IJERD – International Journal of Environmental and Rural Development (2011) 2–1

Research article
erd

The Social Economy - Key Element of Sustainable
Environmental and Societal Development in Asia
FABIAN THIEL
University of Applied Sciences, Frankfurt/Main, Germany
Email: bodenrecht@fabian-thiel.deReceived 10 December 2010

Accepted 8 January 2011

Abstract Cooperatives, associations, partnerships, non-profit organizations (NPOs) andnon-governmental organizations (NGOs) are core elements of the Social Economy. Social
Economy as an economic and societal development approach could support thesustainable rural and environmental management in South East Asian countries. Examples
for Social Economy enterprises are microlending institutions, fishing and rice cooperatives
in Vietnam and Thailand, pepper and pottery associations in Cambodia or rural and small
scale industry commodities and service associations. The Social Economy needs just andequal distribution of property, but also innovative property tax collection models in orderto guarantee sustainable financial support by the governments. The implementation faces
several challenges. Existing private property or leasehold rights and large agriculturalinvestment funds could lead to the exclusion of small and medium landowners, familybased farmers and to a lack of institutional support from higher political levels. A system
combining different forms of public and private property and good land governance may
be the means to bridge the gap between the private right to acquire natural resources andthe needs of the Social Economy. The division of agricultural land, natural commodities
and the means of production in a comprehensive and equal way between the people is offundamental importance for the Asian states.
Keywords social economy, property policy, secure land use rights, resource distribution, Asia

INTRODUCTION
The social economy serves as property policy, underlined by an interdisciplinary approach of good
governance, law, economy, and land use planning. Asian societies should provide its citizens with
opportunities to participate in community-oriented social economies. In developing andtransformation of Asian countries, the social economy seeks to empower individuals in taking partof the general economic growth, poverty reduction, and social development particularly in the rural
areas. Poverty reduction policies oriented towards sustainability and empowerment need a bottomup approach where the people own and manage their businesses or communities and where they
use the natural resources wisely. Hence, land and other non-renewable resources are essential andindispensable pillars of the social economy. But natural resources as the basic means for production
and for any economic activities are limited and getting scarce. Many projects under the wide
umbrella of the social economy, for instance the Federal Land Development Authority (FELDA)
which initiated the pro-poor land reform, land distribution and cooperative projects in thePhilippines, will have to contend with less suitable land for its cooperatives or infrastructure
projects.
Challenges for community-based, socially well-balanced rural development andenvironmental management still remain in several Asian countries until today. The majority ofagriculture producers are small and medium enterprises (SME). Respect for the vulnerable urban
and rural poor or landless people calls for the bottom-up community organizing approach as anempowering instrument of the social economy. Experiences from the Philippines, Thailand,
Vietnam and Cambodia showed that it takes approximately 10 years to organize people until they
have built up a democratic, autonomous and self-reliant local community. In this given timeframe,© ISERD

