Jurnal ISEI Jember, Volume 2 Nomor 1, April 2012

CO-OPERATIVE AUTONOMY IN INDONESIA: A REVIEW

Adhitya Wardhono Department of Economics, University of Jember Jl.Kalimantan 37 Jember Indonesia Telp. 0331-337990/Fax. 332150 CP 68121, a_wardhono@yahoo.com/HP. 08149092171

Abstract The autonomy of co-operative is a controversial issue since it is trapped in the conflicting problem between people's and government's right. It is widely believed that government's over promotion and over intervention makes the co-operatives too depending on government aids. The true co-operative, actually, is marked by its autonomy, and this autonomy could not be reached only by changing government's regulation. It is closed related with the aspect of democratization in economic environment. Therefore the development of co-operative autonomy must be pursued. In this effort the relevant question concerning this problem can be raised: what kind of co-operative autonomy we should develop and how far the co -operative autonomy should be implemented. This main objective of this article is to discuss briefly the autonomy of co-operative problems as a crucial phenomena in developing countries with case of Indonesia. Key words: Co-operative movement, autonomy of co-operative, Indonesian coperative.

1. Introduction In developing countries, co-operatives as an economic institution have still an important role. Current global political and economic changes have put many pressures on government to rethink their policies toward cooperatives. It role in co-operative development, thus has changed from sponsoring to giving more autonomy to this institution. Though many co-operatives have found difficulties to respond to the challenges, however, co-operatives have been recognized as a powerful instrument to transform economy of a country. To be precise, co-operative movement as its very nature, fights against exploitation and inequality. Co-operatives promote people's initiative, self help as well as mutual help1. Contemporary development paradigm, in most developing countries, is based on premises i.e. the need for active intervention by the State in order to promote structural changes on society, influential inter-play of social and economic forces, and to extend support and provide protection to the weak and vulnerable parts of the community. This active intervention by the State often manifests in such of public policy measures, in creation and maintenance of development agencies and institutions, and in laws that provide discriminatory protection to group of socially and economically handicapped 1

Adhitya Wardhono, Co-Operative Autonomy In Indonesia: A Review

people, and in making income of funds by the State for tasks that are perceived to be essential for under-pinning the process of development. In this development paradigm, cooperatives too have been assigned a role. Under this paradigm, third world development institutions and governments in recent years abandon their great enthusiasm on cooperative and participatory development programs (Develtere, 1999). Yet, one problem facing many developing countries is that co-operatives are trapped in the question on how far the penetration of government has gone and should go. This problem has led them to discuss many cases, situations and conditions, they have faced, especially toward the third millennium. State regulation on economic activities does not necessarily have negative effect, but in reality, in developing countries, it has a lot of political interests. Giving governmental authorities a direct role in promoting and developing co-operatives is another common mistake. The bureaucratic approach of government staffs, who play as administrators rather than business developers, has usually yielded negative results. They often tend to focus on protecting their own jobs and benefits rather than developing independent and viable co-operatives (an outcome that may threaten their own future f. So far, this situation makes a complex problem to break down. Consequently, beside the co-operative, the role of private organization has been developed and it become a gigantic enterprises. The challenges for co-operatives today are to ensure that there is a conducive environment to allow people express their ingenuity to create innovative solution for their problem. Rethinking on the co-operative's role has been a large area of studies and open to debate. But one of the problems in developing co-operative is the notion of autonomy. The main objective of this paper is to discuss briefly the problem of autonomy on co-operative as a crucial phenomenon in developing countries. The raised question is what co-operative autonomy means and how far it should be implemented in Indonesian Co-operative. This paper emphasizes obviously two ways, i.e. the first is that cooperative is related to autonomy and the second is that co-operatives autonomy is related to implementation of democracy. 2. Review On Co-Operative Autonomy In Germany, theoretical controversy over government assistance and its effect on Co-operative independence was a major subject of debate between Schulze-Delitzsch, Ferdinand Lassalle and Victor Aime Huber, founders of the Movement in past century. According to this debates, the perspective of co-operative autonomy is really broad and subjective to manage. According to International Co-operative Alliance (ICA) principles, co-operative are autonomous3 by virtue of being people-based, community owned, and democratically controlled organization. Therefore, the autonomy of cooperative can be defined as .capability of the co-operative society, as an economic entity as well as movement, to make and execute its own decisions and be prepared to accept the risks and share the responsibilities of its decisions". Within the context of co-operative movement, autonomy means a situation whereby each co-operative organization at either local, secondary or tertiary level truly independence in its decision-making and administration. It is a state whereby all kinds of extraneous influence, wherever available, does not affect the internal cohesion and running of the co-operatives, except in accordance to law of the land. In that sense, outside assistantship, especially financial help either from government or other organisation is a major source of concern to the co-operative movement. It comes along with aid in whatever of form its such as 'supervision' and 'control' 4. Soejono recommends for other perspective of co-operative autonomy. It is the basic principle of the co-operative and the source of democracy in co-operative management and supervision as 2

