Turning SOEs Into Cooperatives Is Mission Impossible

A number of guests are active near the new logo of the Ministry of State-Owned Enterprises (BUMN) at the Ministry of SOEs Building, Jakarta, some time ago. (Between/Aprillio Akbar/hp)

JAKARTA The issue of plans to dissolve State-Owned Enterprises (BUMN) and turn them into cooperatives creates confusion from many parties. This idea, if realized, is predicted to increase the unemployment rate, while other observers think this is an impossible mission.

The discourse on the disbandment came to the public's attention after SOE Minister Erick Thohir said the dissolution of state-owned corporations would only lead to new unemployment in Indonesia, because 1.6 million people were BUMN employees.

"It is ironic that the view is like that. If you want to be disbanded and replaced with a cooperative, it is tantamount to creating new unemployment when everyone needs jobs," said Erick Thohir, quoting Antara.

Erick Thohir's statement was in response to the proposal from the National Team for Winning Anies Baswedan-Muhaimin Iskandar (AMINAn National Team) which stated that it would encourage SOEs to become cooperative business entities.

This statement was made by the figure of the Indonesian cooperative, Suroto PH in a discussion at the House of the Change Coalition in South Jakarta. Suroto assessed that so far the fate of cooperatives in the country has continued to be played with from one government to the next. Therefore, he argued by operating SOEs in Indonesia to improve the national economy.

Regarding the plan to change SOEs to cooperatives, although later it was denied by the Anies-Cak Imin camp, it invited reactions from various circles. University public policy observer Trisakti Trubus Rahadiansyah said that the plan to dissolve SOEs into cooperatives did not have a strong reason.

"This is impossible, this is impossible. Because this SOE is in accordance with its main duties and functions, and there is a law," said Trubus when contacted by VOI.

"BUMN is state property whose function is to serve the public interest. If you want to turn it into a cooperative, it's clear that this is an irrational thought," he continued.

Trubus further said that cooperatives do not have legal certainty for the company or its members. Law Number 25 of 1992 concerning Cooperatives is considered not in accordance with the times, so there are many cases of violations on behalf of cooperative institutions and detrimental to the community.

The update of Law Number 17 of 2012 concerning Cooperation was also canceled by the Constitutional Court (MK) in 2014, so it had to return to the initial regulations. According to him, do not let cooperatives later provide savings and loan services like what happened to KSP Indosurya.

"Our cooperative does not have a law. Cooperatives are also often used for savings and borrowing, it's strange. Cooperation should be for the welfare of its members, not for savings because cooperatives are not financial institutions," said the lecturer at Trisakti University.

"So basically SOEs cannot be transformed into cooperatives, because cooperatives are only for the welfare of members, while SOEs for the state," Trubus said again.

A similar view was also expressed by the Economist of the Institute for Development of Economic and Finance (INDEF) Tauhid Ahmad. He saw that the idea of turning SOEs into cooperatives was not a realistic step. According to Tauhid, SOEs and cooperatives have a different business style.

"So, it can't be a cooperative. I think it will be very impossible and irrational, of course it is difficult to realize, one thing that is unrealistic is, SOEs become cooperatives," said Tauhid.

He said there were many differences between SOEs and cooperatives. In ownership, Tauhid explained, SOEs belong to the state while cooperatives are owned by members. He also views that the two have different rules, which can be seen from the basis of formation to the goals of the second business process.

Meanwhile, Erick Thohir said the disbandment of SOEs risks making around 1.6 million employees unemployed and Trubus Rahadiansyah agrees with this.

Even though the unemployment rate in Indonesia is quite high, reaching 7.86 million people as of August 2023 out of a total of 147.71 million workforces according to data from the Central Statistics Agency (BPS). This figure is more than 0.54 percent compared to August 2022, which reached 8.42 million people.

Although it continues to decline, the number and the number of unemployed is still relatively higher than before the pandemic or August 2019, which was 7.1 million people.

"Regarding labor, it will definitely cause a lot of unemployment, because this SOE has a lot of chain," said Erick.