Strengthening role of Malaysian cooperatives in national development

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KUALA LUMPUR: The 2011-2020 National Cooperative Policy (NCP) launched by Prime Minister Datuk Seri Najib Tun Razak recently attests the government’s recognition for the cooperative movement’s role in economic development.

NCP is the extension of the original policy but sets forth the plans to strengthen the role of cooperatives within the context of national development.

“The way ahead for the cooperatives should be in line with the nation’s development goals. Therefore, it calls for comprehensive changes in the cooperative movement,” said the Executive Chairman of Malaysian Cooperative Commission (MCC) Datuk Mangsor Saad during an interview with Bernama.

Help to attain national goals

The year 2009 heralded a new paradigm in the nation’s socio-economic development especially with the introduction of the 1Malaysia: People First, Performance Now and the related National Key Result Areas (NKRAs) to fulfil the people’s aspirations.

The government also introduced the New Economic Model in year 2010 to spearhead Malaysia’s transformation into a developed and high income nation.

The new aspirations and ideals bring new challenge to cooperatives to not only uplift the standard of living for its members but also to realise the development agenda.

Therefore, the cooperative movement should ensure effective intervention in issues like cooperative membership, finance, leadership and management.

Starting with nine Thrift and Loan Societies in 1922, the number of cooperatives as at October 2010 stood at 7,980.

The share-capital based on the 2009 financial year stood at RM8.97 billion and the cooperatives owned assets worth RM65 billion, with returns amounting to RM8.92 billion for the same financial year.

However, a study on cooperatives from 2002-2010 highlighted several crucial shortcomings – many are very small setups, lack the entrepreneurial culture and understanding on cooperative movement, and many are not managed by professionals.

Therefore, steps need to be taken to overcome the shortcomings and help cooperatives operate efficiently.

Membership and resources

According to Mangsor, the cooperative movement in Malaysia is growing with a myriad of cooperatives emerging some in specific areas –  consumer cooperatives, agriculture, housing, transport, industry, construction and services, and the multipurpose cooperatives involved in various economic activities.

On their achievement level, Mangsor noted statistics indicate they have been growing steadily from 2005-2009 with a growth rate of 9.4 per cent in their numbers and 4.7 per cent in membership, the share capital grew by 8.2 per cent, assets by 20.8 per cent and returns by 17 per cent.

The cooperatives derive their financial strength from their services especially the financial services that contributed 64 per cent of the total cooperative income in 2009.

This revenue was contributed by 577 banking and credit cooperatives representing 8 per cent of the registered cooperatives based on a turnover of RM5.71 billion.

The biggest is the Bank Kerjasama Rakyat Malaysia Berhad (Bank Rakyat).

The consumer cooperatives account for 2.8 million (40.9 per cent) of the total membership.

Nonetheless, the returns from consumer cooperatives accounted for RM0.98 billion (11.1 per cent) only from the total cooperative returns.

The varying sizes of the cooperatives

On the size of cooperatives, there are about 159 cooperatives in the big cluster, 361 in the medium cluster and the rest within the small and micro cluster, noted Mangsor and added that though the number of big cooperatives accounted for 2.2 per cent out of the total, they contributed 83.1 per cent of the total income of the cooperative movement.

Most of the cooperative in the big cluster are the credit or banking cooperatives.

The medium cluster cooperatives contributed 9 per cent while the small and micro cooperatives contributed 7.9 per cent of the total cooperative movement’s turnover.

On the growth and development of cooperative movement in Malaysia, Mangsor explained that they were mostly funded by internal resources – membership fees and shares.

In strengthening the cooperatives with social objectives, the government prepares assistance in the form of grants and soft loans.

Apart from this, part of the cooperative profits goes to a special fund managed by CCM, Cooperative College of Malaysia (MKM) and the National Cooperative Organisation of Malaysia Berhad (Angkasa).

Up to December 2009, this special fund had accumulated a total of RM218 million.

Previous emphasis

The 2002-2010 National Cooperative Policy stressed more on the conformity with cooperative regulations due to many of the problems faced by the cooperatives previously.

Now, all cooperatives come under a single ministry — Ministry of Domestic Trade, Cooperatives and Consumerism — providing a complete purview of the cooperative activities for the ministry.

Under the policy, eight strategies have been outlined, among others business development programme, access to financing resources, inculcating entrepreneurship culture, updating laws and enhancing cooperative regulatory aspect.

The outcome of the actions taken under the policy during the period is the rapid growth of the cooperative movement, cooperative members’ interest protected and the cooperatives’ contribution to the nation.

A new policy more focused

The 2011-2020 National Cooperative Policy covers a decade with more focused objectives outlined to move along with the nation’s development and the 2020 objectives.

“The policy this time is more focused with targets and implementation plans. As the implementation is spread over a decade up to 2020, a dynamic implementation mechanism has been established with constant reviews taking into account the deviations,” noted Mangsor.

CCM is seeking the participation of all in the cooperative movement especially umbrella cooperatives like Angkasa, MKM and related agencies for the benefit of the cooperative movement and in fulfilling the 2011-2020 national Cooperative Policy objectives.

“With the close and continuous cooperation within the cooperative movement, the objectives can be achieved within the time frame,” said Mangsor. — Bernama