Jurnal ISEI Jember, Volume 2 Nomor 1, April 2012

well as the principles of self-reliance. He emphases that without autonomy, democracy and self reliance, co-operative will be meaningless (Soejono, I. 1992). The real cooperative is marked by its autonomy, a therefore the development of co-operative autonomy effort, like the effort of expanding democracy, has to be fought (Akpoghor, P. 1993). Muenkner introduces that there are three main aspects related to the issue or the autonomy, which become the guidance for developing the co-operative autonomy, namely 5 : a. autonomy in objective setting; b. autonomy in decision making; and c. self control for autonomy. Autonomy of co-operative is closely related to self sufficiency of co-operative. The characteristics of self sufficiency are (Nasution, M. 1992): a. able to and having authorities to make decision; b. able to arrange work planning; c. able to arrange organization of co-operative; d. able to handle staff matters; e. able to decide and conduct all activities, and; f..able to manage, and supervise the whole activities of the organization and all the effort of co-operative. Furthermore, Muenkner 6 also notes that already now a new era for co-operatives has started in the former socialist countries with the reorientation of the Marxist-Leninist model of State-and party-controlled co-operatives serving as transmission belts for the dissemination of private property of mean of production in to co-operative property and working within a centrally planned economy, to private autonomous co-operative societies operating in a market economy . He also emphases that in many developing countries a new era for co-operatives has began with the collapse of socialist regimes, with growing weakness of heavily indebted Government and with the introduction of structural adjustment program. Since 1980s government are becoming aware that to view and use cooperative as development tools to supervise co-operative by government services does not promote but rather impede cooperative development. Many governments can no longer afford to provide promotion, supervision and audit for a large number of co-operatives free of charge. The government agencies for co-operative development are often over effective. Many of government power to control co-operatives laws remain fictitious because the government machinery is unable to make full use of its statutory power.

3. Co-Operative Autonomy In Indonesia Generally, co-operative are voluntary socio-economical phenomena. Especially in developing countries cooperative have been associated with high expectation and dismal failure. For Indonesian economy, the main emphasis of national development is to develop the nation and the state, in which economic development is a means to promote nation and character-building. In this care, co-operative is one of the important institutions with its internal problem. One fact should be kept in mind that under the Indonesian Constitution that there are the major players of economic activity i.e. government, private and cooperative. One of the functions of the co-operative is to develop economic capability and ability of the members and to increase economic and social welfare 8. No society is structurally or culturally completely homogeneous. The Indonesia's environmental condition has been a large debate about this urgency on the co-operative autonomy. The government role therefore are a facilitator, promoter, supporter, and to give guidance for co-operative movement. It should be remembered that in its role as the supervisor of the activities of cooperative, it has to avoid inferring the internal affairs of co-operative. This kind of responsibility of the government is consistent and as a consequence of the state constitution (UUD'45 and GBHN (the general outline of the state policy (Nasution, M. 1992). Experiencing Indonesian co-operative, Nasution (1992) emphases that what makes the co-operative cannot develop and unable to be autonomous, 3

Adhitya Wardhono, Co-Operative Autonomy In Indonesia: A Review

is because the environment is not suitable. This reality can not be refused, but a suitable environment is needed in creating and growing of cooperative. In reality, many Indonesian co-operative was put unsuitable environment. However, clearly the problem is not in the co-operative, but in the environment. Sometimes the government has created the conditions that made it more difficult, with issuing the economic regulation only to the private sector. In so far, the autonomy of co-operative is a controversial issue since it is trapped in the conflicting problem between people's and government's right. It is widely believed that government's over promotion and over intervention makes the co-operatives too depending on government aids. The true co-operative, actually, is marked by its autonomy, and this autonomy could not be reached only by changing government's regulation. It is closed related with the aspect of democratization in economic environment. Therefore the development of co-operative autonomy must be pursued. Undefined boundary of autonomy is reflected in the practice of the co-operative movement in Indonesia. Autonomy, in the sense of freedom, has never any absolute meaning. In practice autonomy of co-operative is limited by government restriction. In fact, Indonesia government has very big influence on the development of co-operative9. Normally co-operative movement is understood to include both primary and secondary co-operatives from the local level up to the national levels with the co-operative council, or association of co-operative, at the apex. In this regards, there are two element of autonomy that must be considered within the Indonesia context (Scholz A.N and Walsh. T.A. 1992): 1) the autonomy of the co-operative primary society as an entity (economic entity at the micro level; and 2) the autonomy of movement at the secondary and national macro level. Beside that co-operative movement has a democratically justification. We should remember that co-operative and economic democracy is closely related. The principle of "one member one vote" is indeed the main principle of cooperative. However, these basic principles of democracy have brought into "a blind democracy" in co-operative. In this dilemmatic problem Sasono (1992) argues that obviously that co-operative autonomy, is needed since, it is the most suitable means of co-operative basic principles. But is it true that the autonomous co-operative will automatically the most advantageous to develop the structure of democratic. He also raises questions about its problem the poor who represent 80% of work force and who that should be represented by co-operative movement, whether able to compete in unbalance situation with non-co-operative association, without government protection. Moreover, he criticizes who is 'really' supported by the government (Sasono, A. 1992).

