Administration first, legislation later: the varied and lively development of social enterprises in Taiwan (Part 1)

Any emerging industry needs policy support, and social enterprises that combine commercial value and public welfare are no exception. In recent years, Taiwanese social enterprises have created tremendous momentum in encouraging the development of local economy and social innovation, and this has also aroused the attention of the public sector, which has created many corresponding policies to support the industry. This article begins with the Social Enterprise Action Plan, the first government policy aimed at supporting the development of social enterprises in Taiwan, to examine what has been achieved in the development of social enterprise policies, what the future of this industry should look like and which direction controversial social enterprise legislation will go. At the end of this article, the whole picture of social enterprise-related policies in Taiwan will be shown by examining current development using perspectives from both the public and private sectors.
In 2014, the Executive Yuan announced that year as “the first year of social enterprises in Taiwan,” and launched the first major policy in Taiwan to promote the development of social enterprises. The three-year Social Enterprise Action Plan with a budget of up to NT $160 million invites the Ministry of the Interior, the Ministry of Finance, the Ministry of Education, the Ministry of Economic Affairs, the Ministry of Transportation and Communications, the Ministry of Health and Welfare, the Ministry of Labor and other ministries to jointly promote the program. Four major strategies, including adjusting current laws and regulations, building a development platform, raising funds, and advocating for business incubation, aim to build an environment that encourages social enterprise innovation, social entrepreneurship, and the development and growth of this sector.
Given that the Taiwanese social enterprise industry was still in its early days of development in 2014, the Executive Yuan decided to use the “administration first and legislation later” approach to guide its governance of the industry. Instead of creating laws and regulations through the parliament that might limit the growth of the social enterprise sector, the government first chose to work on the goal of facilitating the development of the industry at the level of administration.
If we look closely at the Social Enterprise Action Plan, we can see a few major ways in which it has been significant in the history of the development of Taiwanese social enterprises:
1. Making the pie bigger to expand the influence of social enterprises
As a major policy for building social enterprises in Taiwan, the Social Enterprise Action Plan does not define “social enterprises” too strictly. Instead, it tries to encourage the organic development of this model in society and helps to maintain the diversity of social enterprises. When Feng Yen, the former Minister without Portfolio focusing on social welfare, looked retrospectively at the policy she created, she said that adopting the “administration first and legislation later” approach and not defining the legal structure of social enterprises solely as corporations, non- profit organisations or any other specific type was to make the “pie” bigger and give more time and space to allow for the diversified development of social enterprises before proper legislation was implemented. The reason the Ministry of Economic Affairs was chosen as the competent authority was in the hope that one day social enterprises can become a mature industry with increased visibility and possibilities for further development.
2. Cross-departmental cooperation creates desirable synergy
The most noticeable feature of the Social Enterprise Action Plan is that it combines the efforts of many different departments. “Governmental departments should operate like a team, a baseball team, which means that a hit should follow another, and it should be made sure that no one misses the ball,” said Feng Yen. She urged every department to do their best to promote the development of the social enterprise industry. For example, by launching the Multiple Employment Promotion Project and Empowerment Employment Program, the Ministry of Labor aims to encourage the development of local economies and increase job opportunities. The Ministry of Economic Affairs sponsors universities to set up business incubation centres, helping university students work on new social enterprise projects. The Ministry of Health and Welfare assists private foundations to invest in social enterprises. The Financial Supervisory Commission has set up the TPEx Emerging Stock Board and helps existing social enterprises register on the capital market.
3. Establishing a “Social Innovation Lab”, creating a base for developing social innovation
Another pioneering move in the Social Enterprise Action Plan was proposed by Mao Chi-kuo, Premier of Taiwan at the time, who thought the development of social enterprises and entrepreneurial services required an indicative location dedicated to the plan. Therefore, the government transformed a former official mansion of the Premier, located on Jinhua Street and uninhabited for more than ten years, into a social enterprise hub and youth entrepreneurial base that would become a stronghold for the development of social innovation in Taiwan.
In line with the rearrangement of the Executive Yuan’s official residence, the Social Enterprise Hub and Youth Entrepreneurial Base, originally located on Jinhua Street, were moved to the App Creative Park at the TAF Innovation Base and renamed a “Social Innovation Lab” in October 2017. With a focus on “linking the future and connecting to the country and the world”, the newly-established institute hopes to discover more models of social innovation and to build an open, innovative and intelligent environment. It aims to work with many different individuals and organisations to create a bright future for social innovation in Taiwan.
Future prospects: facilitating horizontal communication and creating an adequate legal environment
Because the Social Enterprise Action Plan only lasted for three years from 2014 to 2016, it was not possible to fully implement the four strategies of adjusting current laws and regulations, building a development platform, raising funds, and advocating for business incubation. Many improvements are still waiting to be made and many opportunities to advance development also remain to be explored. Social enterprise policies implicate many aspects of administration and involve many departments, which has resulted in the unconcentrated use of resources and energy, and repeated investment from the private sector, which requires integration. Using as Key Performance Indicators (KPI) the number of events and forums held for this plan, and the number of participants who joined these public activities, is also believed to be aiming at the wrong target and to bear little significance. Nonetheless, the contribution that the Social Enterprise Action Plan has made to the development of the social enterprise industry is still meaningful, and the plan is an important milestone preceding future related policies.
On the basis of the implementation of social enterprise policies over the past three years, Audrey Tang, the Minister without Portfolio in charge of this field, believes that the government should facilitate horizontal communication across all parties and systematically open up related collaborative meetings allowing different departments, Ministers without Portfolio, young advisory committee members and members of the public to take part. In this way, the mindset that “one minds one’s own business” can hopefully be corrected. For example, many social enterprise- themed meetings presided over by her have been transcribed and published online for the reference of participants and other members of the public, so that the conclusions made in these meetings are in black and white and other people can give their opinions and join in the discussion too.
As for the future of social enterprise policies, Ray Chen, co-founder of B Current Impact Investment Inc., said that the most important task that the government should be undertaking is creating law and regulations, as well as making the financial environment instrumental in developing social enterprises. Other aspects can actually be done in the private sector without the interference of the government. At present, the Company Act cannot be completely applied to the operation of social enterprises and the definition of a social enterprise is not very clear, which has caused confusion among the public. If the government wants to build a healthy ecosystem of social enterprises, the setting of laws and regulations is key. It is hoped that the government can collect policy suggestions from different parties and create a legal environment conducive to the development of social enterprises in Taiwan.
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