We provides jobs and vocational training for women who are disabled, poor or HIV-positive in Vietnam's third largest city, Haiphong. Unemployment is high and job choices limited for the city's women and 27,000 disabled residents, so the salaries and training An Duong has given its 500 current and former employees have often provided a significant boost to their family incomes and social status.
Founded in 2004, this social enterprise produces traditional handicrafts, furniture and fashion for the domestic and export markets. An Duong's revenue reached £113,000 in 2012, up 38% year-on-year, and turnover is expected to reach £180,000 in 2015. As part of its growth strategy, it plans to invest £108,000 to build a new factory and retail stores, train workers, and build housing for its disabled staff. It can cover 40% of this total expenditure but seeks investment funding to cover the balance.
The challenge An Duong faces is how and where to obtain such funding. In this, it is not alone. All the social enterprises that participated in a recent investment needs survey will seek external capital in the next three years, but 95% believe that securing investment will be a challenge. Conducted by Centre for Social Initiatives Promotion (CSIP), Vietnam's leading social enterprise intermediary, and LGT Venture Philanthropy, a Lichtenstein-based social investor, the survey found a number of barriers to securing investment. These include the modest amount of external funding sought by Vietnamese social enterprises, which falls well below the USD $1m minimum threshold that most impact investors apply (given the cost of due diligence and legal fees). Other reasons include uncertainty among social enterprises about available funding sources, funding requirements, and standards for financial statements and operation plans.
Seeking to create a more favourable investment environment and connect successful social entrepreneurs with investors, CSIP Vietnam, British Council and Central Institute for Economic Management (under Vietnam's Ministry of Planning and Investment) co-organised Vietnam's first Social Investment Forum in late August, in partnership with Vietnam Chamber of Commerce and Industry, LGT Venture Philanthropy and several intermediary organisations. The event drew over 150 policy-makers, investors, social entrepreneurs and representatives from aid agencies and intermediary organisations.
Participants heard that social investment, much like the social enterprise movement, is in its early stages in Vietnam. In 2012, social investment totalled a mere USD $2m and there were only 200 self-identified social enterprises and another 165,000 organisations which could become social enterprises. This ambiguity in part reflects the absence of a legal structure in Vietnam for social enterprises, so many organisations that could be deemed social enterprises self-identify as either charities or businesses. Like early stage social enterprises around the world, most social enterprises in Vietnam depend on grants, personal loans and then income to get their businesses up and running. But as they mature and look to the future, they increasingly seek out investment capital.
"The participation of high level stakeholders from different institutions, particularly government, investors, and international aid agencies, is an indication of the powerful role that social investment could play in addressing entrenched social problems," said Oanh Pham, the founder and chief executive of CSIP Vietnam. According to an social enterprise research report conducted by the British Council and several partners (Social Enterprise in Vietnam: Concept, Context and Policies, 2012), 28% of Vietnam's population of 88 million is 'in need' (defined as 'poor households, people with disabilities, children in special circumstances, former prisoners, people living with HIV/ AIDS, and the elderly'). And there are a number of sectors which are ripe for social enterprise solutions, including health care, waste recycling, pollution, sustainable energy, education, and cultural preservation.
Meanwhile, Vietnam is emerging from its longest spell of slow growth since its landmark economic reforms of the 1980s. Government has imposed fiscal tightening at a time of declining grants from international donors who have been shifting resources to poorer countries ever since Vietnam became a middle income country in 2010. Traditional NGOs and community development projects are struggling to make up for the aid shortfall, and the state recognises that it cannot solve all social problems. Increasingly, therefore, social enterprises are seen as a model that suits the economic and social context because they are sustainable, tackle social problems and foster economic growth.
The Social Investment Forum made a number of recommendations that will sound familiar to veterans of the UK social enterprise movement. Speakers called for the establishment of a legal structure for social enterprise similar to the UK's CIC (Community Interest Company), for tax relief to attract investors, and for procurement policies that would incorporate and value social impact (thereby making it easier for social enterprises to win public contracts to deliver services). Participants also spoke of the difficulty of measuring social impact and outlined the skills that Vietnamese social enterprises need to develop to meet investor requirements.
"The event generated a number of recommendations to foster the healthy expansion of the Vietnamese social investment market over the next five years," said Bao Cao, assistant director of British Council Vietnam. She added, "It also illustrated the fact that countries like Vietnam don't have to reinvent the wheel – they are learning from the successes and failures of other countries, notably the UK which is seen to have one of the world's most fertile environments for social enterprise and social investment."
Dr Mairi Mackay, who heads the British Council's nine-country social enterprise programme in East Asia, noted that Vietnam is one of four Asian markets in which the British Council is launching social investment programmes this year.
She said: "The social enterprise movement is at a different stages of development in different countries, but across the region there is a growing number of established social enterprises like An Duong with the capacity to absorb mezzanine investment. There is also interest among investors in investing for social impact as well as profit.
"We've trained social entrepreneurs and advised policy makers on creating supportive eco-systems since 2009 and the conditions are now propitious to more actively promote social investment in the region by drawing on UK expertise."
The launch of these British Council initiatives, Mackay noted, will support British Government efforts, announced by David Cameron at the G8 Social Impact Investment Forum, to promote social investment around the world and make London the global hub for social investment. These efforts will be supported by a new Social Impact Investment Taskforce and a Global Learning Exchange to share best practice on social investment.
