Social enterprises in need of more support

Detailed support policies were needed to promote the development of social enterprises. - Photo thoibaonganhang.vn

Nguyen Thi Minh Thao, head of Business Environment and Competitiveness Research Department under the Central Institute for Economic Management (CIEM), said that Vietnam had a number of support policies for social enterprises. However, most were too general and it was difficult for social enterprises to benefit from them.

“There are already support policies. But they must be made more detailed,” Thao stressed.

She pointed the six biggest difficulties for social enterprises: access to capital, talent, markets, corporate governance, administrative procedures and society’s low awareness about the importance of social enterprises.

A survey carried out by CIEM and non-governmental and non-profit organisation Centre For Social Initiatives in Hoa Binh and Lao Cai – two poor northwestern mountainous provinces – found that social enterprises were encountering various difficulties, such as small scale and limited competitiveness.

In Hoa Binh, only 10 of 14 social enterprises could access banking credit. In Lao Cai, it was 16 out of 22. In addition, their credit limits remained modest and interest rates high.

Tan Thi Su, director of a social enterprise operating in tourism in Sa Pa, said it was difficult for her company to borrow money from banks. Her company was provided with a modest loan of VND50 million (US$2,100), she said.

Su said that it was necessary to establish a board at district or provincial levels to consult small- and medium-sized enterprises, especially social enterprises.

Social enterprises also need credit incentive policies and corporate governance training to help them overcome difficulties and operate efficiently, Su said.

Agreeing with Su, Phan Duc Hieu, CIEM’s Deputy Director, that it was vital to deregulate business laws to create favourable conditions for firms like Su’s to develop.

According to Thao, the Law on Enterprise should clarify standards for an enterprise being social.

Nguyen Trung Kien from the Institute of Policy and Strategy for Agriculture and Rural Development said social enterprises should be allowed to participate in supplying public goods and services to impoverished areas.

Social enterprises’ role in promoting links with small business households should also be promoted, Kien stressed.

Social enterprises were officially regulated in the Law on Enterprise 2014 but this type of business already existed for about a decade in Vietnam and account for about 4 per cent of all firms in Vietnam.