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Reform to boost not-for-profits

Update: May, 08/2014 - 09:07

Amendments to the 2005 Enterprise Law aim to enable social enterprises to operate more efficiently, Director of the Central Institute for Economic Management, Nguyen Dinh Cung, told the Viet Nam Investment Review.

One of the new points in the draft amendments to the 2005 Law on Enterprises was the introduction of the concept of "social enterprise". Can you elaborate on this new concept?

In other countries, especially in the USA and the United Kingdom, the concept "social enterprise" or non-profit organisation, is very popular among the people.

That concept has been adopted by some Asian countries as "Social Enterprise". The main difference between social enterprises and other enterprises is that their objective is not-for-profit, that is, dedicated to causes such as the eradication of hunger and poverty, environmental conservation and supporting vulnerable groups in society.

In Viet Nam, there have been more than 200 such enterprises operating in Ho Chi Minh City and Ha Noi, over the past few years. Their activities mainly focus on education, health care and environmental protection.

How do these enterprises operate?

Interviews have told us that these organisations can generate profit, but instead of those benefits being distributed among share-holders, they are re-invested back into the organisation.

So, the value of these enterprises is different from the others. Now it is time for us to recognise this difference from a legal perspective. If the State and the society can see the benefit of having social enterprises in our society, they should be given preferential policies to help them to develop further.

In other words, if the concept is included in the Enterprise Law (revision), these social enterprises will have legal standing. And of course, they will be able to expand their efforts in pursuing the social causes they have been pursuing.

In our interviews, we found that many successful enterprises have used their benefits to reinvest in enterprise development and create more jobs, particularly for poor people. A case in point is Serapon in the central province of Quang Tri.

So it is my suggestion, if it is appropriate, that we transfer State-owned units which operate with self-financial accounting and public utilities to "Social Enterprises."

Do you think social enterprises have to follow the same laws as other enterprises?

Yes. Why not. They operate under the Enterprise Law.

One of the key objectives of revising the 2005 Enterprise Law is to provide better conditions for all enterprises to do business.

During discussions on the amendments, participants raised an issue that legal officers should make some changes in order to make law enforcement more effective when the new law comes into effect. What is your position on this?

We can say the law is the ‘hard power' and law enforcement officers are the ‘soft power'. Any change will have to go through a process.

In my opinion, the change should cover the management method and the people who are directly involved in enforcing the law. In addition, we also need good supporting and monitoring systems throughout the course of implementing the law. — VNS


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