Leveraging the ASEAN Inclusive Business Framework to Empower Underserved Communities in the Philippines

In the economically dynamic and diverse region of Southeast Asia, the concept of Inclusive Business (IB) has emerged as a vital framework to address persistent inequalities and challenges faced by underserved communities. The ASEAN Inclusive Business Framework, officially adopted in 2019, aims to promote inclusive growth by encouraging businesses to integrate low-income communities into their value chains. By doing so, businesses can simultaneously drive profitability and social impact. For the Philippines, where poverty and inequality remain pressing issues, the time is ripe to adopt and accelerate the implementation of this framework.

What is the ASEAN Inclusive Business Framework?

The ASEAN Inclusive Business Framework is a strategic roadmap designed to foster an ecosystem where businesses, particularly small and medium-sized enterprises (SMEs), incorporate underserved populations as employees, suppliers, distributors, and customers. The framework lays out key areas of focus such as access to financing, building capacity, fostering innovation, and creating policies conducive to inclusive growth.

According to the ASEAN Secretariat, the framework targets a dual objective: 1) to encourage businesses to be more inclusive in their operations and 2) to help governments create environments that support the scaling of such businesses. This initiative is part of ASEAN’s broader commitment to Sustainable Development Goals (SDGs), particularly Goal 8, which promotes inclusive and sustainable economic growth.

Data Snapshot: ASEAN and Underserved Communities

Across the ASEAN region, over 140 million people live in poverty, with income inequality remaining a substantial barrier to social mobility and economic development. Here are some key insights into the status of underserved populations in ASEAN countries:

- Indonesia: With a population exceeding 273 million, approximately 9.8% live below the poverty line, representing a significant market of underserved communities.

- Vietnam: Over 6% of the population lives in poverty despite impressive economic growth in recent years.

- Myanmar: Recent reports indicate that nearly 25% of its population lives below the poverty line, making it one of the highest poverty rates in ASEAN.

- Philippines: Despite rapid growth in recent years, 18.1% of Filipinos remain in poverty according to the Philippine Statistics Authority. This translates to over 20 million people who are underserved and can benefit from the Inclusive Business model.

In ASEAN, SMEs account for 99% of all enterprises, employ 88% of the workforce, and contribute around 40% to GDP. These businesses hold immense potential to transform into inclusive enterprises by integrating underserved populations into their value chains.

Why the Philippines Needs to Accelerate the ASEAN IB Framework

The Philippines is at a critical juncture in its development trajectory. While significant strides have been made in reducing poverty, millions still face limited access to education, healthcare, and economic opportunities. Implementing the ASEAN IB Framework can play a key role in addressing these inequalities. Here are several compelling reasons why now is the right time for the country to adopt this approach:

1. Aligning with National Development Goals

The Philippine Development Plan (PDP) 2023-2028 highlights the need for inclusive growth and poverty reduction. By adopting the ASEAN IB Framework, the government can align its economic goals with social objectives, empowering businesses to generate sustainable social impact while localizing SDGs—particularly Goals 1 (No Poverty) and 8 (Decent Work and Economic Growth).

2. Harnessing the Power of SMEs

The Philippine economy heavily relies on SMEs, which account for approximately 99.5% of all businesses in the country. By enabling these businesses to adopt inclusive practices—such as hiring from underserved communities or sourcing materials from local suppliers—SMEs can grow their profits while reducing income inequality.

3. Technology as an Enabler

With the rise of digital technologies in the Philippines, there are more opportunities than ever to integrate underserved populations into the economy. From e-commerce platforms to mobile banking solutions, technology can help remove traditional barriers to access and empower underserved communities to participate in value chains. The ASEAN IB Framework can serve as a guiding structure for businesses seeking innovative ways that are also inclusive.

4. Building Resilience in Post-Pandemic Recovery

The COVID-19 pandemic disproportionately affected low-income communities across the Philippines. Inclusive Business models can provide these communities with economic resilience against future disruptions by offering jobs, healthcare benefits, or access to affordable goods.

5. Fostering Partnerships and Collaboration

The ASEAN IB Framework encourages collaboration between governments, private businesses, and international organizations. The Philippines can leverage this framework to build partnerships that enhance SME capacity and support them in becoming more inclusive. Public-private partnerships (PPP) can provide critical financing, technical assistance, and market access for businesses committed to IB principles.

Impact of ASEAN IB Framework on Underserved Communities

Adopting the ASEAN IB Framework can have a transformative impact on underserved communities in the Philippines. Businesses implementing IB models can provide stable employment opportunities, offer skills training, and improve access to essential goods and services. This can increase income levels for marginalized communities while improving their quality of life and promoting upward social mobility.

For instance, in agriculture—where many of the country’s poorest reside—Inclusive Business models can empower smallholder farmers by providing fair market access and better pricing mechanisms while supporting sustainable farming practices. Similarly, inclusive models in education can help reduce costs for low-income families while improving learning outcomes through innovative delivery methods.

The Path Forward

The ASEAN Inclusive Business Framework offers a comprehensive approach to achieving both economic growth and social progress. By integrating underserved communities into business value chains, this framework provides a sustainable pathway for poverty reduction while simultaneously boosting economic productivity.

For the Philippines—where much potential remains untapped among underserved communities—implementing the ASEAN IB Framework is not just a moral imperative; it’s an economic opportunity. With appropriate policies, partnerships, and technology in place, the country can lead efforts toward fostering inclusive growth that uplifts millions from poverty.

By adopting this framework, we can create a future where businesses thrive alongside communities that are no longer left behind.

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