The role of cooperatives in the context of Indonesia could be said originating from this point of view and cooperative concept. Cooperative concept is a common concept in the world. eg in many countries including Indonesia, the cooperative is one of the body of a business owned by many people with the principle of one person one vote. But when one want to apply the concept of cooperatives in Indonesia initiated by Bung Hatta, the differences therein occurred on the most fundamental cooperative concept Indonesia. First in Indonesia, the role of cooperatives is as the main part of the development in order to eradicate poverty. This role make the burden of Indonesia cooperative more than cooperatives in other countries, because the Indonesian cooperatives have mission to increase the welfare of a country, not only become a form of agency business. Second, the role of cooperatives in order to spread it soul and enthusiasm to other company in private sector and the government sector.
In general, cooperatives in Indonesia has a role in the community such as:
1. Increasing scale and efficiency of business. In the field of business, which is in the grass roots in general, often find themselves operating in a small scale, with low efficiency in doing businesses. By joining in a cooperative, the scale of business activities can be enlarge, including joint procurement of fertilizer, processing, production and marketing.
2. Increasing “Bargaining Position” . In general, individuals (farmers, herders, fishers) or small business groups in Indonesians grass roots community are exposed to limited market access, limited access to capital, limited access to technology and limited access to education. This put them become less powerful in negotiating prices for their products. These victims of asymmetric information, then found themselves to be exploited by more powerful group or individuals because of their inherent weaknesses. By joining the cooperative, the strength of a group can grow and then have a trickle down effect to strengthen their bargaining position in the market.
3. Giving Social Benefits. Provide mutual support to each other, encourage togetherness among the members and to be able to foster the spirit of democracy and loyalty to the organization.
Cooperatives then have long been known as crucial in developing Indonesian economics & business. This is based on the general believe that in Indonesian society, cooperatives way of businesses is in line with Indonesian society tradition and normative values. Traditions and values which is affected by the religion and culture in Indonesia thus very supportive in developing cooperatives. Traditions and values such as the normative behavior in the form of a family, gotong royong, and togetherness together with Pancasila as the ideology of the nation, explicitly and implicitly guide Indonesians people to work together, promoting kindneship, equality of degrees, humanity, and togetherness could be found as several principles strive by every cooperatives organizations.
SME's in Indonesian community have long been known as the backbone of the nation's economy. Particularly since 2000-2006, contributions of SMEs occurs in almost all business sectors in Indonesia, except in the processing industry sector, mining sector, and sector of electricity, gas, and water. SME's also play a key part in increasing GDP, especially in agriculture, livestock, forestry and fisheries; sector and trade, hotels and restaurants
Until the end of 2006 BPS informs that the number of SMEs in Indonesia have already reached 48.258 million, or 99.99% of business units. Business groups are able to absorb this labor approximately 96.3% of the amount of productive labor available while contributions to the GDP reached 53.4%. The data indicates that SMEs are basically business groups that have the potential to overcome the problem of poverty and unemployment.
GOI efforts to build the SME's in accordance with the legal aspects that have been publish in include:
1. Make SME's criteria based on turnover and number of labor,
2. A conducive climate in the aspect of funding, competition, facility, partnership, business licensing and protection,
3. Perform in the field of production, marketing, human resources and technology,
4. Provide financing that consists of bank loans, providing a loan from non-bank financial institutions, venture capital, provides loan funds from the partial elimination profit business owned by the State agency (state-owned) sector governance, providing grants, and other means of financing, and
5. Facilitating partnerships between SME's and medium businesses and medium business with the exporters with foreign buyers.
Sunday, September 13, 2009
Indonesia millenium Development Goal
The five primary strategies set out in the PRSP are:
1. Broadening opportunities. Strategy for creating an economic, political and social condition that enables the poor-both males and females, to extend the opportunities in fulfilling their basic rights and to improve their standard in a sustainable way.
