Lacking Social Business Development Regime

Playing an important role in addressing social issues in a positive and effective way, social enterprises are mushrooming in Vietnam. Unlike other forms of business, social enterprises desire to create social values and make what the society needs.

 

The first social business model in Vietnam is cooperative. In the past few years, social enterprises have developed with more objectives and motivations. They aim to solve one or many social issues through sustainable development business models and for the industry, rather than pursuing maximised profits for investors.

 

According to statistics from the Ministry of Planning and Investment, in 2012, social enterprises created a total income of VND255 billion in 2012, earned a net profit of VND64.5 billion, and had total working capital of VND816 billion, four times more than registered capital of VND204 billion. As regards capital structure, owner’s equity accounted for 20 percent, sponsored funds made up about 5 percent and net profit contributed nearly 45 percent. Social businesses created jobs for over 8,000 people, of whom 3,000 are people living with HIV/AIDS, the disabled and drug addicts. Nearly 300,000 people successfully escaped poverty.

 

According to estimated statistics, Vietnam has up to 25,600 institutions capable of becoming social enterprises (cooperatives, vocational training centres, feeding centres, rehabilitation centres, humanitarian centres, etc.). Vietnam has nearly 200 social and professional organisations considered eligible for becoming social enterprises and tens of thousands of organisations and businesses carrying the characteristics of social enterprises. Economically, social enterprises play an important role in socioeconomic development, and social and social justice. On average, a social enterprise has an initial registered capital of VND1.2 billion, but it employs up to 51 workers, including 18 workers having special circumstances, earns net profit of VND400 million a year, and improves livelihoods for 2,262 stakeholders. Not only that, social businesses also create other social and environmental values.

 

According a report by the World Bank (WB) in early 2013, Vietnam has made significant progress in poverty reduction. The poverty rate fell from 60 percent to 20.7 percent over the past 20 years. Such an achievement results from tremendous efforts of all economic sectors, including social enterprises. In particular, social enterprises are helping change the perception of business ethics and social responsibility in the business community. Besides, they generate many advantages like serving the community, especially vulnerable groups in the society, and create more equitable development among the three pillars: State, market and society.

 

However, social enterprises in Vietnam are meeting with difficulties. They are yet to be recognised as a kind of official business by the State, lack legal status, lack human resources and capital access, and lack authoritative guarantee for partaking in settling burning social issues. Besides, the number of social enterprises is too few in relation to social demand while the trust of community in social enterprises is not high.

 

Currently, Vietnam is facing a number of social issues such as high poverty, rampant disease, unemployment, increased crime, gender inequality, HIV/AIDS, homeless elderly, homeless children, people with disabilities, human trafficking, environmental pollution, and especially deteriorating social ethics. The poor and vulnerable groups still face difficulty in accessing socially equitable services because resources of the State and State-owned enterprises are not enough to bring benefits to all people suffering hardships and disadvantages in the society. And, many other social issues need to be addressed. In this context, social enterprises are the most appropriate answer to the above issues.