OCDE - Powering ASEAN's economy through inclusive business de 2026

Powering ASEAN's economy through inclusive business: From the margins to markets OECD Local Economic and Employment Development (LEED) PapersOECD Local Economic and Employment Development (LEED) Papers

Powering ASEAN’s economy through inclusive business From the margins to markets

Southeast Asia is experiencing rapid economic growth and rising entrepreneurship, with real GDP expected to grow by 4.6% in 2026. Nevertheless, challenges such as high levels of informal employment, limited social protection, poverty and ageing populations are a strain on the region’s economies. Inclusive businesses (IBs), which integrate lowincome populations into their value chains, can create jobs, expand access to essential goods and services, and address development challenges in the region. IBs are being increasingly recognised within ASEAN policy frameworks, such as the ASEAN IB Framework and the Plan of Action for the Promotion of Inclusive Business in ASEAN (20232027). Business models such as social enterprises also play a major economic role in the region, with nearly one million social enterprises operating across diverse sectors. These market economy approaches expand access to market participation, strengthen local value chains and improve access to essential goods and services. This paper maps IBs and social enterprises in the region, analysing legal, accreditation, and business support mechanisms, while highlighting best practices and systemic barriers. It provides actionable recommendations to strengthen enabling policy environments for these businesses in ASEAN Member States.

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POWERING ASEAN’S ECONOMY THROUGH INCLUSIVE BUSINESS © OECD 2026

ABOUT THE OECD The OECD is a multi-disciplinary inter-governmental organisation with member c ountries which engages in its work an increasing number of nonmembers from all regions of the world. The Organisation’s core mission today is to help governments work together towards a stronger, cleaner, fa irer global economy. Through its network of specialised committees and working groups, the OECD prov ides a setting where

in its work an increasing number of nonmembers from all regions of the world. The Organisation’s core mission today is to help governments work together towards a stronger, cleaner, fa irer global economy. Through its network of specialised committees and working groups, the OECD prov ides a setting where governments compare policy experiences, seek answers to common problems, identify good practice, and co-ordinate domestic and international policies. More information available: www.oecd.org. ABOUT OECD LOCAL ECONOMIC AND EMPLOYMENT DEVELOPMENT (LEED) PAPERS The OECD Local Economic and Employment Development (LEED) Programme Papers present innovative ideas and practical examples on how to boost local development and job creation. A wide range of topics are addressed, such as employment and skills; entrepreneurship; the social economy and soci al innovation; culture; and local capacity building, among others. The series highli ghts in particular policies to support disadvantaged places and people, such as the low skilled, the unemployed, migrants, youth and seniors. This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Member countries of the OECD. This paper was authorised for publication by Lamia Kamal-Chaoui, Director, Centre for Entrepreneurshi p, SMEs, Regions and Cities, OECD. This document, as well as any statistical data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

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Attribution 4.0 International (CC BY 4.0) This work is made available under the Creative Commons Attribution 4.0 International licence. By using this work, you accept to be bound by the terms of this licence (https://creativecommons.org/licenses/by/4.0/). Attribution – you must cite the work. Translations – you must cite the original work, identify changes to the original and add the following text: In the event of a ny

bound by the terms of this licence (https://creativecommons.org/licenses/by/4.0/). Attribution – you must cite the work. Translations – you must cite the original work, identify changes to the original and add the following text: In the event of a ny discrepancy between the original work and the translation, only the text of original work should be considered valid. Adaptations – you must cite the original work and add the following text: This is an adaptation of an original work by the OECD. The opinions expressed and arguments employed in this adaptation should not be reported as representing the official views of the OECD or of its Member countries. Third-party material – the licence does not apply to third-party material in the work. If using such material, you are responsible for obtaining permission from the third party and for any claims of infringement. You must not use the OECD logo, visual identity or cover image without express permission or suggest the OECD endorses your use of the work. Any dispute arising under this licence shall be settled b y arbitration in accordance with the Permanent Court of Arb itration (PCA) Arbitration Rules 2012. The seat of arbitration shall be Paris (France). The number of arbitrators shall be one. 3

