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Cooperative: Definition, History, Function, Purpose and Principles

Cooperatives are business entities as a form of people's economy based on kinship.

Cooperatives are suspected as one of the supporting business entities for the Indonesian people's economy. Because, cooperatives have the main goal for the interests and welfare of its members.

The term cooperative is taken from English, 'cooperation' which means 'cooperation'. According to Law no. 25 of 1992, a cooperative is a business entity consisting of a group of people whose activities are based on cooperative principles as well as a populist economic movement based on kinship.

So, why are cooperatives considered important in the development of the Indonesian economy? Also, what are the functions and objectives?

History of Cooperatives in Indonesia

Reporting from the Ministry of Education and Culture's website, the history of Indonesian cooperatives began in 1886, when the Pamong Praja Patih R. Aria Wiria Atmaja in Purwokerto established a bank for civil servants (priyayi). The purpose of establishing the bank is to help employees who suffer from being ensnared by loan sharks who provide loans at high interest rates.

The Patih's ideals were then developed by a Dutch resident assistant, De Wolf Van Westerrode. At that time, he advocated changing the bank into a cooperative.

In 1908, Raden Soetomo founded the 'Budi Utomo' association to take advantage of the cooperative sector for the welfare of the poor. During the Budi Utomo Congress, repairs and enhancements to the intelligence of the people in Yogyakarta were also carried out with small industries and handicrafts.

In 1915, the first cooperative law was born, namely "Verordening Op De Cooperatieve Vereeniging”. Then in 1927, the Islamic Trade Union was formed which aimed to fight for the economic position of indigenous entrepreneurs.

The development of cooperatives spread even more thanks to the founding of the Indonesian National Party in 1929. Although their development was hampered due to the Japanese occupation, on July 12, 1947, the Indonesian government held the First Cooperative Congress in Tasikmalaya, West Java.

From the congress, several important decisions were made, namely establishing the Indonesian People's Cooperative Central Organization (SOKRI), establishing mutual cooperation as the principle of co-operation, and setting July 12 as Cooperative Day.

The Second Cooperative Congress took place in 1953 in Bandung, West Java. In the results of the congress, SOKRI was replaced with the Indonesian Cooperative Council (Dekopin), as one of the subjects at school, appointed Moh. Hatta as the Father of Indonesian Cooperatives, and made a new cooperative law.

Cooperative Function

Cooperatives have several functions, among which are:

Build and Develop

The function of the cooperative is to build and develop the potential and capabilities of its members and the community. With a growing potential, people's welfare will also increase.

Improving human resources

The second function of cooperatives is to actively improve the quality of human resources and society. The increasing quality of human resources will provide benefits to the economy.

Strengthening People's Economic Resilience

The third function is to strengthen the people's economic resilience. Of course, this can be used as a foundation for the strength and resilience of the national economy.

Creating and Developing the National Economy

The last function of cooperatives is to realize and develop the national economy using the principles of kinship and economic democracy.

Cooperative Goal

As previously mentioned, cooperatives have the main goal of improving the welfare of their members. Here are some cooperative goals that you need to know.

  1. Improving the economic life of cooperative members and the surrounding community.
  2. Improving the economic welfare of cooperative members and the surrounding community.
  3. Helping the government to improve the economic welfare of the people in a just and prosperous manner.
  4. Become a milestone in the national economy.
  5. Helping producers by offering relatively higher prices.
  6. Help consumers by providing offers that are relatively more affordable.
  7. Providing capital loan assistance to micro and small scale business units.

Cooperative Principle

According to Law 25 of 1992 concerning cooperatives, there are several cooperative principles, namely as follows.

  1. Membership is not forced. Therefore, it must be based on voluntary and open.
  2. In its management, cooperatives must be democratic.
  3. Distribution of business results is given fairly in accordance with the portion of each member's contribution to the cooperative.
  4. Provision of remuneration to capital providers in accordance with the amount of capital provided.
  5. Prioritize independence.

So, that's a complete explanation about cooperatives that have been summarized by Daily Social. With its main function and objective for the welfare of its members, it is not surprising that cooperatives are considered a form of populist economy that supports the Indonesian people's economy.

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