'Cooperatives need to focus on profits'
'Cooperatives need to focus on profits'
JAKARTA (JP): Cooperatives need to focus their operations on
making profits rather than on social ends in order to increase
their contribution to the country's economic development, experts
said on Saturday.
"Cooperatives, which are expected to operate as the backbone
of the country's economy under the Constitution of 1945, have
played a minor role in the economic development because they have
placed too much emphasis on their social missions," the director
of Trisakti University's Postgraduate Program, Thoby Mutis, told
a seminar.
He said that the names of cooperatives, referring to women,
youths, Islamic schools and the Armed Forces, for example,
indicated that they were more socially-oriented than profit-
oriented.
Dawam Rahardjo, director of the Postgraduate Program of
Muhammadiyah University in Malang, East Java, told the seminar
that the role of cooperatives in economic development over the
past 25 years had been greatly overshadowed by the contribution
of both private and state-owned companies.
He said that statistical data indicated that in 1994 the total
number of cooperatives in Indonesia was about 44,000, with 25
million members.
Dawam said that, compared with cooperatives in Japan, which
can provide loans to companies, Indonesian cooperatives were
generally concerned with merely peripheral businesses.
Interest
A former director general of cooperatives, Sularso, told the
seminar that cooperatives should operate, not only for the
interests of their members, but also for the interests of
investors, management and customers.
He said the government's policies favoring the development of
cooperatives had made them inefficient and less competitive than
other business institutions.
The government has required state-owned companies and
publicly-listed firms to set aside up to five percent of their
net profits for the development of cooperatives, while
conglomerates have been required to sell part of their shares to
cooperatives at nominal prices with payments taken from their
future dividends. Commercial banks, meanwhile, have had to
allocate a minimum of 20 percent of their loans for cooperatives
and small businesses.
Sularso said the government had provided additional privileges
to cooperatives in the form of monopolies over certain goods,
including cloves and fresh milk.
"Such policies extending to cooperatives monopolistic rights
may invite protests from other countries because they are
regarded as non-tariff barriers which are against the principles
of the General Agreement on Tariffs and Trade (GATT)," he said.
He said that, under GATT, such policies should be gradually
abolished over the next 10 years. (kod)