Relevance – Region: In line with the transformative promise of the 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs) i.e. leaving no one behind, IB serves as a good avenue to support and provide systemic and innovative solutions to the population; economically and socially. As the public and private sectors increasingly report their contributions to the SDGs, and IB being the main private sector contribution to the SDGs, it is vital for APEC economies to work together to promote and foster IB in the region. 

According to the study on “Inclusive Business in APEC” published in June 2018, the bottom of pyramid (BOP) market in emerging APEC economies is huge. In emerging Asia, the BOP comprises 53% of the population; in Latin America it is 57% of the population, and in developed APEC economies it is 19%. For APEC as a whole, the BOP forms 43% of the total population. This market is valued at $2.28 trillion annually, and represents 52% of the total market in APEC economies, and 46% of the global BOP market according to the Global Consumption Database of the World Bank. Acknowledging these statistics, it is rationally imperative and strategic for IB to be at the forefront to address the challenges faced by micro, small and medium-sized enterprises (MSMEs) in accessing markets and financing by integrating MSMEs in the IB value chain. Driving linkages between the MSMEs, which formed over 98% of enterprises in the region, and the large companies in a coordinated IB model will greatly enhance their effectiveness. 

In this challenging time of the COVID-19 pandemic, Government support could be linked to social impact for the bottom of pyramid (BOP) and would so help the people most in need. Since early 2020, the COVID-19 pandemic has affected all regions in the world and caused job losses and worsening living conditions. This year also marks the start of the Decade of Action to deliver the SDGs by 2030. It is a critical period to advance a shared vision and accelerate responses to the world’s gravest challenges – from eliminating poverty and hunger to reversing climate change. According to the Sustainable Development Goals Report 2020, even before the COVID-19 pandemic, the progress remained uneven and we were not on track to meet the Goals by 2030. Now, an unprecedented health, economic and social crisis caused by the pandemic is threating lives and livelihoods, making the achievement of Goals even more challenging. The pandemic has forced businesses to pivot and this window of opportunity should be taken by companies to demonstrate leadership in transforming business models, operations and even influence value chains by sourcing responsibly. As the pandemic forced us to rethink the way businesses are conducted, it also presents all economies with an opportunity to rebuild a better and more sustainable future. 

Against this backdrop, IB has the far-reaching potential to build bridges between businesses and the BOP for mutual benefit as well as be a driving force for transformation towards an inclusive and resilient APEC region. The previous APEC projects on IB serves as a solid foundation and continuation for this project proposal by Malaysia. As the Chair of APEC 2015, the Government of the Philippines organised two high-level seminars on IB whereby as a follow-up, a study on “Inclusive Business in APEC” economies was carried-out and presented at the 2017 APEC discussions held in Viet Nam. Subsequently, the 2018 Inclusive Business in APEC Study recommended that APEC as a regional body to include IB in its agendas, and institutionalise IB capacity building and sharing of experiences by formally adopting IB in the APEC work program. The Study also recommended APEC to highlight   the contributions to inclusive growth and economic, financial, and social inclusion whilst encouraging various APEC fora including SMEWG to include IB in their respective work agendas. The current proposal acknowledges the work undertaken so far in this topic and intends to leverage upon the outcome to move this agenda forward by looking at the real cases implementation on SMEs, taking IB as a window of opportunity for businesses to pivot as well as opening financing opportunities by bringing in impact investors. 

To this end, this project plans to re-engage APEC economies in a strategic way to explore how IB can help to address the social and economic challenges posed by not only COVID-19 but also other crisis that may come. In addition, participants through this project can also learn and brainstorm about developing strategic plans to pivot their re-COVID-19 business to IB through technical assistance and capacity building support. In conjunction with the APEC 2020 theme ‘Optimizing Human Potential towards a Future of Shared Prosperity’, the project outcomes will not only contribute to Malaysia’s commitment to the APEC, but more importantly will bring positive inputs within IB context in relation to remedying economic and social challenges derived from the outbreak in the APEC region. 

Relevance – Eligibility and Fund Priorities: This project is to conform to the eligibilities and fund priorities of the ASF MSME Fund. The project will certainly support the capacity building needs required by MSMEs by linking IB promotion activities to MSME development. Promoting IB development benefits MSMEs directly and indirectly, and there is great opportunity for synergy between SME support and IB promotion. Besides, the fund would also support to: 

i)  Enable IB including sustainable SE, SI models and any inclusive agenda of MSME at the bottom of pyramid (BOP); and

ii) Drum up IB activities and best practices to further support enabling environments for IB in the APEC region. 

Relevance – Capacity Building: Since 2012, companies in Asia and Latin America engage in IB investments to address income and social solutions for the relevant problems of the poor and low-income people in the region, while at the same time creating new avenues for commercial returns. In the APEC region, IB landscape studies have been done with support from different development partners for economies like Chile, China, Indonesia, Mexico, Philippines as well as Malaysia. Likewise, since 2016, governments in Asia started promoting IB under their SME and poverty reduction strategies and came up with special incentives programmes and IB promotion strategies. The organisation of this project will encourage the sharing of knowledge and best practices on IB among APEC member economies in the near term and inspire them to work closely to flourish IB in the region for the long term. In this regard, it aligns well with the APEC’s goals for capacity building, which are i) to attain sustainable growth and equitable development in the Asia-Pacific region; ii) to reduce economic disparities among APEC economies; iii) to improve the economic and social well-being of the people; and iv) to deepen the spirit of community in the Asia Pacific. This project will directly benefit potential IB companies, including MSMEs in developing APEC economies by supporting them to make the transition to IB, while helping to improve investment readiness, commercial viability and enhance social impact. The project is also designed to further develop capacities of policy makers and benefit every developing member economy in this field. Furthermore, the project is expected to promote IB as a sustainable business framework which can create business opportunities essential to the rebound of APEC economies in the post COVID-19 era. This is particularly important in times of COVID-19 whereby it pushed so many people into poverty, and when businesses and governments are looking for more sustainable and climate neutral production and consumption patterns.