POWERING ASEAN’S ECONOMY THROUGH INCLUSIVE BUSINESS © OECD 2026

Acknowledgements This report was produced by the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE) led by Lamia Kamal-Chaoui, Director, as part of the Programme of Work of the Local Emp loyment and Economic Development (LEED) Programme, with financial support from the Government of Japa n. This report was authored by Moe Shiojiri , Policy Analyst, under the supervision of Amal Chevreau, Head of the Social Economy and Innovation Unit. María Uceda López, Léo Zimmerli and Chiara Shimizu, interns, provided initial research and inputs. Nadim Ahmad, Deputy Director of CFE and Karen Magu ire, Senior Counsellor in CFE, provided guidance, comments and suggestions.

of the Social Economy and Innovation Unit. María Uceda López, Léo Zimmerli and Chiara Shimizu, interns, provided initial research and inputs. Nadim Ahmad, Deputy Director of CFE and Karen Magu ire, Senior Counsellor in CFE, provided guidance, comments and suggestions. The OECD would like to warmly thank the following for their valuable insights and con tributions: ASEAN Member States, through the ASEAN Coordinating Committee on Micro, Small and Medium En terprises (ACCMSME), the ASEAN Secretariat, Impact Hub Cambodia and Thailand, Pepper Labs (Malaysia), participants in the OECD workshop on the Better Entrepreneurship Policy Tool held durin g the Eighth ASEAN Inclusive Business Forum on 12 September 2025 in Kuala Lumpur, Malaysia, as well as Max Bulakovskiy from the OECD’s Global Relations and Co-operation Directorate (GRC). The layout and cover for this document were prepared by Finbar Pearson, Project and Pr oduct Coordinator, and Eloisa Cozar Navarrete, Communications Assistant at CFE.

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POWERING ASEAN’S ECONOMY THROUGH INCLUSIVE BUSINESS © OECD 2026

Table of contents Executive summary 6 IBs as drivers of economic growth for all people and places 6 Social enterprises as a complementary approach to the ASEAN IB agenda 7 Policy orientations to further promote IBs and social enterprises in ASEAN 7 1 Introduction 9 What are IBs in the ASEAN context? 9 How are IBs and social enterprises related? 10 2 Overview of IBs and social enterprises in ASEAN 12 The evolving IB and social enterprise landscape in ASEAN 12 IBs and social enterprises as complementary models 13 3 Support mechanisms for IBs and social enterprises 16 ASEAN-level support 16 National level support 18 Other forms of support 27 4 Challenges faced by IBs and social enterprises across ASEAN 30 Financial challenges 30 Ecosystem constraints 31 Operational barriers 32 5 Policy orientations 33

ASEAN-level support 16 National level support 18 Other forms of support 27 4 Challenges faced by IBs and social enterprises across ASEAN 30 Financial challenges 30 Ecosystem constraints 31 Operational barriers 32 5 Policy orientations 33 Complement IB instruments by considering the development of an ASEAN framework for social enterprises 33 Support the scaling of social enterprises into IB models 36 Leverage and mobilise IBs and social enterprises to address development challenges 39 References 45 Notes 54

FIGURES Figure 1. Social enterprises vs. Inclusive businesses 13 Figure 2. The nine pillars for action 35 5

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TABLES Table 1. Sectors where social enterprises are most active in ASEAN 13 Table 2. ASEAN support for IBs and social enterprises 16 Table 3. Overview of national policies and institutions for social enterprises and IBs 19 Table 4. Comparative analysis of national policy systems for IBs and social enterprises 26 Table 5. Other forms of support for social enterprises and IBs 28

