Socialist Republic of Vietnam

Cooperative economy is getting increasingly asserted with its indispensable role in Vietnam's socialist-oriented multi-sectoral economy. The 5th Party CC Plenum has set the goal to bring the collective economy, cooperative Economy included, out of its present feeble position within 10 coming years so as to conform to the process of national industrialization and modernization.
Linkage : Engine of Revival
Recently, the issue of cooperatives has become a salient economic event. The reputation deriving from operational efficiency of the cooperatives which belong to the Song Hau Agricultural Farm (Can Tho), the Lam Son Sugar Plant (Thanh Hoa), Vinamilk Milk Company, Cotton Corporation... in the renovation period has enlivened the "cooperative spirit" in numerous provinces and localities of Vietnam. However, differing from the former cooperatives, the present ones have a new tincture, a new character, with the willing participation of their members, and a distinct division of responsibilities for each participant. Along with the increase of export turnover of agricultural commodity items, the volatility of export prices and the unstable cultivation of food and industrial crops for export in many provinces due to a lack of stable outlets have become a "thrust" to enhance the requirement for cooperation among households in order to improve efficiency and competitiveness. Hence, economic cooperative teams and cooperatives in diverse forms and operational modes have come into being and exerted positive effects. Moreover, in the long run, household economy will not be able to exist and develop independently without the cooperation and linkage with one another and other economic sectors, particularly in face of the world competition in the integration process.
In recent years, while the number of cooperatives with the old model and mechanism has declined fast, the need for cooperation has become prevalent, with the nature of a collective economic organization at differing levels. Since the Cooperative Law took effect, there have founded 2001 non-agricultural cooperatives out of the total 3766 cooperatives. The growth rate of some non-agricultural cooperative forms was fairly high; for the past 5 years, the output value of industrial, small-industry and handicraft cooperatives grew by 20% per year on average, and the turnover of trade cooperatives rose from 8% to 10% per year on average.
The above-mentioned results were made possible due to the emergence of a model of joint venture and linkage between cooperatives in a market economy. Although the linkage in recent times has not yet developed strongly, it has taken distinct forms. Some good models have been seen initially, such as the Binh Minh, Tan Tien, and Binh Tay cooperatives (Tien Giang) with the Luong Phu cooperative (Long An)... which maintain a regular exchange of information on market, prices of materials and commodities, and sub-contracting prices in consumption contracts. This has helped enhance their competitiveness. Linkage has also been seen among cooperatives in the same locality.

Some good examples have been known in the country, such as the model adopted by the Lam Son Sugar Plant (Thanh Hoa) in association with the peasant households' material-supply area in the form of cooperatives; the Song Hau Agricultural Farm (Can Tho) in buying and processing the products of household members of cooperatives, the Cotton Corporation, the Milk Corporation, the Cigarette Corporation of Vietnam, and the Long An Food Company. The Tuyen Quang province has also organized a linkage between the materials company, the bank and the cooperatives so as to make an advance of materials to be sold to the cooperatives. By the form of linkage with the peasants, State-owned enterprises have contributed to building some new cooperatives whose members may buy shares and become shareholders when the enterprises are equitized. This is a new direction for developing cooperatives (22 sugarcane cooperatives have been set up with the help of the Lam Son Sugar Stock Company in replacement of sugarcane contractors, and these cooperatives have become the company's shareholders).

In Vietnam, this form of linkage and joint venture has so far not developed widely. For the large areas of commodity production, such as food production in the Mekong river delta, industrial crops in eastern NamBo and the Central Highlands, paper-material crops in Northern mountainous regions, aquatic-product cultivation in coastal regions..., there remain much difficulty in finding outlets for the products of peasant households and cooperatives. In the meantime, State-owned enterprises have better conditions as regards capital and market, but they have not established a linkage with cooperatives.

