The Role of Cooperative Economy in the Structure of the Multi-Sector Economy in Vietnam

Only members of the cooperative can benefit and only members have rights, but technical tasks such as calculating, checking goods, handling machines, etc. can be hired by outsiders. Once you join the association, regardless of how much you contribute, how little you contribute, whether you join early or late, everyone is equal.

So what is a cooperative? What is the concept of a cooperative? What is the difference between a cooperative and a cooperative economy?

Article 1 of the Law on Cooperatives passed by the 9th National Assembly of the Socialist Republic of Vietnam, 9th session, on March 20, 1996 clearly states: “ A cooperative is an autonomous economic organization established by workers with common needs and interests, voluntarily contributing capital and efforts in accordance with the provisions of law to promote the strength of the collective and of each member to help each other more effectively carry out production, business and service activities and improve life, contributing to the socio-economic development of the country ”. [44].

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Regarding cooperative economy. The Resolution of the 9th National Party Congress in 2001 pointed out: " The State economy together with the collective economy is increasingly becoming a solid foundation of the national economy " and " The collective economy develops with many diverse forms of cooperation, in which cooperatives are the core ". [37]. That has affirmed the important and irreplaceable role of the cooperative economy in the multi-sector market economy with socialist orientation. Talking about the cooperative economy is also talking about the relationship in a multi-sector economy of our country.

Cooperative economics are economic indicators, material relations, economic relations within an organization which is a cooperative. Research on cooperative economics in Vietnam is research on quantitative indicators, relations of ownership, distribution, purchase and sale, financing, responsibility in case of bankruptcy, dissolution... including economic relations within cooperatives and in the totality of cooperatives in Vietnam.

The cooperative economy does not include the economy of each individual member household, but it is closely related and has mutual effects. Developing the cooperative economy will make the member household economy develop and vice versa.

When the country gained independence, President Ho Chi Minh paid special attention to the building and development of cooperatives. The cooperative economy played a great role in the construction of socialism in the North and the struggle to liberate the South and unify the country.

Nowadays, the cooperative economy is an economic component in the system of economic components of the national economy. Each cooperative is a form of economic organization, in which there is association and cooperation between members. Members contribute their efforts, capital, and assets to produce and do business together according to the principle of voluntariness, sharing profits and losses.

1.1.1.2. Cooperative economic development

Cooperative economic development is understood in the following aspects:

- Higher autonomy and self-responsibility of cooperatives: Cooperatives themselves are enterprises, so they must decide their own fate, whether they can survive and develop in competition or not. This also shows independence in operations, especially for agricultural cooperatives when local authorities at the commune level here and there still deeply intervene in the operations of cooperatives. High autonomy and self-responsibility also help cooperatives promote creativity, dynamism and responsibility in their operations.

- The number of workers who have common needs and interests voluntarily joining cooperatives is increasing. This depends on the workers' deep and broad understanding of the new cooperative economy. The new cooperative is stipulated in the revised cooperative law, which is a cooperative model that is not limited by administrative boundaries, economic components are closely linked to the cooperative economy. There are even companies and enterprises within cooperatives, where private ownership is recognized alongside ownership.

Collective ownership of cooperatives to help in production and business. With that superiority, workers who understand will participate more in the cooperative economy, those with high skills in the fields that the cooperative needs to develop, who previously voluntarily left, now have the opportunity to return to participate in the cooperative economy.

- Increased capital and labor contributions: from the belief in the new cooperative model, participants voluntarily contribute more capital and are more enthusiastic about the cooperative economy. Thanks to increased capital contributions, the cooperative's equity capital increases and the responsibility of the cooperative members increases. This is a favorable environment for bank credit capital and other capital sources to participate, making the cooperative economy develop more and more.

- The collective strength of each cooperative member and participating members increases. Strength here refers to highly competitive products and services in the market, effectively applied science and technology, closed and tightly organized product consumption, and irreplaceable quality of support services of the cooperative.

- Help each other increase efficiency in production, business and services and improve life. Through cooperatives, workers cooperate and help each other with experience, breeds, capital and skills, stand side by side to survive and develop in competition. Cooperative economy can only develop when efficiency in production, business and services is constantly improved, the life and income of members are improved and vice versa.

- Developing the cooperative economy is also understood as increasing the contribution of the cooperative economy to the country's socio-economic development. That is, increasing the output of goods and services, moving towards a worthy contribution to the GDP of the economy, creating jobs for many workers, developing industries, improving the lives of workers, and stabilizing rural security.

1.1.2. The nature of cooperative economy

In terms of economic nature, a cooperative can be understood in the following aspects:

- A cooperative is an enterprise:

Cooperatives are tightly organized, have clear functions and tasks, have assets, have goals and directions for operation in each period, and are responsible for their own production and business results. Therefore, cooperatives always calculate inputs and outputs, research and study the market to respond promptly when there are fluctuations. However, cooperatives are different from enterprises in that: the leadership and control apparatus is elected on the basis of the trust of members by universal suffrage, regardless of capital contribution.

- A cooperative is an organization that operates to seek profit.

Like businesses when conducting production and business activities, cooperatives must calculate the cost to produce a unit of their products or services. To whom and in what quantity will those goods and services be sold. Cooperatives must also estimate in advance the profit when their products and services are sold. The proceeds are used to cover production and management costs, expand production and business as well as improve the welfare of members. At the same time, cooperatives must also control their expenses.

- Cooperative is an organization with loose ownership.