4. Conclusion It has been suggested earlier that co-operative still have big problem to developed their autonomy. A case of Indonesian co-operatives, the constitutional mandate suggest that this institution should be the pillar of the economy, and its must become autonomous organization. This paper discusses only the problem of co-operative autonomy in the context on Indonesia co-operative movement. But the empirical observation expressed in this paper may reflect that this phenomenon can be referenced for much co-operative movement and government, other developing countries. The main items of recommendation are: 4

Jurnal ISEI Jember, Volume 2 Nomor 1, April 2012

Role of Governments should to be redefined its function. Government role is supervision and control over cooperative movement. Co-operative has to develop harmoniously with government initiative. Government supervision has to raise democratic in internal organization of co-operative. This will guarantee that cooperative is owned by the whole members. Government supervision should not disturb the state of autonomy. 2) For a long period, co-operative development must be understood a part of economics development and democracy understanding. So government must to response to the environmental exchange in co-operative. 3) The strong and successful co-operative is an affirmation over people's democratic right on self-determination that leads to self-reliance. And as an organization, co-operative should be restructured in order to strengthen its integration between co-operative both horizontally and vertically.
1)

To the end, in economic structure (and politics as part of economics globalization, co-operative could not depend only in primary level. Successful implementation of the cooperative autonomy needs proper harmonization and systematic effort to solve the internal problem.

______________________________________________________ Note: 1. Co-operative principle are commonly defined according to the International Co -operative Alliance (ICA of 1966 as organization which have: 1. Open and voluntary membership; f. Democratic control; 3. Limited interest on share capital. 3. Return of surplus on share to members; Co operative education; 5. Cooperation among co-operatives. 2. For deeper discussion see Parnel, 1999, Reinventing Co-operation: the challenge of the 2 1st century, Plunkett Foundation, U.K 3. The Oxford Advanced Learner's Dictionary of Current English defines the adjective, autonomous as "(of states self governing". By inference, autonomy may be referred to as a state of self -government or independence or let by defining the key words of autonomy: autonomy: <noun> right of self-government; autonomous: <adjective> : having self -government; acting independently. 4. see Akpoghor, 1993. p.70-71. 5. for deeper discussion see Soejono (1992) . 6. see Muenkner, H.H, 1995, A New Era for Co -ops and the Implications for Co -op Legislation (with Focus on European Union and Developing Countries , ICA Review of International Co-operation, Vol.88 No.2 p.90-105 and Minkner, H.H, 5

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1995, Basic Co-operative Value to Fill a Conceptual Vacuum, with special reference to Africa, Paper prepared for ICA Co -operative research Forum Manchester, September 17 th and 18th, 1995. 7. According Muenkner and Lux (1997) , there are two types of co -operative similarly this them e. There is socialist co-operative and autonomous co-operative benefit for members are the first priority in: Lesson from Co-operative Development in Japan for the Development of Co operative in China; from Selected Issues of East Asia Economies: Japanese and Germany Perspective, edited by D. Zimmerman. 8. In Indonesia Constitution (Article 33 which emphasize the role of co -operatives and the role of state as follows: 1 The economy shall be organized as a joint endeavor based upon the principle of b brotherhood. f Branches of production, important for the state that affect the lives of many people, controlled by the state. 3 Land, water and nature riches contained therein controlled by the state and made use of for the maximum prosperity of the people. 9. see Soejono, 1992, p.1-18

References Akpoghor, P. 1993. Selected Essays on Co-operative Theory and Practice. Series A-5, MarburgConsult and Self-help Promotion. Marburg. Develtere. 1999. Co-operation and Development. Acco. Leuven. Belgium. Nasution, M. 1992. Experience of The Co-operative Autonomy: Observation and Recommendation. The Lecture Forum and Monograph Series on Co-operative Management and Development. The Southeast Asia Forum For Development 6

Jurnal ISEI Jember, Volume 2 Nomor 1, April 2012

Alternatives, Jakarta. Indonesia. Sasono, Adi. 1992. Economic Democracy or Co-operative Autonomy, The Lecture Forum and Monograph Series on Co -operative Management and Development, The Southeast Asia Forum For Development Alternatives, Jakarta, Indonesia, 1992. Scholz A.N and Walsh. T.A. 1992. Relevance of Micro and Macro Levels in The Autonomy of The Co -operative Movement, The Lecture Forum and Monograph Series on Co -operative Management and Development. The Southeast Asia Forum For Development Alternatives, Jakarta, Indonesia. Soejono, Ibnu. 1992. Experiences of The Co-operative Autonomy: Review and Recommendations , The Lecture Forum and Monograph Series on Co-operative Management and Development , The Southeast Asia Forum For Development Alternatives. Jakarta. Indonesia.