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the social economy enables people to understand the reality of the nature as well as the createdenvironment, to take steps towards effective changes for improving their livelihoods, and thus
liberate people from dependency, especially from donor money or monopolistic market participants
like agriculture product traders.
Theoretical regulatory framework for the social economy
Cooperatives, associations and independent organizations will be discussed whether these sectors
might be used for participatory community environmental and societal development. Thus, thispaper provides theoretical discussions and selected case studies of social economy projects. The
social economy requires a firm land use planning system, socially well-balanced distribution ofproperty rights and a fair, transparent property taxation to redistribute the revenues to the
population in equal shares, particularly in rural areas. In Cambodia, tax revenue from transfer,leasing and selling of land properties rose to 19.51 million USD in 2010. This increased revenue
could be used as subsidies for social economy companies or to support social initiative financials.
As an innovative land use modality, associations and producer cooperatives for common property
resources like land, forests, water and energy are additional instruments for securing existing land
tenure of the farmers and SMEs. Land use planning, public land management and property taxation
tools may be much more efficient if they are embedded within communal land ownership, landleasehold systems and similar bottom-up approaches to allow grass-root communities to empowercollective action in their societies. Hence, the social economy strengthens local communities where
people are enabled to share their knowledge and experience, for instance in agricultural extension
and marketing. Social economy enterprises should consist of steering committees that will facilitate
the framework of  business’  concepts and their strategy. In the case of operating on the local level,
community leaders/managers should call for meetings and moderate the general assemblies. They
have the task to communicate with the political authorities and sign documents or issue certificatescontaining legal registration processes. Moreover, the advantage of co-operation must be evident
for every stakeholder in such an enterprise (Ostrom, 1990).
DISCUSSION
Collective action of vulnerable individuals has been of crucial importance for the social economy
ever since (El-Ghonemy, 2010; Elsen, 2010). For instance, in the seventies, agriculture andproducer cooperatives achieved impressive results in Asian countries like Japan, the Philippines,
Sri Lanka, and Thailand, marking more than 400,000 cooperatives totalling 75 million members.
At present, cooperatives work as a central element of the Thai and Vietnamese economies. Social
economy sub-concepts and terminologies like social enterprises or social entrepreneurship are
attracting an increasing interest in Asia, especially in South Korea, Japan, Taiwan, and recently
Cambodia. Japan successfully adopted the cooperative idea and cooperative law from Germany in
its efforts towards socially-balanced economic growth. In contrast, the historical experience ofCambodia during the Khmer Rouge period (1975-1979) makes it a special case indeed. Due to a
private property-oriented, neoliberal land titling policy since 1995, attitudes towards the social
economy are still limited. Links among NPOs, NGOs, cooperatives, associations and foundations
engaging in rural development are weak in Cambodia. A significant amount of one billion USD as
development money for Cambodia in key sectors like agriculture, trade, education, and governance
was provided in 2010 by approximately 2,000 NGOs. Based on a lack of donor harmonization,
cooperation amongst these NGOs or development aid agencies is still remarkably rare.
Future profits within the Social Economy should be made at organisational, at commune aswell as individual levels. Cooperatives must be able to compete with other private market
participants and state enterprises. Flexibility of each cooperative organization and adaptability to
the changing market conditions as well as experienced, qualified leaders and/or managers areneeded. Due to its agricultural potential, Southeast Asia (in compare with regions in southern
Africa where numerous experiences with independent organizations exist) could serve as a role
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model for the worldwide making of the social economy in order to resemble cooperatives andsocial movements (Defourny and Develtere, 2009).
Key principles of the social economy
Social and health independent organizations, producer cooperatives, associations, and collective
entrepreneurs   create   the   “homo   cooperativus”.   They   open   a   third   way   in   using   of   land,  commodities, and manpower resources beyond either private property or the planning economy. As
an innovative land use alternative, (agricultural) associations and service/producer cooperatives orgroup rights on common property resources and collective entrepreneurship are additional andimportant instruments for secure land tenure (Olson, 1965). These entrepreneurs are part of social
land policies on global scale in view of the social economy and the people-centred development
context (Münkner, 1982; Elsen, 2010). Numerous social economy approaches like économia
popular y solidaria, community economy or the économie solidaire base on similar key principles
as listed below;• Strictly voluntary membership and exit options• Autonomy and solidarity (independent organizations as elements of subsidiarity)• Democracy  amongst  the  stakeholders  (principle  of  “one  member, one  vote”)• Independence from the state• Common public property for resources and other non-renewable means of production• Equal distribution of profits and• Self-organization
Public property or public enterprises which operate on state land are typical manifestations of
the social economy since they are suitable for land, commodities, energy facilities, industries,
service sectors such as banks or insurance companies. The transformation of private land property
into public land property in favor of public enterprises and utilities is legally permitted by the
majority of constitutions in Asian countries. Compensation for the loss of private property has to beprovided to the previous owner(s) but the compensation does not necessarily have to be based onmarket value, money or on similar incentives. Public social or medical communities, trust
arrangements, public funds, commons, public-private partnerships (PPPs) or cooperatives serve associal economy enterprises (see Figure 1 below).
Redistribution of land ownership through the social economy
Within the field of social economy, various definitions coexist like solidarity-based economy,économie sociale or social enterprises. Autonomous decisions about objectives, output, strategies,
marketing, sales, and management are their common guidelines. Social economy is not equivalent
to slow economy. Économie sociale is used due to the French understanding and should not be
confused with économie solidaire which aims exclusively at small, local and regional companies
working with a social performance (Jeantet, 2010). Cooperatives are widely distributed enterprisesof the social economy and are very successful entrepreneurs. Cooperatives may be suitable forlandless and land poor households for residential, rural and agricultural community empowerment.
They encourage independent groups, house construction and business communities, income
generation and agricultural extension including processing and marketing. Cooperatives andassociations can provide access to micro-credit institutions. The Grameen Bank in Bangladesh
serves as a highly influential business model. There are numerous cases and best practices ofsmaller and less known credit cooperatives in other developing countries in Asia, e.g. in Thailand.
Cooperatives could build up mortgage communities including long-term value chain businessstrategies or micro-insurance services. In particular, independent cooperatives which are strongly
supported and advised by the Food and Agriculture Organization (FAO) and the International
Labour Organization (ILO) rely on institutional arrangements and an environment of politicalcommitment, including financial support.

