Teten Masduki: People Need Cooperatives

KOMPAS/CYPRIANUS ANTO SAPTOWALYONO

Cooperatives and Small and Medium Enterprises Minister Teten Masduki

Cooperatives are the pillars of the nation\'s economy. Not only seeking to build financial independence, cooperatives carry the spirit of togetherness among members in order to achieve mutual prosperity. However, the challenges faced by cooperatives are huge. Amid the success stories in helping members boost production or provide credit, unhealthy practices remain rife.

Coinciding with the 74th Indonesian Cooperatives Day on Monday (12/7/2021), Kompas interviewed Cooperatives and Small and Medium Enterprises Minister Teten Masduki virtually in Jakarta last Thursday.

What are the crucial problems faced by cooperatives?

The number of cooperatives in Indonesia is the largest in the world. As of December 2020, the number was 127,124. The number of members is 25 million people. Around 59 percent are engaged in savings and loan cooperatives [KSPs].

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The financing disbursed by cooperatives for micro, small and medium entrepreneurs is only 6 percent of total bank credit. In fact, access to cooperative financing is very important considering that micro small and medium enterprise [MSME] actors make up 99.6 percent of total business actors. Not all MSMEs can access banking.

Cooperatives gather capital forces from ordinary people.

The existence of KSPs is very helpful. KSPs are thriving compared to production and consumption cooperatives. We encourage people to get involved in cooperatives because, as Bung Hatta, the father of Indonesian cooperatives, said, cooperatives make people help themselves. Cooperatives gather capital forces from ordinary people.

The government also has created an ecosystem for the development of cooperatives, such as by facilitating their establishment. On average in the world, it is enough to have three to five people to establish a cooperative. In Indonesia, under the old regulations, it had to be 20 people. Under the Job Creation Law, the requirement for the establishment of a cooperative is only nine people.

Kompas

Cooperatives and Small and Medium Enterprises Minister Teten Masduki.

Second, cooperatives can enter any sector. I encourage cooperatives to get into infrastructure development. Many cooperatives with very large capital experience excessive liquidity. We also work closely with the Agriculture Minister and the Maritime Affairs and Fisheries Minister so that cooperatives enter the food sector: shrimp farming, plantations and agriculture. In developed countries, the agricultural sector is held by cooperatives.

Related to KSPs, the arising cases are that cooperatives fail to pay, which may cause moneylenders to operate on behalf of cooperatives. I\'m not saying cooperatives are bad in general. Cooperatives are needed by the community to access financing. There are cooperatives that violate, do not comply with, regulations, do not carry out annual member meetings (RATs) and fail to manage investment. This is what we’re putting under scrutiny.

How can one detect cooperatives that collect investments inappropriately or fraudulently?

Many companies also resort to fraudulent investments. In a society with low financial business literacy, investment offers with promised large incomes are not assessed adequately.

Their motives are not to develop the people’s economy.

The first problem [is if] the cooperative fails to pay. The founders are mostly big businessmen. Since there are more stringent banking regulations, the source of money is liable to anti-money laundering supervision. Several businessmen may be interested in investing in a cooperative. Their motives are not to develop the people’s economy.

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They only capitalize on the cooperative rules loopholes. Ironically, many people are lured into joining such a cooperative in the hopes of getting an interest rate higher than what the bank gives them. They are not members of the cooperative so they are not involved in the RAT.

KOMPAS/CYPRIANUS ANTO SAPTOWALYONO

Cooperatives and Small and Medium Enterprises Minister Teten Masduki.

Evidently, there are rules being violated. The most authoritative forum in a cooperative is the RAT, in which the cooperative management approves a business plan for the sake of the members. So, in our opinion, to find out whether a cooperative is healthy or not, [one must] look at the implementation of the RAT.

Does the Cooperatives and SMEs Ministry have the right to disband fake cooperatives?

We can dissolve them, although their establishment is under the Law and Human Rights Ministry. In the 2015-2020 period, 7,046 cooperatives were dissolved.

With 1,181 cooperatives having been dissolved in 2021, the total number of cooperatives having been dissolved was 8,227. Many others are being suspended. The dissolution was carried out with the consideration that the cooperatives were inactive, including in their obligation to hold RATs every three years. Many of them did not carry out business activities for two years.

(This article was translated by Musthofid).