1. INDONESIA COUNTRY PAPER
The Ministry of Cooperatives and Small and Medium Enterprises
The Republic of Indonesia
INDONESIA COUNTRY PAPER
POLICY AND PROSPECT OF AGRICULTURAL COOPERATIVES IN INDONESIA

2. Presentation Outline 2 I. Introduction
II. Business Types Run by Cooperatives and SMEs Based on Economic Sector
III. Present Situations of Cooperatives in Indonesia
IV Agricultural Cooperatives Development in Indonesia
V. Government Supporting for Cooperatives Development 2

3. I. Introduction (1) 3 GEOGRAPHY CLIMATE
Indonesia is an archipelagic country (around islands).
It is located in Southeast Asia.
Boundaries : North, Malaysia (Sarawak and Sabah States) and Pacific Ocean; East, Papua New Guinea; South, Arafura Sea; West , Indian Ocean;
The total length of Indonesia’s coastline is kilometers.
The total area of Indonesia is 1.9 million square kilometers.
The total sea area is 7.9 million square kilometers with an exclusive economic zone.
CLIMATE
Weather: hot and humid, The temperature ranges from approximately 23oC to 31oC.
It has two seasons : The rainy season (December to March), while the dry season (June to October). 3

4. I. Introduction (2) 4 Government Language and Ethnicity Population
Democratic country  a Presidential System.
Governmental System: Central government, Provincial government (34 provinces), District government (409 district autonomous)
Language and Ethnicity
Languages: Indonesian (official), javanese, and more than other languages and dialects.
Ethnicity: Javanese 45%, Sundanese 14%, Madurese 7.5%,
coastal Malays 7.5%, other 26%
Population
It is reached 237,5 million individuals (2010)  (1.4 percent annual population growth rate).
Birth rate: 20.3/1000; infant mortality rate: 34.4/1000, life expectancy: 69.9.
density per sq mi: 351 4

5. I. Introduction (3)
The agricultural sector is vital to the national economy development  GDP establisment, the absorption of manpower and agricultural commodities export
Agricultural cooperatives development is still sluggish due to several kinds of problems that derived not only from their internal problems but also due to the prevailing external conditions.
The government of Indonesia take into account for promoting the development of cooperatives through the policy and program of cooperatives development
Cooperatives as economic enterprises play strategic role in supporting the achievement of agricultural development. 5

6. Deputy Minister for Production
ORGANIZATION CHART
State Minister of Cooperative and SME
Secretary for Ministry of Cooperative and SME
Senior Advisor to Minister
1. SA for Institution Relationship
2. SA for Application of Basic Values of Cooperatives
3. SA for International Relation
4. SA for Utilization Technology
5. SA for Development a Conducive Business Climate & Partnership
Head of Planning Bureau
Head of Financial Bureau
Head of General Affairs Bureau
Inspectorate
Deputy Minister for Institutional Development of CoSMEs
Deputy Minister for Production
Deputy Minister for Financing
Deputy Minister for Marketing and Business Networking
Deputy Minister for Human Resource Development
Deputy Minister for Development and Business Restructuring
Deputy Minister for Research of CoSMEs
Deputy Assistant for Organization and Legal Status of Cooperatives
Deputy Assistant for Foodcrop Agriculture and Horticulture
Deputy Assistant for Financing Program
Deputy Assistant for Domestic Trade
Deputy Assistant for Enterpreneurship Development
Deputy Assistant for Productivity & Quality
Deputy Assistant for Cooperative Research
Deputy Assistant for Export & Import
Deputy Assistant for Business Restructuring
Deputy Assistant for Development & Supervision of Saving and Loan
Deputy Assistant for Policy of Cooperative Education
Deputy Assistant for SMEs Research
Deputy Assistant for Regulations
Deputy Assistant for Forestry and Plantation
Deputy Assistant for Facilities & Marketing Infrastructure
Deputy Assistant for BDS Empowerment
Deputy Assistant for Management of CoSMEs
Deputy Assistant for Resources Research
Deputy Assistant for Fisheries and Animal Husbandry
Deputy Assistant for Public Participation
Deputy Assistant for Capital Affairs
Deputy Assistant for Partnership & Business Networking
Deputy Assistant for Investment Facilitation of CoSMEs
Deputy Assistant for Insurance & Financial Services
Deputy Assistant for Monitoring & Evaluation of CoSMEs education&training
Deputy Assistant for CoSMEs cadre development
Deputy Assistant for Member of Cooperatives
Deputy Assistant for Craft Industry and Mining
Deputy Assistant for Information & Business Publication
Deputy Assistant for Business System Development
Deputy Assistant for Financing & Credit Security
Deputy Assistant for Electrification and Misc.Business
Deputy Assistant for Controlling and Accountability
Deputy Assistant for Advocacy