BOXES Box 1. The social economy around the world 10 Box 2. Laos Buffalo Dairy: Integrating low-income farmers into their value chain 14 Box 3. Green Rebel Foods: Social innovation to a commercially viable business model 15 Box 4. Labels for social enterprises 33 Box 5. OECD Recommendation on the Social and Solidarity Economy and Social Innovation 35 Box 6. IBs and social enterprises leveraging technology 37 Box 7. CIRCULAR: Circular economy living laboratories supporting social innovation in Southeast Asia 39 Box 8. IBs and social enterprises generating job opportunities 40 Box 9. IBs and social enterprises delivering affordable education services 42 Box 10. IBs and social enterprises focused on environmental sustainability 446 

POWERING ASEAN’S ECONOMY THROUGH INCLUSIVE BUSINESS © OECD 2026

Executive summary

Box 9. IBs and social enterprises delivering affordable education services 42 Box 10. IBs and social enterprises focused on environmental sustainability 446 

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Executive summary IBs as drivers of economic growth for all people and places Southeast Asia is one of the fastest-growing regions in the world, with real GDP expected to grow by 4.6% in 2026 . The region is also emerging as a dynamic hub for entrepreneurship, ranking among those with the fastest growth globally. At the same time, the region faces significant challenges that require innovative solutions so that growth is delivered to all people and places. High levels of informal employment persist, with approximately 244 million people working informally – accounting for about 80% of the workforce aged 15 and above. This widespread informal sector also underscores gaps in social protection, as only 33% of the region’s population currently benefits from at least one social protection scheme. Many countries still have underdeveloped or underfunded formal social safety nets, leaving populations at risk. Furthermore, the region is experiencing rapid demographic shifts. All Member States of the Association of Southeast Asian Nations (ASEAN) are projected to become ageing societies wit hin the next decade. The working-age population peaked at 68% in 2023, and the proportion of older persons is expected to rise steadily, placing increasing pressure on social protection systems and pension coverage. In this context, the concept of inclusive businesses (IBs) has emerged as a pathway to employment and entrepreneurship, as well as widening access to services in remote and rural areas. IBs refer to commercially viable and scalable enterprises that intentionally integrate l ow-income populations at the Base of the Pyramid (BoP) into their value chains as suppliers, distributors, r etailers or customers. They can complement public and private efforts by formalising economic activity for disadvantaged communities, improving access to social protection, supporting circularity and the environment, an d expanding educational opportunities. Although not legally recognised, IBs are actively being promoted through sever al means across

can complement public and private efforts by formalising economic activity for disadvantaged communities, improving access to social protection, supporting circularity and the environment, an d expanding educational opportunities. Although not legally recognised, IBs are actively being promoted through sever al means across ASEAN Member States (AMS). For instance, Cambodia and the Philippines have dedicated accreditation schemes, while countries such as Malaysia and Thailand support them via social enterprise or SME frameworks. At the regional level, IBs are promoted through the ASEAN Inclusiv e Business Framework (2017) and the Guidelines for the Promotion of Inclusive Business (2020). They are widely regarded as a “triple win” for business, government and society, combining financial performance with measurable social impact. The ASEAN IB agenda provides an overarching regional framework for advancing inclusive and sustainable economic growth. ASEAN drives this agenda through public-private partnerships and a multi-stakeholder approach, bringing together governments, business associations, impac t investors, academia, media, development partners and international organisations. 7

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Social enterprises as a complementary approach to the ASEAN IB agenda Under the ASEAN IB Framework, IB implementation is advanced through three main approaches, namely: IB models, IB activities, and social enterprise initiatives. Among these, IB models represent the core mechanism for integrating people at the BoP into companies’ value chains on a commercially viable and scalable basis. Meanwhile, IB activities and social enterprise initiatives complement this agenda by supporting innovation, expanding outreach to underserved communities, and strength ening pathways towards more inclusive market participation. Social enterprises can complement the ASEAN IB agenda by piloting innovative solutions, addressing market gaps, and developing business approaches that may subsequently evolve into IB models. While social enterprises and IBs share a commitment to generating positive social impact through market-based approaches, they differ in their primary objectives and operational structure. ASEAN therefore recognises social enterprises as a complementary approach that can reinforce IB models and activities, rather than replace them.

