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Cooperative's Contributions Towards Inclusive Development

Authors:
Research Associate Of
Centre for Innovation Policy and Governance (CIPG)
Indonesia Sutainable Centre
Kompleks Harmoni Plaza Block B-5
Jl. Suryopranoto No. 2 Harmoni
Jakarta Pusat 10130
INDONESIA
Cooperative’s Contributions
Towards Inclusive Development
Ferzya Farhan and Daya Cipta Sudrajat
Acknowledgement
This report was prepared and written by Ferzya Farhan and Daya Cipta Sudrajat. The
activities to produce the document has received full funding from Centre for Innovation
Policy and Governance (CIPG).
Cover photo belongs to Damsir Chaniago from SSI Pundi Sumatera
Published in Indonesia in 2017 by:
Centre for Innovation Policy and Governance
Indonesia Sustainability Centre
Plaza Harmoni Blok B-5, Harmoni Jakarta Pusat 10130
Except where otherwise noted, content on this report is licensed under a Creative Commons
Attribution-Non Commercial 4.0 License.
CONTACT
For comments and further information please write to:
ferzya@cipg.or.id or ofce@cipg.or.id or visit www.cipg.or.id
occupation) is also needed. The data can be
obtained from Statistics Indonesia (BPS) with
special request and coordination from Ministry
of Cooperative and Small Micro Business.
Secondly, society, government and development
agency should put attention to non-nancial
impact of cooperative. For example, in the
social dimension, it is important to notice that
the improvement of livelihood does not only
depend on nancial aspect. The cooperative and
credit union successfully increased the number
of educated people. Those people are now
helping the cooperative and the whole community
to improve their life quality. The government
recognition of cooperative contributions in social
dimension will enable them to cooperate, such
as by improving schools’ and teachers’ quality
in the region.
Thirdly, it is important to legalise Cooperative
Draft Law 2015 for legitimacy, and create
Credit Union Law, to distinguish it from Credit
Cooperative. In the new draft law, cooperative
entity is distinct from other business entities.
It does not only differ in denition, but also in
tax regulation. In Article 50, it states that prot
of cooperative should not be taxed. Since
cooperative is non-prot, the ability of cooperative
and credit union in enabling people to pay tax is
important to be recognised.
Last, all development stakeholders should
acknowledge Kooperasi and credit union as
development partners, not as a business entity
or nancial institution; in order to obtain balance
development; improving people’s general
welfare without neglecting society & ecology
needs. The purpose of cooperative and credit
union establishment is not for prot, instead, it
aims for social transformation and improving
community’s standard of living. It is important
to note that the rural and urban cooperatives
are also the strongest potential partners to
defeat environmental degradation. Therefore,
the development stakeholders can work hand-
in-hand with Kooperasi as well as credit union,
such as through joint management of national
resources or modern technology
Active citizens and effective state play the key role
in institutional and policy change. If civil society
can mobilise resources, access mainstream
circuits of power, and influence the policy
process, then meaningful policy and institutional
reform will likely occur. The road is still winding
for cooperative to call for transformative pattern
of development in Indonesia, but there is light at
the end of the tunnel.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 59
Shaping the Ecosystem Towards Development Partners
Chapter 6
Executive Summary
This report aims to review the emerging cooperatives spirit in Indonesia called ‘Kooperasi’,
and its contributions towards inclusive development by exploring their experiences,
innovation and challenges. The research questions guiding this research are the following:
1. How does cooperatives contribute to inclusive development?
2. Howdogovernmentpoliciesinuencetheexistenceofcooperatives?
3. To what extent innovation supports cooperatives to achieve its goals?
Toanswerthesequestions,weselectedveorganisationsassample,inrural,sub-urban
and urban areas. The term Kooperasiisusedtodistinguishideology-drivencooperative
models from ‘Koperasi’. While Koperasi (hereinafter termed as Koperasi or cooperative)
isanancialinstitution,Kooperasi (hereinafter termed as Kooperasi or cooperatives)
isacombinationofideology-drivencooperativemovementandnancialinstitution.To
gatherandanalyseourdata,amixed-methodconsistingofqualitativeandquantitative
methodology was used.
On the whole, the research found that cooperatives highly contribute to aspects of social
inclusiveness, economy, citizen’s rights, and ecological inclusiveness. The government
policies are changing in every phase of Indonesia’s development agenda, with the current
Law applied to cooperatives was enacted in 1992, 25 years ago. In 2014, cooperative
activists protested against the Cooperative Law No.17/2012 because it was not suitable for
the existence of cooperative in Indonesia. Nevertheless, in 2015, Regional Representative
CouncilIndonesia(DPD-RI)draftedCooperativeLaw,containingnewdenitionof
cooperative and its implication to the macro development agenda, as well as to tax regulation.
However, the draft has not been legalised until now.
Despite its contribution to inclusive development, cooperatives do not receive recognition
from the public; lack of trust from the community is one of the challenges. Therefore,
cooperatives in Indonesia needs an ecosystem to address the challenges and help it
develop. The ecosystem involves internal and external evaluation and aspects. For example,
innovationisanimportantelementforthecooperative’secosystem.Duringeldstudy,
researchers found three main innovation categories in Kooperasi namely product, process
and social innovation.
Despite cooperatives is a viable alternative to both corporate capitalism and command
socialism, it is still undervalued. Therefore, putting cooperative back into development
agenda is strictly necessary, especially in Indonesia, in which cooperative contestation
has been developed.
Table of Contents
ACKNOWLEDGEMENT i
EXECUTIVE SUMMARY 1
LIST OF FIGURE 4
LIST OF TABLE 4
LIST OF ABBREVIATION 6
GLOSSARY 7
CHAPTER 1 11
INTRODUCTION 11
BACKGROUND AND RATIONALE 11
RESEARCH OBJECTIVE AND QUESTIONS 13
RESEARCH DESIGN 13
PREVIEW OF COOPERATIVES MOVEMENT’S CONTRIBUTIONS
TOWARDS INCLUSIVE DEVELOPMENT 13
STRUCTURE OF THE REPORT 14
CHAPTER 2 15
THEORETICAL CONTEXT 15
UNDERSTANDING GLOBAL AND INDONESIA’S COOPERATIVE: A SHORT HISTORY 15
-Denition  15
-ValuesandPrinciples  16
-NumberofCooperativeinIndonesiaandGlobal  19
BEYOND Koperasi 19
 -Koperasi, Kooperasi, credit union: tension between economic and social value 19
-Indonesia’scooperativepolicyandregulation  22
A FRAMEWORK TO INVESTIGATE 25
 -Inclusivedevelopment:emergingtheories,
Cooperative and inclusive development 25
-Innovation:conceptandthetypeofcooperative  27
CHAPTER 3 30
APPROACH 30
METHODOLOGY 30
CONSTRAINT AND LIMITATION 32
CHAPTER 4 34
THE BOTTOM UP PURSUIT OF DEVELOPMENT: RURAL COOPERATIVE PRACTICE 34
THE FARMERS PHILOSOPHY OF CREDIT UNION Gemalaq Kemisiq (CU GK) 34
-History  34
-Inclusiveness  36
-Innovation  38
• THEESSENTIALGOALSTOBEEQUAL:DAHLIAWOMENCOOPERATIVE  38
-History  38
-Inclusiveness  39
-Innovation  40
THE WILL TO IMPROVE: HIGHLIGHTS OF THE RURAL Kooperasi 41
CHAPTER 5 42
THEYOUTHPURSUITOFDEVELOPMENT:SUB-URBAN&URBANCOOPERATIVEPRACTICE  42
Kopkun Purwokerto 42
-History  42
-Inclusiveness  44
-Innovation  45
CONSISTENT STRUGGLE FOR CITIZEN RIGHTS: Kooperasi Komunitas Kalimetro 45
-History  45
-Inclusiveness  46
-Innovation  47
• THERELENTLESSPURSUITOFALTERNATIVE:PURUSHARESEARCH&COOPERATIVE  47
-History  47
-Inclusiveness  47
-Innovation  48
• COLLECTIVEINITIATIVEFROMURBANPEOPLE:HIGHLIGHTFROMURBANCOOPERATIVE  48
CHAPTER 6 49
SHAPING THE ECOSYSTEM TOWARDS DEVELOPMENT PARTNERS 49
LEARNING FROM THE CASE STUDY 49
CHALLENGES OF THE COOPERATIVE MODEL 54
THE ECOSYSTEM 54
-EssentialElements:BuildingBlocks  55
-ImportantElements:Accelerators  55
-SupportingElement:Legitimiser  55
CHAPTER 7 58
AGENDAFORCHANGE  58
• INANUTSHELL  58
• AGENDAFORCHANGE  58
List of Figure
Figure 1 Research process 13
Figure 2 Cooperative comparison between Indonesia and international regions 19
Figure 3 Conceptualising inclusive development 26
Figure 4 Summary of cooperative contribution towards inclusive development 51
Figure 5 Summary of the Indonesia’s history on cooperative policies 53
List of Table
Table 1 Comparison of value and principles 17
Table 2 Framework for the potential contribution of cooperatives
towards inclusive development 27
Table 3 Sample consideration 31
Table 4 Research methodology matrix 32
Table 5 Credit Union Values and Principles 35
Table 6 Summary of the organisation 49
Table 7 Cooperatives contribution toward inclusive development 50
Table8 Summaryofcooperativesinnovation 52
List of Figure
Figure 1 Research process 13
Figure 2 Cooperative comparison between Indonesia and international regions 19
Figure 3 Conceptualising inclusive development 26
Figure 4 Summary of cooperative contribution towards inclusive development 51
Figure 5 Summary of the Indonesia’s history on cooperative policies 53
List of Table
Table 1 Comparison of value and principles 17
Table 2 Framework for the potential contribution of cooperatives
towards inclusive development 27
Table 3 Sample consideration 31
Table 4 Research methodology matrix 32
Table 5 Credit Union Values and Principles 35
Table 6 Summary of the organisation 49
Table 7 Cooperatives contribution toward inclusive development 50
Table8 Summaryofcooperativesinnovation 52
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
6
AMA-JK : Aliansi Masyarakat Adat Jalai Kendawangan or Indigenous People
Alliance of Jalai Kendawangan
CU : Credit Union
CUCO : CreditUnionCounsellingOfce
CU GK : Credit Union Gemalaq Kemisiq
CV : Commanditaire Vennootschap or Limited Partnership
DPD : Dewan Perwakilan Daerah or Regional Representative Council
HC : Homo Cooperativus
HDI : Human Development Index
ICA : InternationalCo-operativeAlliance
ID : Inclusive Development
IMF : International Monetary Fund
KUD : Koperasi Unit DesaorVillage-BasedCooperative
MCW : Malang Corruption Watch
MDGs : Millennium Development Goals
MoC : Ministry of Cooperative and Small Enterprises
MP3EI : Masterplan Percepatan dan Perluasan Pembangunan Ekonomi
Indonesia or Master Plan for Acceleration and Expansion of
Indonesia’s Economic Development
NASAKOM : Nasionalis, Agama dan Komunis or Nationalism, Religion
and Communism
OLDEFOST : Old Established Forces
PNSB : Pembangunan Nasional Semesta Berencana or
Comprehensive National Development Plan
PRC : People’s Republic of China
R&D : ResearchandDevelopment
RPJPN : Rencana Pembangunan Jangka Panjang Nasional or
 NationalLong-termDevelopmentPlan
RPJMN : Rencana Pembangunan Jangka Menengah Nasional or
 NationalMid-termDevelopmentPlan
UN : United Nations
USSR : Union of Soviet Socialist Republics
WTO : World Trade Organization
List of abbreviations
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 7
Bottom-up approach – an approach in development which involves local actors in
strategicdecision-makingandinselectingprioritiestobepursuedintheirlocalarea.
Citizens’ rights – a universal term to refer to personal rights acquired by being a
citizen or resident.
Cooperative – a universal term to refer to an autonomous association of persons
united voluntarily to meet their common economic, social, and cultural needs and
aspirations through a jointly owned and democratically controlled enterprise.
Credit Union–amember-ownednancialcooperative.
Ecology – a relationship between organisms and their environment.
Ecosystem – a dynamic elements of individuals, organisations, communities and
institutions that interact to support or inhibit scaled growth of cooperatives.
Inclusive Development–theprocesstoensureequalaccessofwell-beingand
improvement of general human’s livelihood as well as the ecosystem.
Inclusiveness – a quality of including many different types of people and treating
them all fairly and equally.
Indigenous – a native in local community area.
Innovation-aninnovationisanidea,practice,orobjectthatisperceivedasnewby
an individual or other adopting units.
Kinship – or kekeluargaan in Bahasa Indonesia means a family relationship. In
cooperative context, kinship is an Indonesian cooperative value.
Koperasi (id)/cooperative –atermtorefertonancialorganisationmainly
developed during New Order Regime and mostly located in rural area.
Kooperasi (id)/cooperatives–anideology-drivencooperativemovementthatco-
existsalongsidewithanancialinstitution.
Kooperasi ekonomi (id) – or economy based cooperative. A cooperative which aims to
improve people’s livelihood through partnership.
Kooperasi sosial (id) – or social based cooperative. A natural part of being human;
which is fond of helping each other.
Movement – a group of people who share the same beliefs, ideas, or aims.
Top-down approach – a system of government or management in which actions
and policies are initiated at the highest level.
Saving and loan service – a part of cooperative services which allow the members to
save money collectively and get a loan in the meantime.
Wirid yasinan (Javanese)– an activity to recite Quran in group.
Glossary
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
8
CIPG, 2017
The establishment of the
kooperasi strengthen the
presence of customary
land, reduce environmental
degradation, increase gender
equity, ensure education,
healthcare and pension needs,
and increase the sense of
security, unity and solidarity.”
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 9
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
10
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 11
Chapter 1 Introduction
The world has become more unequal as the
economic disparity in our society widens. Despite
the efforts to alleviate global poverty, more than
3 billion of the poorest people in the world own
the same wealth with diminutive groups of global
super-rich,consistingofonly62exclusivepeople
(Oxfam International, 2016). For the sake of
raising capital, cultural changes and the number
of diseases are increasing, while food and
nutrition are declining due to inextinguishable
deforestation(Colfer,Sheil,Kaimowitz,&Kishi,
2006).
In the meantime, the world is increasingly
globalised. Trade and technology run by few
groups of actors are inseparable within the life
of Indonesian communities. These intertwining
process is irreversible. There is a protesting
voice against the ongoing globalisation. The
greedy-economicsysteminproducinggoods
(wealth) causes social and environmental risks.
For this reason, tremendous number of people
areseekingalternativestoprot-dominated
economic actors/companies.
Cooperative, as historically proven, offers
such alternative. It has been playing important
economic and social roles in developed as well as
developing countries. Cooperative is an economic
organisation based on social and ethical values,
aswellastheprinciplesofdemocracyandself-
help. Unfortunately, cooperative has not always
beenrecognised.Inthisindividual-centredworld,
the contributions of cooperatives are not visible
in the public and international context. Instead,
cooperatives are treated as “invisible citizens”
(Saner,Yiu,&Filadoro,2012), comparedto
public and private organisations.
Therefore, cooperatives requires adequate
policy frameworks and regulation to enable it
toourish.Equallyimportant,innovationfor
cooperatives is essential to be emphasised in
order for cooperatives to survive and grow within
globalised world. This research aims to take a
closer look to the contributions of cooperatives
movement to inclusive development, and how
policyandinnovationinuencetheexistence
of cooperatives.
Background and rationale
Throughout many years, the notion of development
is highly concentrated on the economic growth
concept. Growth, since the World War II, has
been being recognised as essential factor for
countries to address depression while acting as
economic indicator in predicting development
(Adibroto, et al, 2013). The fundamental axiom
of growth is ‘when something grows, it becomes
bigger’, hence to become a greater country, one
mustconcentrateontheeconomicgrowth.Atrst
glance, growth is appealing as it provides capital
to improve access to basic entitlements such
as transportation and road. However, it leads
to social cost and environmental degradation.
