The effectiveness of the cooperative market management model in Vinh city

(Baonghean) -Ben Thuy, Cua Bac and Kenh Bac markets previously operated under the form of Market Management Boards managed by the Ward People's Committee. However, after a period of existence, this model did not meet the development requirements of Vinh City, so it was converted to a market exploitation business cooperative model. With that change, it created high efficiency in the new way of market management and business.

Because the Market Management Board was under the Ward People's Committee, before 2008, Ben Thuy, Cua Bac and Kenh Bac markets had to pay a very low amount to the ward (from 10 to 30 million VND/month). This method has given rise to many problems, such as the Ward People's Committee having difficulty closely managing, lack of capital to invest in market technical infrastructure, cumbersome operating apparatus, unclear financial management, causing revenue loss... Therefore, the relevant authorities of Vinh City People's Committee have converted the Market Management Board model into a market exploitation business cooperative.

Kenh Bac Market is seriously degraded.

Ben Thuy, Cua Bac and Kenh Bac markets are three models that were converted to cooperatives since the end of 2008 and started operating in the new form in early 2009. Mr. Du Van Dam - Supervisory Board of the Cooperative operating Cua Bac market said: "Previously, the Market Management Board only paid the Ward People's Committee 12 million VND/month, but after converting to the cooperative model, the management method was innovated, so it created an average revenue of 80 million VND/month and increased the amount paid to the State budget.

The advantage after the model conversion is that the Cooperative has ensured correct and full collection, fulfilled its obligations to the State and especially financial autonomy, self-determined investment and development direction of the Cooperative...". After converting its operating model, the Cooperative has achieved high fee revenue, expected to reach nearly 1 billion VND in 2012. Not only at Cua Bac Cooperative, but also at the Cooperative operating and exploiting Ben Thuy and Kenh Bac markets, business results have increased sharply. Mr. Dang Duy Huong - Head of the Cooperative operating and exploiting Kenh Bac market said: "Previously, under the management of the Ward People's Committee, we only paid 17 million VND/month, but since converting to a Cooperative in 2009 until now, we have collected correctly and fully, so it has reached nearly 60 million VND/month and in 2012 the market's fee revenue reached 720 million VND". At Ben Thuy market, fee revenue has also increased and the Cooperative has the conditions to reinvest and attract more business households...

Through research, it is known that in the 3 models of Market Management Boards (managed by Ward People's Committees) to Cooperatives, the total revenue and payment to the State budget increased. In 2008 (before conversion), the fee collection of the 3 markets was only 972 million VND, but now it has reached 3,240 million VND (average growth rate of 33%/year) and the payment to the State budget in 2009 was 304 million VND, but now it has reached nearly 600 million VND. The positive growth in revenue helps these Cooperatives have new plans to invest and build markets on a spacious scale to meet the business and trading needs of households and especially to ensure urban aesthetics.

However, many cooperatives have not been granted land use right certificates, so investment in market construction is very limited and from 2009 until now, these markets have seriously degraded. Besides, the land rent for markets that have been granted land certificates is too high.

Currently, the Cooperative for the exploitation of Ben Thuy market and Kenh Bac market has been granted a Certificate of Land Use Rights (October 18, 2012). Mr. Dang Duy Huong - Head of the Cooperative for the exploitation of Kenh Bac market said: "The Cooperative has been granted a Certificate of Land Use Rights for a period of 35 years. This is a good opportunity for the Cooperative to borrow capital from the bank and mobilize investment capital to implement the project of building Kenh Bac market with the aim of becoming a multi-product commercial center to serve the essential needs of people in the ward and neighboring areas.

Happy to have the red book in hand, but the Cooperative is very worried about the land rent payment being too high, because after the decision to be granted the land title, the Cooperative must fulfill the obligation to pay the land rent at the new price from November 2012 (while the project to build and upgrade Kenh Bac market has not been implemented yet), so in the last 2 months of 2012, the amount to be paid is nearly 43.2 million VND. In 2013, the Cooperative must pay the land rent of nearly 260 million VND and this is a large amount when the new market is in the investment and construction phase. This problem is also happening at the Cooperative that manages Ben Thuy market. After nearly 2 months of having the decision to be granted the land title, the Cooperative must pay the land rent at the new price of 63 million VND and it is expected that in 2013 it will be 378 million VND, while the market renovation project has not been implemented yet.

Through discussions with some cooperative leaders, it is found that the current concern is mobilizing investment capital. Although having a red book, if borrowing from a bank does not enjoy preferential interest rates, investing in the market will be difficult. Moreover, in the current period, it will be very difficult to mobilize capital from business households as well as from other sources. Therefore, in addition to the efforts of cooperatives, functional agencies and sectors need to have appropriate mechanisms and policies to support cooperatives so that these models can operate more and more effectively.