NESDB: Room for growth for social enterprises
THAILAND’S social enterprises have been facing issues of sustainability and limited ability to have a positive social impact, but they have plenty of room to grow, the National Economic and Social Development Board said.
To promote social enterprise is part of the government’s 20-year national strategy, aiming to narrow the income gap between the rich and the poor and protect the environment. The government wants private and social institutions to participate in the development of the country, according to the report released recently by the state’s planning agency.
Majors issues facing social enterprises in Thailand include poor coordination, lack of innovation, difficulty in accessing capital and lack of assessment of progress, according to the report. “Social enterprises in Thailand have room to grow,” said Chutinart Wongsuban, the deputy secretary-general of the NESDB.
Before the advent of social enterprises, there were several forms of organisations pushing social causes. These organisations included cooperatives, non-profit organisations, charity foundations and corporate social responsibility (CSR). However, some of these organisations face problems with financial sustainability as they largely rely on donations. The concept of social enterprise has developed to fill a gap, as it could be used as a tool to both make profit and take care of social issues at the same time. Unlike normal corporates, these are not solely to make profits for shareholders.
The best-known social enterprise in Asia is Grameen Bank, founded by Nobel laureate Muhammad Yunus in Bangladesh. In Thailand, there are ventures such as Cabbages & Condoms Restaurant and Birds and Bees Hotel run by social activist Mechai Viravaidya.
The government issued regulations regarding social enterprises in 2011, setting a broad definition. The criteria to be considered a social enterprise said: its products or services must not be harmful to the health of the people, society and environment; they must adopt a philosophy of economic sufficiency; have financial sustainability; a large proportion of the profits must be allocated for social causes; and they must incorporate good governance.
According to a recent survey, an estimated 2-3 per cent of about 100,000 community-based organisations are counted as social enterprises. And about 1,000 foundations and non-profit organisations have been operating as social enterprises. However, only 101 organisations are currently eligible for tax allowance from the Revenue Department. Thailand is lagging behind other countries in Asia, for example Indonesia has about 2,000 social enterprises, India has over 1 million and Bangladesh has 20,000.
The report suggested that the Thai government should quickly pass new legislation supporting social enterprise. The government is also urged to create an environment conducive to investment in social enterprises, such as supporting social impact bonds. The government may provide some assistance such as funding and technical support in the initial stages. The government could also launch a campaign and certification, Chutinart added.
