As an economic entity which comprises a group of people who aspire to achieve the common benefit and uphold the principle of equal rights to all members, a cooperative essentially works to provide self-help and mutual help for its members to attain profitable investment. The membership is by nature voluntary, meaning that the cooperative does not restrict membership and stands against any social, political, or religious discrimination. Anyone who fits the condition and qualification set by the cooperative by law can be a member if he/she is committed to the responsibilities.
From a social perspective, a cooperative aims to escalate people’s economic activities. Its objective is to provide goods and services in order to open up more opportunities to increase business productivity, purchasing power, and growth potential, as well as facilitating them to build investment. In Indonesia, the principles of the cooperative revolve around fellowship and mutual aid. The development of cooperatives is always intended for the importance of Indonesians, especially low-income and poor people so that they are able to get aid and financial assistance to improve their quality of life. Cooperatives are also hoped to be the growth agency for small business under the category of micro, small, and medium enterprises (MSMEs).
According to Indonesia’s Ministry of Cooperatives and MSMEs, in 2018, 138.140 units of cooperatives were registered, dropping from the 2014 figure of 212.570 units. The reduction resulted from the Total Reformation of Cooperatives that dispersed inactive, stagnant, and disreputable cooperative organizations. This act is aimed to improve the quality of the organizations to improve quality, rather than quantity.
Despite the number of existing units, cooperatives only contribute 4% to the national gross domestic value. Layered issues have hindered the competitiveness of Indonesian cooperatives. Both external and internal issues are crucial and affecting the growth of cooperatives as business organizations. Commodities’ prices keep surging up, and production costs change from time to time. Most of the players in cooperative organizations are still operating in the micro and small sectors. They face the pressure of competition with large enterprises that produce commodities with more ideal facilities and services, thus leading to lower production costs and larger marketing channels. Meanwhile, it is difficult for cooperatives to earn additional working capital.
Many surfacing cases of scamming and manipulation on the fund collected from some cooperatives’ customers complicate the image of cooperatives further. In December 2018, the Authority of Financial Services handled 11 cases of investment fraud, which had been going on for three years and caused a loss of more than IDR9 trillion. Due to this, the public is concerned about and doubtful to join a cooperative.
Unfortunately, the public’s understanding and awareness remain low, while the expectancy of earning fast and easy funding is high. Regulations, control, and supervision from legit authorities as the custodians are, thus, important. This situation is highly disadvantageous for guiltless cooperatives to obtain trust from the public and prospective partners. They might also need a legit and valid proof to gain better recognition. A valid reputation is needed to build valuable networks and partnerships in the bigger ecosystem so that cooperatives and the members can earn greater economic benefits. The more partnerships they build with prevailing institutions, the more reliable their reputation as business organizations is.
Tokoin brings together the convenient ‘meet-the-needs’ concept between Tokoin’s users and its partners, such as financial institutions, insurance companies, and property business. To accelerate the growth of MSMEs, Tokoin affords membership opportunities for MSMEs to build reputation digitally and accordingly.
Thus, Tokoin will facilitate both cooperatives and the MSME sector in meeting their needs. By means of Tokoin’s blockchain platform, MSMEs will be supported in solving their problem of accessing credit, while cooperatives will be assisted with a trusted platform to build a digital ecosystem equipped with effective market solutions.
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