Draft Bill on Cooperatives Strengthens Oversight and Sanctions

Indonesia’s House of Representatives (“DPR RI”) proposes to strengthen oversight and clarify criminal sanctions in Draft Bill (“Draft Bill”) on the Fourth Amendment to Law No. 25 of 1992 on Cooperatives. In addition to modernizing governance, this regulation is designed to prevent the misuse of the cooperative legal entity as a business vehicle.

“The distinction between cooperatives and companies has long been blurred; as a result, many cooperative practices resemble those of companies,” said Member of Commission VI of the DPR RI, Nasim Khan.

The Draft Bill will also regulate access to capital and restructure the institutional framework from the primary level through to the apex (national) level. It will further stipulate sanctions for individuals who misuse cooperatives, including both administrative and criminal penalties