Preferential treatment for co-operatives as stipulated under the existing Co-operative Law appears to have been incorrectly made use of by private business. About 32 per cent of co-operatives nation-wide have been found to be actually enterprises in disguise.
HA NOI —
|Members of a co-operative in Ho Thi Ky Commune in Ca Mau Province's Thoi Binh District weave rattan baskets. The Co-operative Law is being reviewed to make sure those who benefit belong to genuine co-operatives. — VNA/VNS Photo Le Huy Hai |
This is among the major shortcomings that need fixing as the Co-operative Law is being reviewed.
Ministry of Planning and Investment's Co-operative Department director Nguyen Minh Tu said that the objective of amending the law this time was to establish an institutional framework which would best serve the characteristics of co-operatives and create favourable conditions for them to run smoothly.
According to the statistics of the department, the number of operating enterprises decreased over the last few years from 14,500 enterprises in 2007 to only 12,249 in 2009.
Pham Thi Thanh Ha from the department said the current co-operative model in Viet Nam was not recognisable. In addition, the co-operative model was often equated with social-charitable organisations or enterprises.
She said there was a common misconception that a co-operative was just one form of an enterprise, and that during its development, a co-operative could eventually evolve into an enterprise.
Deputy chairman of the National Assembly's Economic Committee Mai Xuan Hung said there were some enterprises registering as co-operatives to be eligible to benefit from preferential treatment.
As of now, the law amendment draft is being built around the concept that a co-operative is a group of members that voluntarily get together to support each other and meet the common demands.
The draft makes it very clear that the ultimate goal of a co-operative is to make sure that each member will get maximum profit from their contribution.
A co-operative's member is both the owner, through contributing capital, and the user of the products and services delivered. Each member has an equal vote regardless of the contribution amount.
This draft contains the clear definition of a co-operative as an economic group with legal entity, independent of and equal to the enterprise and is voluntarily formed by members.
The draft also introduces a new provision on the conditions to become a co-operative member: prospective members must show their interest in co-operating with other members via their purchase of the goods or services provided and they are required to contribute capital to the co-operative.
In the draft, the maximum capital a member can contribute when participating in a co-operative is suggested to decrease from 30 per cent, as in the current law, to 20 per cent of its charter capital.
In addition, there is a new rule that sets the priority of borrowing from its own members before seeking assistant from credit organisations when capital is needed. — VNS