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Land use models using the concept of common property resources (CPR) or community-based
natural resource management (CBNRM) with regulations, participation and decentralization
strategies for avoiding a land-free-for-all-mentality are still underdeveloped in some Southeast
Asian countries like Cambodia and Lao P.D.R. Fair and transparent land distribution and socioecological land policies also need a firm land use planning system which is incomplete in
Cambodia and other Asian countries like the Philippines (Thiel, 2010). Agricultural associations
and   service/producer   cooperatives   or   group   rights   under   control   of   women’s   groups   on   common  property resources are additional instruments for secure, gender-equal land rights. They can be
combined with value chain business approaches. Agricultural extension services are the basis forfood security and poverty reduction in many Asian countries like Cambodia, Vietnam or Thailand
since about 80% of the population in these countries live in rural remote areas. Moreover,cooperatives and associations can provide access to fair trade systems and mutual public healthinsurance as the cornerstone of a social safety net. Preconditions for cooperatives, associations, andindependent organizations in Asia are;• Constitutional laws and related sub-laws (rule of law, consisting of land laws, business andcommercial enterprise laws, competition laws, cooperative laws etc)
• The creation of property rights, consisting of land as a primary public, local commodity but notas an open resource affected by unlimited and unregulated use
Innovative constitutional and sub-constitutional regulations arrangements for the social
economy need laws by the federal government to be finally implemented. The establishment ofpublic communal and collective private property and/or public enterprises for the building industry
and real estate as well as for energy like coal, water or geothermal energy, industries and banking
or insurance companies could be appropriate social economy strategies.
Social Land Policy“Homo Cooperativus”
Property Policy
Realization

Land Use

Social Economy“Social Investment”

