Date: Tue, 24 Jan 1995 12:27:04 GMT
Sender: Southeast Asia Discussion List <>
From: Binh Anson <anson@CSUVAX1.CSU.MURDOCH.EDU.AU>
Subject: VN: Disbanding Co-operatives

Unable to make the big leap, cooperataives face extinction

From Vietnam Investment Review (Hanoi),
1 January, 1995

It used to be said that Vietnam's collective rice fields were so wide that to cross one would exhaust the wings of a strong bird. Now mud mounds or a scrap of paper tied to a bamboo stick divide the fields, signalling ownership of property, serving as monuments to the end of the centralised economy.

As the market economy develops the concept of "communes" is gradually disappearing. These cooperatives, once the foundation of the collective economy, are no longer talked about in the daily life of the peasant.

It was only a few years ago, however, that cooperatives were the second most important element in the socialist economy after State-owned enterprises.

In theory, a socialist society does not accept private ownership other than in the hands of the collective and the State. That was the reason peasants and small urban entrepreneurs joined together in the 1960s to set up these economic and social units.

Peasants gave their land, mostly rice fields, which had been handed them during the harsh land reforms of the mid 1950s. Now 40 years on, cooperatives have been swept away by economic reforms.

A report from the Vietnam Union of Cooperatives (VUC) says before the onset of "doi moi " - renovation - Vietnam had more than 30,000 industrial and handicraft cooperatives, 10,000 trading, 200 transportation and 500 construction cooperatives.

Several villages would group in one agricultural cooperative. Together they formed the foundation of the socialist society.

According to Hoang Minh Thang, chairman of the VUC central board, only 20 per cent of these cooperatives have survived since 1988. Most of them have folded, unable to stand up without the support of State subsidies. "They proved themselves too weak against the better competition of the market economy," Thang said.

In northern Vietnam's Ha Bac province alone, only 12.2 per cent of the industrial cooperatives have survived the impact of "doi moi", said Pham Trong Lich from Ha Bac's Association of Small Handicrafts and Industries.

"By the end of 1993, only 53 cooperatives were left alive, 30 per cent of which are stable while the rest are facing great difficulties," Lich said. In 1985, Ha Bac had 433 industrial cooperatives employing more than 11,000 people .

The poor performance of cooperatives has disappointed their members. "Membership of a trading cooperative is just a cheap joke," an elderly woman in Hai Ba Trung district of Hanoi recalled.

She joined the Tan Mai trading cooperative in her commune 10 years ago contributing some of her savings.

"I got one kilogramme of sugar every month, and was permitted to buy five kilos of discounted sticky rice for Tet. That was all I got from it [the cooperative]. Now it has just gone out of business and my share of the capital turns out to be worth some vegetables, enough for one meal," she said.

The death of trading cooperatives is common in cities where newly-formed limited trading companies have taken over.

The existence of agricultural cooperatives is, to some labourers, an even more ridiculous notion.

Ho Van Dam, a peasant from Nghe An province, said the director of his cooperative still receives a "salary of responsibility" but does nothing else than work his own rice field. "We have to feed our families and feed him, too," Dam said.

"Farmers continue to grow paddy, but they simply ignore what the head of the cooperative says," he said, explaining that peasants now have to do everything alone from buying fertiliser to selling rice. "We don't need him if we pay taxes," he said.

When asked about the so called "cooperative yard", the symbol of the collective life, where all villagers worked together and entertained themselves for more than 40 years, Dam said, "The only thing it's used for now is for our kids to play and make noise."

Peasants often dried paddy in these yards, but today they prefer to use highways or an open patch of their own ground. Dam said everyone wants to keep their belongings separate from the group.

"Cooperatives are no longer flexible or efficient" Thang said. "They are unable to make the leap to market economics." He said the old State subsidies used to be the motivation for development, particularly when it came to meeting production quotas.

Now, Thang said, this mechanism has "killed all the advantages that cooperatives had five years ago." Vague laws, poor investment, cumbersome economic policies and a management dependent on the cooperative's hierarchy have weakened their competitiveness.

Not all cooperatives, however have dived into bankruptcy. Some have successfully switched to the market economy, especially in the textile industry. But such success stories are few.

The VUC report says the Duy Trinh Textile Cooperative in Da Nang, Thong Nhat Handicraft Coop in My Tho and Tien Bo Industrial Coop in Hanoi are among those who have kept going by applying new technology to traditional industries.

But cooperatives, Thang said, cannot cope with reforms without help from the Government. "The State must have some priority lending and tax policy for cooperatives."

Binh Anson
FAX: (61-9) 244 4726 (Perth, Australia)

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