The Implications of the Global Compact Human Rights Principles for Multinational Enterprises in Malaysia

As a developing economy, Malaysia is at the crossroads between fostering its economic growth and protecting the human rights of its own citizens. Given the inadequacies in human rights regulations, the corporate-related human rights violations have become ubiquitous. Generally, the level of understanding among business entities in Malaysia of their human rights and social responsibilities and their commitment to pursue such responsibilities is still at infancy stage. There is a need to explore the use of soft laws through social non-judicial enforcement as a complementary method of remedy. The objective of this thesis is thus to present the UN Global Compact (GC) human rights principles as a valuable mechanism for enhancing the human rights compliance of multinational enterprises (MNEs) in Malaysia. The GC is a UN initiative aimed at garnering support from non-state actors, especially the MNEs, in the pursuit of good corporate citizenship. Based on the underlying factors contributing to corporate human rights violations and with the special reference to John Ruggie’s ‘Protect, Respect and Remedy’ Framework, this thesis advocates the idea of complementing the traditional judicial-based enforcement with a non-judicial social enforcement strategy. The thesis explores the extent to which the MNEs in Malaysia can benefit from the Compact’s human rights principles in enhancing their human rights compliance. It illustrates the methods of applying GC principles within the state-based institutions as well as within the MNEs business structure. The research draws upon the experience by human rights and business entities in Malaysia namely the National Human Rights Commission (SUHAKAM), Bursa Malaysia and Sime Darby Berhad, especially their efforts in putting human rights and social responsibilities within the practical aspects of their respective institutions. The GC, in relation to its human rights principles has not been explored previously in context of MNEs operation in Malaysia. Both qualitative and quantitative methods have been used for this research. The findings of the study is that the non-judicial social enforcement strategy embodied in the GC soft law principles can be used to remedy corporate human rights violations and invariably contribute to the creation of a socially-responsible and sustainable business environment in Malaysia.