IB models. While social enterprises and IBs share a commitment to generating positive social impact through market-based approaches, they differ in their primary objectives and operational structure. ASEAN therefore recognises social enterprises as a complementary approach that can reinforce IB models and activities, rather than replace them. At the regional level, IBs are supported through a combination of regional framewor ks, implementation instruments, and complementary social enterprise initiatives . For example, the ASEAN Economic Community Strategic Plan (2026-2030) identifies IB as a mechanism for promoting inclusive economic development and strengthening micro, small and medium enterpr ise (MSME) participation in regional and global value chains. Meanwhile, IB promotion i s operationalised through the ASEAN IB Framework, with the Plan of Action for the Promotion of Inclusive Business in ASEAN (20 232027) provides a regional roadmap for implementation through policy support, busin ess development services, access to finance, and knowledge-sharing initiatives. This impleme ntation has been supported by the Model Framework for an Inclusive Business Accreditation System in A SEAN (2024), which guides AMS in developing transparent and credible national accreditation system s. The Capacity Building and Talent Development Framework for Inclusive Business in ASEAN (2025) further supports the development of skills and institutional capacities required to scale IB models across the region. Regional initiatives such as the ASEAN IB Forum and ASEAN IB Awards also promote awareness, knowledge exchange, and recognition of IB models. Complementary mechanisms exist for social enterprises, including the ASEAN Social Enterprise Development Programme (SEDP), initiated by the ASEAN Foundation in 2021. At the national level, AMS have adopted different approaches to supporting IBs and social enterprises. For instance, Thailand has established a legal framework through the Social E nterprise Promotion Act B.E. 2562, while the Philippines and Malaysia have developed national accreditation mechanisms to formalise and recognise impact-oriented business models, through the IB Accreditation System and Social Enterprise Accreditation programme, respectively. The advancement of the ASEAN IB agenda, supported by social enterprise initiatives, provides a

Promotion Act B.E. 2562, while the Philippines and Malaysia have developed national accreditation mechanisms to formalise and recognise impact-oriented business models, through the IB Accreditation System and Social Enterprise Accreditation programme, respectively. The advancement of the ASEAN IB agenda, supported by social enterprise initiatives, provides a practical approach for addressing structural challenges related to poverty, informality and unequal access to opportunities. Rather than replacing existing economic models, these business models expand participation in markets, strengthen local value chains, and improve access to essential goods and services. Policy orientations to further promote IBs and social enterprises in ASEAN While the value of these business models is recognised across the region, they continue to face systemic barriers . A major challenge for IBs and social enterprises is limited access to fi nance. For example, those seeking smaller funding amounts , often under USD 200 0 00, typically fall below the threshold of interest for the majority of impact investors. Furthermore, while grant-based seed capital is relatively accessible, funding at later stages is also largely insufficient relative to demand. Other obstacles8 

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include fragmented support ecosystems, policy gaps across AMS – such as inconsistent legal recognition and regulatory frameworks – operational constraints and shortages of skilled talent. Addressing these challenges will greatly benefit from co-ordinated policy support across the region, as well as financing suitable for different stages of growth . Support could be enhanced for scaling these businesses, including targeted financial instruments, ongoing cap acity-building efforts , as well as impact measurement and monitoring systems to track performance and inform policy design. Furthermore, fostering co-operation across ASEAN – through a regional framework for social enterprise development – could enhance the impact and potential of these enterprises throughout Southeast Asi a. Creating such forms of enabling environments for social economy entities also presents a promising strategy for addressing the socio-economic challenges facing the region. Building on these considerations, this paper includes policy orientations to translate these priorities into concrete actions: • Complement existing IB instruments by considering the development of a regional

