Q&A: Ehon Chan: “People have more confidence to work for a social enterprise”

Author: Carolyn Hong | Date: 28 Oct 2015

Why young Malaysians are shunning traditional employers in favour of organisations that help the local community

Ehon Chan. Photo credit: MaGICSeeking an alternative to the 9-5 grind, many young Malaysians are choosing to found or work for social enterprises – organisations that aim to improve local communities. Ehon Chan, the Malaysian Global Innovation & Creativity Centre (MaGIC)’s executive director of social entrepreneurship, tells People Management about this booming trend.  Photo credit: MaGIC

 
Why are young Malaysians joining social enterprises?
At least one third of social entrepreneurs in Malaysia are younger than 35. This younger generation is full of fantastic ideas: this is partly because, in Malaysia, this generation has an abundance of opportunities compared to older people, who may have had to struggle for everything, even places at university. Young Malaysians are asking: what is there beyond being comfortable? And the answer is making sure that others can be comfortable too.
 
Younger people often have a sense of invincibility. They believe they can change the world, and they will go all out to make that change happen.
 
What does a typical Malaysian social enterprise look like?
Most work is in education, poverty alleviation, clean energy and rural development. One of the most common business models is cross-subsidisation, where the organisation sells a product to those who can afford it, and uses the revenue to subsidise marginalised groups. Other organisations favour the inclusive business model, where they choose to hire members of underserved or marginalised groups.
 
There are other business models that are not as common in Malaysia, such as ‘design for affordability’, which uses innovation to reduce costs. One organisation, for example, has significantly reduced the cost of micro-hydro systems so that rural communities can access electricity.
 
How much support do social entrepreneurships receive?
The government has been very supportive, and backed the establishment of MaGIC in 2013 to lead the social enterprise movement in Malaysia. We run several key programmes, including using Ted-style talks to raise public awareness of social enterprises, and a rural outreach programme where we seek out existing social entrepreneurs who may not be aware that they are running a social enterprise.
 
Another of MaGic’s core functions is training: we run schemes for capacity development and organise opportunities for social entrepreneurs to discuss what is working for them, and what isn’t.
 
We also support social enterprises that are at different stages of their growth. People who have recently founded start-ups have the opportunity to stay with us for four months, and they receive a stipend from us as we work to build their organisation. At the end of their stay, they receive RM30,000 to establish their business. We provide social enterprises that are ready to scale with a grant of up to RM150,000 to help them grow.
 
How can social enterprises become more sustainable?
We are building a movement towards social enterprises, which means making more people aware of them and becoming confident enough to launch their own, work in one or support them in some other way. For example, there aren’t many loans tailored for social enterprises, so we are raising awareness among banks so entrepreneurs can secure funding.
 
The larger socio-economic ecosystem also needs to evolve to support social enterprises. We need policymakers to recognise their value. For example, they could offer tax incentives for those working with underserved groups, because such work requires long-term heavy investment.
 
We are also building up the skills needed for social entrepreneurship. For example, social entrepreneurs need to know how to do impact assessments as well as business modelling. As a social enterprise is different from a profit-maximising business, it needs to measure its impact or outcome to know if its investment is reaching the right goals.