The global formation and development of cooperatives started over 200 years ago. According to the 2021 report of the International Federation of Cooperatives (ICA), cooperatives have undergone rapid development in both developed and developing countries. Currently, there are more than 3 million cooperatives, contributing more than 10% of GDP and ensuring the living standards for more than half of the world’s population. For example: in Germany, most farmers are cooperative members, representing 30% to 90% of food production, accounting for 35% of rural credit market share. In the Netherlands, there are 25.5 million cooperative members, 1.5 times the population, contributing 18% of GD. Similarly, in Japan, the cooperative system serves 65 million members and nearly 50% of households in Japan use the cooperatives’ services. In China, there are 30,287 cooperative members, attracting more than 80% of farmer households to join members. Thailand has 6,626 agricultural and non-agricultural cooperatives, contributing 13% of GDP. The United States has 50,000 cooperatives, accounting for 25% of the market share of processed and consumed agricultural products.
At the meeting of the United Nations General Assembly in 2003 and the Message to the international cooperative movement, the Secretary-General of the United Nations highlighted that “Cooperatives are the largest organized movement of our civilization, making an important contribution to meeting the aspirations and needs of people in the efforts of extensive and balanced economic development in some particular countries and in the world.
The cooperative development in the world, especially after more than 2 years of the Covid-19 pandemic, has shown a number of characteristics that can also be seen in the Vietnam context. Most of the farming households are members of cooperatives. All cooperatives strictly follow the universal nature, values and principles in operation and administration, which are voluntariness, self-reliance, self-responsibility, democracy, equality and solidarity. Members are entitled to one vote each membership and have the interests of the community at heart. Co-operatives are important contributor to the achievement of sustainable development, hunger elimination and poverty alleviation, gender equality, job creation, inclusive economic development, economic transformation, climate change adaptation, digital transformation and building a society that is eager to learn. Governments have regularly improved the legal framework and designed policies for cooperative development, along with consolidating the National Cooperative Alliance to perform the functions of representing, protecting and supporting member co-opeatives.
In Vietnam, the collective economy is core to cooperatives with various forms of cooperation (cooperatives, cooperative units, cooperative unions …) based on the ownership of members and collective ownership, cooperation of workers, production, business households, and enterprises of different economic sectors.
President Ho Chi Minh visited farmers in Ai Quoc commune (currently Hai Duong city) in 1957.
President Ho Chi Minh was the first person to bring the theory of cooperative development into our country and regularly focused on directing the development of the collective economy and cooperatives. In a letter to Vietnamese farmers on April 11, 1946, he wrote: “If our farmers are wealthy, so is our country. If our agriculture is prosperous, so is our country. If we want our farmers to be wealthy and our agriculture to proper, there needs to be co-operatives. In short, co-operatives mean pooling capital and other resources together. When we have much capital and resources, less challenges and more opportunities will arise.”
In a letter to the Congress of Cooperatives and advanced agricultural production teams in the mountains and midlands on April 11, 1964, he advised that “Cooperatives must be strengthened, i.e. to give members a sense ownership, making the management board stable and capable.Democracy, fight against embezzlement, waste, bureaucracy, must be in place in all cooperatives. Co-operative management and technology must be improved and co-operatives staff and members’ knowledge and education must be strengthened.
President Ho Chi Minh visited farmers in Hung Son co-operative (Dai Tu district, Thai Nguyen province) in 1957.
President Ho Chi Minh visited farmers in Tan Lap co-operative (Quoc Oai district, Ha Tay province) in July 1958
Mango processing for export
Rice harvesting
Collective economy and cooperatives have been formed and developed for nearly 70 years, making important contributions to human and material resources to the cause of national liberation, defense and development of the country. From 1955 to 1986, cooperatives grew rapidly in number in both rural and urban areas. Subsequently, from 1986 to 2002, the agricultural and rural areas contracted products to individual workers and groups of workers and the cooperative management mechanism was not renewed, the number and economic efficiency of cooperatives decreased due to consolidation and reorganization. From 2002 till now, the collective economy and cooperatives have developed in terms of quantity, quality and operational efficiency. Over the coure of their development, the nature, values and operating principles, the role of the collective economy and cooperatives have remained consistent with the Party’s policy on developing a society-oriented market economyand the provisions of the Constitution.
Vietnam’s economy is a socialist-oriented economy with many forms of ownership and economic players in which the state economy plays a leading role… All economic sectors are important components of the national economy. Entities of all economic sectors are equal who legally cooperate and compete.
According to statistics, there are 17.3 million households in rural Vietnam, of which 9 million households have low average farming area (Mekong River Delta 0.71 ha, 0.22 ha in the Red River Delta, 0.01 ha in the Central Coast, 2.5 plots per household on average), both capital and assets are still limited, so farmers need to align and cooperate in groups and organize business activities following the collective and cooperative economic model. Even millions of other individual households in rural and urban areas also need to come together and cooperate for production and business to have sustainable efficiency. Based on the guidelines of the Party, the Constitution and laws of the State, and the practice of developing the collective economy and cooperatives in Vietnam and other countries, it can be affirmed that collective and cooperative economic development is indispensable, objective, strategic and long-term in the socialist-oriented market economy in Vietnam.
After 20 years (from 2002 to 2021) implementing the Resolution of the 5th Central Committee, term IX on continuing to innovate, develop and improve the efficiency of the collective economy, we have achieved the collective economy, cooperatives have developed in both quantity and quality and overcomed persistent weaknesses
Most cooperatives provide input and output services to their members, helping to reduce production costs and maintain steady product consumption contracts. Collective and cooperative economies have contributed to sustainable economic growth, inflation control, and increase in export turnover, renewed the growth model associated with economic restructuring especially the agricultural economy. , ensured food security, food, climate change adaptation, towards green development and rotating economy.
