'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)