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Cooperative movement – Is it still relevant?

Co-operatives today are found in nearly all countries from the developing nations of Asia, Africa, and South America to the industrial countries of Europe and North America and cooperatives movement has played a significant role towards improving the benefits and livelihood of millions of members across the globe.

A Report from United Nation’s Secretariat Department of Economic and Social Affairs Division for Social Policy and Development shows that by 2014, the world witnessed the establishment of over 2.6 million cooperatives with over 1 billion in total membership. In Malaysia (then Federal Malay States), Cooperatives have started as early as in 1907, were initiated by the British colonials to fight the chronic problems of deficit spending and rural indebtedness among  local wage earners.

Since then, cooperative in Malaysia have grown at a moderate but steady phase. The number of cooperatives has increased over the years until it reaches 11,871 cooperatives with 7.4 million members and handsomely accumulated 13.81 Billion shares as at December 2015.

Cooperative movement have made known and gained more popular especially after our government encourage more Malaysian involved in cooperative movement.

The principal and the role of cooperative as a social-economic entity which assist the less fortunate people in reducing the risks of vulnerability and raising out of poverty through pooled resources and collective approaches.

Cooperatives are sustainable businesses which needs to be promoted and shared because its business model  foster democracy, people-focused businesses, fostering decent work and inclusion and operate with concern for the environment. As defined by the International Co-operative Alliance (ICA), 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”. By 2020, International Cooperative Alliance (ICA) a body represents cooperatives movement at international level, has set the aim that cooperative form of business should become “the fastest growing form of enterprise”. Our government expects that cooperatives will become the third crucial engine after the public and privates sector in driving the nation’s economic growth

Based on 2016 achievement, cooperative movement in Malaysia has reached 41 Billion in profit, and the government has set target RM50 Billion by 2020, and this figure is within reach in three years remaining.

Some researchers opined that cooperatives in Malaysia are at a cross roads due to stiff competition and challenges from other institutions and organizations that are also rapidly expanding and developing in and outside Malaysia. The issue  that needs to be address whether cooperatives are still relevant and can maintain their integrity and  not merely at the margin of  the national mainstream economy.

In 2002, the Malaysia National Cooperative Policy (NCP), 2002-2010 was launched with the aim of orderly re-developing cooperatives with the long term objective to transform cooperatives into an engine that is highly competitive, geared towards eradicating poverty and creating higher quality of life. In 2010, NCPII (2011-2020) has been launched, an extension of the original policy but sets forth the plans to strengthen the role of cooperatives within the context of national development. The government also set a target to register 16,000 cooperatives by 2020 and 50% of Malaysian to be  members and contributed 10% to national GDP in 2020.

As a brief overview, Cooperative movements in Malaysia are exposed to challenges and problems which needs to be tackled by the cooperatives themselves and surely with the help from the government. A study on cooperatives from 2002-2010 highlighted several crucial shortcomings- many, especially in the micro-coop category are very small set-ups, lack of entreprenual culture and understanding on cooperative movement, and many are not managed by professionals. Therefore, steps needs to be taken to overcome the shortcoming and help cooperative operate efficiently.

The  NCP has acknowledged the fact that not only cooperatives are small in size but they are also funded by a small amount of capital. It is very hard to get sufficient capital to fund their activities, thus cooperatives rely solely on conventional sources of capital, i.e. membership fees, share capital and accumulated profits.

Top-down management dominates too many cooperatives and member participation is weak and inefficiently managed, where most member only thinking what profit do they get from joining a cooperative and even reluctantly paying their members share and members fee.

In setting-up a cooperative, needs courage and really understand the objective of a cooperative movement. Many cooperative especially in the micro-cooperative level are not moving even after they get the approval letter from Malaysian Cooperative Commission (MCC). Most newly cooperative at the micro-level remain inactive and dormant, after having their first Cooperative meeting.  

Usually most members of newly cooperative in Malaysia especially under the micro-level category only contribute small amount of shares as low as RM100. With fifty members, the minimum number required to set-up a cooperative, means they only collected five thousand as a start-up to do their business. This amount is consider small and even not enough to do a business nowadays. But there are  some cooperatives are really serious even to the extent each members contributed one thousand per share. With one thousand they collected fifty thousand dollars and with that amount they can use some portion of the money as a capital to start their business.

