Draft Bill on Cooperatives Should Regulate Business-Based Partnership Funds

The regulation of partnership funds is one of the matters being discussed in the Draft Bill on the Fourth Amendment to Law No. 25 of 1992 (“Law 25/1992”) on Cooperatives (“Draft Bill on Cooperatives”). This instrument is designed as one of the sources of cooperative capital provided by funding partners, whether members or non-members.

Suwandi, an academic at Universitas Bakrie, proposed that the regulation of partnership funds in Draft Bill on Cooperatives should be supported by a clear business basis. According to him, business feasibility should first be established to determine which cooperative business unit or business line will be financed through such funds.

“What needs to be regulated in greater detail is the issue that partnership funds must, as their basis, be supported by business feasibility established beforehand,” said Suwandi.

According to Suwandi, clarity and transparency regarding business feasibility are prerequisites for increasing the interest of financiers or investors in providing capital through the partnership fund instrument. He views partnership funds essentially as a mechanism for inviting financiers to participate in the cooperative ecosystem.

In the Draft Bill on Cooperatives obtained by Hukumonline, provisions on partnership funds are set out in Article 42. Meanwhile, the characteristics and requirements of partnership funds are stipulated in Article 42 paragraph (4). The provision states that a partnership business whose feasibility has been approved by the members’ meeting is entitled to receive a share of business profits based on an agreement between the cooperative and the funding partner.