Institute for Research on Economics and Society – Faculty of Economics and Business – University of Indonesia

Cooperative Substitution or Complement to the Market Economy? – A Short Note

September 6, 2013

PRELIMINARY

 

Experience over more than fifty years of Indonesian independence shows that Bung Hatta's dream of making this cooperative a motor for economic growth is still far from reality. In fact, cooperatives are more often the object of scandal than their function is to help their members.

Some observers consider that the cause of the cooperative's failure was deviations in the implementation of cooperative principles such as: core business what is not clear is the domination of members' rights by the management. Sadli (1962) believes that the failure of cooperatives in the early Soekarno period was because cooperatives were less competitive than BUMN. So the state (BUMN) does not give cooperatives the opportunity to develop. In this regard, Sadli gave an example in branches of activity where BUMN does not exist, cooperatives can develop rapidly.

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