The statistical figure shows that the cooperative economy has seen an annual growth of 6.5 per cent in recent years. Although the Government provides incentive policies, cooperatives still face difficulty in accessing capital, land, training and other resources for development.
At present, Vietnam has more than 15,850 cooperatives; including 9,303 in farming service, 509 in trade and service, 1,075 in fisheries, 941 in people credit funds and 594 cooperatives of various other fields. The cooperative economy employs more than 10.5 million people. Each person has a monthly salary of VND350,000-400,000.
Unclear incentive policies
In February 1997 the Government issued the Decree 15/CP and several supporting and encouraging policies for this sector. However, according to expertise assessments, the movement and development of this economic form have exposed a lot of weaknesses.
According to a governmental regulation, licensed cooperatives have land rental discount of 50 per cent in the first two years. However, this regulation only provides land rental exemption and reduction, not approaches to land. Hence, the beneficiaries are only the cooperatives which are transferred leased land from the State.
Tax incentive policies also revealed a lot of shortcomings. In preferential localities like remote areas, islands and areas of ethnic minorities, many cooperatives have dissolved due to poor performance. Local taxation authorities and even cooperatives cannot specify which business activities are defined tax-free or for reduction and which ones are not.
Hard capital contact
In reality, Vietnamese cooperatives have small operational sizes and their infrastructure and technology are outdated. Therefore, a very few cooperatives are eligible for bank loans. Agricultural cooperatives encounter even narrower accesses. At present, the fixed capital of this economic form is too small for business expansion. According to the statistics, the fixed capital of a cooperative is hovering at VND300 million (US$18,750). Nowadays, only 11 per cent of cooperatives have contacts with banks and other credit funds. In addition, banks and credit funds are not fully willing to lend cooperatives due to various reasons, such as small sum of loans, low lending efficiency and long capital recovery.
In additional, State supporting programmes mainly focus on farm households, not cooperatives. However, the hard approach to bank loans is resulted from the infeasibility and convincingness of projects of cooperatives. As a result, cooperatives cannot invest in technological renewal and production and business expansion.
To resolve this problem, according to Mr. Chu Tien Quang of the Central Institute of Economic Management (CIEM), it is necessary to study specific conditions of each locality to guide cooperatives to approach governmental policies. The most important point is that cooperatives themselves must be more dynamic and more flexible in the market-oriented economy to sharpen their competitiveness.
P.V
Vietnamese
