After going through a series of formulation processes, finally on November 17, 2021, the Regulation of the Minister of Cooperatives regarding multi-stakeholder cooperatives was issued. This ministerial regulation is a new milestone for the development of cooperatives in Indonesia. As we know, this multi-stakeholder model can be developed in various sectors, flexible in various business models, especially the collaborative economy or sharing economy models.

Of course, the presence of this regulation is also interesting for startups in the country. Where when using the conventional cooperative model, it tends to be a disincentive for the pioneering role than the Founder and Co-Founder. In fact, they are entrepreneurs who in the initial initiation phase have incurred large entrepreneurial costs. These costs include ideas, energy, resources, assets, networks, visions, dreams and also the risks involved.

With the multi-stakeholder model, this can be arranged so that the pioneers of the cooperative receive appropriate economic and political incentives. “They can regulate the existence of Copyright on the initiative of the cooperative attached to the Founder group. Which can therefore be given a royalty from the percentage of the distribution of SHU. That’s an economic incentive. Politically, their existence will not be diluted by the entry of other new groups or members. So that the initial vision and goal of establishing a cooperative can be maintained in accordance with what the Founders used to aspire to,” said Firdaus Putra, HC., Chair of the ICCI Executive Committee.

Although this multi-stakeholder cooperative model is new in Indonesia, its practice has grown massively overseas since the 1990s. In fact, if we look at its history, this model existed in 1870 at the Hebden Bridge cooperative in England. The Hebden Cooperative is a cotton spinning production cooperative. Until a certain year they experienced a decline in business, then at the end of 1871 they converted their membership into a multi-party by involving groups of investors and consumers. After the conversion, their growth immediately increased significantly.

This means that multi-stakeholder cooperatives can be initiated from completely new cooperatives or converted from existing cooperatives. The main concern is which groups need to be involved as member bases according to the value chain in the industry/business they do. The regulation above also regulates the process of establishing a new multi-stakeholder cooperative or the conversion of an existing one.

“I think that even though it only consists of 18 articles, it is effective in recognizing and regulating multi-stakeholder cooperatives in Indonesia. With the existence of this legal umbrella, legal certainty is maintained, then the Government will also certainly disseminate this model widely. Yes, the law or regulation does have a social engineering effect. So far, there have been at least five people/parties who have consulted us on how to set up this new cooperative model,” he continued.

As a new model, of course it takes time to find the right shape and pattern. For example, in the regulation of proportional voting rights, which in several studies in other countries also do not include the exact formula. Of course, this is returned to the respective cooperatives to be creative and experiment with what kind of arrangement satisfies the parties in it. The function of the Articles of Association as organizational statutes will be very important for internal regulation in such cooperatives.

Although there is no definite formula, several studies from scholars, a common thread can be drawn regarding these parameters, as follows: 1). There is no dominant group (meaning no group has more than 50% of the votes); 2). Groups that play a role in the back bone of the business can get a higher percentage of voting than others; 3). Support groups and outer circles still get a percentage of the vote although smaller than the others; 4). The percentage of voting is not the same as the percentage of dividend distribution or SHU; 5). The investor group is given no larger vote than the business backbone group; 6). The percentage of votes can take into account several variables: people, capital, territory, roles and so on.

The above can be used as parameters for formulating voting rights, which have a different pattern from conventional cooperatives. However, cooperatives may create a completely different mechanism as long as the parties agree. This is, for example, the Stocksy cooperative (coop platform), which takes a long time to make decisions by emphasizing the role of the artist/creator. However, other cooperatives, such as the Equal Care Coop, Ecological Land Coop and others use the proportional voting model. It can be concluded that the mechanism is returned to each cooperative to regulate it.

More importantly, apart from voting rights, multi-stakeholder cooperatives must really be able to optimize the various modalities owned by the parties to leverage the cooperative’s business. By providing a clear role space for each party, this should be an advantage of this model compared to conventional models that have been developing in society. So that various business sectors can be accelerated with this model. For example in the agricultural sector, multi-stakeholder cooperatives can collaborate with farmers, processors, collectors, entrepreneurs/innovators, investors and even consumers. In the conventional model, each group stands on its own.

Consolidating all these groups is certainly very challenging. The reason is that we must be able to offer the right value proposition where transparency in all value chains can still guarantee a fair profit for each party. “There must be real economic incentives or disincentives so that the parties will see that consolidation is rational. There is no problem with transparency on profits at each point of the value chain, if together they create the economic pie that is bigger than they stand alone,” he added. []