Specific regulations needed to foster social firms' roles

Tuesday, Oct 15, 2013 21:42

Farmers sell milk to the Evergrowth cooperative in southern Soc Trang Province. A specific legal framework for the operation of social enterprises is needed to foster the role of this sector in national socio-economic development, researchers say. — Photo vccinews.vn

HA NOI (Biz Hub) ― Creating a specific legal framework for the operation of social enterprises was necessary to enable this sector's effective contribution to Viet Nam's socio-economic development, a seminar held at the Central Institute for Economic Management (CIEM) heard on Tuesday.

Luu Minh Duc from CIEM's Department of Business Environment and Competition Capacity said 300 social enterprises were operating in the country, and there would be 50 additional firms every year.

The companies, which work in the public interest, are currently subject to the general Enterprise and Cooperative laws.

Research of the Centre for Social Entrepreneurship Development (Spark Centre) on 11 social enterprises showed that, last year, every firm involved in agriculture had revenues ranging from VND600 million to VND319 billion (from US$28,570 to $15.19 million) and together they brought benefits to tens of thousands of people.

In health-care, firms ranged from VND300 million to VND15 billion ($14,280-714,280) in turnover and had up to 20,000 beneficiaries.

Every household in the Evergrowth milk co-operative, which had over 3,000 farmers in southern Soc Trang Province, enjoyed an average monthly income of VND3 million ($143) per dairy cow.

Tri Duc 115, which provides emergency services in northern Yen Bai, Phu Tho and Tuyen Quang provinces, last year carried 2,000 patients to hospital and generated a profit of VND200 milllion ($9,520).

"The lack of separate and clear regulations is hindering development of social firms, which are facing difficulties with small scale and insignificant profits," Duc said.

Nguyen Minh Thao from the business environment department, pointed out that inefficiency was being seen in the vocational training area, where services were mostly provided by State-run units. In 2012, these attracted 62 per cent of about 1.86 million people admitted to vocational schools nationwide.

It was stated that an unreasonable allocation of budgets for training has resulted in a waste of resources at a time when enterprises are trying to cut costs.

More efficiency could be established by encouraging private sector investment in social firms, she said.

CIEM acting president Nguyen Dinh Cung on Tuesday presented a draft law on social enterprises, which he said the institute was petitioning for relevant authorities to consider.

According to the draft, social firms were to deal with social and environmental issues and spend at least 65 per cent of annual total profits for reinvestment. They would enjoy the highest preferential levels in tax, loan access and land use incentives that the Government offered enterprises.

Asked if these could come into law when there were only 300 social enterprises in Viet Nam, Cung said "we could wait for the sector to be large enough for making policies or we could make policies now to support its growth. – We choose the second way."

"In Viet Nam, as an emerging sector, it's clear that social enterprises need to be intensively nurtured to help realise their potential to make a positive and publicly-recognisable impact on the Vietnamese economy and society," said British Council Viet Nam director Chris Brown.

According to Brown, in the UK, social enterprises have contributed $30 billion to the national economy, as well as greatly supporting social reforms. ― VNS

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