Thursday, April 02, 2015

Responsible Business in ASEAN

The Association of Southeast Asian Nations (ASEAN), a grouping of 10 nations, aims to become a single market in 2015 what will be known as ASEAN Economic Community. The economic integration will see free flow of goods, services, investment, capital and skilled labour among the member states to achieve a single market and  production base. With 600 million consumers and $3 trillion in combined GDP, the new economic block will need a strong framework for responsible business to ensure the initiative results in a sustainable growth for weaker member nations and the communities living there.
ASEAN has several challenges to deal with. To start with, ASEAN is a grouping of very uneven economies. Singapore and Brunei, the two smallest member states in ASEAN are also the wealthiest. ASEAN also includes Cambodia, Lao and Myanmar which are the least developed countries in the world. In between fall the remaining countries that include Indonesia, Malaysia, Thailand, the Philippines and Vietnam.
It’s obvious that the capital will flow from the wealthy members to the poor nations in search for growth and expansion as their home markets are very small. While this is a welcome news for the host economies, the key concern is whether the investors will ensure high standards of ethics, human rights and environmental protection.
Singaporean companies perhaps will benefit the most from ASEAN becoming a single market. However, only 20 out of nearly 800 publicly listed companies published a sustainability report in 2014. Singaporean companies have failed in disclosing their economic, social and environmental impacts even though the Singapore Exchange, the local stock exchange, had issued voluntary sustainability reporting guidelines in 2010. Malaysia, where sustainability reporting has been mandatory for the listed companies since 2008, saw only about 20 companies’ report meeting the GRI guidelines.
Singapore has consistently ranked high on Transparency International’s Corruption Perceptions Index while Brunei also enjoys a reputation for low tolerance for corruption. In contrast, almost all other countries in ASEAN are notorious for rampant corruption. The question is whether Singapore companies will follow the same anti-bribery standards in other countries that they follow in Singapore. Early this year, two large Singapore companies, Keppel FELS and Sembcorp Marine, were accused of bribery in a major corruption scandal in Brazil involving the state-run oil company Petrobras. Though both companies have denied any wrongdoing, the incident should be a wake-up call for Singapore companies venturing overseas.
Singapore, Brunei, Malaysia and Thailand have significant number of migrant workers. There are ongoing concerns about abusive working conditions for migrant workers and human trafficking in some of these countries. Economic integration will speed up migration. Investments without respect for a firm commitment to protecting human rights will be red flags for activists.
Indonesia, already at the centre of rainforest destruction by palm oil and paper pulp companies, is an environmental hot-spot. More investment flowing into the country by companies without environmental integrity will result in continued deforestation, and displacement of local communities. Several of the palm oil and pulp companies accused of forest destruction in Indonesia are based in Singapore and Malaysia.
The good thing is that ASEAN leaders seem to be aware of the risks of ignoring corporate responsibility. The ASEAN Intergovermental Commission  on Human Rights (AICHR) was established in 2010 and ASEAN Human Rights Declaration was issued in 2013. A study by AICHR has recommended ASEAN Member States to adopt rules and regulations to deal with adverse impacts of business practices and encourage businesses to implement and internalize corporate social responsibility values, including respect for human rights.
Human Development, Social Welfare and Protection, Social Justice and Rights, Ensuring
Environmental Sustainability and Narrowing the Development Gap between member countries have been included as goals in the ASEAN Socio Cultural Community Blueprint.
The most important initiative however is the establishment of ASEAN CSR Network in 2011, modelled on CSR Europe, to promote corporate social responsibility within the region. The Network recently organized ASEAN Next Gen CSR Forum in Bali  attended by about 250 delegates including business leaders. Addressing the forum, the ASEAN Secretary-General, Le Luong Minh said there were many opportunities for businesses to contribute positively through sincere corporate values and principles.
There is work ahead for the ASEAN CSR Network. Brunei, Cambodia and Lao have not yet joined the ASEAN CSR Network and they don’t have any signatories to the United Nations Global Compact Principles.
Without an aggressive responsible business agenda, ASEAN Economic Community will find it hard to deliver on goals included in ASEAN Socio Cultural Community Blueprint.

-by Rajesh Chhabara,
Founder of CSRWorks International (

 (This article first appeared in Ethical Corporation, March 2015 issue)

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