Creating such forms of enabling environments for social economy entities also presents a promising strategy for addressing the socio-economic challenges facing the region. Building on these considerations, this paper includes policy orientations to translate these priorities into concrete actions: • Complement existing IB instruments by considering the development of a regional framework for social enterprises: To further amplify the impact of IB instruments across the region, ASEAN can leverage its vibrant social enterprise sector , estimated at nearly one million enterprises. Social enterprises have the potential to complement existing IB initiatives by providing innovative, community-driven solutions that align with IBs market-based approach. A SEAN could initiate and facilitate a policy dialogue to establish a regional framework that i ntegrates social enterprise development with current IB instruments. Such a framework would recognise social enterprises, offering legal recognition, accreditation, and incentives that bolster the ir credibility, transparency, and access to finance. This alignment would enable social enterpris es to operate more effectively within impact investment ecosystems, attracting investment and fostering scalable social solutions. This could be built in line with existing ASEAN IB initiatives and the OECD Recommendation on the Social and Solidarity Economy and Social Innovation, wh ich would strengthen ASEAN’s social enterprise ecosystem, while also positioning the region as among the leaders in impact-driven economic development. • Support the scaling of social enterprises through I B models: ASEAN governments could support social enterprises in adopting and scaling IB models by: ‒ Improving access to finance by using blended finance mechanisms that combine public, philanthropic and private capital, establishing co-investment schemes between public and private investors, and providing credit guarantees to address early-stage financing gaps; ‒ Promoting technology adoption through digital transformation funds, innovation vouchers, and public-private technology partnerships, to enable cost-effective scali ng and operational efficiency; ‒ Institutionalising impact measurement via standardised impact measurement frameworks and open-source platforms of good practices and methods to enhance transparency and investor confidence and; ‒ Fostering international knowledge sharin g by encouraging transnational collaboration, mentorship, and living laboratories, which would help best practices to be a dapted and

frameworks and open-source platforms of good practices and methods to enhance transparency and investor confidence and; ‒ Fostering international knowledge sharin g by encouraging transnational collaboration, mentorship, and living laboratories, which would help best practices to be a dapted and scaled regionally. • Mobilise social enterprises and IBs to address development challenges: Social enterprises and IBs can complement public and private efforts to tackle poverty, improve well-be ing, expand education, and promote environmental sustainability. Good practice examples from the region already demonstrate effective models: Pepper Labs (Malaysia) and Sapa O’Chau (Viet N am) generate stable employment for underserved communities ; Ruangguru (Indonesia), Teach for the Philippines (the Philippines) and SolveEducation! (Singapore) expand access to education, and; SUDrain (Cambodia) and Rags2Riches (the Philippines ) deliver sustainable environmental solutions. 9

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Inclusive businesses (IBs) are strategic tools for advancing economic growth, as well as expanding opportunities for micro, small and medium enterprises (MSMEs) and people at the Base of the Pyramid (BoP) across Southeast Asia. By strengthening MSME participation in regional and global value chains and creating economic opportunities for underserved communities, IBs can contribute to more inclusive development. IB models can also be complemented by IB activities and social enterprise initiatives, further advancing the broader IB agenda. What are IBs in the ASEAN context? IBs have gained growing prominence across Southeast Asia, backed by the Association of Southeast Asian Nations (ASEAN). IB was first coined in 2005 by the World Business Council for Sustainable Development (WBCSD), referring to “ventures that go beyond philanthropy by integrating lowincome communities into companies’ value chains as customers, suppliers, retailers, and distributors” (World Business Council for Sustainable Development, 2016 [1]). In ASEAN, IBs are defined as businesses that “provide goods, services, and livelihoods on a

