Social enterprise is not new to Thailand, but growing inequality in the Kingdom has stimulated national interest in social enterprise as a way of delivering both positive social impact and economic growth.
Thailand's modern social enterprise movement can be traced back to 1974 with the establishment of Cabbages and Condoms, a successful restaurant in Bangkok that uses its proceeds to fund a sexual health education and provision programme.
Another pioneer is DoiTung, a project launched in 1989 by the royal Mae Fah Luang Foundation to create jobs and community development for hill-tribe communities in Doi Tung, in Northern Thailand. At the time, this area in the “Golden Triangle” was ravaged by abject poverty, opium cultivation and addiction, and trafficking in arms and people. The social enterprise has boosted employment, incomes and community regeneration in the region by developing a high quality range of coffee, textiles, handicrafts, furniture and a tourism arm – and recently won a contract to supply IKEA.
Encouraged by the growth of social enterprise internationally, the Thai government supported the 2010 establishment of a national sector body, the Thai Social Enterprise Office (TSEO), and since then has developed a Social Enterprise Promotion Act, offering tax relief for corporations setting-up social enterprises and tax incentives for social investment.
Thailand is home to intermediaries such as Change Fusion, Ashoka Thailand, NISE Corporation that work as capacity builders to stimulate social enterprise start-ups and growth.
In addition, there is a growing interest from corporations to set-up, invest or support social enterprise. A key driver of this approach is Stock Exchange of Thailand, which offers incentives for companies to shift their CSR approach towards social enterprise. Furthermore, the current government encourages corporations to co-create social enterprises through public-private partnership.
Challenges and recommendations for the new generation
Today, a younger generation is developing new products and services for social impact. HiveSters and LocalALike.com, for instance, support innovative community based sustainable tourism.
SocialGiver offers deals on spare service capacity such as hotel rooms and restaurant tables and uses the proceeds to fund social causes. Open Dream works with health professionals to design internet based and mobile apps to solve health problems. The Cube Shop works with people with disabilities to provide employment and training in product design. And many more social enterprises are set to make their mark.
Our investigations show that these new social enterprises face a number of key challenges, including in designing business models that deliver social and commercial impact.
Since they operate in a context of limited public awareness, we recommend that they communicate their stories of social impact via public relations and social media and seize opportunities to explain the hybrid nature of social enterprise.
There are also a number of management challenges. Hiring good staff can be difficult as social enterprises can’t always offer market rate salaries so they have to be creative provide other non-financial rewards. Our advice is to search for individuals with commercial skills who want to leave the corporate sector for more fulfilling work. We also advise accessing the pro bono services that some firms offer to social enterprises and maximising the use of volunteers and campaigners.
Access to finance can also be difficult. There are a number of seed funding options for start-ups offered through incubation programmes (i.e. UnLtd Thailand) and business plan competitions (i.e. Banpu Champions for Change), but this funding is often too short-term for social enterprises requiring patient capital lasting several years. There are also organizations providing pre-growth and growth-stage funding such as Change Ventures and the LGT Venture Philanthropy Accelerator Program, but such funding is still limited.
Debt financing has been slower to develop. In 2015 TSEO collaborated with two state-owned banks to set up a SE loan program of 2 billion Baht (GBP 43 million) , but there is insufficient funding for social enterprises seeking move from establishment to growth. Currently, equity financing is available mainly to long established social enterprises.
Thailand’s first socially responsible investment mutual fund, B-KIND, was established in 2014. Up to 15% of the fund can be invested in social enterprise and 0.8% is allocated for venture philanthropy. Additionally, a group of young philanthropists have formed a giving circle. Although in its infancy this initiative could incite more angel investors to channel additional resources to social enterprises.
Marketing can also be a challenge as there appears to be an inaccurate perception in Thailand that social enterprise deal in lower quality products. This myth needs to be dispelled by occupying premium price positions and developing quality products and services targeted effectively at likeminded consumers.
Our advice to aspiring and practising social entrepreneurs boils down to this:
- Get the product and premium price right
- Articulate your social mission clearly to inspire all staff, partners and investors
- Create a strong unique selling point
- Choose your board members and investors carefully to provide resources and shared purpose
- Engage grassroots supporters and campaigners
- Make great partnerships a priority
- Recruit great people
About the authors
Professor Bob Doherty is the editor of the Social Enterprise Journal and the Acting Dean at The York Management School, University of York, where he specialises in research on the marketing aspects of fair trade and social enterprises. Bob has been investigating the social enterprise sector in Thailand with support from the Newton Fund in partnership with the School of Global Studies at Thammasat University.
Ada Chirapaisarnkul is the Founder and Managing Director of Thai Young Philanthropist Network.