Social impact businesses need favourable policies to hold ground

March 11, 2023 - 08:36
Việt Nam had around 22,000 SIBs in 2018, accounting for 4 per cent of the total number of companies in the country.


Vụn Art's bags are made by disabled craft-makers. Vụn Art is a six-year-old SIB specialising in fabric products.  Photo

HÀ NỘI — Social impact businesses (SIBs) are not new in Việt Nam, but unfavourable factors are harming their viability, exposing the need for more favourable policies.

By definition, SIBs are companies that bring about positive changes that address social injustice and challenges. Việt Nam had around 22,000 SIBs in 2018, accounting for 4 per cent of the total number of companies in the country.

Despite their large number, SIBs, especially those owned by disadvantaged groups, find it difficult to pursue their dual objective of making profits and creating public value. Their obstacles include capital shortages, market barriers, and the absence of favourable policies.

Phạm Đức Trung, deputy director of the Enterprise Development Agency, Ministry of Planning and Investment, underlined the role of SIBs in the country's transition to sustainable development.

He said SIBs economically and socially contributed to the communities by creating jobs for disadvantaged groups and bringing environmentally-friendly products to the market.

However, SIBs in Việt Nam were stymied by various internal and external issues. Internally, they normally did not have a good management structure and a strong financial position, resulting in difficulties attracting talent.

Externally, they had been hard-hit by the pandemic and were exposed to the global Fourth Industrial Revolution risks. Against such a gloomy backdrop, SIBs needed favourable policies to overcome tough times.

Trung said his department had assessed the situation and proposed several favourable policies to nurture small- and medium-sized enterprises (SMEs), of which SIBs form a part.

Nguyễn Tùng Anh, deputy head of the Department of SME Support Activities Arrangement, Enterprise Development Agency, held that it was not true to say that no favourable policies had been put in place to support SIBs.

Such policies had been around for quite a while, but they were aimed at a broader scope of enterprise - the SMEs, which comprise SIBs. In other words, the policies were not specifically targeted at SIBs, but they did have some impact on them.

She took the Law on Bidding as an example. Under the law, SMEs with over 25 per cent of their employees being female or disabled would be eligible for preferential bidding terms.

She also asserted that her department would develop some SIB-targeted policies in 2023 to push them into top gear. Specifically, the department would take measures to help SIBs move forward in digital transition, corporate governance, education and training, trade promotion, and business matching.

Some experts called for a regulatory sandbox to foster SIBs in a controlled environment. Different preferential policies could be tested in the sandbox to gauge their impact on SIBs. — VNS