2. Empowering community institutions. Strategy for strengthening social, political, economic and cultural institution, and for promoting participation of the poor-both males and females in public policy making process that ensures respect, protection and fulfillment of basic rights.
3. Increasing capacity. Strategy for increasing basic and entrepreneurship capacities among the poor; both males and females, to keep up with the development progress.
4. Providing Social protection. Strategy for providing social protection and personal security assurance for the vulnerable groups (female-headed households, the poorest, the elderly, street and abandoned children, the disabled) and for those experiencing a new poverty episode due to natural disasters, negative impact of economic crisis and social conflicts.
5. Promoting global partnerships. Strategy for promoting and restructuring international relationship and cooperation in supporting the implementation of the above four strategies.
There is many contributing factors and argumentation on the cause of this continuing poverty. But, financial crisis in Indonesia which is triggered by the economic crisis in mid 1997 is one of the major factors. Following this crisis, almost all the economic actors get affected. However, although most of the big entrepreneurs hits by the crisis, different situation occurred to the cooperatives & Small Medium Enterprises (SME's) institutions in Indonesia. The crisis surely hit them too in matter of fact, however most of the cooperatives & SMEs able to survived, especially those which have the core activity and businesses in commodity exports due from gaining extras rupiahs from rupiah depreciation against the U.S. Dollar.
1. Broadening opportunities. Strategy for creating an economic, political and social condition that enables the poor-both males and females, to extend the opportunities in fulfilling their basic rights and to improve their standard in a sustainable way.
2. Empowering community institutions. Strategy for strengthening social, political, economic and cultural institution, and for promoting participation of the poor-both males and females in public policy making process that ensures respect, protection and fulfillment of basic rights.
3. Increasing capacity. Strategy for increasing basic and entrepreneurship capacities among the poor; both males and females, to keep up with the development progress.
4. Providing Social protection. Strategy for providing social protection and personal security assurance for the vulnerable groups (female-headed households, the poorest, the elderly, street and abandoned children, the disabled) and for those experiencing a new poverty episode due to natural disasters, negative impact of economic crisis and social conflicts.
5. Promoting global partnerships. Strategy for promoting and restructuring international relationship and cooperation in supporting the implementation of the above four strategies.
There is many contributing factors and argumentation on the cause of this continuing poverty. But, financial crisis in Indonesia which is triggered by the economic crisis in mid 1997 is one of the major factors. Following this crisis, almost all the economic actors get affected. However, although most of the big entrepreneurs hits by the crisis, different situation occurred to the cooperatives & Small Medium Enterprises (SME's) institutions in Indonesia. The crisis surely hit them too in matter of fact, however most of the cooperatives & SMEs able to survived, especially those which have the core activity and businesses in commodity exports due from gaining extras rupiahs from rupiah depreciation against the U.S. Dollar.
Indonesian Economic Condition
Since the last decade, when the economic and political crisis hit the Indonesian region, poor communities within the regions increased instantly and millions of rural poor in Indonesia fell below the poverty threshold as shown below.
Table 1. Number and percentage of poor people in Indonesia by Urban-Rural areas
Consequently, poverty alleviation program became the most important policy objectives of development of Indonesia, which mentioned in chapter 16 of the Medium- term Development Plan (Rencana Pembangunan Jangka Menengah Nasional) 2004 – 2009. This describes policy guideline for poverty reduction focusing on the fulfillment of the rights of the poor, and the promotion of regional development through acceleration of rural development, revitalization of urban development, coastal areas development and acceleration of lees-developed region. In addition, the GOI has launched the Poverty Reduction Strategy Paper (PRSP), which describes GOI’s long-term national Poverty Reduction Strategy in line with its commitment to realizing the Millennium Development Goals (MDG). The GOI has set a deadline of 2015 for most of these goals, including bringing down the number of poor people to 7.5 percent of the total population. In 2004, this percentage stood at 16.6, furthermore, it was increased to 17.75% in 2005.
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