KOTA KINABALU: Government-assisted cooperative, Koperasi Serbaguna Sanya Sdn Bhd (Kosan), can no longer afford to rely solely on government-awarded contracts for revenue and is in urgent need of new sources of income to ensure its survival.
A recent decision by the State Cabinet to cut allocations for the government school uniform and shoes assistance programme under Yayasan Sabah, on which Kosan is dependent for most of its income, was a big wake-up call for the cooperative.
Over 95 per cent of Kosan’s revenue comes from supplying school uniforms and shoes that are given for free to government school students in the State by Yayasan Sabah, while the remaining four per cent are derived from other activities such as property rental.
Concerned with how the cooperative has all its eggs dangerously kept in a single basket, the appointed chairman of Kosan, Datuk Tawfiq Abu Bakar Titingan wants the cooperative to look into other opportunities to complement its existing businesses.
“For over 30 years, Kosan has always been relying on this contract. This contract, however, is determined by government policy, which is beyond the co-operative’s control.
“The initial proposal was actually to have Yayasan Sabah stop the allocation for the uniform assistance programme, but luckily for Kosan it was agreed to only reduce it by half.
“Should the government decide to reduce its spending by scrapping the programme altogether, Kosan would have been out of business as it did not have any other resources to fall back on,” he said when officiating at Kosan’s 31st Annual General Meeting here yesterday.
Kosan was set up 38 years ago with a vision of assisting towards the development of youth in the State, apart from operating as a business entity.
In line with this vision, the chairmanship of the co-operative is given automatically to the Youth and Sports Minister.
Kosan is currently the fourth biggest co-operative in Sabah in terms of annual turn over, having raked in RM18.5 million of revenue last year.
The biggest co-operative in Sabah is Ko-Sawit with RM41 million revenue in 2013 followed by Kopeks with RM31.9 million.
Meanwhile, on a more positive note, Tawfiq commended Kosan for managing to record a higher profitability last year despite recording lower gross revenue.
He said the higher profit was made possible by prudent spending and administration transformation that allowed for lower operational costs.
Tawfiq expressed confidence that with aggressive image re-branding and product enhancement, Kosan could soon realize its full potential and set its eyes beyond supplying products for government school assistance programmes.
“It is not impossible that Kosan could one day produce high quality clothing products that could compete with established products being sold at departmental stores and shopping malls.
“There is still a lot of work that needs to be done, particularly in terms of product quality. The biggest challenge is to change the widely accepted perception that Kosan products are no good, but nothing is impossible,” he said.
Also present was Cooperative Commission of Malaysia Sabah Branch director, Omar Sarim.