TheWashingtonConsensus ofthe1980s
emphasised the need to downsize certain
government institution. However, the prescription
failed to escalate growth in developing
countries (Rodrik and Subramaian, 2009),
while exacerbating poverty and inequality. To
respond to such failure, mainstream development
communitycameintheformof‘post-Washington
Consensus’, adding ‘good governance’ and
‘poverty reduction’. Since early 1990s multilateral
organisations, International Finance Institution
(IFI), and development agencies such as the
United Nation (UN) and World Bank, has been
crafting proactive responses to that failure.
Introduction
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
12
Theoretical Context
Chapter 2
Sen’s (1999) notion of freedom as development
creates a fundamental change is practiced
around the world. Sen argues that development
should remove poverty and tyranny as well as
improving access to resources for poor people.
Development agencies as well as aid institutions
strongly embrace this idea, hence Sen’s concept
of freedom becomes the pulse of inclusive
development. The notion of ‘inclusive’ grows as
a way to include the poor in the development
agenda; enabling them to access the resources
that they never could. In recent years, a growing
number of global and national organisations have
taken part in the new poverty reduction agenda
created by the UN, in order to achieve a more
inclusive development, such as Millennium
Development Goals (MDGs) and Sustainable
Development Goals (SDGs).
In the context of Indonesia, development goals
are outlined in the preamble of 1945 Constitution.
The independence of Indonesia aims “to promote
general welfare, to educate the life of the
nation, to participate in a world order based on
freedom, eternal peace and social justice”. It is
furtherelaboratedintheArticle28and31–34
of 1945 Constitution. The articles highlight the
signicanceofcitizen’srights,righttoeducation,
national economic standard and social welfare.
Morespecically,Article33statesthatIndonesia
aims to achieve economic democracy; putting
socialwelfareaboveindividualprots.
Indonesia sets its own value of inclusive
development; referring to a general welfare for
its people as well as participation in the world
order. The development agenda should include
all people without discrimination at the first
place;placingtheurban,sub-urbanandrural
communities in equal position. Unfortunately,
until now, development agendas of Indonesia
donotspecicallyrefertotheConstitution.The
political and economic dynamics in this country
already shifted several times; from Old Order,
New Order, and after Reform.
Nevertheless, the characteristic of inclusive
developmentisexempliedintheunderlying
valueofcooperative;co-operative–working
together towards common prosperity. This
bottom up movement proposes alternatives to
the capitalistic world order. Through practicing
economic democracy, increasing members’ and
community’s general knowledge, cooperatives
aims to attain common prosperity under its own
denition.Asanexample,theglobalautonomous
processes on the resources allocation is more
into ‘one dollar one vote’ approach (Piketty, 2014),
while cooperative system uses the ‘one person
one vote’ system. Therefore, every decision is
made by the people, instead of the amount of
money that people have.
For this reason, the research selected an
illustrative sample of emerging cooperatives term
called ‘Kooperasi’. This research uses the term
cooperatives (Kooperasi) to illustrate an organic
organisation with a movement spirit to improve
community’s general welfare and livelihoods.
The term cooperatives (Kooperasi) is used to
distinguish it from the cooperative model of
Koperasi’. While Koperasi is a term referring
toprotorganisationmainlydevelopedduring
New Order Regime, Kooperasi is a combination
ofideology-drivencooperativemovementand
nancialinstitution.Togatherandanalyseour
data,amixed-methodconsistingqualitativeand
quantitative methodology was used.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 13
Theoretical Context
Chapter 2
February - March 2017
Desk study and survey Interview Data analysis,
further desk study
and report writing
March - April 2017 May - June 2017
Research objective and
questions
This report aims to review a type of cooperatives
in Indonesia called ‘Kooperasi’, and its
contributions to inclusive development; as well
as to explore their experiences, innovation and
challenges. The researchers selected two urban
cooperativesassample;consistingofonesub-
urban cooperative, one rural cooperative, and
one credit union.
The research questions guiding this research
are the following:
1. How does cooperatives contribute to inclusive
development?
2. Howdogovernmentpoliciesinuencethe
existence of cooperatives?
3. To what extend innovation supports
cooperatives to achieve its goals?
With these questions guiding the research,
the main objective of this study is to have
broader understanding on the contributions of
cooperatives to inclusive development. The
researchers recognise that the cooperative’s
(both national and international) value is voluntary
based, and aim to improve peoples’ welfare. The
researchers also recognise that cooperative is
voluntary in nature, with improving its members’
welfare as main objective. This research aims
tospecicallyunderstandthecontributionsof
cooperatives to economy, social, ecology, and
citizen’s rights.
Research Design
This research followed a process as described in Figure 1 using a combination of methods and
tools (see 3.1 Methodology)
Preview of cooperatives
movement’s contribution
towards inclusive
development
There is a strong need to strengthen cooperative’s
position in the national development agenda. In
this era, where inclusivity is highly needed, the
cooperatives can offer such way. Based on data
analysis, the researchers found that cooperatives
with various types have been passed through
several stages in the history of development in
Indonesia. Nevertheless, the acknowledgement
of cooperatives in national development agenda
is limited. Therefore, the report shows a plethora
of cooperatives practices across sectors,
geographical context, and development agendas.
The research findings demonstrate that
cooperative contestation is not only diffused
in rural area but also in urban area. Moreover,
it also indicates that various cooperatives are
able to enhance community welfare as well
as mitigating environmental degradation. The
report is concluded with an offer to develop an
ecosystem for the cooperatives and strengthen
its position in the national development agenda.
As an overview, this study shows that the
cooperatives’ contributions to ecology
inclusiveness are concentrated in rural
area. Such contribution thrives because the
Figure 1
Research process
Figure 1 represents the
research process within
therst4months.Inthe
rstmonth,theresearch
conducted desk study and
distributed a survey to potential
cooperatives. Interview took 2
months to complete. Another
two months were allocated for
analysingthedata,conrming
thendingsofdeskstudy,and
writing the report.
The research was completed at
the end of June 2017.
To comprehensively answer the research questions, the primary data was collected by distributing
survey and conducting interviews. The data was collected in March and April 2017. In April and
May2017,dataandndingsofdeskstudyonpolicywereanalysed.Inpre-researchphase,
researchers analysed secondary data and theoretical context through desk study. Chapter 3
will elaborate the methods in more detail.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
14
Theoretical Context
Chapter 2Chapter 2
communities directly face the consequences of
environmental degradation; especially in regards
to water and safety. In contrast, the communities
in urban area do not fully get the nuance and
signicanceofcontributingtoecologicalbalance,
except reducing the number of plastic usage.
Whenlookingattheurban andsub-urban
cooperatives’ contributions, they mainly focus on
the diffusion of cooperative ideology and social
improvement. After all, it shows that cooperatives
contestationcomesfromself-consciousnessand
deliberate attempt to provide freedom to be fully
independent.
Given the fact that cooperatives contributes
in many ways to inclusive development, the
initiativeshouldbedeeply-rootedinmanylevels.
There are many points that need to be addressed
in the cooperative ecosystem to make it sustain
and be acknowledged as imperative alternative
for development.
Structure of the report
This report represents an analyses of cooperatives’
contributions towards inclusive development in
Indonesia.Chapteronebrieyintroducesthe
dynamics of cooperatives and its contributions
towards inclusive development. Theoretical
perspectives are discussed in the second chapter.
The third chapter presents the research approach
by outlining methodology and data collection tools,
alongwiththeirconstraints.Chapterfourandve
explicate the cooperatives’ contribution towards
inclusive development through case study in
rural,sub-urbanandurbanarearespectively.
Inchaptersix,compilationofresearchndings
and discussion about ecosystem are presented.
To summarise the research, the last chapter on
thisreport,chapterseven,outlinesreectionand
agenda for change.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 15
Theoretical Context
Chapter 2Chapter 2
Theoretical Context
Understanding Global and
Indonesia’s Cooperative:
a short history
It is interesting to observe the distribution of
cooperative contestation around the world.
Paradoxically, humankind has the tendency
toboth‘co-operate’amongcommunitywhile
individually seeks novelty. As the population
keeps rising, the willingness to cooperate is slowly
declining, including to establish cooperative.
The idea to cooperate has been living among
humankind, however, no one knows exactly
when cooperative society started. In the recorded
history,writteninthe‘SchaarsBook’(Zeuli&
Cropp,2004),therstcooperativesocietybegan
in England in 1696. At that time, they created
Mutual Aid Society (later known as Friendly
Societies)thatofferednancialandemployment
assistances to members during economic
difculties,sickness,ordeath.
Thequasi-cooperative inbakingindustries,
cornmills,andourmillingappearedin1760
prior to Industrial Revolution. Cooperatives
diffused in many ways; as advocated by Robert
Owen and William Kings in England as well as
Charles Fourier in France, with the supports from
cooperative media and journals. Their ultimate
goal was clear: to alleviate poverty and suffering
caused by Industrial Revolution.
Laterin1844,JamesSmithiesandagroupof
28memberswholivedinRochdale,England
created a prototype of cooperative model for a
shop. They laid out a foundation of cooperative
called Rochdale Pioneers. The group wanted
cooperativeto“establishaself-supportinghome
colony of united interest” and to “arrange the
powers of production, distribution, education
and government” for the interest of its members.
Into the bargain, they also created Rochdale
Cooperative Principles, containing 12 principle
points.
Meanwhile,duringthe1840s,extremefamine
hitEurope;lowshingyieldandshortageof
potatoes caused high unemployment, economic
and political depression. Cooperatives and Credit
Unionthenbegantoappearinthe1850sin
Europe. Since the depression, cooperatives
gradually has been spreading around the world,
including to the United State, African and Asian
countries.
Long before Indonesia became a nation, the
cooperative concept had appeared when
AriaWiraatmaja,Vice-RegentofPurwekerto,
established the Hulp and Spaarbankin1886;
a financial Cooperative to help people in
Purwokerto from money lender. Furthermore,
organisations such as Boedi Oetomo, Syarikat
Dagang Islam, Kelompok Studie Club and
publicguressuchasTanMalaka,Mohammad
Hatta and D.N. Aidit diffused the concept
to their respective community. After gaining
independence, Indonesia’s founding fathers laid
out the foundation of cooperative system in the
1945 Constitution of Indonesia (Dewan Koperasi
Indonesia, 2016).
Denition
‘Cooperative’ is derived from the Latin word ‘co’,
meaning ‘together’ and ‘operate’ meaning ‘to
work’. As a phrase, ‘cooperative’ was coined in
early 17
th
century. It is then become English word
‘cooperative’ which means ‘mutual assistance
in working towards a common goal’ (Oxford
Dictionary English). However, the meaning of
cooperative as an organisation is diverse in many
countries.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
16
Theoretical Context
Chapter 2
In the context of Indonesia,
cooperativeisdenedbythe
Indonesian Government in
the Law 25 Year 1992, as:
A conceptual definition,
the one developed by
InternationalCo-operative
Alliance or ICA
1
(1995), is
now widely accepted in over
100 countries as universal
denition.Itstatesthat:
a cooperative is an autonomous
association of persons united
voluntarily to meet their common
economic, social, and cultural needs
and aspirations through a jointly
owned and democratically controlled
enterprise”.
a cooperative is an autonomous
association of persons united
voluntarily to meet their common
economic, social, and cultural needs
and aspirations through a jointly
owned and democratically controlled
enterprise”.
1 ICA (1995):
an international cooperative
organisation with over 230
members around the world
aiming for global cooperation
to build a better world.
Ingeneral,cooperativeisdenedaseconomic
organisation based on social, ethical values, and
the principle of cooperation. In broad context,
cooperative: a) universally focuses on activities
to accomplish its goal, while in b) Indonesia, the
denitionofcooperativefocusesontheentity.
Thisresearchadoptstherstperspectivedue
the specific characteristics of cooperatives
(Kooperasi), which is further explained in the
sub-chapter2.2.
Values and Principles
Cooperative is a unique organisation due
to its purpose that is not only for economic
improvement of its members, but also for
contributing as social cornerstone to their
communities through implementing its values and
principles. However, the values and principles in
each country might be different, according to its
own social characteristics. Indonesia as a country
has distinct value and principles, compared to
other countries. Table 2 presents the comparison
between them.
Chapter 2
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 17
Theoretical Context
Chapter 2
There is a prominent distinction of cooperative
value in Indonesia. While the universal
cooperative values are detailed in 6 points,
Indonesia only points out one value: kinship,
or kekeluargaan in Bahasa Indonesia. Since
kekeluargaanspecicallyreferstothecontext
ofIndonesia’snature,Sri-EdiSwasono(2010)
simpliesitas‘abrotherhood’spirit,describing
it as a behaviour of mutual assistance/help
and cooperation in order to achieve common
interest.Swasono’sdenitiondemonstratesthat
Indonesiancommunityvaluessolidarityandself-
help, which is in some way in line with several
universal values. However, Swasono’s limited
explanationdoesnotfullyreecttheothervalues
suchasself-responsibility,democracy,equality,
and equity.
Value of Cooperative Value of Cooperative
Indonesia Universal Indonesia Universal
Kinship 1. self-help
2. self-responsibility
3. democracy
4. equality
5. equity
6. solidarity
1. voluntary and open
membership
2. democratic member
control
3. distribution of the
remaining results of
operation is divided
proportionally based on
members’ service
4. giving limited return
on capital to the
stakeholder
5. self-sufcient
6. cooperative education
7. co-operationamong
co-operatives
1. voluntary and open
membership
2. democratic member
control
3. member economic
participation
4. autonomy and
independence
5. education, training and
information
6. co-operationamongco-
operatives
7. attention for the
community
Table 1
Comparison of value
and principles
Sources: Author’s, interpreting
Law 25 Year 1992 and ICA’s
document (1995)
Three out of seven cooperative principles
in Indonesia are identical with the universal
principles: voluntary and open membership,
democraticmembercontrol,andco-operation
amongco-operative.Nevertheless,there
are several distinctions such as ‘cooperative
education’ in Indonesia that is not similar with
‘education, training, and information’ as universal
principles.
Another prominent distinction is in economic
participation. Universal cooperative states that
a member is based on economic participation.
In contrast, “distribution of the remaining results
of operation is divided proportionately based
on members’ services” in Indonesia. The word
“service” is to explain that cooperative can be
established with or without members’ economic
participation.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
18
Theoretical Context
Chapter 2
Based on these similarities and distinctions, there are three main conclusions of cooperative in Indonesia:
Value and principles are key factors for the
success of both the organisation and the
movement. Therefore, it is essential to take a
transformativeactioninordertore-conceptualise
the cooperative value and principles.
The Number of Cooperatives (Koperasi)
in Indonesia and
The World
Despite the limited exposure of cooperative
(Saner,Yiu,&Filadoro,2012),surprisinglythe
numberofcooperativeestablishmentsignicantly
grows in the world.
Figure 2 illustrates the rising number of
cooperatives between 2007 to 2015 in the
world,especiallyinAmerica(180%)withmost
of the cooperatives are worker cooperatives,
andAfrica(96.56%).The dataindicatesthe
tremendous number of people who are looking
for global development alternatives. The number
of cooperatives in Figure 2 excludes China’s
cooperatives, to prevent imbalance proportion
of the overall number of cooperatives in Asia.
However, the Global Consensus in 2014
calculatedthattherewere2.614.598cooperatives
in the World (Dave Grace and Associates, 2014).
First, Indonesia’s cooperative value of
kinship (kekeluargaan) is very broad.
This value does not explain to whom
it applies, whether to its members or
the surrounding communities. In fact,
kinship can be interpreted into various
actions, from creating public facilities
to corruption; considering that the
action may involve all members.
Second, ‘distribution of the remaining
results of operation is divided
proportionally based on members’
services’ is very difficult to be
implemented. The principle does
not specify any way to measure
members’ services. In addition, it may
create different perceptions among
members, thus leading to internal
conict.
