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Jakarta Post

Omnibus bill to relax requirements to establish cooperatives: Government

  • Dzulfiqar Fathur Rahman

    The Jakarta Post

Jakarta   /   Tue, July 21, 2020   /   07:04 pm
Omnibus bill to relax requirements to establish cooperatives: Government Hari Fitri Rahmadhani makes batik at an Andalan Cooperative workshop in Pangkalan Kerinci, Riau, in this undated photo. The Cooperatives and Small and Medium Enterprises (SMEs) Ministry is seeking to relax the requirements to establish a cooperative by reducing the minimum number of founders to just nine people through the omnibus bill on job creation currently under deliberation at the House of Representatives. (The Jakarta Post/Stefani Ribka)

The Cooperatives and Small and Medium Enterprises (SMEs) Ministry is seeking to relax the requirements to establish a cooperative by reducing the minimum number of founders to just nine people through the omnibus bill on job creation currently under deliberation at the House of Representatives.

The prevailing regulation, Law No. 17/2012 on cooperatives, stipulates that at least 20 founders are required to establish a cooperative.

The government initially proposed lowering the number to just three, but after a series of deliberations with the House, both sides agreed to reduce it to nine.

Fiki Chikara Satari, a special staff member to the cooperatives and SMEs minister, said Monday that the omnibus bill would make the process of establishing a cooperative “more agile”.

“This is the agreement with the House,” Fiki said in a virtual talk. “We hope it can be finalized in the near future and ease [the establishment process].”

Coordinating Economic Minister Airlangga Hartarto stated in mid-July that the government was expecting the House to conclude deliberations of the omnibus bill by late August or early September.

The relaxation of requirements is part of the government’s effort to boost the participation rate in cooperatives, which currently stands at 8.41 percent, far lower than the global average participation rate of 16.31 percent.

Increased participation in cooperatives could help boost Indonesia’s gross domestic product (GDP). In 2019, the country’s more than 123,000 cooperatives contributed 5.54 percent to the country’s economy.

Indonesia’s economy grew by just 2.97 percent in the January to March period and the government has warned of a recession in the third quarter, as the pandemic continues to devastate economic activity.

The government also plans to encourage five big cooperatives to list their shares on the Indonesia Stock Exchange (IDX) this year, depending on developments in the COVID-19 pandemic’s impact on the economy. It initially planned to encourage 10 major cooperatives to go public this year.