Social enterprises need legal status to succeed

Thursday, Nov 14, 2013 10:34

Participants discuss about the British Council's research in HCM City. — Photo British Council
HCM CITY (BizHub)— The Government should provide incentives and a legal framework for social enterprises, said speakers at a forum held on Tuesday in HCM City.

Luu Minh Duc of the Central Institute for Economic Management said the country had yet to form a legal framework for social enterprises.

Many social enterprises have not been recognised officially and established or restructured from old non-governmental organisations.

Viet Nam has 300 social enterprises, many of which operate in difficulties. About 50 social enterprises are established every year, Duc said.

Without sufficient State support, most of them cannot exist on their own profits, he added.

There is no overarching definition of social enterprises, and many of them vary from one locality to another, with different perspectives.

They are generally defined as enterprises that pursue the objectives of social development and environmental protection, according to Duc.

They have different legal forms, depending on countries, such as NGOs, charity organisations, co-operatives and private firms.

Many social enterprises lack specific business strategies and plans, according to research conducted by the British Council.

The Enterprise Law in 2005 did not clearly define establishment, operational methods, rights and obligations of social enterprises.

The enterprises should make clear why they are established and to whom they serve. They also need to define the purpose of their products and services and how they affect society.

Pham Kieu Oanh, director of the Centre for Social Initiatives Promotion, said many of these enterprises do not have preferential incentives like corporate income taxes, export duties, credit support and infrastructure support.

Speaking at the forum, Nguyen Dinh Cung, also of the Central Institute for Economic Management, said the Law on Enterprises should include a provision on the recognition of the legal status of social enterprises.

Social enterprises should be allowed to receive funds from stakeholders for social purposes and have tax incentives regarding tax and land, Cung said.

The law should also stipulate their obligations such maintaining their principles and goals during operation.

In addition, they must not use funds from others for other purposes, except for cost for community service activities.

Other speakers at the event said that there should be a clear distinction between charitable organisations and social enterprises to prevent abuse of charitable activities for illegal benefits.

The forum, co-organised by the Central Institute for Economic Management, the British Council and Southern Social Enterprise Club, focused on the creation of a sustainable environment for social enterprises, including a closer relationship between social enterprise and other businesses. — VNS

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