Third, Indonesia’s principles do not
indicate any concern to the wider
community. It only focuses on its
internal organisation. Nevertheless,
many cooperatives in Indonesia
include social activities to generate
positive impact.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 19
Theoretical Context
Chapter 2
ThegurealsoindicatesahugespikeinthenumberofcooperativesinIndonesia.However,the
ratio of cooperatives number to population is low, which translates to two possibilities: 1) the global
statistical data of cooperatives is not complete or updated, or 2) the cooperatives in Indonesia do
not apply for legal entity.
Figure 2
Cooperative comparison
between Indonesia and
international regions
Sources: BPS for Indonesia
dataset (Badan Pusat Statistik,
2016); Cooperative Europe for
Europe dataset (Cooperative
Europe, 2016); ILO for Africa
dataset (International Labour
Ofce,2014);Loubereand
Zhang(Loubere&Zhang,
2015), ACCU (ACCU, 2016)
forAsiandataset;Co-op
Zone (CoopZone, 2010) and
University of Wisconsin Center
for Cooperatives (Deller, Hoyt,
Hueth,&Sundaram-Stukel,
2009) for America dataset.
Comparison of Cooperatives Number
2007
20,000
69,919
29,214
104,999
114,106
155,288
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
0 2008 2009 2010 2011 2012 2013 2014 2015
81,843
132,635
137,436
150,223
174,461
2016
Indonesia Africa America Asia Europe
Unfortunately, the number of cooperatives per region in the world is not available. The
data in the gure presented above is derived from various sources
and Kooperasi, and credit union are as follow:
Koperasi, Kooperasi, credit union:
tension between economic and
social value
The term “Kooperasi”rstlyappearedin1954
when Hatta (1954) in his book describes
Kooperasi as a “cooperation organisation to
achieve certain purpose”. For him the value
of Kooperasi is in the cooperation. He divides
Kooperasi into two types; social and economy.
Kooperasi sosial (social based cooperative)
includes a natural part of being human; which
is fond of helping each other. On the other
hand, Kooperasi ekonomi (economy based
cooperative) aims to improve people’s livelihood
through partnership.
Beyond Koperasi
Around the world, cooperative is widely regarded
as an economic organisation whose values and
principlesarebasedondemocracyandself-help.
However, in Indonesia, due to political
consequence, cooperative (Koperasi) is known
as a product of Soeharto’s regime from the
issuance of the Presidential Instruction 4/1973.
Thus, some people interpret Koperasi as “enfant
terrible” of economics. They focus on the inability
of Koperasi in practicing economy, meanwhile
thecooperativeprinciplesarenotdenedas
thepursuitofprot(Arsad&Anggraeni,2015).
Community’s trust towards Koperasi declines
due to massive corruption among government in
local, regional, and national levels including in the
board of cooperative directors (Rusdiyono, 2009).
Therefore,thedistinctdenitionsofKoperasi
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
20
Theoretical Context
Chapter 2
Nevertheless, the spirit of Kooperasiwasrst
echoed by Sutan Ibrahim gelar Datuk Sutan
Malaka or widely known as Tan Malaka.
Both Malaka and Hatta studied in the Netherlands;
Malaka was a senior to Hatta. He started to learn
aboutsocial-democracyideologyin1917,2
years before Hatta came to Europe. For Malaka,
Koperasi (cooperative) is a system with a spirit
of Kooperasi (cooperation). He believes that
cooperative can be established everywhere
– urban and rural, with an aim to oppose
imperialistic and capitalist way of life (Malaka,
1948).Furthermore,throughcooperative,he
wished to see the full independence of Indonesia;
aswellasIndonesiancommunityworkinghand-
in-handtoachievetheproletariatinterest.
Ontheotherhand,Hatta(1954,pp.16-17)
explored the pattern of cooperatives in his
country and others. He found a distinction
between Indonesian and Western cooperative.
Cooperative in Indonesia strongly focuses on
social aspect to ensure social welfare in the
surrounding community; highlighting examples
suchas:partofcooperative’sprotisusedto
build places of worship, healthcare facilities, life
insurance or scholarship. Hatta noticed those
examples when he studied cooperative in rural
area. Social aspect of cooperative was prominent
as a collective effort to address poverty. Therefore,
Hatta argues that cooperative as joint ventures
should be established from rural area.
However, Hatta’s thought on cooperative does
not always share the same perspective with the
others. Aidit (1963) argues that cooperative under
community system will not defeat economic crisis
or capitalist system without a collective level of
consciousness. Aidit believes that cooperative
is a movement to improve people’s standard of
living.Itshouldnothavethetendencyoftheleft-
wingnorright-wing,butprogressive.
Therefore, he acknowledges that the basis of
cooperative is a cooperation between those who
are economically weak, especially farmers, in
order to unite and help each other to improve the
standard of living. People who have concurrent
interests gather in a cooperative on voluntary
basis. This concurrent and voluntary basis of
interest should be considered in organising
a cooperative. Nevertheless, Aidit did not
neglect the potential existence of Koperasi, as
an organisation with capitalistic practices; the
Koperasi entity was used to facilitate tax evasion
and to seize facilities that should only be obtained
by cooperatives.
Lubuk Linggau village,
Jambi where Koperasi Wanita
Dahlia located
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 21
Theoretical Context
Chapter 2
Malaka, Hatta and Aidit present distinct understandings of cooperative:
Since Indonesia’s founding fathers created the
1945 Constitution of Indonesia, Koperasi began
to be formally established. As recommended by
Article 33 of 1945 Constitution of Indonesia,
cooperative became the economic vehicle,
the tool for practicing democracy, and national
economy movement. At that time, the idea of
Koperasi was easily accepted; the movement
was also widely spread in Indonesia. In 1947, the
movement gathered in Tasikmalaya, West Java
to conduct a national congress. As a result, they
announced July 12th as ‘Koperasi day’.
As Rusdiyono (2009) recorded, in 1953,
the movement held second congress, and
announced Mohammad Hatta as the Father of
IndonesianCooperative.Eventually,in1958,the
new law on cooperative was issued. The Law
Number79Year1958highlightedthedenition
of cooperative as an association of people, not
capital association. In Article 2, it stated that “the
government should engage and guide the people
through education and leadership so people are
keen to live cooperatively”. Under Soekarno’s
regime, the number of Koperasi vastly increased.
However, in the late 1965, many Koperasi were
used as a revolutionary tool to achieve certain
goals, especially by several political parties.
Therefore, in 1967 when Soeharto was ruling,
he managed to ‘organise the Koperasi’. By
establishing the Law 12 Year 1967 to replace
Law14Year1965,here-denedKoperasi as
an economic organisation with social character,
composed of individuals or legal entities based
on the principle of kinship. To enforce this type of
Koperasi, government disbanded all cooperatives
which did not adhere to the regulation, including
informal cooperatives without legal status.
Furthermore, government also formulated a
medium-termstrategy(1966-1975)toensurethat
all cooperatives were formed by adhering to Orde
Baru’s vision. In this phase, government provided
capital support for cooperative, causing a
signicantincreaseinthenumberofcooperatives
throughout all provinces. The trust of community
towards cooperative began to decline.
Nevertheless, the spirit of Kooperasi started
blooming again after Reform, several Kooperasi
were established in urban area such as
Purusha
2
, Ura-Ura
3
, Credit Union Gerakan
Lingkar Massa, Sorge, Komunitas Kalimetro
4
and Litera
5
. Those Kooperasi were initiated by
young generation, mostly those who are aware
of the current economic, political and cultural
situation. Kooperasi Litera, for example, aims
tobeeconomicallyself-sufcient,sovereignin
politics, and to have a strong personality in culture
(Susanto, 2015).
In spite of the fact that this report uses the
term Kooperasi to resonate with the sample,
it also involves Credit Union (CU). Under the
current Law on Cooperative, all Credit Unions
in Indonesia are under the category of credit
cooperative,asdenedbyLaw25Year1992.
However, the researchers do not only follow the
categorisation in the law but also acknowledge
that Credit Union is one of the most important
grassroots social movements (Bamba, 2015).
2 Kumparan (2017):
Owl House Coffee, Secuil
Mimpi “Keadilan Sosial” dalam
Kedai Kopi, https://kumparan.
com/ardhana-pragota/owl-
house-coffee-secuil-mimpi-
keadilan-sosial-dalam-kedai-
kopi
3 Rakapare (2016): Telah
Hadir! Koperasi Pendidikan
Ura-Ura!,http://rilis.rakapare.
org/telah-hadir-Koperasi-
pendidikan-ura-ura/
4 Indoprogress (2015):
KoperasiyangPolitis”-Sebuah
Pleonasme Yang Perlu, https://
indoprogress.com/2015/11/
Koperasi-yang-politis-sebuah-
pleonasme-yang-perlu/
5 Suara Merdeka (2015):
Koperasi yang progresif
tumbuh dari kaum muda, http://
berita.suaramerdeka.com/
smcetak/dwicipta-Koperasi-
yang-progresif-tumbuh-dari-
kaum-muda/
Malaka perceived
cooperative as an economic
system and political tool
to achieve certain goals,
for that reason it can be
established everywhere,
Hatta figured out that
cooperative as a joint
venture or organisation is
the most suitable form of
Indonesian economy, and
Aidit observed that
cooperative is a movement
of anti-imperialism and
capitalism as well as to
improve the have-nots’
general welfare.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
22
Theoretical Context
Chapter 2
Credit Union (CU) was first established in
Germany.UrbanCUwasformedin1852and
ruralCUwasformedin1864.InIndonesia,Credit
Unionwasrstintroducedintheearly1970sby
theCatholicChurch.Interestingly,within1970-
1975, 95 CUs were established in Kalimantan but
only 5 remained active at the end of the period
(Bamba, 2015). These 5 CUs demonstrate that
considering local culture and identity is important
for development approach.
In1987,therstCreditUnionMovementstarted
to emerge. The members, mostly farmers,
created their own philosophy called “The Ways
of the Farmers” which contained four basic needs
in every product or service that they provided:
Survival, Sustainable, Social and Spiritual Needs.
Therefore, the CU Movement is also considered
as an organic organisation with a spirit to improve
community’s general welfare and livelihoods.
Indonesia’s cooperative policy and
regulation
According to Lange and Rueschemeyer (eds,
2005), states have important contradictory roles
in economic growth and social transformation.
Statescanbreak-down theresistancesto
the market coming from powerful interests;
but they can also ‘moderate the impact of the
market’ through regulation and social policy.
Hence, states will protect individual interests by
growing economic activities based on kinship and
community (Lange and Rueschemeyer, 2005).
In term of inclusive development, Teichman
(2016) argues that political inclusion is needed to
achieve progress towards inclusive development.
Teichman states that political inclusion usually
operates as key independent variable, shaping
the nature and extent to which social issues being
addressed by public policy.
Furthermore, this research discusses how to
include Kooperasi in the development map. It
elaborates the government’s role in cooperatives’
growth and inclusive development by highlighting
related regulations.
Indonesia’s development agenda has been
through several periods and dynamics. In
general, the agenda can be divided into six
periods, while each period produced particular
points of development:
Early Independence (1945-1949)
During this phase, Sukarno and his group tried
to unite these highly pluralistic nations into
a new nation. The focus of this period was a
diplomatic struggle to internal and external
powers. After gaining agreement from many
localrulers,Indonesiasignicantlychanged
the ethnic caste. Moreover, they also set up the
nation’s foundation called Pancasila and 1945
Constitution of Indonesia.
Several government’s initiatives to enhance
economic growth and development were included
in Industrial Policy Guidelines in 1946. In addition,
therstdevelopmentplanwasformulatedby
Sumitro Djohadikusumo, the Minister of Trade
and Industry under Natsir’s Cabinet. At that time,
the development plan aimed to take Indonesia
further in modern industry rather than agrarian
economics (W. Dick).
Nevertheless,itdidnotsignicantlyimprovethe
economic or political development in the majority
of the population; famish, malnutrition, illiteracy
and unskilled people caused by war and colonialist
occupation were widely seen. Moreover, the
Indonesian government acknowledged three
types of money issued by De Javanese Bank,
Netherlands East Indies and the Japanese, which
ledtohighination(Sachs&Collins,2007).The
political and economic situation began to stabilise
after the sovereignty was gained in 1949 (Reid,
1974).
Liberal Democracy Period (1950-1959)
During this period, several important events
tookplace:TheAsian-AfricanConferenceor
BandungConferenceandrstelectionwereheld
in1955.Theconferencereectedaspiritofanti-
colonialandanti-imperialstruggleinsolidarity,
which later known as ‘Bandung Spirit’ (Dellios,
2016). The spirit also emerged in cooperative;
two laws on cooperative were issued during
1958-1959.Nevertheless,therewerenumerous
separatist movements in several regions due
to dissatisfaction with Soekarno’s governance.
GuidedDemocracy(1960-1965)
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 23
Theoretical Context
Chapter 2
In this period, high level of diplomatic delegation
visited Indonesia. The delegation of Union of
Soviet Socialist Republics (USSR) and People’s
Republic of China (PRC) arrived in Indonesia.
Although there was no tangible action from
USSR or PRC that affected Indonesia’s
developmentatthatmoment,itdidinuence
the direction of Indonesian domestic political
forces.
Afterrstelectionheldin1955andSoekarno
visited PRC in 1956, at the end of 1959 he
announced his own concept for Indonesia’s
governance. He established a political system
known as The Political Manisfesto of Republic
Indonesia (Manipol). The Manipol consisted
ofvemainpoints,i.e:the1945Constitution,
Indonesian Socialism, Guided Democracy,
Guided Economy, and the Indonesian
Personality (Mortimer, 2006).
It was fascinating to see how the ideology
switched in this period. In 1955 during
Bandung Conference, Indonesia claimed to
be the leader of developing world, aiming
for liberal democracy. However, by the early
1960s, government expenditure was mainly for
military and infrastructure, especially to confront
Indonesia’s neighbour country: Malaysia
through military approach (Zaelani, 1963).
Moreover, Indonesia also walked out from
the United Nations (UN) and the International
Monetary Fund (IMF).
Soekarno aspired to take the lead in defeating
imperialism which he called “Old Established
Forces” (OLDEFOST) by implementing “New
Emerging Forces” (NEFOS). During this period,
he built symbols of greatness in the form of
grand buildings such as national monuments
(Zaelani, 1963), evocative slogans (Nationality,
Religion,andCommunism -NASAKOM),
prestigious acts such as hosting the Fourth
Asian Games (Trotier, 2017); and taking over
Western New Guinea from the Netherlands.
He intended to show the world that Indonesia
was in revolutionary period and had the power
to do so.
Development agenda in Guided Democracy
periodwasreectednotonlyinforeignpolicies
but also in domestic policies. The agenda
was expressed in economic sector, through a
grounded framework called “Comprehensive
National Development Plan” or Pembangunan
Nasional Semesta Berencana (PNSB); while
Communist Party of Indonesia penetrated all
levels of government extensively, including in
developing economic policy. Nevertheless,
the spirit to naturalise foreign companies into
national assets and high military expenditure led
todebtandination.Consequently,thecostof
living index roughly doubled and unemployment
raisedup(Sachs&Collins,2007).
Transitional Period (1965-1966)
Soekarno’s political cocktail proved to be
a ticking time bomb. A chaos at the end of
September to early October led to massive
replacement in the government. Slowly,
General Soeharto managed to take power
away from Soekarno. He was committed to
maintain political order. Hence, the military
under Soeharto’s command, eliminated people
who were indicated as communist. At that time,
Indonesian economy was in crisis. In 1965,
interest payments on foreign debt exceeded
thevalueofIndonesia’sexports,andination
was over 600 percent (Collins, 2007).
