Cooperative development falls short of expectations

Many cooperatives have overcome difficulties and achieved effective operation thanks to transformation of their operational model

The 2012 Cooperative Law, based on foreign experience and the new cooperative development trend in Vietnam, was passed by the National Assembly on November 20, 2012 and went into effect on July 1, 2013.

Mai Thi Thu Huong from the Ministry of Planning and Investment’s Co-operative Department said the government has so far issued eight decrees guiding the Cooperative Law implementation, while provincial and city people’s committees have issued many documents guiding implementation in their localities.

The number of newly established cooperatives increased by 3.07 percent from 18,986 units in 2013 to 19,569 in 2016. Huong assessed that although the increase in numbers was modest, cooperatives improved in terms of operational stability and practicality. The average revenue and profit of a cooperative reached almost VND3.02 billion and VND196.8 million in 2016, up 19.8 and 26.9 percent from 2013, respectively. The average annual income of a regular employee in a cooperative increased from VND22.8 million in 2013 to VND31.3 million in 2016, while the number of cooperative employees increased from 71,595 in 2013 to 76,154 in 2016.

However, according to the Ministry of Planning and Investment’s report, cooperatives are still encountering difficulties in land and capital access. This explains why the vast majority of cooperatives in Vietnam remain small in scale, with limited financial capacity, accounting, and production equipment.

Huong cites various causes for the shortcomings in implementation of the law, a major one being lack of investment stemming from poor awareness of cooperatives’ role in the country’s socioeconomic development and new rural area development.