Amendments to Act will halve number of open credit co-ops

KUALA LUMPUR: The Domestic Trade, Cooperatives and Consumerism Ministry is amending the Cooperatives Act 1993 as part of efforts to consolidate cooperative financial services sector.
Speaking at the launch of the Development Plan for the Cooperative Financial Services Sector 2016-2020 yesterday, Minister Datuk Seri Hamzah Zainudin said almost 90% of the Act will be amended, and the amendments will be tabled by June this year.
With the amended Act, many loopholes will be tightened and with tighter laws, smaller credit cooperatives are expected to seek ways to collaborate or merge in order to remain sustainable, he said.
There are too many credit cooperatives in the sector, Hamzah said, adding that he expects the consolidation to reduce the number of cooperatives to about 200 from 596 currently.
He said the 596 cooperatives include 117 open credit cooperatives which should be reduced to 50.
“In 2015, the total revenue from credit financing cooperatives was about RM80 billion but a large portion, about 70%, was from Bank Rakyat and Co-opbank Persatuan Malaysia Bhd. The rest are too small, their businesses are not sustainable,” Hamzah told reporters.
He urged small and medium credit cooperatives to merge in order to achieve a credit cooperative system that is more effective, competitive and able to complement other financial sectors.
He said consolidation will result in a bigger and stronger sector that is able to generate bigger revenues.
According to Hamzah, credit cooperatives in Malaysia are still underdeveloped with room for improvement in terms of assets, membership and market share.
He said the ministry has stopped approving new cooperatives for the past 1½ years and this will remain until the amendments to the Act are tabled.