income communities into companies’ value chains as customers, suppliers, retailers, and distributors” (World Business Council for Sustainable Development, 2016 [1]). In ASEAN, IBs are defined as businesses that “provide goods, services, and livelihoods on a commercially viable basis, either at scale or scalable, to people at the BoP, making them part of the value chain of companies’ core business as suppliers, distributors, retailers, or customers” (ASEAN, 2020 [2]). The ASEAN IB Framework positions IB as a “triple win” strategy for companies, governments, and low-income populations. Through commercially sustainable busine ss models, ASEAN seeks to promote economic inclusion, strengthen local value chains, and expand pa rticipation in regional and global markets. A milestone in advancing ASEAN IB agenda was the endorsement of the ASEAN IB Framework (2017) and the Guidelines for the Promotion of Inclusive Business (2020 ). Together, these instruments provide the foundation for promoting and scaling IBs across the region. AS EAN identifies several key characteristics of IB by engagement of the BoP; financial viability; impact management practice; environment, social and governance (ESG); scale and replicability; and innov ation. The guidelines also emphasise ASEAN’s commitment to promoting IBs throughout the region (ASEAN, 2020[2]). Through a public-private partnership and multi-stakeholder approach, ASEAN continues to encourage transformation towards IB by involving the government, as well as rel evant stakeholders such as business associations, impact investors, business facilitators, business schools, media, development partners and international organisations. Among these, social enterprises are increasingly seen as a complementary pathway to furthering the IB agenda in Southeast Asia. Thi s is because their hybrid models bridge social impact and financial sustainability, as well as com mercial activity and local community development, helping to advance IB principles (OECD, 2022[3]).

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How are IBs and social enterprises related?

community development, helping to advance IB principles (OECD, 2022[3]).

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How are IBs and social enterprises related? While IBs and social enterprises are distinct approaches, they share several common characteristics. For example, they both contribute to inclusive and sustainable development through market-based solutions. Within the ASEAN IB agenda, social enterprises are recognised as a complementary approach that can support and reinforce the IB objectives. Similar to IBs, social enterprises may generate surplus/profit and engage in economic activity and job creation, while addressing social and environmental issues . However, IBs primarily focus on integrating people at the BoP into commercially viable and scalable value cha ins, whereas social enterprises typically pursue explicit social and/or environmental objectives through entrepreneurial activities. Social enterprises are part of the broader social economy, which is evolving and taking different shapes depending on regional and national contexts. The OECD defines the social economy 1 as comprising a range of “organisations such as associations, co-operatives, mutual organisations, foundations, and, more recently, social enterprises . (…) The activity of these entities is typically driven by societal objectives, values of solidarity, the primacy of people over capital and, in most cases, by democratic and participative governance” (OECD, 2022[4]). The social economy is prominent in the European Union (EU), as well as countr ies such as Brazil, Canada, France, Korea and Spain (see Box 1). Its growing relevance at the global level was reflected in the adoption of the first United Nations (UN) General Assembly Resolution on the Social and Solidarity Economy (A/RES/77/281) in April 2023 (United Nations General Assembly, 2024 [5]). This increasing recognition reflects the broader role that market-based approach es can play in addressing social and environmental challenges. Amid global megatrends such as climate change, demographic shifts and digitalisation, both IBs and social enterprises are increasingly relevant for building

This increasing recognition reflects the broader role that market-based approach es can play in addressing social and environmental challenges. Amid global megatrends such as climate change, demographic shifts and digitalisation, both IBs and social enterprises are increasingly relevant for building competitive and resilient economies. In Southeast Asia, these approaches form part of broader regional efforts to advance inclusive and sustainable economic development, supported by the AS EAN IB agenda and complemented by the growing role of social enterprise. Box 1. The social economy around the world European Union The 27 Member States of the EU are home to more than 4.3 million social economy entities. The sector accounts for at least 6.3% of total employment in the region, generating a tur nover of EUR 912 billion in 2021. Recognising its economic and social potential, the EU implemented a Soc ial Economy Action Plan in 2021, which was complemented by the Council ’s first-ever recommendation on developing social economy framework conditions. Together, they aim to increase sector visibility, s trengthen its supporting ecosystem, enhance policy coherence across Member States, and promote its contribut ion to sustainable and inclusive growth in the E