Co-ops heading for trouble again?

5.9 Million Members and RM38 Billion Assets in Malaysian Cooperatives

Cooperatives have been in the country since 1922. In 2006 we had about 5,000 cooperatives with 5.9 million members and total assets of RM38.3 billion. That is a lot of assets and a lot of people involved, both of which give rise to concerns about the cooperative movement.

Many complaints against many co-ops

1) Koperasi Wawasan Pekerja-Pekerja Malaysia Berhad (KOWAJA)

RM7,980 Deducted from Loan

A member applied for a RM80,000 loan in January 2009  but only RM33,995 was deposited into his account. He was never given a copy of the loan agreement.

When he said he wanted to return the  RM33,995 as it was not what he applied for, he was told that he would have to pay a fee of  RM2,000.  His   February 2009 salary slip revealed that RM897 had been deducted to pay for the loan.

History of cooperative scandals

1) ANGKASA: Alleged Fraud at Umbrella Co-op

Angkatan Koperasi Kebangsaan Malaysia (ANGKASA) commenced in 1977 as the umbrella cooperative of the country.

However it has become obvious that all is not well in ANGKASA. Its former President Royal Professor Ungku Aziz voiced his disappointment that SKM’s investigation into the alleged misappropriation of funds was still not completed in January 2009.

24% interest rate for co-op loan

Cooperative members may find it easy to get loans but these loans can be very expensive.  For one cooperative member, the interest rate is as high as 24% per annum.  

The loan is expensive because the cooperative deducts “cost of loan 19% from the principal”.