The role of CSR
For centuries, Malaysia’s multicultural society has been united by companies’ socially responsible behavior and the consideration shown by the members of society for one another. While the terms “corporate social responsibility” and “sustainable economic activity” are new, these concepts are taking on increasing importance in Malaysia, not least because of growing environmental awareness and a desire for greater social equality among the population and in civil society.
In 2000, Malaysian companies introduced the idea of a „Malaysian Code on Corporate Governance”, which was subsequently drawn up in cooperation with political leaders. The code establishes the principles of good governance and describes the kinds of structures and processes that companies should strive to achieve. Listed companies are required to submit reports detailing their compliance with the code, allowing shareholders and the general public to judge for themselves the conduct of these companies (Bursa Malaysia). The stock exchange, therefore, is one of the most powerful forces driving CSR in Malaysia. According to ACCA, 28 companies published sustainability reports in 2009.
For the past ten years, awards for good practices in the area of CSR have been given out in an effort to raise awareness of social responsibilities.
• Prime Minister’s CSR Award
• ACCA Malaysia Sustainability Reporting Awards (ACCA MaSRA)
• Ansted Social Responsibility International Award (ASRIA)
• StarBiz-ICR Malaysia CR Awards
Networks devoted to responsible corporate management, such as the UN Global Compact and ICR Malaysia, also champion the idea of CSR in Malaysia.
The public sector promotes CSR as well: For years, policymakers have lent their support to such values as sustainability and environmental protection. The government is putting these concepts into practice through public-private partnerships; it also created the new Ministry of Energy, Green Technology and Water. State-owned enterprises have established guidelines for their own conduct. For example, the enterprises that make up the state-run Kazanah holding company affirmed their social responsibility in a publication entitled “Silver Book – Achieving Value Through Social Responsibility.”
Growing interest in this topic is also reflected in the media and in civil society; newspapers report on CSR projects, and NGOs publicly criticize companies that fail to live up to their responsibilities.
International organizations are playing an important role in the further expansion of CSR. The Konrad Adenauer Stiftung (KAS) in Malaysia is currently developing the country’s first certification course for CSR managers. Beginning in 2010, the foundation’s partner of many years, the Malaysian Institute of Management (MIM), will offer the course as part of its program. The institute plans to train about 60 managers each year.
The German Chamber of Commerce Abroad (AHK Malaysia) is promoting this topic within the framework of the EU-Malaysia Chamber of Commerce and Industry (EUMCCI). The EUMCCI CSR committee includes representatives of European and Malaysian companies. The goal is to raise public awareness of CSR in Malaysia. To that end, the committee published a book in 2009 which contains a number of examples of CSR initiatives. Information is also exchanged on a regular basis. The topic of CSR is also to be given a more prominent place in the relevant agendas by taking advantage of contacts to government agencies and the business community.
Many Malaysian companies show social responsibility by engaging in philanthropic projects. CSR is rarely an explicit component of a company’s business model or planned in a strategic way; that approach is generally found only in multinational companies or among the members of the UN Global Compact.
Malaysian companies are active mainly in the communities in which they are located. The number of municipal and charitable projects nearly tripled over the past 10 years, from 350 (1998) to 1,000 (2008). They range from building healthcare centers to providing scholarships for schoolchildren to renovating public buildings to make them accessible to the disabled. Topics that are more closely related to a company’s core business, such as flexible work hours and occupational safety, play a role as well: In a study conducted by ASRIA in 2008, 47 percent of companies reported engaging in efforts to promote good working conditions (Source: W. Visser & N. Tollhurst (2010) The World Guide to CSR).
The subsidiaries or branches of German companies in Malaysia often follow the CSR guidelines of their headquarters, so it is no surprise that they are involved in charitable initiatives and projects relating to poverty, education, environmental protection and culture.
Expectations towards companies
Most of all, political leaders and society at large expect companies to be involved in philanthropic activities such as donations and volunteer work. To some extent this is related to the fact that social projects in Malaysia tend to have a social and religious component: One of Islam’s five pillars is the principle of zakat, according to which Malayan Muslims are required to donate a certain percentage of their property to the needy; Malayans of Chinese descent attach great importance to family bonds; and charity is an integral part of the culture of Malayans from an Indian background.