7. 7 Problem faced by Cooperatives & MSMEs
Limited access to finance, resources, technology and market
Problem faced by
Cooperatives &
MSMEs
Low human resources  lack of management,
entrepreneurial skills, and technology capability
Limited used of modern equipment
Low quality of cooperatives institution
Limited capacity to fulfill huge market demands
Inability to optimize the economic scale due to
limited cooperation/networking among and between
cooperatives and other business entities
The government has been take into account for the development of CMSMEs. The development of CMSMEs has been promoted through policy reform, technical assistance, institutional strengthening, training & education, financing, enhance the participation of cooperative member and many kinds of other significant effort. 7

8. Source: Statistic Bureau Data on 2011
II. Business Types Run by Cooperatives and SMEs Based on Economic Sector
Source: Statistic Bureau Data on 2011

9. III. Present Situation of Cooperatives in Indonesia
A. Number of Cooperatives
The number of cooperatives increased quite significantly, from 149,793 in 2007 to 194,295 in It means the figure increased by 44,502 units or 29,71 %. 9

10. 10 B. Distribution of Cooperatives and SMEs Year 2011 10
BANGKA BELITUNG Micro & SME’s
Cooperative 929
CENTRAL KALIMANTAN Micro & SME’s
Cooperative 3.782
SOUTH KALIMANTAN Micro & SME’s
Cooperative 2.395
CENTRAL SULAWESI Micro & SME’s
Cooperative 1.903
SOUTH SULAWESI Micro & SME’s
Cooperative 7.796
GORONTALO Micro & SME’s
Cooperative 959
KEPULAUAN RIAU Micro & SME’s
Cooperative 1.850
WEST KALIMANTAN Micro & SME’s
Cooperative 4.138
EAST KALIMANTAN Micro & SME’s
Cooperative 5.338
WEST SULAWESI Micro & SME’s
Cooperative 7.497
NORTH SULAWESI Micro & SME’s
Cooperative 5.730
NORTH SUMATERA Micro & SME’s
Cooperative
SOUTH EAST SULAWESI Micro & SME’s
Cooperative 3.147
ACEH Micro & SME’s
Cooperative 7.099
NORTH MALUKU Micro & SME’s
Cooperative 1.283
RIAU Micro & SME’s
Cooperative 4.865
MALUKU Micro & SME’s
Cooperative 2.706
JAMBI Micro & SME’s
Cooperative 3.289
WEST PAPUA Micro & SME’s
Cooperative 903
WEST SUMATERA Micro & SME’s
Cooperative 3.619
PAPUA Micro & SME’s
Cooperative 2.302
SOUTH SUMATERA Micro & SME’s
Cooperative 5.122
BENGKULU Micro & SME’s
Cooperative 1.860
LAMPUNG Micro & SME’s
Cooperative 3.727
JAKARTA Micro & SME’s
Cooperative 7.507
BANTEN Micro & SME’s
Cooperative 6.056
YOGYAKARTA Micro & SME’s
Cooperative 2.410
BALI Micro & SME’s
Cooperative 4.207
EAST NUSA TENGGARA Micro & SME’s
Cooperative 3.351
CENTRAL JAVA Micro & SME’s
Cooperative
WEST JAVA Micro & SME’s
Cooperative
EAST JAVA Micro & SME’s
Cooperative
WEST NUSA TENGGARA Micro & SME’s
Cooperative 1.820 10

11. 11 C. Self Owned Capital of Cooperatives
The figure showed that the self-owned capital increased significantly during 2007 – 2012 by 154,19 %, or IDR ,62 trillions from IDR ,45 trillions in 2007, to IDR ,07 trillions in 2012. 11

12. 12 D. External Capital of Cooperatives
The number of external capital increased by 120,37% or IDR trillions from IDR trillions in 2007 to Rp trillions in 2012. 12

13. 13 E. Business Volume of Cooperatives
The number of business volume of cooperative in 2007 was Rp. 63,080 trillions, increased by 88,94% (Rp. 56,102 trillions) from 2012 figure of Rp. 119,182 trillions. 13

14. 14 F. Members of Cooperatives
The total number of cooperative members in 2007 was 28,888,067 persons, increased by 17.24% (4,981,372) to 33,869,439 in 2012. 14

15. 15 G. Managers of Cooperatives
The total number of cooperative managers in 2007 was 32,015 persons, increased by 13% (4,161) to in 2012. 15

16. 16 H. Workers of Cooperatives
The total number of cooperative workers in 2007 was 339,390 persons, increased by 15.94% (54,112) to 393,502 in 2012. 16

