Co-op – Government Dailogue on Policy and Legislation

Co-op – Government Dailogue on Policy and Legislation CASE STUDY: M A L A Y S I A

CONTENT: • Overview of MALAYSIAN co-operatives • Major co-operative policies and legislation - Co-operative Act 1993 and salient provisions - The National Co-operative Policy - The Malaysian Co-operative Commission • Government initiatives to improve management and ethics • Policy on women in co-operatives • Policy on youth in co-operatives • Co-operatives in the social sectors • ISSUES • CONCLUSION

Malaysian Co-ops… overview • 4651 co-ops, 5.392 million members ( 23 % of population) • Adult co-ops = 2920 • School co-ops = 1731 • Total Shares = RM3,524 million • Total Fees = RM2,539 million • Total Assets =RM25,978 million

Co-ops by Main Activity • Banking • Credit • Plantation • Housing • Industrial • Consumer • Construction • Transportation • Services

Co-ops by Target Groups • Government Officers • Teachers • Uniform personnel • Government Agencies • Workers • Private Sector Workers • Educational Institution/ Schools • District Development • Women • Consortium / association • Small / Village industry

Co-ops “State of Activeness” • Total co-operatives = 4651 • Active = 4131 (88.8%) • Inactive = 122 (2.6%) • Dormant = 398 (8.6%)

Co-operative Act 1993 • Incorporation in 1993 • Major provisions: - powers of Director General of Co-op - penalties - contribution by profitable co-operatives for development and education

Involvement of co-ops in economic activities • No inteference by government – the co-ops to decide what business and investment to undertake with the exception of…. banking insurance Investment as provided in the Co-op Act Approval from the Annual Gen Meeting required Approval from the Registrar of Co-ops required

…econ activities …. Cont.2 • Co-ops can form joint ventures with private companies... - 27th Sept 2005…. 8 co-ops form strategic partnership with private companies to undertake trading and marketing activities) - 30th July 2005….. Dy P.M advised co-ops to improve management effctiveness to compete with private companies, and for co-ops to embark in big business

Women in co-ops • Not in legislation yet but policy wise already implemented • Provision in the National Co-operative Policy (NCP) • The Co-operative Development Department….. Establish “Women’s Committee” • Encourage establishment of women’s co-operatives • Encourage co-operatives to incorporate in their Co-operative By-Law provision for women to be nominated in the Co-op Board

Women in co-ops…..2 ANGKASA established “Women’s Development Unit”…. ……programme to educate women cooperators to become better leaders; ….. “Training of Trainers” programme; …. Course in “Effective Oratory Skill” …. Women co-operators to improve listening and oratory skill, become better leaders, and better at presenting points and views at co-ops meetings and functions; … train women cooperators as child minders to obtain certificate to operate kindergarten

Autonomy of Co-ops and self regulation • The Government only supervise and provide guidelines….. Incorporate provisions in the ACT • The co-ops to determine their own destiny • The co-ops to abide by provisions in the Co-op Act 1993, regulations issued, and the Co-operative By-Law The Annual General Meeting or Extraordinary General Meeting provide all approvals

Role of Co-ops in social sector….1 • The School Co-operatives…. social role to educate school children co-op principles and values, provide practical training opportunity on managing a co-op and developing their management and leadership skills, to work together for the benefit of their members, to develop entrepreneurship skills….. and to make them better future cooperators ….. The School Co-operative Tourism Project.. To appreciate local history, learn basic tourism business skills, to inculcate moral values in being a Host and Guests

Role of co-ops in social sector..2 • The FELDA Settlers’ Co-operatives co-operatives formed by Felda land settlers to provide community service, retail shops, school bus service, petrol station, kindergarten, tuition centres for children, self-help service to repair house, roads, etc, and allow co-ops members to earn supplementary income. Felda Land Authority provide assistance in awarding service contracts in the land schemes e.g land clearing, road building/ repairing, replanting, transportation of palm oil seeds.

Role of co-ops in social sector….3 • Co-ops operate AR-RAHNU (Islamic Gold Pawn Service)…… use gold ornaments to pawn as pledge for money received; • Provide fair , simple and feasible sistem with very minimal risk to the co-ops; …. The service provide easy micro credit facilities for the co-op members and local community to borrow money for business, education and emergency requirement

Malaysian Government Initiative towards Improved Co-op Supervision and Development • The National Co-operative Policy • The Malaysian Co-operative Commission

National Co-operative Policy (NCP) • Launched in January 2004 • Recognised the co-operative sector as a catalyst, alongside the public and private sector, in the nation’s economic development • Outline 8 implementation strategies:

NCP……..2 Strategies: 1. Ensuring co-op principles are understood and practiced; 2. Formulating clear rules and regulations to assist the promotion and development of the co-op sector; 3. Recognising the co-op movement as a prime motivator and contributor to the economic development of the nation;

NCP……..3 4. Strengthening and maintaining good co-op governance, efficient administrative and financial management and effective supervision of co-ops; 5. Increasing sources of capital to enable co-ops to face challenges and competition; 6. Strengthening co-operation among co-ops and strengthening co-operation between co-ops and third parties;

NCP……4 7. Continuously improving the quality of products and services; 8. Establishing a National Co-operative Consultative Council, consisting of several ministries and state government representatives, to provide avenues for co-operatives to contribute to development of States.

NCP…..5 • In strategy 2 for example the following areas need to be undertaken: • To’ve a provision in the statute that enables the involvement of co-ops in all sectors of the economy; • Any law or policy that hinders the rapid expansion of co-ops has to be reformulated to promote co-op development; • To ensourage women’s participation in the leadership and management of co-operatives;

NCP…… 6 Some actions that need to be done in the various sectors includes: • Review and update of legal provisions to encourage co-op development; • Provide standard by-laws according to the various co-op activities as a guideline; • Provide regulations for new activities to be undertaken; • Develop training opportunities sponsored by government agencies for co-ops;

NCP…… 7 • Create policy for regulation of co-op expenditure; • Ensure enforcement and implementation of co-operative legislation; • Encourage networking among co-ops; • The Economic Planning Unit to consider the role and contribution of the co-op movement in national development when outlining and preparing development plans.

The Malaysian Co-operative Commission (MCP) • Approval of Cabinet in 2nd March 2005, awaiting approval from Parliament; • The Commission would be a statutory body managed by a board comprising of a chief exec officer, and 8 other members from the government and private sectors;

MCP….. 2 Objectives of the MCP: • To foster sound and orderly development of co-operatives and the co-operative sector in accordance with the co-operative values and principles to contribute towards achieving the socio-economic objectives of the nation; • To promote a financially sound, progressive and resilient co-operative sector; and • To maintain confidence in the co-operative movement.

MCP……3 • Two Funds to be established: • The Co-operative Deposit Account • The Co-operative Liquidity Facility

Issues…. With the implementation of the National Co-operative Policy,most policy issues encountered by the co-operative movement has been noted and addressed . It is now in the implementation stage, and it is a matter of monitoring the implementation of the policies. The creation of the Malaysian Co-operative Commission further enhances the future position of the co-operative movement in the country. A few minor issues maybe: • Conflict of interest rule (within a government department) • Conflict of interest (within co-operative board members) • Restriction on formation of a co-operative

THANK YOU

Co-op – Government Dailogue on Policy and Legislation