Cooperatives told to get into business

JAKARTA (JP): Chairman of the Indonesian Cooperatives Council Sri-Edi Swasono said yesterday the country's cooperatives must become more self reliant to serve their members effectively.

Sri-Edi said cooperatives could empower themselves by buying shares in related companies and developing partnerships with them.

The tobacco and clove cooperatives had achieved a degree of self-reliance by securing shares in cigarette companies, he said.

Sri-Edi said cooperatives were often seen as social welfare organizations without a serious economic role. They must improve their identity, credibility and leadership to improve their image, he said.

Armed with these mechanisms of empowerment, he said, the cooperatives would eventually become independent, commercially successful enterprises which could compete equally with limited- liability companies.

Sri-Edi said the cooperatives benefited from large networks and grass-roots customer bases which could give them economies of scale.

Former director general of cooperatives Ibnoe Soejono said the cooperatives required a professional management system similar to those abroad, instead of a heavy reliance on cooperative management boards.

Ibnoe stressed this was important for Indonesia because it faces competition with the realization of free market policies in 2003.

He said the country's 44,458 cooperatives with assets of Rp 6.4 trillion (US$2.7 billion), in 1995, required regular audits and clearly defined guidance to make a transition to commercial viability.

He said cooperatives in Thailand, Malaysia and the Philippines were offered more education, low-interest credit and tax breaks to raise their financial independence and, eventually, become profitable enterprises. (01)