Artels to be treated as normal businesses
Artels to be treated as normal businesses
The Ministry of Planning and Investment (MPI) is in the process of constructing a new resolution on artels, a kind of economic co-operative, nationwide, in which these units would receive their own registration number and be treated as normal businesses.
An artel is a co-operative economic entity with at least three members of equal business rights, needs and propositions working together to produce goods and services based on a contract from their local government. They are often rurally-based, sharing the work and spoils of rice fields.
The Department of Co-operatives (DoC) under the MPI reported that at present there are about 98,000 artels, with more than 1.2 million members, yet only 36,104 are officially documented and registered for operation, with the rest either bankrupt or in a different line of work as they usually go unsupervised and unsupported.
The MPI has proposed each artel be required to register according to their occupation to ensure they are properly supported and managed, despite being miniscule economic units.
With each artel having a registration number, the MPI hopes to clarify their function and better manage them as part of the national co-operative system. By giving them business and legal status, the MPI believes these artels will be better equipped for production and growth.
To ease financial burdens on these units, the MPI has agreed to keep the registration fee at a mere US$1.3 per artel, and will not issue any further business operation requirements on them.
Ultimately, the MPI expects to see artels’ weak points be improved through supporting policies previously applied to businesses only, which would give them more funding, production materials, technology and information to improve productivity while cutting costs.
The DoC commented that at present, artels in rural and remote areas face many difficulties and competition from foreign goods. As these economic units are minute and separated, they struggle to participate in large production chains.
The average artel’s annual income in 2016 is VND229 million ($10,200), and each participant gets VND26 million ($1,158) per year on average.
Considered the junior version of the well known co-operative, artels function based on the principles of willingness, equality and self responsibility among members.
