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  • Writer's pictureMICRA

Indonesian Cooperative Reform: Progressive Breakthrough of Cooperative Building (part 3)

Blog by Moh. Faishol Khusni, MICRA Regional Manager East & Central Java.


The third and final part of this series continues the importance of cooperative reform in Indonesia and the steps in creating progressive Innovation in the “Cooperative-Building” Movement.

Cooperative business entities that have been dormant must take a more strategic role to expand their services to all lines. The Cooperative Movement, the Government, and cooperative stakeholders must develop a framework for future programs through the following suggestions:

  1. Establishment of independent bodies An example is the Indonesian Cooperative Accreditation Board (Badan Akreditasi Koperasi/BAK), which is filled by various independent groups who are very knowledgeable about cooperatives and cooperative reformers (Cooperator Innovators). This agency functions as an official institution that has the authority to evaluate the performance of cooperatives, standardize the development of cooperatives and provide recommendations to the Government and other cooperative stakeholders.

  2. Evaluate and strengthen the existence of cooperatives through the reverse proof method Immediately after the establishment of the Cooperative Accreditation Board (BAK), all cooperatives in Indonesia are required to certify themselves to continue obtaining operational permits following existing regulations. This allows screening of cooperatives by legal entities that determines if their permits are to be maintained or revoked. This action will reduce the number of cooperatives significantly but will retain the healthy and strong cooperatives and will also eventually provide an impact to create a positive image from the community and raise the prestige of cooperatives in Indonesia.

  3. Improving cooperative business implementation The business run by the cooperative must be parallel to the activities of its members to add value to its members’ products and business management must be carried out in a focused manner.

  4. Digital ecosystem in building growth Through a digital ecosystem, its members will improve service, modernize business, increase accountability, and will have a cohesive performance in general. Digitalization can also serve as a new source of income for cooperatives.

  5. Committed and competent members Cooperatives must be empowered so that they are not inferior to other business entities. One way to do that is to recruit young members who are competent in their fields, committed to unity, and can manage and develop cooperatives.

  6. Cooperative Rebranding To increase the selling power of cooperatives, it’s necessary to encourage young members to take part. It’s important to introduce cooperatives as an innovative business opportunity for the youth that uses an effective digital platform.

  7. Implement good cooperative governance (GCG) Cooperatives need to imitate the implementation of GCG which has been applied to legal entities. The concept of GCG in the cooperative sector needs to be modified to respond to the challenges of management and the increasingly complex business model of cooperatives. This needs to be directed at building the culture and awareness of various parties in the cooperative to always be aware of the welfare of its members. In implementing GCG, Indonesian cooperatives need to ensure that several strategic steps are necessary and the development of awareness of the objectives needs to be spelled out in the appropriate vision, mission, and work program. Building awareness to achieve goals is an important capital for the management of cooperatives in a professional, trustworthy, and accountable manner.

Goals of the Cooperative-Building Movement

Within the framework of the cooperative-building movement, 4 things need to be considered to strengthen the cooperative.

1. Cooperative institutions

Cooperative institutions are building on the functions of management, supervisors, managers, and employees of cooperatives. Usually, the implementation of these functions is often not working properly and overlapping in practice and its ineffectiveness also results in the abuse of authority by one party. All elements within the cooperative need sharp reforms to carry out their functions to the maximum extent possible.

2. Human Resources A common problem that occurs in cooperative institutions is the limitations and weaknesses of their human resources. This is mainly because cooperatives are community-based business entities within the low to high educational strata. It often happens that the management only relies on the dedication and not professionalism. Considering this, efforts to increase the professionalism of human resources managing this cooperative must be carried out, and should also be extended to its members.

3. Partnership and Network Expansion Cooperatives should be encouraged to build close and broad partnerships and networks to help continue their growth. This helps in building its trustworthiness with its ability to be transparent to different partners and networks

4. Capital Capital from its members allows its members (equity) allows cooperatives to constantly develop their business. In addition, cooperatives can seek outside capital to help them expand.

With its large role as a pillar of the national economy, cooperatives must be restructured to function effectively and can bring more opportunities to their members and the country at large. Cooperatives must be made to be self-identified, professional, and free from short-term interests, especially for groups that seek temporary profits that are detrimental to the development of the cooperative itself. I once emphasized that this pandemic brings the future much more accelerated than it should. We now have a challenge if we wait for it to remain constant or we start working on making it a stronger pillar of our society following the Indonesian Cooperative Reforma.

Bravo and Rise Up Indonesian Cooperatives!


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