around four times (World Bank 2017). Today, Malaysia is an upper-middle income country with only 0.3 percent of the population living on less than US$1.9 per day. With its economic growth sustained at more than 7 percent annually for the past 25 years, Malaysia’s youthful workforce (median age of 28.2) is a potential source of more growth (Mohan, Harsh, and Modi 2017). The Eleventh Malaysia Plan (2016–2020) points to the future direction of economic growth in the country. As the plan identifies uplifting the bottom 40 percent of households to middle class income as one of its “game changers,” there are opportunities for social enterprises to support “inclusive development” as identified by Mohan, Harsh, and Modi (2017). Given Malaysia’s relatively high-income status, international nongovernmental organizations (NGOs) and aid organizations prefer to engage with less developed countries such as Cambodia and Myanmar. This also provides opportunities for social enterprises to step up to tackle social problems. 4 2.2. Social Issues in country As an upper-middle-income economy, the Malaysian government has been highly successful in alleviating extreme poverty. The primary school enrolment rate stood at 98 percent in 2015, with adult literacy reaching 94.6 percent in the same year (Mohan, Harsh, and Modi 2017). As such, the government has been focusing on other social needs such as urban-rural inequality, labor shortages, and its ageing population. According to the national census in 2012 by the Malaysian Department of Statistics, 5 percent of Malaysian households (1.5 million Malaysians) earn less than RM 1,000 a month. The study also demonstrated the evidence of an urban-rural gap in income levels, where the number of households earning more than RM 5,000 a month is three times higher in urban areas than in rural areas (MaGIC [Malaysian Global Innovation and Creativity Centre] 2015b). Poverty also has a racial dimension: 17.1 percent of Malays and also another 17.1 percent of Indians fall into the bottom 40 percent of households by income in 2014, compared to 16.3 percent for Chinese and just 14.9 percent for other races (Economic Planning Unit, n.d.). An increasingly prominent social issue in Malaysia is the ageing population—like other developed economies which face similar concerns as a result of successful family planning and increasing wealth. While its median age of 28.2 is a promising sign for the future development of Malaysia’s economy, the growing percentage of senior citizens aged 60 years and above, expected to rise over the next 14 years (Idris 2017), is of deep concern to policy makers. Some efforts have been made to pre-empt possible problems faced by the country, such as allocating RM 424 million (US$97.5 million) to senior citizens in 2017 including a RM300 (US$69) monthly allowance. Senior citizen activity centers are also being established in the country (Prime Minister’s Office Malaysia 2017). Nonetheless, further accommodations in areas of social and health care needs will be required for the transition to an increasingly ageing economy. Malaysia continues to face labor shortages and rely on foreign labor. Foreign workers in Malaysia accounted for almost a third of the total labor force in July 2012 (Mohan, Harsh, and Modi 2017), totalling 1.6 million. The vast fraction of migrant workers among Malaysia’s labor force can be attributed to the insufficient skilled labor among its local workers, with only 28 percent among its 14.8 million workers skilled, even though the economy needs 50 percent of the workers to be skilled (Anuar et al. 2016). The government has made its response through the Eleventh Malaysia Plan (2016– 2020) where “enabling industry-led vocational
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