The owners of cooperatives are citizens and groups of people. The ownership within cooperatives is also only relative. Many assets contributed by members to cooperatives are then immediately transferred to the members themselves to use for maximum efficiency. Members together establish cooperatives because they share a number of interests that they themselves cannot create individually or cannot do effectively. Therefore, capital and assets are all contributed by individuals to cooperatives, only undivided funds are collectively owned (but in the end, they are still owned by members). Profits from production and business activities after

Having fulfilled all obligations to the state belongs to the members, they have full authority to decide on the division plan. Conversely, when there is a loss, they must also bear all material responsibility.

- Cooperatives are diverse economic organizations.

First of all, a cooperative is an organization of many people, owned by people with the same interests and goals, the same profession, aiming for increasingly higher profits. Only the members of the cooperative have the right to decide on the products and services produced by the cooperative.

The cooperative itself also has multiple ownerships, with subsidiaries, enterprises, groups, and private individuals within the cooperative to promote its inherent strengths and increase the competitiveness of the cooperative economy.

Cooperatives are not limited to the same locality or region, but can link and expand their production, business and service activities widely, suitable to the development conditions of the industry and the management level of each cooperative.

With the above diverse economic linkages, the cooperative economy has opened up great potential for flexible and effective development.

- Cooperative is a democratically managed organization with equal participation of all members.

Each cooperative member is both the owner and the customer. They have the right to participate in the activities of the cooperative through voting. Each member has one vote, the votes are equal regardless of the amount of capital contributed by that person. This is the fundamental difference between cooperatives and other types of companies and enterprises. It determines the social, democratic nature and superiority of this type of economy.

In summary: In essence, a cooperative is a special economic organization, a business that operates for the purpose of making a profit, is a private property, owned by many people. Management is democratic, with the participation of all members.

1.1.3. Basic operating principles of cooperatives

- Voluntary principle

The content of this principle is: members are completely voluntary to join and leave the cooperative. In our country, all Vietnamese citizens from 18 years old and above must have full civil capacity, agree with the cooperative charter, voluntarily contribute capital to join the cooperative and can become members of the cooperative. On the contrary, if they want, they can voluntarily leave the cooperative without any pressure. Thus, the cooperative includes a group of people who join together to seek benefits for themselves, to protect themselves from the fierce competition of the market mechanism that they cannot do if they operate individually.

- Principle of self-responsibility and mutual benefit

This principle stipulates that the cooperative is responsible for the results of its production, business and service activities and regulates the distribution of income to ensure that both the cooperative and its members benefit. The distribution of income through a sharing plan is discussed openly and democratically by the members.

This principle must be specifically stated in the charter of each cooperative, from regulations on capital contribution to business organization, profit distribution and cooperative management. The strength of a cooperative can only be maximized when the interests of the State, the collective and the members are harmonized.

- Principle of equal democratic management

The content of this principle is: cooperative members have the right to participate in managing, inspecting and supervising all activities of the cooperative and have equal voting rights.

Thus, the ownership of members in cooperatives is different from ownership in other enterprises. In cooperatives, all members have equal political and social rights regardless of how much property or capital they contribute or what position they hold. In terms of economics, equality here must be understood in the sense of

More broadly: Equality does not mean equal and the same, but here whoever works more, contributes more assets, capital, and innovations that benefit the cooperative will receive more and vice versa.

Only by properly implementing the above principles can the cooperative develop quickly, firmly and in the right direction, meeting the aspirations of all members.

- Principles of cooperation and development of cooperative community

The content of this principle is that members promote collective spirit, enhance the sense of cooperation within the cooperative and the social community. The principle of cooperation needs to be understood more broadly, in addition to internal cooperation, it is also necessary to cooperate between cooperatives and other economic sectors, cooperate domestically and abroad with appropriate steps in accordance with the provisions of law. The community spirit of cooperative members demonstrates mutual support and mutual development.

1.1.4. The economic role of cooperatives in socio-economic development

1.1.4.1. The role of cooperative economy in the multi-sector economic structure in Vietnam

Before 1986, our country's economy was organized and operated according to a centralized, bureaucratic, subsidized planning mechanism. It was a stagnant, underdeveloped, dynamistic, and uncompetitive economy. For a long time, it existed mainly thanks to foreign aid. When that aid was no longer available, the ineffectiveness of the bureaucratic subsidy mechanism was clearly revealed.

Faced with that situation, our Party and State advocated implementing the renovation policy towards developing a multi-sector economy, operating under a socialist-oriented market mechanism. It is an “open” economy that gradually integrates with countries in the region and the world.

At the 9th National Party Congress in 2001, it was affirmed that our country's economy currently has the following economic components: [37]

1- State economy. 2- Collective economy.

3- Individual and smallholder economy. 4- Private capitalist economy. 5- State capitalist economy.

6- Foreign invested economy.

In those economic sectors, there are still 3 basic forms of ownership, which are: State ownership, collective ownership, private ownership. These forms of ownership can be interwoven and mixed. In the system of economic sectors mentioned above, the state economy plays a leading role, the state economy together with the collective economy increasingly becomes the solid foundation of the national economy.

1.1.4.2. The economic role of cooperatives in economic development

Collective economy, with the core being cooperative economy, is identified as an economic sector with a very important position and role in the country's economic development, for the following reasons:

Firstly : Cooperative development will fully exploit all potentials of the country to promote economic growth and development together with the State economy.

State-owned enterprises often have large capital and high professionalism, so their products are highly technological and technical. Cooperatives mostly produce labor-intensive products with traditional, single-piece products of a handmade nature. Therefore, the presence of cooperatives will supplement the State economy and improve the efficiency of the economy. Exploiting the potential of cooperatives is demonstrated in three aspects: capital - labor - science and technology.

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