Article by H.E. Mr. Nguyễn Xuân Phúc, Politburo Member, President, State of the Socialist Republic of Vietnam on the 76th anniversary of the cooperative day of Vietnam (11/4/1946-11/4/2022)
Originally published by The People’s Newspaper on April 11, 2022
The development of collective economy and cooperatives is an indispensable, long-term and strategic objective for the socialist-oriented market economy of Vietnam.
The process of formation and development of cooperatives in the world started more than 200 years ago. According to the 2021 report of the International Federation of Cooperatives (ICA), cooperatives are continuously thriving in both developed and developing countries. There are presently more than 3 million cooperatives, accounting for more than 10% of GDP and ensuring the living standards for more than half of the world's population. For example, most farmers in Germany are cooperative members, producing from 30% to 90% of food production, accounting for 35% of the rural credit market share; the Netherland has 25.5 million cooperative members, contributing 18% of GDP; Japan has 65 million cooperative members and nearly 50% of households there use the services provided by cooperatives; China has 30,287 cooperatives, involving more than 80% of farmer households; Thailand has 6,626 agricultural and non-agricultural cooperatives, contributing 13% of GDP; the United States of America has 50,000 cooperatives, which account for 25% of the agricultural food production and consumption market share.
At the United Nations General Assembly in 2003 and the Message to the International Cooperative Movement, the Secretary-General of the United Nations said: "Cooperative movement is the largest organized one of a civilized society, contributing significantly to meeting people's aspirations and needs in the efforts of extensive and balanced economic development in countries in particular and the world in general… As key partners of the United Nations’ system, cooperatives provide a model of self-help and solidarity with special and invaluable contributions.”
The reality of cooperative development in the world over the years, including more than two years of the Covid-19 pandemic, shows a number of problems that apply to Vietnam's practice: Most of the farming households are members of cooperatives. All cooperatives strictly adhere to values and principles that are common in operation and management, namely, voluntariness, self-reliance, self-responsibility, democracy, equality and solidarity, equal suffrage and community care. The role of cooperatives is an important contributor to the goals of sustainable development, hunger eradication, poverty reduction, gender equality, job creation, inclusive economic development, informal-to-formal economic and labor transition, climate change adaptation, digital transformation and building a learning society. Governments regularly improve the legal framework, implement policies to support cooperative development, and develop the national cooperative alliance to perform the functions of representing, protecting and taking care of cooperative members.
In Vietnam, the collective economy, which is the core of cooperatives, has various forms of cooperation (such as cooperatives, pre-cooperatives and unions of cooperatives) based on individual and collective ownership, extensive connection and cooperation with workers, production and business households and enterprises of all economic sectors. President Hồ Chí Minh was the first person to introduce the theory of cooperative development into our country and has an interest in directing the development of the collective economy and cooperatives. In a Letter to Vietnamese Landowners and Farmers dated April 11, 1946, he wrote: "Our farmers are rich and our country is rich. If our agriculture is prosperous, our country will be prosperous. If farmers want to be rich, they need a cooperative… In short, cooperatives are syndicated in capital and work together. With a lot of capital and strength, there is little hardship but great benefit." On April 11, 1964, in a letter to the Congress of Cooperatives and the Advanced Agricultural Production Team in the mountainous and midland areas, he wrote: "It is necessary to strenthen cooperatives by heightening the members’ sense of ownership, improving the management board’s firmness and capability, practising democracy, fighting corruption and waste and bureaucracy, consolidating unity in cooperatives, improving management skills, promoting technical advances and constantly raising cadres and cooperative members’ awareness of political and cultural aspects.”