The number of cooperatives has declined considerably. There were in the whole country 73,490 cooperatives in 1987, and only 18,607 in 1996. At present, over 7,000 cooperatives are on the road to dissolution. In fact, only 11,791 cooperatives are operating by the newly promulgated cooperative law. Following is a classification of cooperatives in 2000:
Agricultural cooperatives: 28.2% were good, 46.9% medium, and 25% defective.

Non-agricultural cooperatives: 39.5% were good, 43.5% medium, and 17% defective.
(Source: Central Economic Board, Vietnam Cooperative Alliance, Ministry of Agriculture and Rural Development).

The production-business situation of 3,628 cooperatives in 2000 in various domains is as follows: 34.3% were profitable, 13.8% incurring losses, and 31.9% in a draw.
Their average turnover was 990 million VND each, and the ratio of profits to turnover was 3.9%.

The highest turnover was seen in trade cooperatives (5-6 billion VND each), and the lowest turnover was seen in salt-making and agricultural cooperatives.

The biggest contribution in 2000 was made by transportation cooperatives (97.5 million VND each), and the smallest contribution by agricultural, aquatic, and salt-making cooperatives (1-5 million VND each).
(Source: Reports from 4,718 cooperatives in 7 regions - May 2001).
Social Cognition

One of the reasons impeding the transformation and development of cooperatives in rural area is the peasants' frustration with the old-type cooperatives, which do not conform to market mechanism. Cooperatives have experienced a "golden times" to be followed by an ignominious failure. So far, many peasants have not applied for membership, making no contribution. Cooperatives' assets remain part of the former asset value, and no efficient production-business scheme has been worked out. Many offshore fishing cooperatives were founded just to fulfill the formalities for taking preferential capital loans within the relevant Program, hence they operated inefficiently and incurred losses. The coop members failed to realize their responsibility for the cooperatives' debts to the State; the risk of insolvency and the difficulty in recovering the loans have become clear. Some coop members have even left the cooperatives at their own free will, depriving the cooperatives of an adequate number of members in accordance with the regulations. Many cooperatives are unable to settle their debt and asset problems, although they have registered for operation; and in some places, old cooperatives are not dissolved just to retain the persons who are to pay debts.

In addition to the objective factors bearing on the survival of cooperatives, mention should be made of the capacity of coop members and their leaders. According to a preliminary survey of relevant organs, at present only about 20% of coop managerial personnel have medium-level qualification and 8% college-level qualification; and over 50% of coop heads have had no professional training. Therefore, economists say that to remove the prejudice against the defects of cooperatives in the old time, the relevant authoritative organs should, first of all, adopt a policy to train and develop young human resources so that coop members can enhance their self confidence.

Following are the facts about cooperative management by lines and occupations:
+ Agro-forest-fishery cooperatives: 51.2% of coop heads, 45.63% of coop chief accountants, and 72,66% of coop chief supervisors have had no training.
+ Non-agricultural cooperatives: 22.78% of coop heads, 15.61% of coop chief accountants, and 37.64% of coop chief supervisors have had no training.

(Source: Reports of 4,718 cooperatives in 7 regions - May 2001).
New Measures In A New Period

The search for ways to develop cooperative economy is one of the main measures aimed at attaining the goal set by our country in the 10 coming years, that is to reduce the ratio of agricultural labour to 50%, and to induce an important segment of rural households and a segment of urban population to engage in various forms of collective economy.
The Ministry of Finance may continue to implement the policy of reduction and exemption of agricultural tax to the tune of some 300 billion VND (estimated). The land policy in the coming time may unfold in the direction of encouraging and enabling peasants to pool their fields and plots accumulating land for agricultural production households to turn out commodity products and to expand lines and occupations in accordance with the State policies.

Together with the above-mentioned measures, the ministries and lines concerned are also ready to put forth a host of measures with respect to capital mechanism, capacity building, investment assistance for industry... in a hope to change the rural physiognomy with an ebullient development of cooperatives which will show new features in conformity with market mechanism oriented towards socialism.