Cooperative movement should focus on quality of its members, not merely depended on government help. It is a wrong perception that when setting a cooperative, the first thing come to their mind is what kind of assistance they can get from the government without first have a strong desire to pool their own resources and plan a good business which they know and can do. We do not want cooperatives only seen during their opening ceremony where they invite VIP or YB in their constituensies, then disappear without trace without even manage to hold their first committee meeting. Cooperative should also avoid sponsering in paying their members share then collect from them in a later stage. It would be meaningful for the member themself to pay personally their share and members fee so that there will be sense of responsibily towards their cooperative rather than ask other people paying for them and prefer joining the cooperative for free. Its seems a syndrome in our society, only gets serious in the beginning with big publicity but did not sustain longer, it is lucky for a cooperative to exist after one year of their existence. However there are also success story of cooperative in Malaysia which we can emulate, we can google-up to Malaysian Cooperative College (Maktab Koperasi Malaysia) website, we can read few cooperative which are very commited to their core business and produce good profit to their members. But we want more cooperative success in their business, maybe they cannot be like the big cooperative which earns millions or even billions of ringgit, because by comparing the small cooperative with the giants is not a level playing field for them. New cooperative must start their journey with small step that is to unite their members, make them understand of what is cooperative are all about. It is about leadership and management, and it’s a long journey, need passion as the saying goes, Rome is not built in one day. With the current higher cost of living, where people struggle to meet their end needs, cooperative might be the way-out to ease the burden among the members.

The table below shows that there are 12,691 co-op under the small and micro category as compared to the middle and top category but only contributed less than 10% of overall profit in 2015.

*Source:Malaysian Cooperative Commision

Most cooperatives in Malaysia are living in a comfort zone, having a subsidy mentality and heavily depended on government assistance. Coopertives in Malaysia should learn from cooperative in certain countries like Korea,Netherlands,New Zealand and Australia which have significantly contributed to their national development and to some extent determine the political party that will win in the general election.

Below are few examples on cooperative movement around the globe for reference;

In Denmark, consumer co-operatives in 2007 held 36.4% of consumer retail market. Source: Coop Norden AB Annual Report 2007. 

In Japan, the agricultural co-operatives report outputs of USD 90 billion with 91% of all Japanese farmers in membership. In 2007 consumer co-operatives reported a total turnover of USD 34.048 billion with 5.9% of the food market share. Source: Co-op 2007 Facts & Figures, Japanese Consumers' Co-operative Union.

In Mauritius, in the agricultural sector, co-operators play an important role in the production of sugar, vegetable, fruit and flower, milk, meat and fish. Nearly 50% of sugar-cane planters are grouped in co-operatives. Source: Ministry of Industry, Small & Medium Enterprises, Commerce & Cooperatives.

In The Ivory Coast, co-operatives invested USD 26 million into setting up schools, building rural roads and establishing maternal clinics in 2002. Source: ICA, Briefing for NGOs on the Work of the Noncommunicable Diseases and Mental Health Cluster, 2004.
 

In New Zealand, 3% of the gross domestic product (GDP) is generated by co-operative enterprise. Co- operatives are responsible for 95% of the dairy market and 95% of the export dairy market. Source: New Zealand Co-operative Association, 2007.

Having said this, cooperative movement in Malaysia must come out from their comfort zone

Our government are preparing a new vision for younger generation in the next 30 years with the launcing of TN50. Hence, cooperative movement should be included in the vision as the participation of younger generation is crucial to rejuvenate and ensure that the future growth of the cooperative segment in the country is on track. However, young generations involvement in cooperative movement after living school days are still low where statistics shows that are less than 200 youth cooperative to date registered nationwide. This weak participation are due to the general perception that co-operatives as unintresting organisations, does not present good feeling factor for gen Y to get involved, and only a few take advantage of co-operative opportunities.

In life, if we go alone we can go fast, but if we go together we can go far and cooperative if about pooling resources and energy. Why not start now to setup a cooperative in our family, our group of friends and in our community. Not only merely for profit but makes us, our family and our community more closer to each other in a meaningful way.

Salam koperasi.

This article open for comments and correction.

By: Roslan Hj Masran