During this transitional period, Indonesia
announced that it would return all foreign assets
in Indonesia and end the confrontation with
Malaysia. Thus, at the end of 1966 the United
States, Japan, Italy, Great Britain, France, the
Netherlands, and Germany (also known as
Tokyo Club) decided to defer Indonesia’s debt in
the amount of $357 million and continue to help
and support development in Indonesia (Pauker,
1967). Inevitably, Indonesia’s parliament created
favourable conditions for foreign investment.
New Order (1967-1998)
Inaugurated at March 1967, Soeharto’s
administration took a completely different
approach.Hisrststepwastoavoidfavourable
conditions for the communist revival – banning
Marxistideologyandpeasant-basedmovement
(Sachs&Collins,2007).Second,andthemost
highlighted policy in economic sector was the
Law no.1 Year 1967 about Foreign Investment;
it provided an opportunity for foreign capital
owners to exploit and extract Indonesian natural
resources.
Foreign aid institution called this period as the
‘New Order Miracle’. For them, the government
was committed to eliminate rural poverty
(Sachs&Collins,2007),Soeharto’sdecision
to improve rural livelihood was implemented
through transmigration programme, replacing
the cooperative law and creating Koperasi Unit
Desa (village unit cooperative) for transferring
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
24
Theoretical Context
Chapter 2
nancialaidtovillagers.Hebelievedpeasant-
based movement in rural area was motivated
by inequality of development, therefore rural
development was one of the top priorities.
The development programme during 32 years
of Soeharto’s presidency was divided into three
phases:
1. economicrecovery(1967-1973),
2.
rapid economic growth and government
intervention(1974-1982)and
3.
export-ledgrowthandderegulation(1983-
1996).
Hisdecisiontore-joininternationalaidnetwork
such as the IMF and World Bank as well as the
United Nation encouraged foreign investment to
come to Indonesia. In contrast with Soekarno,
Soeharto began to cooperate with American
hegemonic power.
Soeharto was not only extensively capable
in military force to maintain his power but
he was also lucky. In the 1970s, Indonesia
gainedbenetfromglobaloilboom,resulting
in high government revenue and enabling
establishment of manufacture and massive
infrastructure development. However, in the
1980s,oilpricebegantofall,causingRupiah
devaluationandnancialcrisisin1997.
Reform or Post-Soeharto Era (After 1998)
After New Order Regime collapsed,
Indonesia experienced several changes in
social, economic, and political landscape.
The government shifted from authoritarian
into a more democratic system. Hence,
decentralisation became the new approach
of the Indonesian development agenda. To
date, the local governments have the authority
to distribute local resources and shape their
own policies.
Moreover, the development strategies also
shifted from exclusive to more inclusive
(Tambunan, 2012). In the New Order era,
Soeharto applied top down approach in the
development agenda. In the Reform era, more
inclusive policies started to be introduced. If
portrayed into a wider context, this is also
related with the blueprint of global development
agenda called eight Millennium Development
Goals (MDGs). The principles of more inclusive
policies are included in the MDGs. Thus,
according to Adibroto et al (2013), to achieve
these development targets, everyone should
be involved and supported.
Susilo Bambang Yudhoyono (SBY) as the
forthpresidentinPost-Reformera,applieda
paradigm called ‘development for all’, carried
out in six development principles (SNRI,
2011). Under SBY’s regime, medium and
long-termdevelopmentstrategies(RPJPN
and RPJMs) were enacted. Moreover, in
2011 the government launched Master Plan
for Acceleration and Expansion of Indonesia’s
Economic Development (MP3EI) for 2011 –
2025 period. This development plan aims for
Indonesia to be one of the world’s developed
country by 2025, with expected income per
capitaofUSD14,250-USD15,500,andtotal
GDPofUSD4.0-4.5Trillion(MP3EI,2011).
Both cooperative and inclusive development
require a comprehensive, supporting policy and
regulation to make them widely recognised.
The policy can be applied to many different
layers; organisation, local government, national
government or international accepted policy.
According to Romli (2013), under the
elucidation of the 1945 Constitution of
Indonesia, cooperative is explicitly stated
and understood as an economic entity that is
most appropriate for Indonesia. Consequently,
cooperative has strong legitimacy in legal,
political, and ideological aspects. In terms of
legal law, cooperative law is realised in the
form of cooperative legislation, dynamically
always in the process of attraction among
various interest, especially between interests
of law and economic interest (Romli, 2013).
Inthisresearch,ahigh-levelpolicywillbe
discussed, namely 1945 Constitution of
Indonesia, national regulation and presidential
instruction during three regimes; Old Order,
New Order, and Reform. The three regimes had
signicantlydifferentsetsofpoliticalideology.
It is necessary to look into each dynamic of
the regime.
Furthermore, it elaborates the role of
government for Kooperasi and inclusive
development. This research discusses how to
put Kooperasi into the development map. The
researchers review the development agendas
during post Reform, particularly the policies
under Susilo Bambang Yudhoyono, by referring
to the term of ‘development for all’ introduced in
that era. The policies include six development
agendas, MP3EI, and Development Missions.
The policies are still applied to current
administration under President Joko Widodo.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 25
Theoretical Context
Chapter 2
A framework to investigate
Inclusive development: emerging
theories, cooperative and inclusive
development
The definition of inclusive development (ID)
evolved from various development theories in
each generation. The establishment of inclusive
development concept took centuries. Year after
year, the development of society consists of
continual increase in material comfort and
leisure.Forexample,MarxandEngels(1888
[1986])explainthebourgeoisieactof‘clearing
the whole continents for cultivation’ as an allusion
of development; wild land was considered
unproductive unless brought into cultivation. As
a result, deforestation is massive, causing natural
disaster and food scarcity. In turn, people have
no voice to ask for their rights to the government
or market. The fruits of development are reaped
exclusively by those who have access to the
resources.
Sen (1999), as written in a book titled ‘development
as freedom’, argues that development shall be
a process of expanding the real freedoms that
people enjoy. Therefore, democracy becomes
a foundational value of development. However,
freedom without ‘opportunities’ according to
Noam Chomsky, “is a devil’s gift” (Chomsky,
1997).
Considering the fact that community’s opportunity
to exercise their freedom is undeniably taken
over by diminutive exclusive group, development
should involve marginalised groups. Opportunity
to access land and other resources such as equal
education, as well as political participation should
not be limited to one group.
Through times, the ‘inclusive development’
notion, to inverse the exclusive, becomes an
integralpartofliteraturefrom2008onward
(Gupta&Ros-Tonen,InclusiveDevelopment,
2015), after the term appeared in publications
of the Asian Development Bank (ADB, 2007).
For Asian Development Bank, inclusive
development is a strategy towards equity and
empowerment based on poverty reduction,
human capital development (education,
health care), and social capital development
(participatorydecision-makingandcommunity-
based steering). A gender development (health,
welfare and participation in societal development
for women) and social protection (reducing risks
and vulnerabilities associated with age, illness,
disability, natural disasters, economic crises
andcivilconict)arealsoincludedintheaims
ofinclusivedevelopment(Rauniyar&Kanbur,
2010).
Moreover, in the main literature on inclusive
development, there are eight elements ascribed
to the term ‘inclusive’:
Democracy, social protection and equal
opportunities for participation (Gupta,
Pouw,&Ros-Tonen,2015);(Lawson,2010);
(Adibroto,Amalia,Sartika,Pawennei,&
Tanaya, 2013); (Sen, 1999); (Sachs I. , 2004)
Ensuring exercise of civil, civic and political
rights (ID21, 2007); (Sachs I. , 2004)
A focus on the most marginalised group in
society (the poor, vulnerable, disadvantaged,
women,elderly)inanon-discriminatory
manner and with the aim of reducing
inequalities (Chatterjee, 2005); (Gupta,
Pouw,&Ros-Tonen,2015);(Rauniyar&
Kanbur, 2010).
Rearranging existing power relations, going
beyond a merely technocratic approach
(Cook, 2006)
Acknowledging local and indigenous
knowledge or approach in development
(Chibba,2008)
Wideningaccessofwell-beingchannelsand
improvement of general livelihood (Adibroto,
Amalia,Sartika,Pawennei,&Tanaya,2013);
(Rauniyar&Kanbur,2010).
Reconciling the imperatives of society and
theenvironment (Gupta,Pouw,&Ros-
Tonen, 2015); (Perch, 2011)
A process as well as a goal to accommodate
differences by removing all barriers which
discriminate or exclude certain individuals/
groups within society (Tambunan, 2012).
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
26
Theoretical Context
Chapter 2
Discourse of Sen’s (1999) argument inspires
development worker in the world to explore new
perspective in the area, and hence established
Human Development Index (HDI) as alternative
approach to measure development. The HDI
juxtaposing the Gross Domestic Product (GDP); is
awidelyused,so-callednormativedevelopment
measurement, echoed by Simon Kuznet (1934).
According to Sen’s point of view, development
motivation is concentrated in the society.
However, considering numerous literatures on
inclusive development, researchers found other
dimensions. For example, increasing individual’s
life opportunity such as sustainable ecology and
strong relationship between governance and
society, are not less important than improving
economic status. While economic growth is
essential for expanding the freedom of the society,
social, political, civil rights and the balance of
ecology are also essential in the process.
Inclusive development, in this report, is the
processtoensureequalaccessofwell-beingand
improvement on the general human livelihood
as well as the ecosystem. The dimensions of
inclusive development are presented in Figure 3.
Discourse on inclusive development theory was
derived from the need to include the ‘left behind’
society, particularly in the European context;
poor people living in rural area, women, the
disabled, and indigenous people. They are not
fully included in the development participation
(Borda-Rodriguez&Johnson,2015).
Cooperative is an organisation that is owned
and managed by its members. Its activities are
to serve the need of members before seeking
tomaximiseprots.Fromthispointofview,
cooperative differs from other enterprise types
suchasarm,whichaimstoincreaseitsmarket
share and investment.
Many people perceive operative as a small,
rural-basedorganisation,andmostlymanaged
by farmers. Nevertheless, the existence of
cooperative is not only in the rural area but also
intheurbanandsub-urbanareas.Cooperative
aim to increase people livelihood and prosperity.
Universally, cooperative has played an important
economic and social role in developed as well
as developing countries. As an example, in
Switzerland alone, cooperative has 2.5 million
members (quarter of population), in the form of
Society
Economy Ecology
I
N
C
L
U
S
I
V
E
D
E
V
E
L
O
P
M
E
N
T
C
i
t
i
z
e
n
s
R
i
g
h
t
s
Figure 3
Conceptualising inclusive
development
Sources: Author’s
interpretation from
(Sen, 1999); (Sachs I. , 2004);
(Cook,2006);(Rauniyar&
Kanbur, 2010); (Tambunan,
2012); (Adibroto, Amalia,
Sartika,Pawennei,&Tanaya,
2013);and(Gupta,Pouw,&
Ros-Tonen,2015)
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 27
Theoretical Context
Chapter 2
1.998retailshopsand$30.8billionofturnover(InternationalCo-operativeAllianceandEuricse,
2017). Therefore, taking cooperative into account is one of the key strategies to achieve inclusive
development(Borzaga,Bodini,Carini,Depedri,Galera,&Salvatori,2014).Giventherangeof
cooperative experience and outcome, it is vital to realise that the experience towards inclusive
development is an ongoing and deliberative progress.
Development Dimension Sub-dimension
Economic Inclusiveness
Increasing household income
Accesstonance
Social Inclusiveness
Enhancing access to education
Ensuring equity principles for participation
Enhancing opportunities for employment
Equitably sharing rights, responsibilities and risks
Ecological Inclusiveness Environmentally concern
Citizens’ rights Inclusiveness
Ensuring people's knowledge of their rights and
responsibility as citizens
Equal relation to the government
Table 2
Framework of the potential
contribution of cooperatives
towards inclusive development
Sources: Authors, from various
resources
Cooperative’s universal value and principles
promote social inclusiveness while increasing
economic growth. However, social inclusiveness
alone is not a representative dimension of the
inclusive development. Therefore, this research
explores the cooperative’s contribution towards
inclusive development, using the dimensions of
social, ecology, economy, and citizen’s rights as
explained in Section 2.3 .
Innovation: concept and types of
cooperative
According to Rogers (2003), “an innovation is
an idea, practice, or object that is perceived as
new by an individual or other unit of adoption”,
therefore innovation is determined by individual
reactions. Furthermore, he also explains the
newness of innovation may be appearing in terms
of knowledge or decision to adopt. Additionally,
Spence(2008)strengthensRoger’sargumentby
distributing a survey in several Southeast Asian
countries.Hedenesinnovation“astheuseof
new ideas, technologies, or ways of doing this,
in a place where (or by people whom) they have
not been used before”.
Financial management
capacity building for women in
Lubuk Linggau village, Jambi
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
28
Theoretical Context
Chapter 2
It is important to emphasise that the actors
comprising innovation are not limited to
companynorscienticelites.People incivil
society organisation, student at school (formal or
informal), and farmer also contribute extensively
to innovation; for example, they may contribute
tacit knowledge that comes from their experiences
while companies rely on their research and
development(R&D)division.
In cooperative context, innovation is crucial for
resilience because it enables organisation to
develop adaptive capacity to be sustainable.
In order to define example of innovation in
this research, the characteristics of innovation
(Rogers, 2003) are applied. First, innovation
should bring advantage for cooperative. Second,
innovation is compatible with values and norms
of each social system. Third, innovation is easy
to understand. Forth, it is easy to adopt. Lastly,
the result of innovation is observable to others.
A case study conducted by Nugroho, Adibroto,
Tanaya,Amalia,&Pawennei(2015)indicates
asignicantimpactofinnovationbyremoving
barriers to access energy, market economy and
agricultural yields. Innovation does not only widen
people’s access to developmental resources,
but also increasing community’s participation in
decision-making,andimprovingpeople’sgeneral
livelihood.
However, a deeper understanding about the
impacts of innovation is derived from clear
articulation of innovation types. The relevance of
innovation in economic and social changes was
rstrecordedin1934,whenScrumpeter(1934)
proposed 5 types of innovation: new products,
new methods, new markets, new source of
supply, and new industry structure.
Later, Schmookler (1962) narrowed the types of
innovation into “product innovation”, referring to
new improved goods or services, and “process
innovation”, referring to implementation of new
method. However, the product and process
innovation itself will only occur if the organisation
is open to changes. The researchers became
interested in organisational innovation, which
later is defined as “the adoption of an idea
or behaviour that is new to the organisation”
(Damanpour,1988).
Due to rapid innovation in organisation and
creating innovation in product and process,
people started to think about new ideas that
work to improve people’s life. While product,
process and organisational innovation theory
aregenerallyproducedbyprotmaximisation,
social innovation aims for social change (Mulgan,
Tucker,Ali,&Sanders,2006).
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 29
Theoretical Context
Chapter 2
This movement is a tool
to enhance local people’s
prosperity, the answer of
community livelihood needs
- John Bamba, CU Gemalaq Kemisiq co-initiator, interview May 2017.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
30
Approach
Chapter 3
Approach
Methodology
This research used qualitative method for
collecting data. Particularly, researchers applied
the vfollowing methodology to assess the
contribution of Cooperative towards inclusive
development:
First step: researchers defined inclusive
development (ID) and Cooperative by identifying
the inclusive development dimensions and
Cooperative value and principles. By looking
thedenitionofCooperative,anditsvalueand
principles, researchers categorised cooperative
under inclusive development dimensions.
For example,
• Universally,ICA(InternationalCo-operative
Alliance, 1995) defines cooperative as
an autonomous association of persons
united voluntarily to meet their common
economic (was considered under ‘Economic
Dimension’ in ID), social, and cultural needs
and aspirations through a jointly owned and
democratically-controlledenterprise(was
considered under ‘Social Dimension’ in ID).
• IndonesiadenesCooperativeasstatedin
the Law 25 Year 1992: is a business entity
consistingperson-persons,orCooperative
legal entity which runs its activities based on
economic principles (was considered under
‘Economic Dimension’ in ID), as well as
people’s economic movement based on the
principle of kinship (was considered under
‘Social Dimension’ in ID).