Collective economy and cooperatives have undergone 76 years of formation and development, making important contributions to the cause of national liberation, construction and defense. In the 1955-1986 period, cooperatives grew rapidly in number in both rural and urban areas. In the 1986-2002 period, the agricultural and rural areas contracted products to groups and workers, the cooperative management mechanism was not renewed, and the number and economic efficiency of cooperatives decreased due to consolidation and appropriate reorganization. In the period 2002-2021, the collective economy and cooperatives developed in terms of quantity, quality and operational efficiency. Through the development periods, the nature, values, principles as well as role of the collective economy and cooperatives in Vietnam are in line with the Party's policy on developing a socialist-oriented market economy and the provisions of the Constitution. "Vietnam's economy is a socialist-oriented market economy with many forms of ownership and economic sectors. The state economy plays a leading role... Economic sectors are all important components of the national economy. Entities belonging to all economic sectors are equal, cooperating and competing with each other according to the law.” According to statistics, Vietnam currently has 17.3 million households in rural areas, 9 million households of which have low average farming area. Capital and assets are still limited, so farmers need to cooperate in groups to organize production and business according to the collective economic model. Millions of other individual households in rural and urban areas also need to cooperate for production and business to maintain efficiency. Based on the guidelines of the Party, the Constitution and laws of the State, the practice of developing the collective economy and cooperatives in Vietnam and other countries, it can be affirmed that developing collective economy and cooperatives is an indispensable, strategic and long-term objective for the socialist-oriented market economy of Vietnam.
After 20 years of implementing the Resolution of the 5th Plenary Session of the 9th Central Party Committee (2002-2021) on continuing to innovate, develop and improve the efficiency of the collective economy, Vietnam has gained the following achievements: Collective economy and cooperatives have gradually developed in both quantity and quality (by the end of 2021, Vietnam has 26,823 cooperatives, 120,319 cooperative groups and 106 cooperative unions nationwide, attracting 33% of households in the rural areas, and nearly 60% of cooperatives operate effectively). A large part of cooperatives provides input and output services for members, reduces production costs and stabilizes product consumption contracts. In the collective economy, cooperatives have contributed to sustainable economic growth, curbed inflation, increased export turnover, renewed the growth model associated with economic restructuring, especially the agricultural economy, and ensured food security and climate change adaptation towards green development,
Lessons have been drawn and improvements have been made. Among them, the people’s awareness of the nature, mechanism and benefits that cooperatives have brought to the people and the economy has been raised. The Party committees and local authorities have shown their initiative and activeness in implementing the Resolution in line with reality, such as in Tiền Giang, Đồng Tháp, An Giang, Đồng Nai, Hà Nội, Hồ Chí Minh City, Thừa Thiên Huế, Quảng Nam, Ninh Bình and Sơn La. Many models of cooperatives have proved effective in consulting and supporting the core of the Vietnam Cooperative Alliance system, such as Sinh Dược Cooperative (Ninh Bình), Mỹ Đông Cooperative (Đồng Tháp), Mỹ Tịnh An Cooperative (Tiền Giang), Xuyên Việt Cooperative (Hải Dương) and Ái Nghĩa Cooperative (Quảng Nam).
However, the development of the collective economy and cooperatives in Vietnam has not met the requirements set forth. Shortcomings and limitations should be taken into consideration: A large percentage of individual households in the area rural areas have not joined cooperatives and cooperative alliance; a large part of cooperatives has small scale, little capital, limited management capacity, low membership association, no reputation and brand name in the market; contribution to socio-economic development is still limited. There are some "bottlenecks" in awareness and incorrect understanding of the operating mechanism and role of cooperatives, laws and policies to support the collective economy, and weak management capacity of cooperatives. Some Party committees, local authorities, ministries and branches have not really paid attention to the collective economy and cooperatives.
The development of collective economy and cooperatives in the 2021-2030 period and the vision to 2045 must be consistent with the main lines, guidelines, goals, tasks and solutions of the Resolution of the 13th Party Congress, and aimed at overcoming the “bottlenecks” that hinder development in the new context and conditions.
