By Robby Tulus
The views expressed here are personal.
I applaud the ICA-AP for its genuine efforts to engage members in the region to celebrate and deepen the understanding of the Statement of the Cooperative Identity (SCI). I am privileged to have been called on to share my modest insights into Coop Principle 2 (Democratic Member Control) and Principle 4 (Autonomy and Independence) and to show their relevance in nurturing and sustaining the credit union movement, as well as the incipient multistakeholder cooperatives in Indonesia.
It would be reasonable to assert that the application of these two important principles must not be done in isolation of all other five principles. We, as cooperators, know that coop principles are not carved in stone to become ironclad commandments. They are guideposts that must be applied within the spirit of an empowering framework. A framework to grasp the future sustainability of the cooperative institution itself. Principles 2 and 4, therefore, provide clear standards that guide us what must and must not be encouraged, but always within the framework and spirit of all other principles as well. The following is a case study based on my own experiences in Indonesia.
The principle of Democratic Member Control was undeniably a very crucial one to guide decisions during my pioneering efforts in initiating the credit union movement in Indonesia in 1970. At that time, the movement still adhered to the second ICA principle of 1966, simply called “Democratic Control”. It embraced the same spirit of the SCI of 1995, as the statement read: “The general body meeting of the members of a cooperative society is the supreme authority in regard to the conduct of the affairs of the society”.
Indonesia was, in theory, a democratic state when it transitioned from the so-called ‘Guided Democracy” to “Pancasila Democracy” in the late 1960s. The “New Order” government of President Suharto legitimized its capacity to bring sustained improvements in the standard of living of all Indonesians by creating a host of well-intentioned policies. Unfortunately, these policies were mostly enacted from the top down. One such policy was the formation of multi-purpose “Village Unit Cooperatives (VUCs)”, ruled under a Presidential Decree no. 2/1978. The policy decreed that all existing rural cooperatives must integrate themselves into the VUCs. Rural credit unions (CUs), which came into existence in the early 1970s to shield members from the exploitation by unscrupulous moneylenders, were also forced to join the VUCs. As might be expected, CU members and leaders reacted strongly and spontaneously against such imposition. They insisted to abide by the “Democratic Control” principle, as enshrined in Cooperative Law 12/1967. Moreover, such forcible tactics also violated the first principle of “Open and Voluntary Membership”. Notwithstanding, despite faithful adherence to the ICA principles of 1966 and not in violation of the de facto Coop Law, CUs were not granted any license and legal recognition up until the New Order government came to an end in 1998. It meant 29 years of continuous struggle to keep surviving until formal recognition was finally granted in 1999. The resilience and strength of CUs in upholding the democratic principle spurred the steady growth of the movement, which has currently reached more than 3.25 million members.
In 1995, suppression of free political expression, as well as grassroots organizing, continued in earnest in Indonesia. It was also the year when the SCI was promulgated during ICA’s 31st Congress in Manchester. The addition of “Autonomy and Independence” as the Fourth Principle in the SCI was evidently a great blessing for cooperatives worldwide, and certainly so for CUs in Indonesia. It further fortified and solidified the principle of democratic control as the internal stronghold of CUs. Yet in an era where neo-liberal policies of the Indonesian government continued to prevail, Principle 4 has become a crucial guidepost to resist high-handed regulatory processes.
It is a known fact that CUs have always been at the forefront in demonstrating the virtues of the SCI in the cooperative landscape in Indonesia. Fast forward, however, a more recent measure taken by the Indonesian government to establish Ultra Micro Holdings under the Indonesian Peoples’ Bank (popularly known as BRI) is tantamount to disrupting the operations of credit unions due to lower interest rates being offered as loans to the SMEs. This is in addition to a subsidized credit fund, popularly known as KUR, and already in operation for many years. Both these loan facilities could potentially derail the smooth operations of CUs if members shift their borrowings away from CUs to the BRI. Another contentious issue pertains to the recently promulgated ruling by the Ministry of Cooperatives and SMEs. This ruling, called “Operational Guideline 33”, mandates all members of classified Cooperative Board of Directors and Supervisory Councils to be vetted first before they qualify to serve as Directors and Supervisors. Vetting is to be done by a Team of Adjudicators in provincial and district jurisdictions under the auspices of the Ministry of Cooperatives and SMEs. There is a sudden collective awakening among cooperative leaders who argued that this ruling contravenes the very principle of autonomy and independence, as well as the democratic functioning of a cooperative. Deliberations and debates on this new policy are still ongoing at the time this article is being written.
As mentioned earlier, the credit union movement in Indonesia strived and grew quite steadily amidst trials and tribulations since the New Order era and even until now. Three pillars underpinning the CU movement since 1970 were responsible for generating the growth of these CUs. i.e., Self-Help, Solidarity, and Education. It is no surprise that these pillars are much in sync with the Identity Statement of 1995 as they constitute the values of Self-help, and Solidarity, as well as the principle of Cooperative Education.
Be that as it may, CUs continue to face internal and external challenges despite their steady progress. With huge assets and extra liquidity surfacing to date, it could easily trigger fraudulent practices and moral hazards if audit and supervision are not meticulously enforced, and good governance is held in check. The prevailing neoliberal system relies heavily on certain human inclinations such as greed and competition to pursue material impulses. There is a risk that CU leaders, especially new professional recruits, go with the flow of businesses that are engaged in the captivating grip of neoliberal values, and hence become a threat to democracy within their own CUs. It may well cause drift from focusing on members’ needs and welfare toward that of seeking mere financial gains. Worst still if membership education is lacking, and members are coaxed to carry the same misguided pursuits of their elected leaders. Thus, CUs could be shaped in different directions under pressures of uncertainty in a prevailing neoliberal era of globalization. Given all these uncertainties, an additional pillar was added to the Credit Union movement in 2013, namely “Innovation”.
As co-founder and advisor to the CU Movement in Indonesia, I was encouraged to innovate and initiate a new program to build socio-economic cadres from among credit union activists in 2011. As it turned out, the program was also attended by activists from other cooperatives and civil society organizations. The program was intended to build a social and economic system of the future that centers on human beings, with a multistakeholder concept. Following the formation of more than 350 cadres, a national association called “AKSES” was formed in 2013 by these cadres in a democratic fashion. These cadres were further encouraged to incubate embryonic ‘real sector’ cooperatives, other than credit unions, based on the need of communities and by way of a multi-stakeholder concept. The idea was to create a paradigm shift from having just a single class of members into a more heterogeneous one. It thus captured the interests of stakeholders in the community to create horizontal integration of multiple partners with interdependent interests. A number of these multi-stakeholder cooperatives have now been organized and are associated under the flagship of the INKUR Federation (National Federation of People-Based Cooperative Enterprises).
The above case study shows the utmost importance of the principles of Democratic Membership Control as well as Autonomy and Independence. Once members understand that they democratically own, and are in control of, their credit union or cooperative and can maintain their autonomy and independence, they are capable of reaching greater heights amidst ongoing challenges. This being said, disruptions and external pressures will obviously not disappear overnight, and may even escalate during and after the long-drawn-out pandemic. But the spirit of the SCI will continue to shine and will be key to sustain the cooperative movement well into the future.