In many instances this categorisation was rather
subjective and arguable. However, it is the most
practical way to address the theme of the paper.
Second step: researchers examined the sample
ofidentied‘Kooperasi’ and credit union which
are formed due to grassroots social movements.
Kooperasi and credit union are chosen in
theurban,sub-urban and rural area.The
classicationofareasrefersto2010Indonesian
Population Census.
The area and sample of subject are outlined
in Table 1. A few comments regarding the
categories of samples are in order. First, Jambi
and West Kalimantan are considered as rural
basis of Cooperative and credit union based on
the percentage of village’s share (BPS, 2010).
Conversely,Jakartaistheonly100%urbanarea
in Indonesia. In addition to Jakarta, Malang, a city
located in East Java, is also considered as urban
basedontheshareofurban-ruralpercentage.
Although Central Java and East Java has similar
percentage of villages, Purwokerto is an urban
area within the rural area of Banyumas Regency.
For this reason, the researchers decided to
categorisePurwokertoassub-urbanarea.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 31
Approach
Chapter 3
No. Province
2010
Kooperasi Credit
Union Location Categories
% of village
Urban Rural
1 Jambi 12.8 87.2 Koperasi Wanita
Dahlia
Bungo Rural
2 Jakarta 100.0 0.0 Purusha Research
Cooperatives
Jakarta
Barat
Urban
3 Central Java 31.7 68.3 Purusha Research
Cooperatives Purwokerto Sub-urban
4 East Java 33.3 66.7 Kooperasi
Komunitas Metro
Malang Urban
5 West Kalimantan 7.1 92.9 Gemalaq
Kemisiq
Ketapang Rural
Explanation about the distinction of Kooperasi
(cooperatives) and Koperasi (cooperative) is
provided in chapter two.
Third step: researchers analysed Indonesia’s
policy, law and regulations that are relevant to
the development in general and Cooperative
specically.Thepolicy,law,andregulationwere
analysed by reviewing policy documents provided
byofcialgovernmentsites.
The research in the third step used doctrinal
research methodology and deductive reasoning
explained by Paul Chynoweth (Chynoweth,
2008).Asalreadymentionedabove,theaimis
toanswer‘Howthegovernmentpoliciesinuence
the existence of cooperatives?’. In this case,
the initial process of research took the following
forms:
Major premise – identifies national
development principles
Minor premise – compares and contrasts
the factual regulations as well as empirical
investigations with major premise
Conclusion – elaborates whether the rule
in the major premise applied in the minor
premise,andwhetherthepremisesinuence
the existence of cooperative.
CU Gemalaq Kemisiq open
their service from Monday to
Saturday
Table 3
Case Study
Source: BPS, 2010.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
32
Approach
Chapter 3
To make it simple, Table 4 presents the research methodology matrix as explained above.
No Output Research question Research area Data collection
instrument
1Description of cooperative relations
with inclusive development
How does
cooperatives
contribute to inclusive
development?
Institutional (type of
co-operation,number
and composition
of members) and
cooperative activities.
Desk study,
institutional
cooperative survey,
semi-structured
interviews.
2Description of the role of public policy
to the existence of cooperative
How do the
government
policiesinuence
the existence of
cooperatives?
Policy Desk study
3Innovation landscape in the
Cooperative
To what extend
innovation supports
cooperatives to
achieve their goals?
Cooperative activity In-depthinterview
Table 4
Research
methodology matrix
The methodology allowed researchers to conduct
institutionalsurvey,semi-structuredandin-
depth interview with the key actors involved in
establishing and organising cooperative. The
method was selected to better understand the
drivers of cooperative establishment, inclusivity,
relation with the government, and the role of
innovation in sustaining cooperative. In order
to elaborate what cooperatives have done to
improve their members’ life, the researchers
interviewed members of each cooperative. In
total, researchers interviewed 13 participants, by
considering their understandings and experiences
in the cooperative movement.
Constraint and limitation
There are hundreds of millions cooperative in
Indonesia. However, the sample of this research
is limited to cooperatives and credit union, which
prioritiseideologyaboveprot.Thesampleis
selectedbasedononlineandofinepresences,
access and resources to visit. The study aims
to explore intangible and tangible contributions
toward inclusive development.
Moreover,duringelddataanalysis,researchers
recognised that the contribution of each
Kooperasi towards inclusive development can
be scored and then compared to the degree of its
contribution. Through this method, one dimension
of inclusiveness can contain various degrees.
As an example, in ecological inclusiveness,
the degree of a Kooperasi concern on the
environment can range from ‘avoiding plastic
bag’ (1) to ‘reject the environmental degradation
activities’ (10).
Furthermore, a deeper exploration on the
intangible contributions such as ‘knowledge
diffusion’ will also increase the value of study.
Further research on intangible contributions is
required in the future.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 33
Approach
Chapter 3
Ayuk, Dahlia Women Cooperative’s member, interview April 2017
Our initiative is not
purposed to gain much
moreprot.Wejustaimto
help each other through this
cooperative.”
Ayuk, Dahlia Women
Cooperative’s member,
interview April 2017
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
34
The Bottom up Pursuit of Development: Rural Cooperative Practice
Chapter 4
The Farmers Philosophy
of Credit Union Gemalaq
Kemisiq (CU GK)
History
Itwas48yearsago,8thDecember1969,when
a German priest, Karl Albrecht Karim Arbie, SJ
establishedCreditUnionCounsellingOfce(CU
CO) in Jakarta, Indonesia. The Credit Union
concept began to spread out all over Indonesia;
which then was acknowledged by the Indonesian
government. In Credit Union National Conference
1976 held in Bandung, Ir. Ibnoe Soedjono, the
director-generalofcooperativeinIndonesia,
proposed 3 requirements for the Credit Union
(CU) establishment in Indonesia: a) CU should
follow Indonesia’s Cooperative Law, b) CU should
use Credit Cooperative name, and c) that Credit
Cooperative should act as a lighthouse for the
cooperative development in Indonesia.
As an organisation, Credit Union has its own
value and principles which contain 7 values and
9 principles, respectively. Table 5 presents the
value and principles, including the comparison
of them.
The Bottom up Pursuit of
Development:
Rural Cooperative Practice
CU employs holistic
empowerment in
order to realise the
social transformation
to free humanity from
poverty, hopeless and
dependence, towards a
better quality of life that
isself-reliant,dignied,
sovereign and sustainable
life”
John Bamba,
Credit Union Gemalaq Kemisiq
co-initiator,InterviewMay2017
The Bottom up Pursuit of Development: Rural Cooperative Practice
Chapter 4
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
34
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 35
The Bottom up Pursuit of Development: Rural Cooperative Practice
Chapter 4
Credit Union
Value Principles
Self-help Open and voluntary
Self-responsibility Open and democratic supervision
Democracy Services only for members
Justice Distribution only for members
Equality Buildingfamilynancialstability
Solidarity Sustainable education
Cultured Non discriminatory
Cooperation between CU
Social responsibility
Table 5
Credit Union Values
and Principles
The Bottom up Pursuit of Development: Rural Cooperative Practice
Chapter 4
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 35
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
36
The Bottom up Pursuit of Development: Rural Cooperative Practice
Chapter 4
According to Bamba (2015), the CU Gemalaq
Kemisiq (CU GK) was established in 1999, in
Ketapang Regency, West Kalimantan. CU GK
rises from the seeds of resilience movement as
a protest of inequality and feeble community in
Kalimantan.Theyghtagainstexternalthreats
such as: palm oil plantation and mining, and
internal threat such as: vulnerability in economy,
education, politics, and excessive natural
resources extractions from several local elite
businessmen. The CUGK differs from traditional
CUs, because it aims for holistic improvement
anditisnotonlyseenasanancialinstitution.
From its beginning, CU GK has prioritised local values,
as well as when CU GK was developed in conjunction
with other initiatives. Hence it is part of a holistic
movement that also deals with other issues, such as
environment, indigenous peoples, social, and cultural
education. All of that becomes one unity. Therefore,
Gemalaq Kemisiq does not become an exclusive
institution”.
John Bamba,
Credit Union Gemalaq Kemisiq
co-initiator,InterviewMay2017
Inclusiveness
CU GK is one of several CU gerakan or CU
movements in Indonesia. The establishment is
inseparable from the spirit of ‘Farmers Philosophy’
containing 4 needs: Survival, Sustainability,
Social and Spiritual needs. According to AR
Mecer in Bamba (2015), this philosophy is drawn
fromtheDayaksfarmersin1987andgrounded
on their CU activities because they believe these
four needs should be applied in order to achieve
safe and peaceful life. As part of its movement
ideology, people who manage CU GK daily
business as called activists.
Interestingly, inclusive development dimensions
in present days are in line with the ‘Farmers
Philosophy’. For example, securing daily basic
consumption needs (survival) is in line with
economic inclusiveness where community
have the ability to increase household income.
Moreover, the sustainable need is identical with
ecology inclusiveness namely environmental
concern for securing seeds for the upcoming
season.
CU GK is located in the heart of Kalimantan
Forest, particularly in Manis Mata District,
Ketapang Regency, West Kalimantan. Ketapang
Regency is known as one of the fastest
deforestations in Kalimantan after West Kutai,
East Kalimantan due to palm oil plantation and
mining (ICW, 2013). Most of the companies aim
to take over Dayak’s Customary Land. On the
other hand, people who live in the district mainly
haveariceeldandrubberplantation.Therefore,
as the most directly impacted community, CUGK
membersandmanagementtakeactiontoght
against ecology degradation. No single mining
or palm oil plantation in the village, even a road
plan is approved by the community, because they
do not want their land to be destroyed.
John Bamba as CU GK founders believe
that ecological concern to protect their local
environment from external interests should be
started from CU GK activists. Moreover, to be
part of CU GK, an activist is exclusively selected
and have to follow several disciplines. One of
those disciplines includes farming and visiting
other local communities, which are associated
as members of CU GK.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 37
The Bottom up Pursuit of Development: Rural Cooperative Practice
Chapter 4
Despite their concern on the sustainability for next
seeds season, CU GK is not leaving its members’
basic need behind: which is improving household
income. Paula, one of CU GK members who
reapedabenetfromitsactivities,described
that most people in her village were unable to
access other resources, except what they already
owned. After the establishment of CU, joining, and
following the programme and rules, she noticed
that today everyone in their village is capable to
build a house, buy a motorcycle and television.
Paula believed that by joining CU movement, it
does not merely change her life but also her entire
family and the whole community in her villages.
In social aspect, she illustrated that their formal
education is getting better throughout each
generation. Taking an example of herself, she
is an elementary school graduate and not all
members in her family graduated. Today, her
oldest son already graduated from senior high
school, her second child is in junior high school
and the third child is studying in elementary
school. Moreover, the social dimension offered
by CU GK does not only give them an ability to get
better formal education but also better healthcare.
Paula admitted that CU GK provides allowance
for hospitalisation and other medical needs.
Paula (F) lives in Ketapang, she sells
groceries for a living. Her store is located
in her family’s house.
“What I want in the future? To see my kids
continuing school, up until college. It would
take so much cost, but I will take care of it by acquiring some money from CU”, said Paula.
Paulaisamiddle-agedwoman,livingwithherhusbandandvechildren.WhileIwasdropping
by, she was sitting down at her store and sometimes yelled out to her kids to stop running around
and messing up the store. She loved to smile and answered my curious questions sanguinely.
Her store is quite big and has various stuffs to sell. I was to lucky have a conversation with Paula
in the store as she mentioned it many times.
“BecauseofCUGKallowances,mybusinesshasbeendeveloped.Ihavegainedprot”,shesaid.
Not only developing economy in the rural community, as Paula told me, CU GK also implements
basic welfare programmes, which distributes education, health and social stipend. That is why
Paula believes that she could afford higher education for her children, with assistances from CU GK.
“Before the establishment of CU GK, people in this community were poor”, Paula conveyed.
House, motorcycle, and television possession indicates that people no longer lived in poverty.
“CU GK has already helped us”.
Though, Paula confessed that she hesitated to join as CU GK member at the beginning, because
she did not have much money. One of her neighbours suggested her to be listed in CU GK. “My
neighbourcansavehermoneyandsheknowshowtomanageitsufciently”,saidPaula.She
added, “Today I have joined as member of CU GK, and my prosperity, as my neighbour said, has
been secured”.
Duringmytenhour-roadtripfromPontianakcitytoTanjung,theruralareawherePaulaandher
family lived, I have heard a lot about people preference to save in CU rather than conventional
bank. I asked Paula afterward, how about people in Tanjung? “People choose CU than Bank, so do
I. Because Bank requires a lot of preconditions if we want to get some loans, while CU does not”.
Box 1
Story from Kalimantan
Paula shared the experience of CU
Gemalaq Kemisiq as local community
member at her groceries store in Tan-
jung village, Ketapang
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
38
The Bottom up Pursuit of Development: Rural Cooperative Practice
Chapter 4
ItisnotdifculttojoinCUGK.Mostofthepeople
in Manis Mata District are registered because CU
GK has a tagline “susah sempit tetap bisa pinjam
or“indifcultortightsituation,youcanstillget
a loan”. This what makes them feel secure and
willing to improve their cash management skill.
By joining CU GK, members acknowledge their
rights and responsibility as human and citizen,
such as indigenous rights and paying tax. The
benetofjoiningCUGKincludesthefullment
of economic, social, ecology needs and rights.
Therefore, it is not a surprise that the community
prefers to save in CU rather than open a bank
account.
Innovation
There is no credit union movement before the
‘Farmers Philosophy’. Since Credit Union notion
comes from Germany, most of the approach is
basedonwestern-styleknowledgewithadditional
Catholicinuence.However,Dayakcommunity
does not fully agree with the concept. Therefore,
they established their own way of living containing
four needs of human.
This innovation is categorised as social
innovation. Its aim for social change is identical
with the explanation of social innovation by
Mulgan,Tucker,Ali,&Sanders (2006).The
‘Farmers Philosophy’ was developed by Dayak
Farmers and it successfully built community’s
resilience by strengthening what they already
had; Survival, Sustainability, Social and Spiritual
needs. This philosophy is highly respected
by the community because it creates social
transformation in their life.
CUGK is the only credit union movement that
isestablishedinthespiritofghtingmediocrity.
By fully adopting the ‘Farmers Philosophy’,
community in Manis Mata District, Ketapang
regency,WestKalimantannotonlybenetsin
nancialaspect;improvingtheirabilitytobemore
productive and consume more, but also in social,
citizens’ right and significantly at ecological
aspects.
The innovation does not stop there. After Farmers
Philosophy was implemented in the credit union,
members realised that their capabilities are
beyond basic needs. Therefore, they developed
others innovation such as “Aliansi Masyarakat
Adat Jalai Kendawangan (AMA-JK)” or Indigenous
People Alliance of Jalai Kendawangan, Gemalaq
community library, Manjing Tarah community
radio, Upui Damang Gelancuq studio, farmers
group, balin or physician association, and women
&childrengroup.InnovationforCUGKisnot
merelybenetingthemembersofcreditunion
but also the whole community.
The essential goals to
be equal: Dahlia Women
Cooperative
In the past, women
always rely on their
husband. Now, after
the establishment of
cooperative, we always
get involved in every
village-relateddecision”
History
Koperasi wanita Dahlia or Dahlia Women
Cooperative was established as a legal entity
on 23 August, 2010. Even though the legal entity
started in 2010, its spirit has been growing up
since early 2000. According to Nursiah, before
the establishment of the cooperative, the women
in Lubuk Beringin village conversed with each
other while bathing in the river. They saw that
vgovernment aid had been disbursed and family
income was not well managed by men. Their
awareness led to a shared understanding that
family income should be supported by the ability
of women to save and develop new ways of doing
remedial work.
In August 2000, 34 women in the village took the
initiative to implement wirid yasinan. During the
establishment of wirid yasinan, the women had
routine discussion every Friday afternoon. They
educated each other and decided on several
matters such as weekly fee (one thousand
Rupiah). The discussion inspired an idea to form
amicronanceinstitution.