Regarding the viewpoint, the development of collective economy and cooperatives is an indispensable, long-term and strategic objective; a consistent policy of the Party and State; and an important component of the national economy, which is suitable for the socialist-oriented market mechanism. Together with the state economy, it plays a fundamental role in the socio-economy of Vietnam, acting as a bridge between the Party and State and the people of all classes. In developing the collective economy and cooperatives in industries, fields, rural and urban areas, it is necessary to stay positive and firm, derive from reality, avoid acting in haste, and strengthen the leadership of the Party and management of the State. It is also necessary to improve the legal framework and policies to support the development of the collective economy and cooperatives, as well as promote the role of the Vietnam Fatherland Front and mass organizations, including the core role of the Vietnam Cooperative Alliance system.
Regarding the objective, collective economy and cooperatives, which are developing quickly and sustainably, are important modes of production and business organization that play a fundamental role in the national economy. They help to improve the operational efficiency of cooperatives, unions of cooperatives and pre-cooperatives; increase economic benefits and social welfare to members; and attract most individual households in rural areas and other economic sectors to participate in the collective economy.
Regarding the task and solution, it is necessary to perform synchronously and timely while focusing on a number of breakthrough solutions:
Firstly, it is necessary to boost propaganda in order to raise people’s awareness of the nature, operational mechanism and role of the collective economy and cooperatives in the socialist-oriented market economy. Meanwhile, educational institutions, especially those in national economics, should be required to provide knowledge on collective economy and cooperatives.
Secondly, it is essential to improve the institutional framework, focusing on amending the inadequate provisions of the Law on Cooperatives, stipulating that the operating mechanism of cooperatives is an economic legal entity similar to an enterprise, and ensuring that the law is easy to understand and apply. It is also crucial to simplify the procedures for establishment and operation, reduce the administrative apparatus, regulate reasonably the proportion of contributed capital and use appropriate internal services for each type of agricultural and non-agricultural cooperatives to increase autonomy in resource mobilization, stipulate the appropriate governance mechanism for each type of agricultural and non-agricultural cooperatives, as well as distributed or concentrated production and business cooperatives, specify support policies along with principles of resource allocation from the state budget, renovate state management of the collective economy and cooperative in the direction of ministries and branches focusing on promulgating mechanisms and policies, and create a developing environment for the collective economy and cooperatives.
Thirdly, the State should promulgate a program to promote the development of the collective and cooperative economy with specific policies and allocate resources for implementation to lead and mobilize other resources; focus on training and mobilizing high-quality human resources for the cooperatives (training in cooperative management and production and business skills for members and employees associated with the cooperative's products, attracting young workers with specialized training, starting a business according to cooperative model); apply high technology and implement digital transformation; facilitate access to credit capital, branding, tax policy (such as corporate income tax exemption for cooperatives for 3-5 years, suitable application to each type of cooperative, and omitted regulations on the collection of personal income tax on profits distributed from capital contributions of cooperative members to encourage individual households to join cooperatives), credit policy (such as issuing regulations on credit within cooperatives, allowing the People's Credit Fund to expand lending outside its members, especially in rural areas, arranging credit packages for cooperatives to invest in infrastructure, stipulating the level of unsecured loans for cooperatives and cooperative members in line with current production costs, and providing additional capital to the central and local Cooperative Development Support Funds).
Fourthly, it is important to carry out renovation, strengthen the organization, and improve the capacity and efficiency of the system of the Vietnam Cooperative Alliance to effectively promote the core role and main responsibility in building and promoting the development of collective economy and cooperatives; represent and protect the legitimate rights and interests of economic organizations in cooperation with members.
Finally, the Party committees, authorities, and the Vietnam Fatherland Front should have programs and plans to direct, lead, and create conditions for collective economy and cooperatives to develop in the right direction, effectively and sustainably.
It is strongly believed that the Politburo Resolution, this Central Resolution and the Law on Cooperatives (supplemented and amended) will provide the collective economy and cooperatives with the right and consistent views and solutions for rapid and sustainable development in the near future.