German companies are expected mainly to contribute in the economic arena, by providing good working conditions and appropriate compensation and behaving in an environmentally responsible manner. To a lesser degree, they are also expected to contribute in the social arena, especially if they occupy a prominent position in the location where they do business. The industrial firm Elektrisola, for example, is one of the most important employers in its rural region, and it is involved in the area of vocational training. Companies are not expected to participate in political dialogue except as regards trade and investment conditions. For the most part, German companies have done an excellent job of meeting Malaysian expectations; they have implemented successful CSR projects in such crucial areas as environmental protection, good governance, training and neighborly assistance.
Government regulations - Implementation of international regulations
Malaysia has been a member of the International Labour Organization (ILO) since 1957. It has ratified 14 ILO conventions, including five core labor standards, but withdrew from the convention on the abolition of forced labor.
The following have been ratified:
• Convention 98: Right to organize and collective bargaining
• Convention 29: Forced labor
• Convention 100: Equal remuneration
• Convention 138: Minimum age
• Convention 182: Prohibition of and immediate action to eliminate the worst forms of child labor
Cooperation between Malaysia and the ILO consists largely of technical assistance, dialog and the transfer of knowledge. The Ministry of Human Resources has drawn up a strategic plan for 2007-2010. The ILO is currently working with partners in Malaysia to formulate a country program
Economic initiatives - CSR tools for private industry
GLOBAL COMPACT network
Ten companies founded the Malaysian UN Global Compact network in 2008. As of 2010, the network includes 33 companies.
Contact and network focal point
Dr. Lin Lah Tan
linlah (at) crt.org (dot) my
Areas of activity
The government’s goal is for Malaysia to become an industrialized country by 2020. This is to be accomplished with the help of five-year plans to manage the economy. The Ninth Malaysia Plan (2006–2010) laid the groundwork for a knowledge-based economy, seeking to change Malaysia's image as a low-wage country. The Tenth Malaysia Plan (2011–2015) builds on that foundation. One of five political strategies involves “developing and retaining a first-world talent base,” as the Prime Minister noted in his speech at the presentation of the new five-year plan. The government wants to ensure high-quality infrastructure and well trained teachers throughout the educational system, from primary schools to universities. This means, for example, hiring more primary school teachers who have a university degree in crucial subjects and opening elite schools.
Public spending on education (share of GDP): Up to 30% (including infrastructure as well as research and development investments); approx. 25% of public spending in 2009
Compulsory school attendance: 6–16 years
Rate of school enrollment: 99% (2003-2008)
Literacy (definition: persons over the age of 15 who can read and write): Total population: 88.7%; men: 92%; women: 85.4% (2000 census)
HDI Education Index (2010): 66th of 182: 0.851 (1=max., 0=no education)
Public spending on education reflects the high priority the government attaches to this area. Over the past few years, the educational system (including infrastructure, research and development) has accounted for up to 30 percent of total spending. This policy is showing clear results: The illiteracy rate is down to six percent, and children have access to primary and secondary education throughout the country (97 percent rate of school enrollment). The country’s public as well as its many private universities offer a high-quality education for roughly 600,000 students, particularly in technical fields.
Ministry of Education
The ministry is responsible for preschools as well as primary and secondary schools.
Ministry of Higher Education
The ministry is responsible in particular for university education.
Malaysia has nearly full employment, with an unemployment rate of slightly under four percent, so the biggest challenge for companies is a lack of qualified employees at every level. To solve this problem, the German Malaysian Institute was founded in 1991 for the purpose of providing basic and advanced vocational training in such areas as production technology, mechatronics and industrial design. In addition, some German companies have their own training programs or contribute components to other programs. Mercedes Malaysia, for example, offers a dual training program modeled after the German system.
In 2005, the Merck Sdn company contributed nearly EUR 50,000 to the YSB Fund, which was established after the tsunami to provide education for 120 schoolchildren on Langkawi island.
Every year, BASF has organized a "Kids' Lab Day," which is a program to help primary school students discover chemistry as a fascinating and many-sided subject. Eight hundred children in Malaysia participated in this event.
