Differences Cooperative vs BMT: Definition, Principles, Functions, and Objectives

Cooperatives and BMT both play an important role in the national economy. However, both have differences, you know. What is the difference between BMT and cooperative? Here's information about the differences.

Definition of Cooperative

Cooperative is a conventional-based business institution consisting of a group of members who carry out activities based on cooperative principles with the principles of kinship and mutual cooperation. Funds from the cooperative come from members, and the money can be loaned back to members in need. Therefore, cooperative activities generally focus on mutual assistance activities to improve and improve the economic welfare of its members.

Definition of BMT

Baitul Maal wa Tanwil (BMT) is a sharia-based business institution similar to a cooperative which in its implementation aims to carry out commercial and social missions. Generally, BMT is focused on helping small traders or entrepreneurs. By prioritizing the sharia concept, BMT is not like online money lending application, applying interest to customers who want to borrow money, but a profit-sharing system.

Cooperative Principle

According to Law 25 of 1992, the following are the cooperative principles:

1. Cooperative membership is voluntary and not coercive.
2. In practice, cooperatives are democratic.
3. Promote independence.
4. Profits from operating results are given fairly to cooperative members by considering the contribution portion of cooperative members.

BMT Principle

In carrying out its activities, BMT applies the following principles:

1. Profit sharing principle. That is not applying an interest system to customers who want to borrow money, but sharing the results in the form of profits.
2. buying and selling system. BMT makes customers as agents. Then, agents are given the power to buy goods on behalf of BMT, and act as sellers. Later, the goods that have been purchased can be resold by adding the selling price.
3. System non-profit. Due to its social and sharia nature, BMT customers only need to return the principal amount of the loan.

Cooperative Function

Cooperatives have the following functions:

1. Build, improve welfare, and develop the potential and economic capacity of cooperative members.
2. Strengthening the people's economy as a support and source of national economic resilience.
3. Developing the national economy on the principle of kinship.

BMT function

BMT has the following functions:

1. Identify, mobilize, organize, encourage and develop the economic potential and capabilities of BMT members.
2. Improving the quality of human resources for members to be more professional and sharia so that it becomes more intact and resilient in the face of global competition.
3. Become a financial intermediary between fund owners, both as investors and depositors and users of funds for productive business development.

Cooperative Goal

In practice, the objectives of the cooperative are:

1. Improving the life and economic welfare of cooperative members.
2. Assist the government in improving economic welfare.
3. Become a pillar in the national economy.

 BMT goals

In practice, the objectives of BMT are:

1. Improving the quality of economic business as well as the welfare of members and the public.
2. Avoiding BMT members from moneylenders and usurious behavior such as borrowing money through moneylenders online application.
3. Realizing its institutional empowerment movement towards a prosperous and advanced economic order.
4. Realizing the justice movement to build a just civil society structure that is prosperous, progressive, and justly based on sharia.

Well, although they are different, they both have an important role in improving economic welfare. Hopefully this article can add to your insight who wants to know the comparison of the two business entities above, yes!