Strategies to Strengthen Savings and Loan Cooperatives in Indonesia

Abstract

This writing aims to describe, analyze, and identify the legal issues of savings and loan cooperatives and the strategies that the government can undertake to support and enhance the role of savings and loan cooperatives in the Indonesian national economy. This study adopts a normative legal research method. The research approach used includes legislative and conceptual approaches. The legal materials utilized in this writing comprise primary and secondary legal sources. The technique employed to gather legal data is document or library research. Furthermore, the legal materials are analyzed using descriptive, evaluative, and argumentative techniques. Based on this research, it is found that the obstacles faced by Savings and Loan Cooperatives in their development are the lack of quality human resources, weak supervision of these cooperatives due to the absence of a specialized independent body responsible for overseeing Savings and Loan Cooperatives, loss of cooperative identity due to the prevalence of illegal investment practices disguised as Savings and Loan Cooperatives, and the increasing number of default cases by these cooperatives, indicating a deviation from the cooperative principles of kinship. This is caused by some individuals being easily lured by business entities that promise ease and high returns on investment in cooperatives. The strategies that the government can implement to address these obstacles include strengthening the supervision of savings and loan cooperatives by establishing a specialized body with the authority to oversee them or designating the Financial Services Authority as an independent institution with the power to supervise savings and loan cooperatives. Additionally, forming a Cooperative Deposit Insurance Agency is suggested to provide protection and legal certainty.