Dahlia is the name chosen by acclamation, by
all members of Friday afternoon wirid yasinan
committee in August 2000. Dahlia became a
savings and loan group unit, with a principal
savingsofvethousandrupiahandmonthly
mandatory fee of one thousand rupiahs.
Ayuk,
Dahlia Women Cooperative’s
member, interview April 2017
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 39
The Bottom up Pursuit of Development: Rural Cooperative Practice
Chapter 4
In the early development, the initial capital
ownedbyDahliawasinsufcienttobeusedas
loans for each member. The initial capital was
collected and stored by the manager. Loans
for new members could only be distributed in
2001, when the capital reached 500.000 rupiah.
At the time, members of the group agreed on
10%interestwithlongrepaymentperiodoften
months. These rules are not written, instead they
are based on collective agreement and kinship.
Trust towards the manager is not only derived
from his/her personal integrity but also through
good record of book keeping (Buku Pinjaman).
Managers ensure that accounting records can
be understood by all members in order to avoid
misunderstanding among them.
Dahlia reaped the rewards of its efforts. In 2006,
Dahlia contributed in achieving the vision and
mission of the village; to became an “independent
conservationvillage”thatisself-sufcientinterms
of conservation, food, capital, energy and human
resources.
According to Nursiah, for Dahlia, naming
isjustasymbol;acooperativeisnotaxed
price. Because Dahlia grows not to become an
institution called cooperative, it was named as
‘an economic productive group’. Dahlia grows
to make it easier for members and society
around them to achieve the welfare they desire.
Dahlia grows in a suitable place, coming from
the seed of collective consciousness to live
better. Its experience is a growing process that
is supported by the local cultural values, namely
cooperation, kinship,opennessandrmness.
Collectively, they are aware that registering as a
cooperative should not limit or even undermines
their potential.
Inclusiveness
In Lubuk Beringin, Dahlia Women Cooperative
successfully achieved its target: to see the
members’ children continue their education
until college. According to Nursiah and Ayuk,
before the cooperative was established, only
the village elite kids continued their education
in other regency or province. Nowadays, every
mother in Lubuk Beringin can witness their
children’s graduations. The cooperative put
formal education for future generation on high
priority.
Education is able to be improved because of
increased household income. Married women
are now capable to manage their own resources
without depending on their husbands. Most of
the money goes to education, then to rubber
plantation improvement, and lastly, to their tertiary
consumption such as motorcycle, or house.
Most of the time, the capital in cooperatives is
distributed to the village’s necessities.
Lubuk Beringin village is located close to the
Kerinci Seblat National Park, it is rural and
remote; no electricity at all. The community
is aware that every decision they make will
inuencethemotherearth.Therefore,in2006,
Dahlia supported the community’s independent
micro hydro power plant. To develop a micro
hydro, the community worked together and the
cost management was distributed fairly among
them.Moreover,therstmicrohydrowhichhasa
50.000-wattcapacityalsolightupthehave-not’s
house without charging. The decision was made
collectively among the community.
Members of Kopwan Dahlia
also participate actively in local
policy making such as rembug
desa.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
40
The Bottom up Pursuit of Development: Rural Cooperative Practice
Chapter 4
As a group, Dahlia often conducts annual
member meetings. Based on Shafrizaldi (2015),
this meeting set the distribution of ‘remaining
business income’ (Sisa Hasil Usaha in Bahasa
Indonesia)orknownas‘prot’inbusinessterm.
The agreed distribution percentage is as follow:
• 15%formemberswhoborrow
• 15%forallmembers
• 30%ofbusinesscapitalreserves
• 20%forruralvillagecash/cashconservation
• 15%foradministrationandhonorarium,as
well as
• 5%formembersocialfunds
The social funds are intended for members or
communities who experience misfortune such as
death, accidents or to pay the salaries of mosque
administrators.
The existence of Dahlia in assisting physical
development planning such as roads, bridges,
clean water facilities, worship facilities, electricity
and others is a component in the village
development system. Dahlia wants external
parties who work for landscape development,
education, health, conservation and physical
development to collaborate in financial
management. Hence, Lubuk Beringin has a
system that is realised, planned, implemented,
monitored and assessed together. Thus,
achieving welfare is not the result of only a small
group’s effort, but a comprehensive joint effort.
Innovation
The existence of cooperative is inseparable
fromchallenges.Therstchallengethatleadsto
hindered innovation is loan interest. The interest
feeisonly10%ofthetotalloan;thisismuch
lowerthaninterestinCreditUnion,whichis20%
of the loan. However, several members found
itdifculttopay.Eventhoughtheymanaged
to return the loan, the members ignored the
interest. Nursiah gave an example that for every
Rp100.000 loan, the interest is Rp10.000. The
loan should be returned by instalment in each
month for ten months, therefore the member
should pay Rp11.000 every month. However,
most of members only paid Rp10.000 per month
and ignored the Rp1.000 of interest.
After almost 2 years struggling with the problem,
all members agreed to have a new rule. The
interest fee will be cut off at the front. For
example, every Rp500.000 of loan will have
Rp50.000 of interest, hence the borrower only
gets Rp450.000 and there is no need to worry
about paying the interest. This process innovation
remains until now.
Other challenges led Dahlia to create innovation
for social purpose. For example, the limited
energy supply led to the supports for micro
hydro power plant. Dahlia succeeded to provide
electricity. Another example is customary forest
land was used to help the poor in the village, to
open plantation and secure water resources for
other plantations.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 41
The Youth Pursuit of Development: Sub-urban & Urban Cooperative Practice
Chapter 5
The Will to Improve:
Highlights of the Rural
Kooperasi
The term “development” is associated with a
foreign concept that alienates indigenous and the
have-nots.Theconceptshouldberespondedwith
critical minds and determination. Development
should not bring destruction, exploitation, nor
cultural genocide, especially in rural areas. The
Kooperasi, whether as cooperative or credit
union,hasthecapabilitytocreateself-determined
development. The creation is undertaken by,
from and for its people in order to empower and
liberate them.
Cooperative or credit union has different
impactsinnancialandnon-nancialaspect.In
nance,cooperativeorcreditunionincreases
householdincome.However,innon-nancial
aspect,theimpactismorethought-provoking.
The establishment of cooperative or credit union
strengthens the presence of customary land,
reduces environmental degradation, increases
gender equity, ensures education, healthcare
and pension; and increases the sense of security,
unity and solidarity.
The will to improve from the bottom removes
the boundary of exclusivity, the action of
cooperatives is more inclusive. It is not about
giving the members an access to resources, but
through their benevolence and persistence – the
members create their own resources.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
42
The Youth Pursuit of Development: Sub-urban & Urban Cooperative Practice
Chapter 5
The Youth Pursuit of
Development: Sub-urban &
Urban Cooperative Practice
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
42
The Youth Pursuit of Development: Sub-urban & Urban Cooperative Practice
Chapter 5
Kooperasi Konsumsi (Kopkun)
Purwokerto services office,
located near Universitas
Jenderal Soedirman,
Purwokerto
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 43
The Youth Pursuit of Development: Sub-urban & Urban Cooperative Practice
Chapter 5
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 43
The Youth Pursuit of Development: Sub-urban & Urban Cooperative Practice
Chapter 5
History
Established in 1995, Kopkun Purwokerto has
been through several milestones to expand
their movement around Banyumas city. Their
rstinitiativecameupfromastudentcooperative
(Koperasi Mahasiswa)inawell-knownstate
university, Universitas Soedirman (Unsoed).
Hence, Kopkun Purwokerto has a strong basis in
campus because some of Unsoed lecturers and
students were involved during the establishment.
However, Kopkun itself is a merger of two
cooperatives in Unsoed; Koperasi Soedirman
(used to be Koperasi Mahasiswa, before
rebranding its name in 2006) and Koperman
Unsoed, a cooperative which was established
by university’s staffs and Unsoed alumni. They
manage a new brand under the name of Koperasi
Konsumsi (Kopkun) Purwokerto to gather more
members outside the campus. Its vision is to
Kopkun Purwokerto
We need policies which
can help us to growth
and expand these
movements. All we want
is fairer environment
for cooperatives, not
merely allocating material
assistances for us”
Herliana,
Kopkun Purwokerto’s
management,
interview April 2017
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
44
The Youth Pursuit of Development: Sub-urban & Urban Cooperative Practice
Chapter 5
make the movement more inclusive in order to
enhance welfare of the people. In March 2017,
Kopkun successfully reached 1.215 members
from various regions in Banyumas.
From the beginning of its establishment, Kopkun
has been maintaining close relationship with
the government. Both Koperasi Soedirman and
Koperman Unsoed were initiated by government
project Koperasi Civitas Academica (Kocika); to
expand the growth of cooperative in Indonesian
universities. Kocika was a programme under
Ministry of Cooperative and Small Medium
Enterprises in Susilo Bambang Yudhoyono’s
administration. Among 10 campus cooperatives
which were targeted by Kocika programme, only
Kopkun that still operates until now. Moreover,
changing the cooperative’s name into Kopkun
is not only supposed to expand its movement,
butalsotoapplymoreindependenceandself-
help values.
Inclusiveness
By 2015, Kopkun had built three supermarkets
as part of their core business. One of the
supermarketsislocatedatthesametwo-oor
buildingwithKopkun’ssecretaryofce,near
Unsoed Purwokerto. At the early stage of the
establishment, they built a supermarket with
Mika Swalayan as the brand. About seven
years later, second branch had been already
established. Due to its achievements, Kopkun
is getting closer to accomplish its vision: to be the
biggest cooperative in Banyumas and to improve
the economy, culture and social aspects of the
region.
Firdaus, one of Kopkun founders conveyed that
the spirit of Kopkun’s initiative is to create equal
economic opportunity, especially in Banyumas
region. However, as the cooperative is based on
consumptions (Kooperasi konsumsi), its main
concern is to provide basic economic needs of
the members. Kopkun believes that to enhance
the impact to local communities, people should
join Kopkun as members.
Kopkun also creates inclusiveness in some
part of rural areas in Banyumas, by helping the
communities to create the same initiative based
on their local characteristics. The grassroots
initiatives which Kopkun Purwokerto has built,
slowly shows its result. People are aware that
those initiatives are cooperatives prototype,
therefore government could have an imagination
to establish cooperatives environment in
Banyumas.
Even though Kopkun Puwokerto does not run
particular programme related with ecological
issues, Kopkun Purwokerto has been helping
local farmers to compete in the market. Guntur,
a member of Kopkun Purwokerto, said that
environmental concern should be embedded in
cooperative values.
Local and central governments recognise the
attempts of Kopkun in improving the surrounding
community. Kopkun was invited as the only
representative of cooperatives to a coordination
forum with Ministry of Small Medium Enterprises
and Cooperatives at provincial level. However,
in Herliana’s perspective, government still needs
to enhance their roles in cooperatives policy
making.
We need policies which
can help us to growth
and expand these
movements. All we want
is fairer environment
for cooperatives, not
merely allocating material
assistances for us”,
he said.
In 2016, Kopkun was invited by President Joko
Widodo to discuss the issue of tax policies for
small enterprises.
Kopkun Swalayan,
one of three Kopkun
supermarket in Purwoketo.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 45
The Youth Pursuit of Development: Sub-urban & Urban Cooperative Practice
Chapter 5
Innovation
Since 2006, Kopkun Purwokerto has created
several innovations for bringing the cooperative
closer to the people in Banyumas. Based on
ourin-depthinterviewwithKopkun Purwokerto
practitioners and members, as well as on document
study, we review four notable innovations. Those
innovations include establishing research centre
named Kopkun Institute in 2015, building credit
and online groceries mobile application, and
putting international nuances on its campaign.
Kopkun Purwokerto also created a programme as
part of saving and loan services named Kopkun
Micros.
First, Kopkun Purwokertoestablishedacutting-
edge institute named Kopkun Institute. Kopkun
Institute,asemi-autonomousorganisationunder
Kopkun, was established in April 2015. Kopkun
Institute is run by several members of Kopkun
Purwokerto, who are mostly academics. Besides
conducting research about cooperative dynamics
in Indonesia and global context, the institute holds
training class as well as education activities for
cooperative practitioners in Banyumas. The
institute also came up with the idea to place HC
(Homo Cooperatives) title after its last name, for
expanding people’s recognition to cooperative
movements.
Second, they attempted to adapt with technology
development in society, from manual to
computerised, and the latest android technology.
Kopkun Purwokerto has been registered in TAPP
Market android application, an e-commerce
app for small enterprises. Kopkun Purwokerto
members will be able to do transactions such
as delivery order from Kopkun Swalayan
(Supermarket) and save their money in Simpin/
Simpan Pinjam (savings and loan) service by
the app.
Third, Kopkun Purwokerto has been actively
engaged in spreading ideas about cooperative
movement in Banyumas. Kopkun Purwokerto
aims to adopt more global nuances rather
than traditional values in its campaigns. One
of the attempts is putting international logo of
cooperative together with its own. This campaign
strategy is supposed to build positive insight for
cooperative movement in Indonesia. In addition
to using international logo in its publications
consistently, Kopkun also invites other
cooperative practitioners to do the same. Kopkun
Institute provides digital format including manual
users about using the logo on social media.
Lastly, in 2016, Kopkun Purwokerto set up
Kopkun MicronanceSystem(Micros)teamafter
theyconductedabench-markstudyinCUTyas
Manunggal in Bantul, Yogyakarta. Micros team’s
responsibilitiesarevisitingandprovidingdoor-
to-doorservicestomembers.Italsoprovides
business assistances for members who run
small enterprises. Besides establishing Kopkun
Micros to upgrade saving and loan service,
Kopkun Purwokertodesigneditsofcesimilarly
to conventional bank. Kopkun implements the
strategies above to promote cooperative as a
viableoptionofnancialservice.
Consistent struggle for
citizen’s rights: Kooperasi
Komunitas Kalimetro
Meet our members, they
have basic knowledge on
constitution and citizen
rights. It is all done for
them. And know how to
narrate their rights in front
of the policy makers”
Luth Darmawan,
Kooperasi Komunitas
Kalimetro manager,
interview April 2017
History
The establishment of Kooperasi Komunitas
Kalimetro can not be separated from Malang
Corruption Watch (MCW) movements activities.
MCW was established in 1999, in order to counter
local governance problems after decentralisation
had been applied. MCW aims to promote the
function of checks and balances from general
public to the local government. MCW also
educates people to organise themselves into a
social movement.
As MCW grew bigger, it established Kooperasi
Kalimetro as funding assistance for MCW and
its members in 2014. Kooperasi Kalimetro has
similar social spirit. It was established as a result
of a concern from a community group named
Forum Warga (citizen forum), in education
issues. Forum Warga consists of members of
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46
The Youth Pursuit of Development: Sub-urban & Urban Cooperative Practice
Chapter 5
members have different privilege than who are
not, such as loan can only be requested after
they become active members. Furthermore,
Kooperasi Komunitas Kalimetro want to replicate
the spirit of cooperative movement in other citizen
forums.
Civil rights education to members is the core
activity of Kooperasi Kalimetro. Kris, a citizen
forum member, said that local communities
need to know how to address their interests and
manage equal relationship with the government.
Despite of using conventional protests such as
demonstrations, for Kris, people should learn to
articulate their aspirations about policy at the
same forum with stakeholders. By attending
Sekolah Rakyat regularly, members become
morecondenttospeakupabouttheirrights
as well as take the role as watch dog to monitor
the local government.
Starting from 15.000.000 Rupiah as its initial
capital, Kooperasi Komunitas Kalimetro is
stillsustainednancially.Currently,according
toLuthDarmawan,thecooperativeaimsto
enable people to propose a loan for their needs
and fund MCW advocacy activities. It receives
external funding from international organisation
for the mean time, but on the other hand
rejects all potential funding supports from the
government. The cooperative tries to keep its
independencebyavoidingtop-downtreatment
from the government.