Question: What are the new regulations on the implementation of investment activities, termination of investment projects, report on investment projects, and investment incentives and support as stipulated on Decree 118/2015/ND-CP?
Implementing investment activities
Scope and conditions of each project, investment projects shall comply with one or more of the following procedures: (i) the decision on investment policy and issuance of an investment registration certificate in accordance with Investment Law and this Decree; (ii) establishment of economic organizations for foreign investors to invest in the form of economic organization establishment; (iii) implementing procedures for allocation and re-allocation or lease, sub-lease, or permit the change of purpose of land use in accordance with the law on land (if any); (iv) implementing construction procedures in accordance with the law on construction. In case investors award the auction for the land use right or the bidding for investment projects involving land use, the investment will be implemented under the relevant provisions with written approval of the auction result or result of investor selection in consistency with the law and have not to perform the procedures of investment policy decision with the People’s Committee at provincial level.
Foreign investors investing in the form of capital contribution and share purchase, the capital share in the economic organization is not required to perform the procedures issuance of an investment registration certificate, unless foreign investors contribute capital and purchase shares or equity: (i) in economic organizations performing in conditional investment business lines applicable to foreign investor; (ii) the capital contribution, purchase of shares or equity lead to an increase in charter capital owned by foreign investors under 51% to over 51%, and increasing its percentage of owned charter capital for investors that already own more than 51% of charter capital in economic organizations.
Termination of investment projects
Decree 118 also instructs in detail the order and procedures for termination of the project in the cases mentioned in Article 48 of the Law on Investment. Termination of the project due to unable to contract with the investor, Decree 118 stipulates that when the project stops due to an investor such as sending a letter requesting the investor to make contact at the address registered with IRA or send a letter requesting communication support from the People’s Committee of the commune where the investor resides. After implementing contact measures and after the expiry of 12 months from the date the investment project stopped operating, and the investor or his legal representative still can not be contacted, the IRA will end the project. Assets of the investment project will be resolved in accordance to the provisions of the civil law on property management of absentee people.
Report on investment report
Economic organizations implementing investment projects must report to the IRA and State management agencies with respect to local statistics indicators, including (i) monthly report on the implementation of capital; quarterly reports made before the 12th of the first month of the quarter following the quarter being reported; and (ii) annual reports to be made before March 31 of the following year reported.
Reports will be sent online on the National Information System for investment and which does not need to be submitted in writing.
Investment incentives and support
According to Annexure I on list of incentives lines of investment and Annex II on list of areas of investment incentives which details the provinces and cities facing difficult or extremely difficult economic-social conditions, investment projects may apply for investment incentives. Accordingly, beneficiaries include investment projects in regions with difficult economic-social conditions; projects implemented in industrial parks, export processing zones and projects to which the special investment incentives apply in areas with special difficulties; and investment projects implemented in high-tech zones and economic zones, and will have its deposits reduced by 25% and 50% in accordance with the law.
Decree 118 replaces Decree 108/2006/DN-CP and shall take effect on December 27, 2015./.
Question: What are new regulations on enterprise registration?
Answer: Circular 20 consists of the following new regulations:
Issuing new forms for enterprise registration
Circular 20 issued 88 new forms applied to enterprises, household businesses and licensing authorities. The system of forms replaces the previously applied forms issued in attachment with Circular No. 01/2013/TT-BKHDT (Circular 01) and the temporary forms that have been applied in recent times, issued together with Official Letter 4211/BKDT-DKKD.
Guiding issuance of the enterprise registration papers
Circular 20 stipulates where enterprises propose any issuance of the enterprise registration certificate replacing the business registration contents of the Investment License or Investment Certificate or any document of equivalent legal value without changing the business registration contents, they just need to submit papers to the Business Registration Office of the locality where enterprises are headquartered.
The submission includes (i) valid copy of the Investment Certificate or Certificate of Branch Operation Registration or Representative Office issued by the investment registration authority; (ii) valid copy of the Tax Registration Certificate; (iii) the Application for adding and updating the enterprise registration information (as per the available form).
This provision applies similarly to the cases where enterprises propose any issuance of the Certificate of Branch Operation Registration, Representative Office and the Certificate of Business Location Registration in replacement of the operation registration contents of the Investment Certificate or the Certificate of Branch Operation Registration or Representative Office issued by the investment registration authority.
Publicizing corporate stamp specimen
Under Circular 20, the information on enterprise name, enterprise code, head office address, business lines, name of the legal representative, corporate legal status and especially corporate stamp specimen shall be publicized free of charge on the National Business Registration Portal (dangkykinhdoanh.gov.vn).
Organizations or individuals may propose any other information on business registration contents and corporate financial statements on the basis of service charge payment.
Requirements on information of enterprise registration
Circular 20 regulates that the enterprise is responsible for fully adding the missing information of the previous enterprise registration dossier including those on its telephone number, tax number, email and website.
In addition of telephone number information is deemed as mandatory and the application file for changing enterprise registration contents shall be deemed as invalid in case of no additional information on the corporate phone number.
In addition, where it is detected that the information on enterprise registration as recorded on the enterprise registration and the national business register database is inaccurate or incomplete, enterprises shall promptly amend and supplement such information according to the proper process.
Circular 23 took effect from January 15, 2016 and replaces the previous Circular 01./.
Take action to restructure the economy and transform the growth model in accordance with the roadmap and proper steps to establish, by 2020, a more in-depth model of economic growth that ensures the quality of growth and a more efficient and competitive economy.