Many lessons and experiences have been learnt, in which the awareness of the political system and people of all classes about the nature, mechanism and benefits of cooperatives for the people and the economy is improved. The initiative and activeness of the Party committees and local authorities in implementing the Resolution is consistent with reality such as Tien Giang, Dong Thap, An Giang, Dong Nai, Hanoi, Ho Chi Minh City, Thua Thien Hue, Quang Nam, Ninh Binh, Son La…Localities have many models of cooperatives that operate effectively with the key advisory and support role of the Vietnam Cooperative Alliance system, with spillover effects such as Sinh Duoc Cooperative in Ninh Binh, My Dong Cooperative in Dong Thap, My Tinh An Cooperative in Tien Giang, Xuyen Viet Cooperative in Hai Duong and Ai Nghia Cooperative in Quang Nam and etc….
However, the collective economy and cooperatives have not met the requirements set forth, there are still a number of shortcomingsand limitations that need to be paid attention to and resolved. A large percentage of individual households in rural areas have not yet joined cooperatives and cooperative groups. Meanwhile, a large number of cooperatives have small scale, insufficient capital, limited management capacity, low membership alignment, low reputation and brand name in the market; hence their contribution to socio-economic development is relatively limited. There are some “bottlenecks” in awareness and irrelevant understanding of the operation mechanism and role of cooperatives, laws and policies to support the collective economy plus poor co-operative governance. In addition, some local Party committees, authorities, ministries and branches have not paid enough attention to the cooperative economy and cooperatives.
Collective and cooperative economic development from 2021 to2030 and with a vision to 2045 must be consistent with the main guidelines, goals, tasks and solutions of the Resolution of the 13th Party Congress and be able to solve the existing problems that have been hindering development under the new conditions and context.
Collective and cooperative economic development is indispensable, objective, strategic, long-term, is a consistent policy of the Party and State and an important economic component which is in line with the socialist-oriented market mechanism. Together with the state economy, co-operatives play a fundamental role in the socio-economic in our country, filling the gap between the Party, the State and all people. The collective and cooperative economy will be developed in all sectors, fields, rural and urban areas in a positive and solid manner. The leadership of the Party and management of the State must be strengthened; the State will continue to improve the legal framework and policies to support the development of collective and cooperative economy, bringing into play the role of the Vietnamese Fatherland Front, mass organizations, including the core apex of the system namely the Vietnam Cooperative Union.
Rapid yet sustainable collective economy and cooperatives development is an important solution for efficient production and business organization. It will play a fundamental role in the national economy, and improve efficiency in the operation of cooperatives, cooperative unions, cooperative groups, increasing economic benefits and social welfare to members, and therefore be able to attract most individual households in rural areas and all economic sectors.
The development of the collective economic and cooperatives for 2021-2030 with a vision to 2045 must be in line with the main direction, guidelines, objectives, tasks and solutions of the Resolution of the 13th Party Congress and be able to solve “bottlenecks” problems that are hindering development under the new context and conditions.
It is necessary to implement timely and consistently while staying focused on a number of breakthrough solutions.
Firstly, to promote propaganda, insight and raise awareness for Party members and employees, especially the heads of agencies, organizations and people about the nature, mechanism of operation, and the role of the collective economy and cooperatives in the socialist-oriented market economy. There should be regulations which required training institutions to provide knowledge on the collective economy and cooperatives.
Secondly, to make amendment and supplement to the Law on Cooperatives, stipulating the mechanism of operation of cooperatives as economic legal entities similar to other enterprises, ensuring simplicity and understandability, reasonable regulation of the proportion of capital contributed and using internal services suitable for each type of agricultural and non-agricultural cooperative to increase the autonomy in mobilizing resources; stipulate appropriate governance mechanisms for each type of agricultural and non-agricultural cooperatives, distributed or concentrated production and business cooperatives, specifying support policies along with the principle of allocating resources from the State budget; renew state management of the collective economy and cooperatives in the direction of Ministries and sectors focusing on promulgating mechanisms and policies, creating a development environment for the cooperative economy and cooperatives.
Thirdly, the State promulgates a program to promote the development of the collective and cooperative economy with specific policies and allocates resources for implementation to lead, mobilize other resources, focus on training, mobilize high-quality human resources for cooperatives by providing training cooperatives in management and production and business skills for members and employees associated with the cooperative’s products, attracting young workers who have professional training; application of high technology and digital transformation, access to credit capital, branding, tax policy. Corporate income tax exemption for cooperatives is for 3-5 years, subject to different cooperatives. There is no regulation on collection of personal income tax on profits distributed from capital contributions of cooperative members to encourage individual households to join cooperative. Credit policies (Promulgation of regulations on determining credit within the cooperative, allowing the PCFs to expand lending outside of its members, especially in rural areas; arranging loan packages for cooperatives to borrow for infrastructure investment; stipulating a cap on unsecured lending for cooperatives and cooperative members which should be in line with current production costs; providing additional capital for the local and central Cooperative Development Support Funds).
Fourth, restructure and strengthen the organization, improve the capacity and efficiency of the Vietnam Cooperative Union system to effectively promote its apex role and main responsibility in developing and promoting the collective economy and cooperatives, representing and protecting cooperatives’ rights and interests.
Fifth, the Party committees, authorities, and the Fatherland Front need to design programs and plans which direct, lead, and create conditions for the cooperative economy to develop in the right direction, effectively and sustainably.
We believe that the Politburo Resolution, this Central Resolution and the supplementes and amended Law on Cooperatives will be efficient solutions for the cooperative economy and cooperatives towards future rapid and sustainable development.
Member of the Politburo, President of the Social Republic of Vietnam Nguyen Xuan Phuc.
