Using national social procurement policies to drive economic resilience: The Malaysian Budget 2021

by Helen Harvey / February 2021

At the beginning of November, the Malaysian government released their 2021 Budget, which focused on supporting the government’s work in three principal areas: ensuring the wellbeing and health of the general public, maintaining business continuity and supporting economic resilience. The strategies and measures associated with the third goal of ‘economic resilience’ are particularly promising for the continued development of the social enterprise ecosystem in Malaysia.

After years of advocacy by social enterprise leaders in Malaysia, this year’s national budget includes an allocation of 20 million ringgit (£3.6 million) to develop a social procurement pilot programme. The Malaysian Global Innovation and Creativity Centre (MaGIC) will lead the programme alongside other agencies and provide registered and qualifying social enterprises with a ‘Government Impact e-Procurement Program Certificate’ allowing them to become Government suppliers. MaGIC has already been leading Malaysia’s national social enterprise accreditation programme in collaboration with the Ministry of Entrepreneur and Cooperative Development. They will continue to administer the accreditation programme while also supporting social enterprises to provide goods and services worth up to 20 million ringgit annually as part of the social procurement initiative.

This initiative utilises the government’s massive purchasing power to create additional social value beyond the 20 million ringgit invested directly in social enterprise supply chains, ultimately driving positive environmental and social outcomes within Malaysia. During 2021, MaGIC will work with eligible social enterprises and a few ministries to develop a viable proof of concept with an eye toward establishing an innovation-driven economy in Malaysia. MaGIC CEO Dzuleira Abu Bakar has described these budget allocations as ones that will help fuel the sustainable growth of social enterprises within Malaysia and ensure the work they do to innovate and create jobs is supported and protected.

At SEWF Digital in September 2020 we polled attendees about what they thought would make the biggest difference to social enterprise in 2021. 27% said it would be general consumer desire to support social enterprises, 26% thought supportive government policies would have the greatest impact, followed by 18% who believed commercial and public sector procurement would provide the greatest opportunity for social enterprises this year. Especially because previous research has shown that public sector sustainable procurement lagged behind that of the private sector in Malaysia, SEWF is especially encouraged by the Government’s commitment through the 2021 budget. 

Beyond Malaysia’s social procurement commitment, the government has also been supporting the social enterprise sector in other ways over the past year. As part of their COVID-19 recovery programme, they developed a Social Impact Matching (SIM) Grant to support social enterprises during the pandemic. Uptake throughout the sector was low until the end of 2020 when the government widened access to the SIM leading to increased utilisation in early 2021. The government also created an additional fund for foundations and Government Linked Companies, encouraging them to work closely with NGOs and social enterprises to foster socio-economic development amid the pandemic. The National Economic Action Council’s Secretariat has also been engaging with third sector representatives to explore new ways for social enterprises and NGOs to play greater roles in Malaysia’s economic development and recovery.

SEWF will continue working with governments and leading social enterprise organisations internationally, to ensure social enterprises remain part of the conversation on COVID-19 recovery. The role of social enterprises in recovery will be a key theme of this year’s SEWF Policy Forum on 27-28 April 2021.

Helen Harvey is SEWF's Event Director