The Indonesian — In the midst of a moral and systemic crisis marked by scandals in Savings and Loan Cooperatives (KSP) and the staggering growth of online gambling, Indonesia is facing a critical juncture in its people-centric economic foundation. Cooperatives, a constitutional economic pillar that should serve as a bulwark for collective welfare, are on the brink of losing their relevance. Weak governance, low-quality human resources, and rampant KSP scandals demonstrate the vulnerability of this system to what can be described as a modern manifestation of the “Ghost of VOC”—extractive institutions that drain the wealth of the people for the benefit of a select few.
*The State of Cooperatives and Online Gambling*
The Ministry of Cooperatives and SMEs reported that the national cooperative business volume reached IDR 214 trillion in 2024, while online gambling transactions soared to IDR 900 trillion. This stark comparison is not just a striking statistic but a reflection of a character and systemic deficit.
*The Importance of Reform*
The mandate of Law No. 4/2023 on the Development and Strengthening of the Financial Sector (UU PPSK) gives the Financial Services Authority (OJK) oversight responsibilities as a first step. However, the government needs to promptly issue Government Regulations (PP) that guarantee the protection of members’ funds in Financial Services Cooperatives from systemic risk and bailout gaps.
*Strengthening Cooperatives*
Mohammad Hatta’s quote, “The strength of cooperatives lies in their association based on mutual assistance and shared responsibility… not in weakening solidarity,” emphasizes the importance of cooperation and mutual support. However, the current state of cooperatives is plagued by weak management, low adherence to Good Corporate Governance (GCG), and inadequate oversight systems.
*The Ghost of VOC and Extractive Institutions*
Daron Acemoglu and James A. Robinson’s theory in “Why Nations Fail” explains that nations fail due to extractive economic institutions that drain resources without creating shared value. This phenomenon is evident in Indonesia’s cooperatives, where scandals such as the KSP Indosurya (losses of IDR 15 trillion) and KSP Sejahtera Bersama (losses of IDR 8.8 trillion) symbolize governance failures.
*Online Gambling: A Modern Form of Extraction*
Extractive institutions are no longer limited to corporations; they now manifest in more subtle and massive forms, such as online gambling. The Financial Services Authority (OJK) and the Center for Financial Transaction Reports and Analysis (PPATK) report that online gambling transactions have reached IDR 900 trillion, with over 4 million people involved, including 51,611 civil servants.
*Revitalizing Cooperatives*
Revitalizing cooperatives requires a governance reform based on risk mitigation and systemic integrity. Key steps include:
1. Strengthening GCG and risk culture
2. Enhancing capital and transparency
3. Implementing UU PPSK and protecting members’ funds
*Conclusion*
The progress of a nation is not determined by the size of its capital but by the strength of its character and systems in managing collective potential. Cooperatives must become a dignified ecosystem, resilient and competitively systemic—a bulwark for the people’s economy and a structural vaccine against the “Ghost of VOC” that still lingers in the nation’s policy gaps.