Mercedes Malaysia makes it possible for young people to participate in a dual training program modeled after the German system. So far, the Mercedes Training Center has trained 600 young people as mechatronic technicians.
Malaysia’s healthcare system includes a private and a public component. Treatment in public healthcare facilities is free of charge, but the quality of care is not as high as in the private sector.
Public spending on health (share of GDP): 2.2% (2008)
Medical care: 1 physician per 1,474 people (2009)
Infant mortality: Total: 15.87 deaths/1,000 births; boys: 18.32 deaths/1,000 births; girls: 13.24 deaths/1,000 births (2010 est.)
Maternal mortality: 62 deaths/100,000 births (2005)
Child malnutrition (moderate and severe): 8% of children under the age of five (2003-2008)
Rate of HIV/AIDS infection (>15 years of age): 0.5% (2007 est.)
Number of HIV/AIDS sufferers: 80,000 (2007 est.)
HIV/AIDS deaths: 3,900 (2007 est.)
Life expectancy: Total population: 73.29 years; men: 70.56 years; women: 76.21 years (2010 est.)
Over the past few years, the government has devoted considerable resources to improving the public healthcare system, which accounts for approximately five percent of the national budget. Initial treatment is provided by general practitioners, healthcare centers and rural clinics; 127 public and 224 private hospitals offer more specialized care. As the healthcare system undergoes modernization, a great deal of emphasis is being placed on the latest information technology. Telemedicine, for example, takes advantage of the Internet and telephone communications to make medical care more widely available, even in remote areas.
Ministry of Health
The Ministry of Health sets health policy and is responsible for the development of the public healthcare system.
Malaysia AIDS Council
MAC is the umbrella association for all of the organizations in Malaysia that deal with HIV/AIDS.
MAKNA (National Cancer Council)
MAKNA is a social enterprise that collects knowledge and raises money to fight cancer.
Perastuan Diabetes Malaysia
http://www.diabetes.org.my/ is a diabetes information portal that is supported by a large number of pharmaceutical companies and operated by the Malaysian Diabetes Association.
NASAM (National Stroke Association of Malaysia)
NASAM is an NGO that educates the public about strokes and assists stroke patients.
Yayasan Jantung Negara
The Heart Foundation of Malaysia is involved in educational efforts and research related to cardiovascular diseases.
Red Crescent Society
The Malaysian Red Cross organization.
Overall, medical care in Malaysia is good, although there is a lack of trained specialists. Outside of the large cities, healthcare tends to be relatively rudimentary. Nurses are often the only medical personnel available in rural areas, with mobile physicians visiting rural health centers only once a week or as infrequently as once a month.
Mercedes Benz Malaysia
Mercedes-Benz Malaysia helps to fund the Red Ribbon Media Award, which recognizes representatives of the media for their efforts in educating the public about HIV/AIDS (http://www.mercedesbenz-malaysia.com/coporate.htm).
Elektrisola Dr. Gerd Schildbach GmbH & Co. KG
Many German companies in Malaysia have introduced health programs for their employees. Elektrisola Dr. Gerd Schildbach GmbH & Co. KG extends this service to employees’ children as well: The company’s childcare center offers children a medical checkup every month.
Increasing industrialization and growing prosperity have caused new ailments to become more common: Lifestyle diseases such as high blood pressure and obesity are on the rise. In addition to promoting basic healthcare, companies might support campaigns by the Ministry of Health, such as the Healthy Lifestyle program, the Reduce Sugar Consumption campaign and the organ donation campaign.
In 2002, Malaysia introduced a National Policy on the Environment based on the principle of economic, social and ecological sustainability. This policy seeks to enhance quality of life in a healthy environment and to ensure the country’s sustainable development. Malaysia has numerous laws dealing with specific aspects of environmental protection, including industrial waste disposal and clean air. A brief summary of these laws can be found in a publication for investors (http://www.doe.gov.my/files/Publication/Investor%20Guide%202.pdf).
