Thai social enterprises tapping tourism income to spur rural development

BANGKOK, 9 Oct 2017: 

Six years ago, Somsak “Pai” Boonkam drew up a plan with two villages in northern Thailand for tourists to stay with local families and immerse themselves in hill-tribe culture.

The aim was for the villagers to see some financial benefit from their country’s multi-billion-dollar tourism industry.

Pai was sure it would be a hit with tour operators in Bangkok – but he was wrong. “They weren’t even interested to go and inspect the places.”

That pushed the former engineer, now 34, to set up Local Alike, a travel consultancy that promotes sustainable tourism in 70 villages.

“I grew up in the same situation where there weren’t many economic opportunities, so it attracts me to work for the people,” said Pai, who lived with his grandparents in a village in northeast Thailand until he was eight while his parents traveled in search of laboring work.

A growing number of young Thai entrepreneurs like Pai are getting involved in activities that have traditionally been the domain of the government and development groups – from providing water in remote communities to helping coffee farmers earn a fair income.

This new generation of business owners believes running companies that invest in tackling social and environmental causes is a better way to help than relying on donors’ whims.

“There are so many problems in Thailand that need to be solved,” said Pai. “I see (this as) the new pattern of doing business – doing good while making money.”

Half of Local Alike’s business units are now financially sustainable and it runs a development fund that supports local projects, he said.

Thailand’s transformation to an upper-middle-income country in less than a generation has lifted millions out of poverty, but inequality and deprivation persist.

Over 80% of Thailand’s 7.1 million poor people live in rural areas, and an additional 6.7 million are just above the poverty line, according to the World Bank.

The Southeast Asian nation of 66 million also faces serious challenges of environmental degradation and resource depletion caused by mass tourism, pollution, generation of waste and intensive farming, experts say.

Aliza Napartivaumnuay, 34, grew up in Kolkata, Rome and Seattle before moving back to Bangkok. She spent nearly a decade working in the retail supply chain before co-founding Socialgiver more than two years ago.

The online business offers deals on leisure services, including hotel rooms, restaurant tables and spa packages. The proceeds fund social and green projects, such as reforestation, children’s education and hospital beds for poor patients.

The idea was not to set up a business that spoke only to people who already care about such issues.

“We wanted to create something more inclusive and approachable by offering services users are accustomed to spending on,” said Aliza.

Many trace the birth of social enterprise in Thailand to the establishment in 1974 of Cabbages and Condoms, a successful Bangkok restaurant that funds sexual health education and provision.

But the concept only started gathering pace a few years ago, with incubators such as Change Fusion fostering start-ups.

Now there are businesses that enable blind children to learn using a special drawing board, or that train and employ people with disabilities. Others support widows and orphans affected by the conflict in southern Thailand, and use IT to help health professionals and charities develop mobile apps.

There are between 5,000 and 10,000 organizations in Thailand that fit the social enterprise model, said Nuttaphong Jaruwannaphong, director of the Thai Social Enterprise Office (TSEO).

Saks Rouypirom, 39, opened Broccoli Revolution, a trendy restaurant serving vegan, mostly organic food to help fund his non-profit Sati. Its projects include installing water filters in northern villages in partnership with US-based Planet Water Foundation.

“Sati means ‘mindfulness’ so it’s about being mindful of problems and solutions,” said Saks, who buys mushrooms for his restaurant from a street-child shelter and kale from farmers to whom he has provided the seeds.

“Being a business owner, you can make a conscious decision to support these causes,” added Saks, who was born and raised in the US.

Still, for all the excitement about their potential, social enterprises face multiple challenges in Thailand, including a lack of regulation and limited access to finance.

It was “very difficult” to get investors on board to set up Local Alike, when they were told they would not see all the profits, said Pai. He received support from Change Fusion and entered business competitions to win funding.

In Thailand, companies seeking certification as social enterprises cannot pay more than 30% of their profits in the form of shareholder dividends, said TSEO’s Nuttaphong.

When Ayu “Lee” Chuepa wanted to help coffee farmers in his community earn a fair income, he had a hard time convincing villagers to work with him due to his youth and inexperience.

“My mother said that is to be expected. So I asked, ‘If you weren’t my parents, would you have joined me?’. They said, ‘Of course not. Are you crazy?’” he recounted, laughing.

Things have since improved. The Stock Exchange of Thailand, for example, now has an online platform that promotes investment in social enterprises.

But the public perception that such businesses offer lower-quality products still needs to be tackled, experts say.

“Since the beginning, I didn’t want to sell our products by making people feel pity. I want them to buy because they’re good,” said Lee, who belongs to the Akha ethnic minority.

He is now building his third branch of Akha Ama Coffee, with help from architects at Jai Baan Studio, another social enterprise that uses local resources and nature in its designs.

Lee hopes the division between social and traditional businesses will fade with time. “I want everyone in the world to be a social entrepreneur, doing good.”

Since leaving behind conflict and poverty in their native countries, Kam Kampun and Nittaya Soponprakobkit have not ventured beyond the forested hills in northern Thailand they now call home.

Without Thai ID cards, their movement is restricted. Their handmade creations, however, are set to travel the world.