Public Property

Sustainability

Private Property

Organizational
Structure

Cooperatives
Foundations
TrustsFig. 1 Policy structure and the organizations of the social economy
Challenges and perspectives for the social economy in Asia: The example of Cambodia
A viable formula for a socially equal distribution of land as of paramount importance for a just andsustainable planning and property system (pro-poor property policy) – the property basis of thesocial economy – has yet to emerge in many Asian states. Property policy does not only consist of
property rights and the attempts of the legislators to balance private and public interests. A system
combining different forms of property and governance may be the means to bridge the gap between
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bear the transaction costs that legal private ownership entails. The needs and actions of real
government efficiency in order to divide land up in a comprehensive and equal way per capita is aneverlasting task for the social economy legislator (El-Ghonemy, 2010). Globalization induces
structural problems and negative effects mainly in remote rural regions in Asia as it does
worldwide. This development causes poverty in broad segments of the population and could lead tomigration into cities or urban bias, and may result in problems particularly for farmers and small
enterprises, especially due to insufficient resources and lack of access to financial services,
working equipment, sales, new technologies, and updated knowledge.
The importance of amending sub-constitutional regulations can be illustrated with the example
of Cambodia. An amendment of the existing legal framework – a Royal-Decree for agricultural
cooperatives – is currently projected towards the implementation of a modern Cooperative Law.
This law on cooperatives should form the basis to introduce successful models (e.g., purchase offarm inputs, bulk buying, marketing, credit and saving systems) to small-scale family farmers andother target groups like SME. Additionally, the law should help to increase the number of officiallyregistered agricultural cooperatives slowly and sustainably. As of July 2010, there were 175
producer cooperatives registered in Cambodia to provide strategic and technical assistance towards
the  formation  of  cooperative  federations  and  marketing  systems  like  worker’s  unions  (v.  Walther,  2010). However, the recently drafted Cambodian Law on Associations and Non-Governmental
Organizations   (“NGO-Law”)   established procedures for mandatory registration, operation andtermination of domestic associations as well as international NGOs. In particular, the law setsminimum numbers of founders or initiators (21 founders for associations and 3 initiators for NGOs).
Foreign NGOs will have to collaborate with Cambodian governmental institutions which can
examine the financial status reports and properties of associations and NGOs at any time.
Registration and reporting requirements are comprehensive and a lack of clarity on applications
and postponements or dissolution can be observed. In light of the registration procedures, theadministrative   “NGO-Law”   could   be   seen   as   a   contradiction   to   the   existing   Civil   Code   of  Cambodia which also sets rules and procedures for associations and communities.
The Kampong Cham experience of founding and running a pepper farmer cooperative also
shows that Cambodian farmers are strongly interested in organizing their own producer units. Since
November 2009, different meetings with local farmers’ groups were held to prepare the guidelinesand discuss  the   future   cooperative’s   role   and   its   function.   Pepper   fields   were   extended   from   450  hectare to around 550 hectare in 2010, equivalent to 1.1 million poles. The first assembly in March2010   established   the   “Dar-Memot   Pepper   Development   Agricultural   Cooperative”. The farmers
were trained on organic plantation; a cooperative shop supplies organic fertilizer and pesticides.
The cooperative was registered at the end of May 2010. Credits for poor pepper farmers were givenby the cooperative (Glatzel, 2010).
CONCLUSION
Land property, land use planning mechanisms, and social property policy as basic elements for thesocial economy in Asia as well as around the globe should include;• Just and equal distribution of property: different property forms and tenure securities for land
beyond the private property rights solution for the use of non-renewable natural resources andany immovable properties• Effective and efficient state land management with non-transferable public property• Leasehold tenure contracts, combined with innovative property taxation collection models(redistribution of the ground rent for the benefit of the people as an ‘add up’)
• Property steering function of the spatial/land use planning policy (property policy)• Reduced transaction costs for the access to fertile land, but avoiding the ‘tragedy of thecommons’
This review allows a number of final conclusions. How can better governance be achieved
through the social economy in view of uncontrolled land consumption, urban migration and a© ISERD

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socially still unbalanced distribution of property rights, in particular of land use rights? Neutral
land use planning – bare of private speculative interests – and property taxation can be achieved, as
mentioned above. Due to globalization, the bilateral and multilateral donor organizations involvedin the rule of law processes, those especially engaged in social economic reform activities indeveloping countries in Asia, are far more focused on the property rights reform than at any time inthe last half century.
In the year 2000, neoliberal interpretations of property models dominated and were seen as anecessary foundation for development according to the Washington Consensus. The concept of thesocial economy was hardly discussed in scientific publications. However, times and property
interpretations are changing rapidly nowadays because the private property rights orientation nolonger holds everywhere in the world (Barrera-Hernández, 2010; Riddell, 2008). There is lessagreement on how to resolve land and other natural resource allocation decisions and conflicts thanit was at the end of the previous decade when that neoliberal model of private property rights had
nearly universal acceptance (Riddell, 2008; Bromley, 2008). Today, social economy, pro-poor land
policy, public/private land property management, and land use planning policy need frameworkarrangements guaranteed by the institutions responsible for rural and urban development.
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