Law on Cooperatives Subject to Be Amended under New Trend

With responsibility delegated by the State to draft and finalize the Law on Cooperatives, the Cooperative Department under the Ministry of Planning and Investment has conducted a review on the process of implementing the Partnership Law issued in 2003 and 2009 with positive results achieved in 2010. Simultaneously, the Ministry has also directed responsible agencies and units to conduct surveys in 63 provinces and cities on the implementation of the Law on Cooperatives. In addition, these agencies have researched cooperative models around the world, accessed the seven principles of the international Cooperative Alliance and studied the Resolution of the Government and the National Assembly on the cooperative. During this process, the Ministry also held several workshops with the participation of relevant agencies such as the Vietnam Cooperative Alliance, Farmers Union, Vietnam Fatherland Front and in particular from the consultation and ideas contributed by foreign experts, including those from Germany which is considered the birthplace of the most popular cooperative model in the world.

 

It is true that the draft of amended Cooperative Law was put into discussion by the 7^th National Assembly at its 8^th session and the 3^rd session of the 8^th National Assembly. On October 25, 2012, NA deputies continued to input ideas and will vote on November 22, 2012. Specifically, quite a few deputies have not expressed agreement on the definition of co-operatives in the draft. They stated that if cooperatives are not considered a type of special or collective enterprise, it will not be consistent with the policy of the 5^th Conference of 4^th Party Central Committee and therefore the cooperatives’ activities will not be effective. However, in the process of law preparation, we have found out the similarity between the cooperative and businesses. These two are economic organizations having legal entity (excluding private enterprises). They are established legally, have organizational structure, assets and assume civil responsibility via their assets. Therefore, cooperatives are to have governance as businesses’ so as to conduct business effectively.

 

Besides, between cooperatives and enterprises, there are differences in their nature. The purpose of cooperative is to maximize benefits for its members by meeting their common needs in regard to products, service or job generation and income improvement. The effectiveness made by cooperatives would be higher than that made by each separate member. Obviously, cooperatives’ activities exert direct impact on the economic activity of each member. Meanwhile, the purpose of enterprise and shareholder is making profit. Normally, enterprises’ activities do not have impact on economic activities of the shareholders. Instead, they affect the capital contributed by shareholders with a view to getting profit.

 

On the other hand, under the Enterprise Law, the concept of special or collective types of enterprise does not exist.

 

Therefore, it would not reflect the nature of cooperatives, if we considered them enterprises.

 

This works quite well in the Cooperative Law amended this time. To meet the common needs of input supply, output consumption or job creation for members, cooperatives can take the initiative to conduct business transactions in the market. Therefore, a new cooperative model is certain to bear difference to the former. Specifically, focus is first laid to service supply to create jobs for cooperatives’ members. Only after this step is properly taken, can cooperatives have the right to provide services and create jobs in the outside market.

 

From the definition of the cooperatives’ nature, we can see that cooperative participants are mostly disadvantaged people; especially farmers who need to cooperate with each other to compete in the market. Therefore, in addition to enjoying common policies applied to all the economic sectors, the draft law provides preferential policies which provide greater support to cooperatives compared to enterprises and Law on Cooperative in 2003.

 

The Draft Law on Cooperatives this time will usher in new premises including lower costs, high operational efficiency of the cooperative members. Instead of working separately, cooperatives’ members can now bargain with traders in the market. The notable illustration is the case of Saigon Co.op Mart’s procurement of fruits and vegetables. It is obvious that the support policy will help underpin economic development, exert political impact on all the economic sectors and constitute a high degree of democracy, raising the status of poor laborers. The gap between employers and employees is shrinking. The policy will help create harmony among three economic pillars including public sector, private sector and non-profit organizations.

 

According to research done by several developed countries, the cooperative model still exists and thrives. Specifically, in Canada, one out of three people is a cooperative member. In the US, one out of four people are a cooperative member. In China, 180 million people out of the total population get involved in cooperative activities. However, in Vietnam, this ratio is much lower. Taking advantage of preferential policies and government support, many disguised cooperative models have sprung up. According to unofficial statistics, as many as 3,000 enterprises in the form of cooperatives have been established. Thanks to preferential land policy, cooperatives can benefit as much as VND180 billion. As per the regulation, cooperatives are exempt from 50 percent of land rental. In addition, we have not had a cooperative management system from central to local levels.