CO2 emissions: 0.66% of total global emissions (2007)
CO2 emissions per capita: 6.8 metric tons (2007)
Electricity consumption: 96.0 billion kWh (2006)
Water consumption (households/industry/agriculture): Total: 9.02 km3/year (17%/21%/62%); water consumption per capita: 356 m3/year (2000)
Challenges facing Malaysia in the area of environmental protection include maintaining biodiversity and preserving natural environments such as the rain forest, as well as such issues as sewage treatment and water quality – despite the existence of legal regulations in these areas.
Air and water pollution from factories and vehicle emissions is an issue mainly in the cities and industrial centers. There are various ways in which companies can become involved in this area. The Ministry of the Environment is also active in promoting alternative and renewable sources of energy. Particularly for German companies, this not only offers opportunities for charitable work, but it also represents an attractive market for the sale of energy technology.
Ministry of Natural Resources and Environment / Department of Environment
The Department of Environment is part of the Ministry of Natural Resources and Environment and responsible for issues of environmental protection. In addition to setting environmental policy, it promotes public awareness in this area.
Green Tech Malaysia
An NGO that promotes renewable sources of energy and clean technology. http://www.ptm.org.my/index.php
The Malaysian section of the international environmental organization WWF, which works for the protection of species and the environment.
Environmental Protection Society of Malaysia (EPSM)
EPSM was founded in 1997 and organizes seminars and training sessions to promote sustainable development.
ENSEARCH is a network of private individuals and institutions that supports research and environmental management.
Malaysian Nature Society
The Malaysian Nature Society was founded in 1940, making it Malaysia’s oldest environmental organization. It focuses on preserving Malaysia’s natural heritage, maintaining biodiversity and promoting sustainable development.
Malaysia has a high level of biodiversity. It is one of 12 nations in the world classified as “mega-diversity countries” because of its unusually high density of many different species. This diversity is declining, however. Fourteen percent of all mammals in Malaysia, including the tiger and the orangutan, are threatened with extinction, owing to the fact that their habitats are steadily disappearing as well as to the problem of poaching.
The Bayer chemical company launched the Bayer Young Environmental Envoy project to give students the opportunity for advanced training in the fields of environmental research and sustainability.
Approximately 60 percent of Malaysia’s territory is still covered with rain forest, but an area of 4.9 million hectares was cleared between 1983 and 2003 as Malaysia became increasingly industrialized. Illegal deforestation is a problem even in protected areas. Initiatives like the Roundtable on Sustainable Palmoil protect the rainforest by taking action against the large-scale clearing of rainforest areas and advocating sustainable cultivation methods.
Allianz Malaysia held a Road Safety Video Contest in 2008 to highlight the dangers posed by traffic.
German companies are also active in the spheres of art and culture. In cooperation with the Goethe-Institut Kuala Lumpur, Schenker Logistics organized an art competition entitled “My Wildest Dreams of Future Global Logistics” in 2007. Submissions were received from 76 art students. Approximately EUR 3,000 (MYR 15,000) in prizes was awarded to the top 30 artists.
Together with the NGO Malaysian Anti-Corruption Commission (MACC), Siemens established the Integrity Certification Award to fight corruption and help build political will.
Data & facts
- ACCA (2010) The Rise of the Reporting and the Regulator, PDF 178 KB
- ASRI Report (2003) SRI in Asian Emerging Markets: Malaysia, PDF 2 MB
- Bursa Malaysia, Corporate Social Responsibility Framework for Malaysian Public Listed Companies, PDF 32 KB
- Chamhuri Siwar & Siti Haslina Md Harizan (2008) A Study on Corporate Social Responsibility Practices amongst Business Organisations in Malaysia, PDF 115 KB
- Md. Tareq Bin Hossain & Chamhuri Siwar (2009) A Comparative Analysis Between Islamic Concept On Corporate Social Responsibility And Malaysia Managers Opinion, PDF 43 KB
- Peter Wad & Sabrina Chong (2008) State-driven Coroprate Social Responsibility? Mediating Offshore Outsourcing and CSR in Malaysia, PDF 411 KB
- Putrajaya Committee on GLC High Performance (2007) Silver Book - Achieving Value Through Social Responsibility, PDF 451 KB
- Lloyd's Register Quality Assurance (2010) CSR in Asia - The real picture, PDF 791 KB