THE SECOND MEETING OF THE ICA REGIONAL ASSEMBLY FOR ASIA AND THE PACIFIC, Kuala Lumpur, 13 June 1996
I heartily welcome the Second Meeting of the International Cooperative Alliance Regional Assembly for Asia and the Pacific. This significant gathering of the Asian cooperative movement has come at a most opportune moment, as the circumstances of our time would require us to undertake a fundamental review of the role of cooperatives in our society and economy.
The potential of cooperatives as an economic instrument, and as a force that can shape the structure of Asian society, has not been fully appreciated. There are about 500 million individuals who are members of cooperatives in the Asia and Pacific and that number constitutes two-thirds of the total membership of the International Cooperative Alliance. This surely represents a tremendous potential if it is effectively harnessed.
In Malaysia, its importance is borne out by the fact that there are today more than 3,500 registered cooperatives with a total membership of 4.1 million. Their accumulated shareholding exceeds RM2.6 billion, with assets around RM10.6 billion. They are involved in all types of business. Although thrift and loan societies still form the bulk of the movement, the trend is now shifting rapidly towards activities such as trading, housing, transport, land development, industrial production, banking and insurance.
However, the enthusiasm for cooperatives in Asian countries seems to have come to a standstill, if not diminished. Current social and economic trends are more in favour of the growth of corporations and conglomerates, and the consequent concentration of wealth and economic power among a handful of individuals. Although in theory the general public can participate in the ownership of these corporations though the purchase of stocks and participation in mutual funds, nevertheless in practice they have practically no influence in the general direction and activities of these companies. Yet, while the opposite is true in cooperative movement, where every member has a say in the affairs of their cooperative, it must also be admitted that the growth of cooperatives lags behind the overall growth of our economies as a whole. One is therefore confronted by the question whether coop-eratives really do have a future.
True cooperatives have contributed significantly towards income generation, poverty alleviation and employment creation. It has helped the growth of small-scale enterprises and provided training ground for entrepreneurial development.
We are living in the region which is a major source of global growth. Dynamism in the Asia Pacific region has been brought about by the move to market-oriented economies with increasing liberalization, deregulation and privatisation in our respective countries. While this has nurtured the growth of conglomerates, the cooperatives which are `people-centred' have an important role to play in ensuring `growth with equity'.
The success of a cooperative, just like any business concern depends on strong organization, human resources and finance. In view of this, cooperatives will need to adapt themselves to the demands of the new global environment of liberalization, deregulation as well as privatization. They will need to strengthen their management vis-a-vis other business and commercial entities to maintain and further acquire a greater share of economic opportunities. This is made more urgent with technological advancement where telecommunications and IT have become immensely sophisticated, and information have become obtainable instantaneously.
Cooperatives can become very important sources of capital mobilization by channelling the savings of members to those involved in production and marketing. In this way, members can cut the costs of borrowing and purchasing by cutting the role of the middleman. Cooperation among cooperatives is therefore necessary for this effective horizontal integration. It is therefore pertinent that cooperatives network or form strategic alliances among themselves. I am sure this meeting will provide a forum for member countries to exchange ideas, share their experiences and identify new economic opportunities.
I believe cooperatives that are large and strong are the ones that will survive the pressures of competition. This is evident in many industrialized countries such as in North America and in Europe where cooperatives are competing with the private sector. There will be a need to plan for potential mergers and amalgamations to reach economies of scale in order to maintain and sustain quality service to members. In order to maintain efficiency, big amalgamated cooperatives can form chapters or clusters to run these sub-units effectively.
While cooperatives need to look for innovative ways to deal with the dynamics of economic globalization and competition, they must retain the character and basic values of cooperatives. Profits should not be the only aim but the activities should be viable to provide better and quality services to the members. Let us work together to promote active and constructive participation and involvement of the members to ensure the `people-centred' character of the cooperatives is intact. Cooperatives have emerged as an important instrument for socio-economic transformation and change. It also serves as a mechanism for income distribution.
On that note, I officially open this Second Meeting of the ICA Regional Assembly for Asia and the Pacific.