Kampun, 60, makes beautiful paper from mulberry bark and Nittaya, 32, has woven striking black, white and grey textiles which are now on sale in Ikea stores across Europe.

The pair work for the Doi Tung Development Project, one of Thailand’s oldest and most established social enterprises – which employs hill tribe communities, many of whom are stateless.

From this month, their products can be bought at Ikea stores in six European countries, including Britain and Sweden, as part of a limited-edition collection called EFTERTANKE (“reflection”) launched by the world’s biggest home furnishings retailer.

This is the sixth and largest collection Doi Tung has produced for Ikea in a decade-long partnership. Some 200,000 products – made of textiles, pottery and paper – have been crafted by about 330 artisans, three quarters of them women.

“I cannot go anywhere (in) or outside the country, but my products can be sold in other countries,” said Nittaya, a native of Yunnan in China who started helping her family farm opium aged six.

In Thailand, a middle-income country of 66 million people, about seven million live in poverty and one-third of 15-year-olds are illiterate, according to the World Bank. There are nearly half a million stateless people, who are not recognized as nationals of any country, government figures show.

Nittaya’s family struggled to survive from opium farming, and migrated to Myanmar in search of work when she was about 11. She moved to Thailand a few years later, eking out a living as a farm labourer. She joined Doi Tung four years ago and has learned weaving, as well as how to read and write.

Kam fled hunger and fighting between Shan insurgents and the army in Myanmar some 30 years ago, walking six days and nights to reach Chiang Rai, a province in northern Thailand. She is now a 14-year veteran at Doi Tung, where her two sons also work.

Lars Svensson, sustainability and communications director at Ikea Southeast Asia, said personal stories like these make the new collection stand out.

“Even though Ikea is mass-market, associated with repetition, here you can actually get individually made pieces and also know where it comes from and who made it.”

Doi Tung was founded in 1988 by the grandmother of Thai King Maha Vajiralongkorn on the edge of the “Golden Triangle” opium-growing region that straddles the borders of Myanmar, Laos and Thailand.

Starting out as an initiative for reforestation and opium-replacement crops, it now has business units in food, horticulture, tourism and handicrafts.

The partnership with Ikea has helped Doi Tung become more efficient and strategic, said Khunying Puangroi Diskul Na Ayudhya, the organisation’s former executive director, aged 70, who retired last month after nearly 30 years.

“We consider ourselves a cottage industry,” she said. “Without Ikea, Doi Tung would not have moved as fast,” she said, adding that the artisans now turn out thousands of each product.

The Ikea-Doi Tung partnership may be unique in scale, but a growing number of Thai businesses are following in its footsteps by focusing on social and environmental benefits.

They are reinvesting some of their profits into local communities, making the approach work despite a lack of clear regulation and patchy official support

Proponents of social enterprises say they can play a key role in tackling global challenges such as poverty and climate change.

The UN recently announced an international coalition to promote social business in Asia, including the British Council and the Social Enterprise World Forum.

Bangkok has tried to be supportive, setting up the Thai Social Enterprise Office (TSEO) in 2010, which enacted a five-year master plan.

But momentum slowed after the military came to power in a 2014 coup, according to a 2016 report by German social responsibility foundation Bertelsmann Stiftung.

The TSEO has now been dormant for close to three years but should reopen once the Social Enterprise Promotion Act is passed, said its director Nuttaphong Jaruwannaphong.

The law, which aims to regulate and encourage social enterprises, was proposed to the cabinet two years ago, he said.

Meanwhile, the military government is setting up a social enterprise company nationwide to improve the rural economy, with provinces owning three-quarters and Thai conglomerates the rest.

Many entrepreneurs, like Ayu “Lee” Chuepa, however, are not waiting for the new law.

The 32-year-old founded Akha Ama coffee in Chiang Mai, Thailand’s second-largest city, eight years ago to help coffee farmers in his community earn a fair income.

No bank would lend to him, so Lee – a member of Chiang Rai’s Akha ethnic minority and the first person in his village to graduate from university – relied on a grant from a Swiss philanthropist.

Lee now works with 20 coffee-growing families, and is opening his third café soon. His beans were selected for the World Cup Tasters Championship, a global competition for specialty coffees, three years in a row.

Hilltribe Organics also operates in Chiang Rai, working with villagers who want to run chicken farms by providing free inputs and a guarantee to buy the eggs to sell in Bangkok supermarkets.

One of 47 farmers working with Hilltribe, Chankaew Lipoh, 36, now makes 12,000 Thai baht a month from eggs, a big jump from her previous annual income of 50,000 baht from growing corn.

Chankaew’s 680 chickens roam around the farm, laying up to 450 eggs daily, which she cleans and stamps so consumers can trace them back to the source.

Heavy rains in September, however, slashed production to about 300 eggs a day. Despite the stress she suffered then, Chankaew said she wants to raise more hens.

“I think I can handle up to a thousand,” she said, smiling.

– Reuters

Image: Aliza Napartivaumnuay, co-founder of SocialGiver, an online business offering deals on hotels and other leisure services that channels profits into good causes

Leave a Reply