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Law regulates social enterprises

Update: March, 29/2014 - 09:00

Community Support Initiative Enterprise Centre director Pham Kieu Oanh discussed the draft revised enterprise law and articles relating to social enterprises with the Government's online newspaper.

Why are social enterprises equipped to handle social and environmental issues compared with social organisations?

Researching social enterprises around the world and following social enterprise development in Viet Nam, we have seen it as an effective model to handle social issues through the provision of public services.

Social enterprise involves using private mechanisms to solve social problems. This would be an effective way to provide public services. The socialisation of providing public services to reduce poverty and alleviate hunger and other issues would encourage social enterprise's development.

We currently use the Government's administrative mechanism to handle social issues. However, the State machine would be very cumbersome if it had to cover all.

Another way would be to encourage social organisations to be involved in the relevant areas where support is needed.

However, the weakness is unsustainability. This is from a financial point of view and the point of view of creating value added operations.

The third way would be to encourage the establishment of enterprises using capital mobilised from private sources to solve social and environmental issues. However, this affects profit which is an important concern to them.

Social enterprises aim to serve people who are trying to overcome difficulties. Providing that support is their mission and they could not sacrifice their mission for profits.

I think that drafters have seen the potential of social enterprises when compiling the draft of revised enterprise law. Potential is still modest at the moment but experience learnt by England and France showed that it could develop well.

What are the difficulties faced by enterprises working as social enterprises in Viet Nam?

The draft revised enterprise law has listed some priorities for social enterprises but at the moment none have been given to them and few people know what a social enterprise is.

The problem is that local authorities, clients or even State management units usually see a social enterprise as a profitable enterprise, so they treat them as a normal enterprise. This is despite the fact they face difficulties mobilising support from society in a sustainable way.

Some social enterprises are even registered and function as co-operatives.

How do you define a social enterprise?

Experience from other countries shows that enterprises must prove that they are social enterprise. It means they have to show how they benefit society. The Government should regulate mechanisms and a criteria to differentiate social enterprises from regular enterprises and to measure the social benefits of their activities.

Without a mechanism for measuring the impact of social enterprises, it would be very difficult to convince people to support social enterprises. The social enterprise sector would be very small without the acceptance and support of the community.

I think that it will be very difficult to perfectly define a legal framework for such a new field in Viet Nam. The foundation for defining a social enterprise is different in certain countries. In Thailand, they define social enterprises by measuring the level of community support. They also have a social enterprise body and public list of social enterprises. Local authorities also take responsibilities to oversee and withdraw the licences of unqualified or fraudulent enterprises. — VNS


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