MCW. Form Warga was eager to transform the
groupintoamorebenecialorganisationfor
itsmembers,bothinnancialandknowledge
capacityaspects.AccordingtoLuthDarmawan,
board of management Kooperasi Komunitas
Kalimetro, the cooperative also aims to support
advocacy, in addition to doing business for
nancialbenets.
The members of Kooperasi Komunitas Kalimetro
are from diverse backgrounds. Most of them are
informal workers and college students. Kooperasi
Komunitas Kalimetro as a young progressive
student community operates side by side in
oneofceaddress,withIntransPublishing,a
publishing body that takes part in executing
business activities, and MCW. There is also a
small kiosk that sells food and beverages for
peoplewhocometothecollectiveofce.
Inclusiveness
Interestingly, the sense of togetherness was
born out of individual urban society from Malang.
Kooperasi Komunitas Kalimetro has been
promoting public awareness to demand for civil
rights in front of the local government. Kooperasi
Komunitas Kalimetro consists of labour group,
informal workers, and student activists in Malang
region. The former activists of MCW also help to
build cooperative members’ knowledge about law,
civil rights, and ways to address their interests.
Hence, Kooperasi Komunitas Kalimetro
established Sekolah Rakyat (school of people)
as a medium to learn about those issues. All
member candidates of the cooperative have
to complete the courses in Sekolah Rakyat as
a prerequisite to be active members. Active
Urban farming, one of
Kooperasi Kalimetro
members activities.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 47
The Youth Pursuit of Development: Sub-urban & Urban Cooperative Practice
Chapter 5
Innovation
Kooperasi Kalimetro was established by the
existing citizen forum. It is not easy for the forum
tonanciallysustainthismovement.However,
setting up a cooperative movement itself can be
seen as an attempt to create a social innovation.
In Kalimetro context, members of citizen forum
established the cooperative to sustain and
develop its movement. The cooperative has
replicated the spirit successfully in Malang and
in an former labour organisation in Batu.
The members admitted that the cooperative has
beenfacinguctuateconditions,fromcapitalto
human resources issues. In order to address the
issues, the members formulated a cooperative
long term plan. Moreover, Sekolah Rakyat, and
others advocacy activities have formed the sense
of belonging within the cooperative. Furthermore,
as part of the cooperative long term plan, they
want to create welfare loan packages, including
health, education and retirement assistances.
The relentless pursuit
of alternative: Purusha
Research Cooperative
self-fundingsourcesis somethingthat the
cooperative wishes to do in the future. Purusha
has been running collective work system and
research becomes its core business, because the
members are mostly from academic background.
Purusha saw collective work as a form of
resistance to the current economic and division
of labour system. The current system, according
to Hizkia Yosie, tends to be more individualistic,
particularly in the division of labour. Kooperasi
has been selected as the form of its movement
due to the principles of Koperasi that are already
embedded in Indonesian society. Purusha does
not focus on different views about cooperative as
opined by national founding fathers, instead, it
adoptsnecessaryprinciplesthattintoPurusha’s
movement.
Though ‘cooperative’ is the title of the organisation,
Purusha is registered as ‘foundation’ for practical
reason. As a foundation, Purusha is legally
allowed to receive external funding. Koperasi,
asYosieargued,isverydifculttoformbecause
the requirements are complicated. Interestingly,
when he managed to get a legal form for their
initiative, the notary and person in Ministry of
Cooperative and Small Micro Business suggested
him to register as a business entity rather than
as Koperasi.
In spite of the fact that they ended up registering
as a foundation, Purusha’s members still aim
to transform the foundation into Koperasi in
one year after its establishment. Moreover,
Purusha currently implement its activities under
cooperative principles and values, despite the
administrative obstacles to get legal status as
Koperasi; such as inadequacy in number of
registered members and the amount of assets.
Inclusiveness
In addition to research as its core activity, Purusha
spreads cooperative ideas among urban youth.
Purusha argues that cooperative and research
are both a tool for social transformation. Priska,
a member of Purusha, said that by joining this
movement, she can transform the concepts
of establishing ideal society (which is less
individualistic) into practical actions.
To diffuse cooperative notions into society,
Purusha provides consultancy services for people
who want to set up cooperative initiatives. Its
clients are usually from various professions such
as fashion designers and lawyers. Purusha is
also concerned about and connected with several
group-movementsinruralareasandlabour
movement. The connection is its strategy to make
its movement recognised by the general public.
In order to be a member
of Purusha, s/he must
have a project of
knowledge, but having
a project alone is not
enough, s/he shall have
a passion for social
transformation”.
History
Purusha Research Cooperative, an urban
youth cooperative based in Jakarta, came up
withcollectiveresearchideasduringitsrst
establishment. It used to conduct researches
aboutWorldTradeOrganization(WTO)in2013-
2014, as well as mass movement of organised
people. Conducting research collectively with
Hizkia Yosie Polimpung,
co-initiator Purusha Research
Cooperative, interview March 2017.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
48
The Youth Pursuit of Development: Sub-urban & Urban Cooperative Practice
Chapter 5
Besides doing research projects, as cooperative,
Purusha also has economic activities. Initially,
it set up a coffee shop named Owl Coffee
House. The coffee shop does not implement a
traditional business management approach. The
coffee shop’s distribution of work is divided into
a proportional load. Each member gains fair and
proportional payment based on the time, energy,
andideasthathe/sheprovides.Thereisnox
salary for members.
According to Anggra, a member of Purusha,
italsohasasetpercentage of‘prot’thatis
distributedineverynishedprojectoractivity,
insteadofannually.Theterm‘prot’isreplacedby
‘contribution of production activity’ to be aligned
with the ideology of the cooperative. However,
according to other Purusha’s member, Priska, it
is still struggling to enable the members rely on
thecooperativenancially.Themembersmostly
have another main jobs outside Purusha.
Even though Purusha aim to replicate the
cooperative ideas in other places and make the
movement inclusive, it selects potential members
carefully. Purusha only considers people who
have the same ideas and goals about how
they will transform the society. The potential
members should express how their ideas could
bebenecialfortheorganisation.Moreover,they
have to assure this organisation will sustain on
the right persons’ hands.
Innovation
Promoting cooperative movement in urban
society leads Purusha into several challenges to
sustain. Anggra and Priska, members of Purusha,
argued that Purusha should always adjust with
society changes. Hence, Purusha should not
onlyfocusonhowmembersgetbenetfromthis
movement, but also to develop novel strategies
to give more impact to the youth within urban
society.
Those concerns lead Purusha to initiate an
innovationinitsunits.ForinstancesMinervaCo-
LabandMovement-Experiment.Theactivitiesof
these units aim to enhance urban youth initiatives
in cooperative movements; using hypnotherapy
methods and intensive consultations. Through
their consultancy services, Purusha relentlessly
breaks the prejudice about cooperatives by
offering other names such as arisan or collective
group besides conventional term such as
Koperasi. Yet, collective and cooperative spirits
within economic activities are still embedded as
its values.
On the other hand, before shifting its movement
into cooperative, Purusha was a company. Being
a cooperative entity led it to apply collective
work relations. Purusha does not merely use
conventionalschemesuchas‘prot’formembers
and organisation’s revenue, rather it creates
its own scheme and calls it ‘contribution of
production activity’. The scheme allows members
to get revenue based on their contribution in
workprocessandthat’swhatmakethema‘co-
operative’; working together equally to achieve
common goal. Hizkia Yosie, as Purusha founder
and board of management, disclosed that in every
research project, the members list the details of
the tasks in order to accomplish the project.
Collective Initiative
from Urban People: The
Highlight from Urban
Cooperative
According to Warwouw (2014), alliance between
marginal class and progressive group such
asnon-governmentorganisations,activists,
and student onion is possible to be set up.
Such alliance may promote the rights and
freedom of urban society that is affected by
development. Kopkun Purwokerto, Kooperasi
Komunitas Kalimetro, and Purusha Research
and Cooperatives aim to create cooperative
environment in urban society context.
Urban cooperative initiatives came from
academics, even though each cooperative has
different target group. Kopkun Purwokerto is an
example of successful cooperative movement
in inviting more people to join. On the other
hand, both Kalimetro and Purusha have been
limiting their members. They develop cooperative
environment by replicating the cooperative ideas
in their local communities.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 49
Shaping the Ecosystem Towards Development Partners
Chapter 6
Learning from the case study
PresentedbelowisthesummarisedndingsasoutlinedinChapter4and5.
Shaping the Ecosystem
Towards Development
Partners
All Kooperasiwere establishedafter1998
Reform, starting from CU GK in 1999 to
PurushaResearch &Cooperativein2015.
The persistence to pursue common prosperity
without neglecting social and environmental
challenges gradually pays off. Kooperasi in rural
area strengthen the presence of customary land,
reduce environmental degradation, increase
gender equality, ensure education, healthcare
and pension needs, and increase the sense of
security, unity and solidarity. While Kooperasi
insub-urban andurban areasincrease the
knowledge and awareness of the society on
cooperative movement spirit.
Interestingly, despite the application of
cooperative value and principles, Komunitas
Kalimetro does not have a legal status, while
PurushaResearch&Cooperativeisregistered
as foundation. Both of them are located in urban
area, and agree that the Law and requirements
to establish cooperative is complicated; from
the minimum number of members to minimum
amount of capital. According to them, the
requirements limiting cooperative to grow.
CU Gemalaq
Kemisiq
Dahlia Women
Cooperative
Kopkun
Purwokerto
Komunitas
Kalimetro
Purusha Research
Cooperative
Established 1999 2000 2006 2014 2015
Initial members N/A 23 69 15-20 7
Current members 15.000 116 1.400 40 23
Legal status Credit
Cooperative Cooperative Cooperative None Foundation
Specicservices Financing Financing Consumption Financing Research
In the context of inclusive development,
Kooperasi does not only contribute in economic
inclusiveness but also in other dimensions
such as social, ecology, and citizen’s rights as
presented in Table 7.
Fahrudin, Kooperasi
Komunitas Kalimetro founder
explained the cooperative’s
master plan
Table 6
Summary of the organisation
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
50
Shaping the Ecosystem Towards Development Partners
Chapter 6
Although it is not an apple to apple, the rural,
sub-urbanandurbancooperativecomparison
provides a short review of the cooperatives’
contribution towards inclusive development.
In Figure 4, the colour of the box represents
eachinclusivenessdimensionthatislledby
each Kooperasi. The half colour indicates that
the dimensions are not fully filled, and the
white colour indicates that Kooperasi does not
contribute to that dimension.
Dimension Sub-dimension
Kooperasi
CU Gemalaq
Kemisiq
Dahlia Women
Cooperative
Kopkun
Purwokerto
Komunitas
Kalimetro
Purusha
Research
Cooperative
Economic
Increasing
household
income
• • • n/a
Access to
nance • • • n/a
Social
Enhancing
access to
education
• • • • •
Ensuring equity
principle for
participation
• • • • •
Enhancing
access to
employment
• • • • •
Equitably
sharing rights,
responsibilities
and risks
• • • • •
Ecology Focusing in
environment n/a n/a n/a
Citizen’s
Rights
Ensuring people
to have the
knowledge of
their rights and
responsibility
• • • • •
Equal relation to
the government • n/a • n/a n/a
Kooperasi Komunitas
Kalimetro, an urban
collective initiative in the
heart of Malang city
Table 7
Cooperatives’ contribution
toward inclusive development
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 51
Shaping the Ecosystem Towards Development Partners
Chapter 6
Thetableandgureaboveshowsthatsocial
inclusiveness is the most contributed aspect from
all cooperatives. Furthermore, except Purusha
Research&Cooperative, all cooperatives
contribute towards economic inclusiveness.
The third aspect is citizen’s rights inclusiveness.
Cooperatives contribute to the dimensions but
not in one of the aspect. The constrain that
hinder cooperatives to be inclusive is, most of
cooperatives do not have an equal relation to the
government. Therefore, the government treats
cooperatives as an organisation that only requires
grant without further assistance nor monitoring
and evaluation.
The local governments in those areas do not
recognise cooperatives as a development partner.
Cooperativesinruralareacontributesignicantly
to ecological inclusiveness. The direct impact
of environmental degradation in rural areas lead
cooperatives to address the issue. People who
live near the forest are the most affected by illegal
mining and massive plantation. Water resources
is critical for sustaining their livelihoods and the
forest.
All organisations and things in the world need
innovation to adapt and survive; there is no
exception for cooperative. Through innovation,
these 5 cooperatives differ from the others. In
this case, innovation is divided into three types,
namely product, process and social innovation.
Table 9 presents summary of cooperative
innovation.Whethertheyarerural,sub-urban
or urban cooperatives, most of them shows
process innovation as the most prominent type
ofinnovation.Thisreectsthestageofinternal
adaptation in each cooperative.
According to Schmookler (1962) “product
innovation” refers to new improved goods or
services, and “process innovation” refers to
implementation of new method. However, the
product and process innovation itself will only
occur if the organisation is open for changes. Due
to rapid innovation in organisation and creating
innovation in product and process, people start
to think on new ideas that work to improve
people’s life. While product and process theory
aregenerallygeneratedbyprotmaximisation,
social innovation aims for social change (Mulgan,
Tucker,Ali,&Sanders,2006).
Figure 4
Summary of cooperatives’
contribution towards inclusive
development
Dahlia
Women
Cooperative
Kopkun
Purwokerto
Komunitas
Kalimetro
Purusha
Research
Cooperative
Credit Union
Gemalaq
Kemisiq
Economic Social Ecology Cityzens’ Rights
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
52
Shaping the Ecosystem Towards Development Partners
Chapter 6
Cooperatives Type of innovation Innovation Impact
CU Gemalaq Kemisiq Social Innovation Farmers Philosophy Members, community, and the
ecology
Dahlia Women Cooperative Product, Process and
Social Innovation
Offering new business for
the community, interest is
collected at the beginning,
support the community to
develop micro hydrwo power
plant
Members, management and
community
Kopkun Purwokerto Product and Process
Innovation
Mobile application,
organisation governance
Members and community
Komunitas Kalimetro Product and Process
Innovation
Establish the Kalimetro
Community Cooperative and
publishing
Members and community
Purusha Research
Cooperative
Process Innovation Establish the Research
Cooperative (was a company)
Members
Although the existence of cooperatives contributes to inclusive development, the cooperatives
policy does not entirely support it. In short, Figure 5 displays policies of Indonesia’s cooperative
historically, since early independence until present days. The dynamics of political aspect in regards
to the regulations is explained in Chapter 2.
Warung Kalimetro and
Intrans Publishing, as part of
Kalimetro community
Table 8
Summary of
cooperatives’ innovation
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 53
Shaping the Ecosystem Towards Development Partners
Chapter 6
However, it is important to note that the last positive development of Cooperative Law was produced
by the Regional Representative Council, not the Parliament. The Regional Representative Council
has been drafting new Cooperative Law since 2015, but it remains undisclosed until now.
EARLY INDEPENDENT PERIOD (1945-1949)
LIBERAL DEMOCRACY PERIOD (1950-1959)
GUIDED DEMOCRACY PERIOD (1960-1965)
TRANSITIONAL PERIOD (1965-1966)
THE NEW ORDE PERIOD (1967-1998)
POST-SOEHARTO REGIME/REFORM (1998-PRESENT)
Indonesia 1945 Constitutions, particullary Article 33 state that the economy
shall be organised as a common endeavour based on the principles of
kinship. This imply to cooperative initiative.
