Cooperatives Development

in Indonesia

“Country Presentation” of The Ministry for Cooperatives and SMEs

The Republic of Indonesia2010

Presented by : Deputy Minister for Institutional DevelopmentBeijing, 3rd September, 2010

Def

initi

on &

Typ

es o

f Coo

pera

tive

Based on the Law of Republic of Indonesia Number 25 of the Year 1992 Concerning Cooperative :

A Cooperative society is a business enterprise having individuals or registered cooperative societies as members of which its activities are based on cooperative principles and simultaneously as a people’s economic movement based on the principle of brotherhood.

A primary cooperative society is a cooperative society established by and having individuals as its members.

A Secondary cooperative society is a cooperative society established by and having cooperative societies members.

The type of a cooperative society is based on the similarity of activities and economic interests of its members such as :1.Saving-loan cooperative society2.Consumer cooperative society3.Producer cooperative society4.Marketing cooperative society5.Service cooperative society

Typ

esD

efin

ition

Statistic of Cooperative in IndonesiaYear 2006 – 2010

2006 2007 2008 2009 2010

Number of Cooperative (unit)

141,326 149,793 154,905 166,155 175,102

Number of Member (people)

27,776,000 28,888,000 27,173,000 27,951,000 29,124,067

Number Coops hold Annual General Meeting (unit)

46,057 48,262 47,153 51,353 52,856

Number of employee (people)

350,435 371,405 357,005 343,370 351,504

Own Capital (US $ Million)

1,865.67 2,248 2,479.33 2,922.77 3,406.22

Business Volume (US$ Million)

6,968.67 7,009 7,555 6,140.11 8,612.70

Surplus (US$ Million)

357.44 385.55 558.33 462.00 628.19

% Surplus from Business Volume

5.13 5.50 7.39 7.52 7.29

Rationale1. Providing jobs.

2. Reducing poverty.

3. Drive innovation.

4. Nurture entrepreneurship.

5. Foster supporting industries.

6. Develop new products.

7. Generate export opportunities.

8. Increase the overall well-being of society.

9. Triggering economic growth.

10. Ensuring equitable development.

11. Ensuring sustainable development.

1. The main task is to formulate and coordinate policy initiatives in the development of Cooperatives.

2. The areas of policy initiatives

1. Creating conducive policy environment.

2. Institutional building (under Deputy of Institutional Development)

3. Entrepreneurship development (under Deputy of HRD).

4. Enhancing productive capabilities (under Deputy of Production).

5. Access to financing (under Deputy of Finance).

6. Enhancing marketing access (under Deputy of Marketing and Business Networking).

7. Business development and restructuring (under Deputy of Business Development and Restructuring)

8. Research and development (under Deputy of Research and Development)

The

Min

istr

y

IMPLE

MEN

TIN

G

AG

EN

CIE

S1. The Ministry of Cooperatives

and Small, Medium Enterprises.

2. The Indonesian Cooperative Council (DEKOPIN), based on The Law no. 25 of 1992 article 57.

Th

e In

donesi

an C

oop

era

tive C

ou

nci

lThe main duties of Indonesian Cooperative Council (DEKOPIN), based on The Law no. 25 of 1992 article 58 as follows:

1.To struggle for and extend the aspirations of the cooperative societies;

2.To enhance consciousness of the society to cooperate;

3.To carry out cooperative education for the members and the society;

4.To develop cooperation among cooperative societies

and between cooperative societies and other business

enterprises, at the national as well as at the international

levels.

1.

Conduci

ve e

nvir

onm

ent

1. Enactment The Law no. 25 of 1992 (under reviewing).

2. Evaluation on the existing regulations obstructing Cooperatives development.

3. Creating enabling government regulations (Government and Minister decrees).

4. Smoothing coordination among relevant agencies including with local govt.

5. Inviting big private company involvement to promote Cooperatives (CSR, business partnership).

2. In

stitu

tiona

l bui

ldin

g 1. Promoting genuine cooperatives (Revitalization of Institution of Cooperative).

2. Strengthening cooperative apex organization (Cooperative council).

3. Strengthening cooperative organization and management capacity.

4. Strengthening cooperative legal status.

5. Preserving cooperative values and principles.

6. Promoting cooperative cadres.

7. Member capacity building (member education, promotion and participation).

3. E

ntre

pren

eurs

hip

devt

. 1. Training for Cooperatives managers

and leaders.

2. Promoting cooperative field mentors.

3. The development of incentive system to enhance entrepreneurship for Cooperative is conducted through several training, recognitions, support for business development and other incentive systems.

4. P

rodu

ctiv

e ca

pabi

litie

s 1. Financing for Cooperatives production

facilities.

2. Introducing appropriate production

technologies (energy, machineries).

3. Business engagement in promising

sectors ( fisheries, palm oil estate, milk

industry, integrated farming etc.).

5. A

cces

s to

fina

nce

1. Government budget for revolving fund.

2. Creating credit scheme for specific target groups (woman coops, youth coops)

3. Cooperation with commercial bank to execute special credit scheme for small scale borrowers, including Coops (KUR and linkage program).

4. Establishing semi-government body (LPDB) in charge in operating revolving fund.

5. Strengthening saving and loan cooperatives.

6. Promoting financial consultation for Coops.

6. M

arke

ting

acce

ss 1. Annual exhibition at local, national and

international (SMESCo Festival and local and international exhibition).

2. Trade mission.3. Participation in International product exposition in

selected foreign countries.4. Establishing trading house.5. Establishing virtual trading board.6. Establishing semi-government body (LLP-KUKM)

in charge in marketing.7. Revitalizing traditional market (wet market) with

Market Coops (Koppas) involvement.8. Promoting business partnership.9. Promoting Coops retail shop.

7. B

usin

ess

deve

lopm

ent

1. Promoting BDSP (Business Development

Service Provider) for Cooperatives.

2. Development Small Holders Credit (KUR).

3. Promoting venture capital companies in

relation with Coops Development.

4. Warehouse receipt for Cooperatives’ Loan

Guarantee.

SM

ES

CO

Indo

nesi

a 1. Trading2. Exhibition3. Consultation4. Incubation5. Retail6. Permanent display7. Trading House

8. C

oops

Res

earc

h an

d D

evel

opm

ent

1. Policy research.

2. Program evaluation.

3. Strategic policy formulation (Mid Term Action Plan).

4. Pilot project One Village One Product (OVOP).

5. International Cooperation (APEC, ASEAN, BIMP-EAGA)

Closing Statement

At the celebration of the Indonesian Cooperative’s Day in July 12, 2010, the Government of Indonesia has launched the “Cooperative Awareness Campaign”.

The Government of Indonesia also commit to the development of Indonesian Cooperatives in the Medium Term Development Plan, 2010 to 2014.

Thank You