17. IV. Agricultural Cooperatives in Indonesia
A. Number of Agricultural Cooperatives
31,27%
45,56%
30,38%
46,77% 17

18. B. Members of Agricultural Cooperatives
83,33%
84,11% 18

19. C. Business Volume of Agricultural Cooperatives
67,14%
66,36% 19

20. A TYPICAL STRUCTURE OF AGRICULTURAL COOPERATIVES
Business networking within and inter cooperatives (Rural/Village Cooperative Unit (KUD)) in Indonesia
PUSKUD
KUD
Farmers, Rural People
INKUD
National Level
Tertiery
Cooperatives
Province Level
Secondary
Cooperatives
Subdistrict Level
Primary
Cooperatives
Rural Level
Member 20

21. V. Government Supporting for Agricultural Cooperatives Development
A. Credit For People’s Business
Objective :
To solve collateral problem encountered by micro and small enterprises in accessing credit, especially to banking institution. This program is for feasible but not bankable businesses.
Features of the Programme:
The Government Recapitalised 2 (two) State Owned Credit Guarantee Companies amounting to Rp.1.45 trillion.
The gearing ratio is 10. Therefore the credit available for MSMEs under this programme is Rp.14.5 trillion.
Maximum loan of Rp 500 million for each borrower
Maximum interest rate 16% year 21

22. 22 Risk Bearer : Credit Guarantee Company 70%, Bank 30%.
Fees for Credit Guarantee is paid by the Government.
Loans for all sectors of Economy
Total Loan (May 2013) Rp Trillion for 8.7 million debitor 22

23. B. Training National Level Provincial Level 23
Enterpreneurship for leaders, managers, and members of cooperatives
Provincial Level
Accounting training
Bookkeeping training
Cooperative training
Marketing training
Cattle farming training 23

24. C. BIG SCALE COOPERATIVE DEVELOPMENT24
Policy:
Minister of Cooperatives and SMEs Decree No.07 Year 2011 Concern of
Guidance of Big Scale Cooperative Development
Objective
To increase the potential of cooperative to become Big Scale Coperative
To increase the number of big scale cooperative each province
To strengthen partnership and business network among cooperative
To increase role of cooperative as distribution leveling in national economic
Target 2014 : 3 cooperatives per province 24

25. D. SHS SHOP
Policy:
MOU between Deputy Minister for Production and President Director for Sang Hyang Seri (State Own Company)
Objective
Optimize the role of cooperative to provide agro-input with better services 25

26. 26 26

27. ORGANIZATION CHART State Minister of Cooperative and SME
Secretary for Ministry of Cooperative and SME
Senior Advisor to Minister
1. SA for Institution Relationship
2. SA for Application of Basic Values of Cooperatives
3. SA for International Relation
4. SA for Utilization Technology
5. SA for Development a Conducive Business Climate & Partnership
Head of Planning Bureau
Head of Financial Bureau
Head of General Affairs Bureau
Inspectorate
Deputy Minister for Institutional Development of CoSMEs
Deputy Minister for Production
Deputy Minister for Financing
Deputy Minister for Marketing and Business Networking
Deputy Minister for Human Resource Development
Deputy Minister for Development and Business Restructuring
Deputy Minister for Research of CoSMEs
Deputy Assistant for Organization and Legal Status of Cooperatives
Deputy Assistant for Foodcrop Agriculture and Horticulture
Deputy Assistant for Financing Program
Deputy Assistant for Domestic Trade
Deputy Assistant for Enterpreneurship Development
Deputy Assistant for Productivity & Quality
Deputy Assistant for Cooperative Research
Deputy Assistant for Export & Import
Deputy Assistant for Business Restructuring
Deputy Assistant for Development & Supervision of Saving and Loan
Deputy Assistant for Policy of Cooperative Education
Deputy Assistant for SMEs Research
Deputy Assistant for Regulations
Deputy Assistant for Forestry and Plantation
Deputy Assistant for Facilities & Marketing Infrastructure
Deputy Assistant for BDS Empowerment
Deputy Assistant for Management of CoSMEs
Deputy Assistant for Resources Research
Deputy Assistant for Fisheries and Animal Husbandry
Deputy Assistant for Public Participation
Deputy Assistant for Capital Affairs
Deputy Assistant for Partnership & Business Networking
Deputy Assistant for Investment Facilitation of CoSMEs
Deputy Assistant for Insurance & Financial Services
Deputy Assistant for Monitoring & Evaluation of CoSMEs education&training
Deputy Assistant for CoSMEs cadre development
Deputy Assistant for Member of Cooperatives
Deputy Assistant for Craft Industry and Mining
Deputy Assistant for Information & Business Publication
Deputy Assistant for Business System Development
Deputy Assistant for Financing & Credit Security
Deputy Assistant for Electrification and Misc.Business
Deputy Assistant for Controlling and Accountability
Deputy Assistant for Advocacy