Eliminating all grassroots movement
Law No.79/1958 President Instruction No.60/1959
Communist Party take a role in
parliamentary, create a coopera-
tive law as a tool for revolutionary
system
President Instruction No.2/1960
and Law No.14/1965
Communist Party take a role in
parliamentary, create a coopera-
tive law as a tool for revolutionary
system
President Instruction No.2/1960
and Law No.14/1965
Parliament amend the Law
No.25/1999 with Law 17/2012,
however it was revoked in 2014
through the decision of the
Constitional Court
Regional Representative Council
drafting new Cooperative Law in
2015 but remain undisclosed
Figure 5
Summary of the Indonesia’s
history on cooperative policies
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
54
Shaping the Ecosystem Towards Development Partners
Chapter 6
Challenges of The
Cooperative Model
In almost all parts of the world, cooperatives
face one or more of the following crises: crisis
of ideology, capital, credibility and management
(Taimni, 1997). In Indonesia, cooperatives has
been being associated with student or civil
servantuniformshopsincetheNewOrderre-
denedtheconceptandpracticeofcooperative
– put it in the country structure as an organisation
to facilitate (mostly) civil servant and armed force
(Sugarda, 2016).
Cooperative faces not only internal challenges,
butsignicantlyexternalchallenges.Society
perception on cooperative as trusted entity
to increase household income is low; hence
cooperative is not able to adequately compete
with other types of business entity. Komunitas
Kalimetro, for example, established a publishing
company to support its economic development.
However, Komunitas Kalimetro did not register
its business as cooperative but as Limited
Partnership (known as CV in Indonesia). The
decisionreectsitsscepticismofcooperative
model in the market competition.
Several cases, such as Koperasi Pandawa
6
and Koperasi Cipaganti
7
in the past 3 years
exacerbated the bad reputation of cooperative
model. The leaders in both cooperatives took
overallprotsthenranawayfromtheirmembers.
The massive news coverage of these cases
decreased trust among members, and moreover,
among society. Nining Soesiolo (Suara.com,
2016) added, most cooperative in Indonesia are
highly dependent on government subsidies. The
subsidies are distributed without monitoring and
evaluation, which consequently leads cooperative
to have stagnant development.
Therefore, to maintain the existence of
cooperative, it should be considered as an
organisation, movement, and system beyond
economic dimension, but as a supporting
actor of inclusive development. Based on the
ndings,researchersseekanidealecosystem
for cooperative to grow.
The Ecosystem
Starting a cooperative takes energy and
resources. It begins with the recognition of
the need and consciousness to improve the
community. Cooperative needs an ecosystem
to grow. Inspired by Abell and Hoover (2016),
researchers set the recommendation of
cooperative ecosystem, which consists of internal
and external factors such as elaborated below.
Essential Elements: Building Blocks
A cooperative without strong component of value
is in danger to lose its uniqueness. In order to
be considered as an inclusive development
or social transformation actor, cooperative
should have essential elements. The Essential
Elements are the building blocks of cooperatives
and the engines for growth; neither impact nor
improvement can be achieved without them. The
thought of essential elements is derived from 5
Kooperasi values and principles as discussed
before. Researchers found that these elements
emerge from inside Kooperasi and make it
resilientagainsttoday’seconomic-political
situation:
1. Value-drivenorganisation
2. Collectiveness
3. Management
First and foremost, cooperative should be a
value-drivenorganisation.Itshouldnotonly
careabouteconomyornancialaspectofits
members, but it should also be concerned about
the community as a whole. Cooperative should
aim for social transformation, raising community
awareness on their rights as citizen, increase
people’s knowledge about their own resources
andhowtodefeattheinuenceofprot-driven
individuals or organisation.
Second, cooperative should begin with
collectiveness. As cooperative starts, it might
faceseveralstagesoflife-cycle.Duringthose
stages, individuals would be resilient to external
or internal challenges through collectiveness.
PurushaResearch&Cooperative,forexample,
has been through several stages of life. Its
collectiveness began since college, then it
transformed into a company, which later became
a cooperative. The transformation might not
succeed without collectiveness. As a cooperative,
Purusha does not increase its members’ income,
however impressively, the number of members
keep growing.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 55
Shaping the Ecosystem Towards Development Partners
Chapter 6
Homogeneity is one of the building blocks. This
element might sound not inclusive, however,
heterogeneity in cooperative does not bring
added-valuetotheorganisationnorbenet,but
destruction. Learning from Koperasi Pandawa
and Cipaganti as mentioned before, when the
cooperative becomes highly heterogenic, it has
lesscontrol.Allvecooperativesinthisreport
show that their member’s homogeneity is the key
to their existences. Dahlia Women Cooperative,
as an example, do not allow men to be involved
in their activities, nor unmarried women. This
restriction was made to keep the organisation
on track to achieve its goal; which is to increase
womenparticipationinvillage-developmentand
gain trust from men about the action of women.
In addition, the skill to manage cooperative
members and its system is also an important
key to establish the cooperative. For instance,
Kopkun Purwokerto hires a manager to manage
eachbusinesswhiletheothersactivitiesareself-
managed by its members. Each cooperative can
ndthewaytomanagetheirorganisationby
considering its resources. It is important to note
that management skill requires experience, and
the experience is gained from failure, attempts,
and persistence. Therefore, cooperative should
not only have management skill but all of these
components from the essential elements in order
to build the blocks.
Important Elements: Accelerators
A strong cooperative is undoubtedly capable to
accelerate. Accelerate refers to the development
of wider community, in addition to the members’
benet.Learningfromthecase studies,the
cooperatives can accelerate growth through
these Important Elements. The elements play
a role as key drivers for scaling up initiatives:
1. Innovation
2. Connection to market
3. Network to other cooperatives in the world
First is innovation and it may come in several
types. Based on the case studies of 5 Kooperasi,
researchers found that all cooperatives have
their own unique innovations; from product,
process, to social innovation. This research
raises those innovations up because they are
notonlybenecialfortheirmembersbutalsofor
a wider part of community. For example, Credit
Union Gemalaq Kemisiq in West Kalimantan
successfully prevented land degradation by
adopting the “Farmers Philosophy”.
The philosophy acknowledges the importance
of adat or local customary as social innovation;
it does not merely focus on the prosperity of
individuals inside CU, but prosperity of the whole
community and the environment.
The innovation (product, process or social)
should meet the demand of the market. Market
refers not only to the members, but to national
and even global market. For example, Dahlia
Women Cooperative’s business in rubber
plantation meets the national demand; by
providing rubber from Muara Bungo District to
Jambi and N orth Sumatera Province. During that
phase, the performance of the cooperative’s cash
owwasexcellent.Thecooperativemanagedto
distributeloanuptoRp80.000.000perperson,
support community’s micro hydro power plant,
and establish customary forest.
Subsequently, the connection to market will
accelerate cooperative’ success to connect with
other cooperatives in the world. Cooperatives
networkmightrstbeestablishedatlocallevel,
then at provincial, national, and international
level. Kopkun Purwokerto and CU Gemalaq
Kemisiq, for instance, established international
connection by joining the international alliance
suchas InternationalCo-operativeAlliance
and sounding their work to international forum,
respectively.
All of these components will accelerate
cooperative’s work and lead to social
transformation as development actor.
Supporting Element: Legitimiser
Asidefrominternalcapabilitytoestablishvalue-
driven cooperative, cooperative should consider
its external threats. Nowadays, cooperatives in
Indonesia face numerous external challenges
such as complex regulatory framework, lack of
trust from people, and lack of ability to compete
withothercapital-basedorganisations.The
important and essential elements need to be
strengthened. Supporting elements consist
of legitimacy. Legitimacy might not directly
support growth and scaling up, but without it
thecooperativewillfacedifcultiesinachieving
its goal.
1. Community awareness and recognition
2. Policy
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
56
Shaping the Ecosystem Towards Development Partners
Chapter 6
One of the reasons why most of Indonesian are
sceptical with cooperative notion is because the
numerous corruption cases in KUD (Koperasi
Unit Desa orVillage-BasedCooperative)
1
.
Furthermore, the cooperative establishment is
oftenassociatedwithrural,thehave-nots,small
scope organisation, civil servants or armed forces
business; resulting lack of trust to cooperative.
Therefore, cultural shift to increase general
awareness of cooperatives among public, social
movement, and business is urgently needed. It
can be created by expanding the coverage of
cooperative in the mainstream and alternative
media; the presence and visibility of successful
cooperatives in local communities; and local
support for alternative development models.
In place where cooperative is embedded in the
local culture to a great degree, the researchers
see several positive effects: member loyalty,
advocacy strength, institutional support,
cooperative development as an accepted
strategy for community economic development,
and ultimately more individuals starting their
own small businesses as cooperatives. The
community awareness and recognition will
help cooperative gain ideal ecosystem to
grow, however without supporting regulation
or policy from the government, the existence of
cooperative will be hindered.
The tension between cooperatives activists with
government lead to weak cooperation between
them. Cooperative activists, particularly those
of Kooperasi, have achieved great success
in demonstrating that cooperative contributes
towards inclusive development, way beyond
economic aspect. On the other hand, the
government focuses on financial aspect but
cares less about the other aspects such as
social, ecology and citizen’s rights. These very
signicantdifferencesincooperativeandthe
government lead to unsynchronised policy.
The last cooperation regulation (Law no.25/1992)
as an example, is complex and lengthy in
establishment procedures. In addition, the
Minister of Cooperatives and Small Medium
Enterprises (MoC) issued Regulation No
01/2006 that requires cooperatives to implement
numerous procedures. In comparison, these
additional procedures such as preliminary
meeting, does not exist for the establishment of
any other legal entities. Moreover, both policies
state that cooperatives must be formed by at
least 20 members, while a company may be
established by 2 persons or more.
Way to Lubuk Linggau village,
Jambi
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 57
Shaping the Ecosystem Towards Development Partners
Chapter 6
Nevertheless, in 2015, the Regional
Representative Council drafted a new cooperative
law.Impressively,thelawdenescooperativeas
“autonomous associations of voluntarily united
persons to meet their shared economic, social
and cultural needs and aspirations through jointly
owned and democratically controlled enterprises”.
The draft is in line with the notion of Kooperasi.
Moreover,thedrafted lawalsodefinespre-
cooperative organisation, and removes minimal
member requirement. However, the draft has not
been legalised.
To sum up, developing a cooperative ecosystem
isalong-term,iterativeundertaking.Thereisno
single way to integrate a robust ecosystem. For
instance, in several communities, the Essential
Elements are key in building cooperatives. In
other communities, Important and Supporting
Elements, such as community awareness, may
be the initial catalysts for ecosystem growth.
While Ecosystem Elements do not fall into a set
sequence, the process of purposeful ecosystem
development seems to progress through common
stages. Based on change management and
innovation theory, researchers see multiple
stages of ecosystem development, which may
evolve sequentially or simultaneously.
It is important to note that forming a cooperative
is not a guarantee for success without these
elements. Although cooperative is driven by
ideology, many cooperatives fade away. Its
ght,struggle,andmovementdisappearasits
vehicle breaks. Cooperative developers should
not struggle in isolation, but aim for concrete wins
toestablishahigh-impactcooperative.
CU Gemalaq Kemisiq
services office in Tanjung
village, Ketapang
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017
58
Shaping the Ecosystem Towards Development Partners
Chapter 6
Agenda for Change
In A Nutshell
Thenotionofdevelopmentwasrstlypervasive
in western world, but then shifted from one
generation to others. There is no ‘one prescription
tsall’indevelopment;eachcountryhastheir
own situation. The international financial
institution and development aid agency seek
for an ideal development form and recently
announced the Sustainable Development Goals
(SDGs). However, international development
perspective might be different with national or
local perspective. In the context of Indonesia,
perspective of development between
government and civil society should be equal.
Currently, besides SDGs, there is another
approach for development, namely inclusive
development. The latter approach is a process
toensureanequalaccessofwell-beingand
improvement on the general human livelihood as
well as the ecosystem. The cooperative and credit
union are strategic partners to attain inclusive
development. They highly contribute to the social
inclusiveness as well as to the economic, citizen’s
rights and ecology dimensions.
Alas, cooperatives do not receive recognition
from people despite their contributions to the
inclusive development. The common challenges
lie from internal aspect such as their sense of
purpose, management skill; to external aspect
such as connection to market, access to network,
supportive society and policy.
Therefore, cooperative should establish
bottom-up rather than a top-down initiative,
aiming for social transformation towards
inclusive development. To gain trust from the
people, cooperative should establish instrument
for monitoring and evaluating. Cooperative
should also collaborate with mainstream and
alternative media to cover cooperatives news
and spread the notion. However, the Government
of Indonesia also urgently needs to approve
the Draft of Cooperative Law 2015. To achieve
ideal inclusive development, the cooperative
movement should be widely spread everywhere,
while the government should transform into a
progressive government that supports the
emerging movement.
Agenda for Change
In order to strengthen cooperative’s contributions
for inclusive development, both quantitative and
qualitative approach need to be conducted.
Firstly, statistics on cooperatives is essential.
Statistic is needed to provide data of detailed
number of cooperatives based on types (such
as producer, consumer, worker, or movement)
in addition to only based on province. Data of
economic sectors of cooperatives (such as
agriculture,nancialservice,retail,professional
service, transportation, recycling, or construction),
number of members of these cooperatives, by
their various characteristic (such as gender,
age, education level, employment status or
Local communities in
Tanjung village, Ketapang
Acknowledgement
This report was prepared and written by Ferzya Farhan and Daya Cipta Sudrajat. The
activities to produce the document has received full funding from Centre for Innovation
Policy and Governance (CIPG).
Cover photo belongs to Damsir Chaniago from SSI Pundi Sumatera
Published in Indonesia in 2017 by:
Centre for Innovation Policy and Governance
Indonesia Sustainability Centre
Plaza Harmoni Blok B-5, Harmoni Jakarta Pusat 10130
Except where otherwise noted, content on this report is licensed under a Creative Commons
Attribution-Non Commercial 4.0 License.
CONTACT
For comments and further information please write to:
ferzya@cipg.or.id or ofce@cipg.or.id or visit www.cipg.or.id
occupation) is also needed. The data can be
obtained from Statistics Indonesia (BPS) with
special request and coordination from Ministry
of Cooperative and Small Micro Business.
Secondly, society, government and development
agency should put attention to non-nancial
impact of cooperative. For example, in the
social dimension, it is important to notice that
the improvement of livelihood does not only
depend on nancial aspect. The cooperative and
credit union successfully increased the number
of educated people. Those people are now
helping the cooperative and the whole community
to improve their life quality. The government
recognition of cooperative contributions in social
dimension will enable them to cooperate, such
as by improving schools’ and teachers’ quality
in the region.
Thirdly, it is important to legalise Cooperative
Draft Law 2015 for legitimacy, and create
Credit Union Law, to distinguish it from Credit
Cooperative. In the new draft law, cooperative
entity is distinct from other business entities.
It does not only differ in denition, but also in
tax regulation. In Article 50, it states that prot
of cooperative should not be taxed. Since
cooperative is non-prot, the ability of cooperative
and credit union in enabling people to pay tax is
important to be recognised.
Last, all development stakeholders should
acknowledge Kooperasi and credit union as
development partners, not as a business entity
or nancial institution; in order to obtain balance
development; improving people’s general
welfare without neglecting society & ecology
needs. The purpose of cooperative and credit
union establishment is not for prot, instead, it
aims for social transformation and improving
community’s standard of living. It is important
to note that the rural and urban cooperatives
are also the strongest potential partners to
defeat environmental degradation. Therefore,
the development stakeholders can work hand-
in-hand with Kooperasi as well as credit union,
such as through joint management of national
resources or modern technology
Active citizens and effective state play the key role
in institutional and policy change. If civil society
can mobilise resources, access mainstream
circuits of power, and influence the policy
process, then meaningful policy and institutional
reform will likely occur. The road is still winding
for cooperative to call for transformative pattern
of development in Indonesia, but there is light at
the end of the tunnel.
Cooperative’s Contributions Towards Inclusive Development - CIPG 2017 59
Shaping the Ecosystem Towards Development Partners
Chapter 6
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INDONESIA
Cooperative’s Contributions
Towards Inclusive Development
Ferzya Farhan and Daya Cipta Sudrajat
... This paper aims to bridge this knowledge gap by providing empirical evidence on