The Role of Multi Purpose Cooperative in Developing Economic Independence or SME’s

Partono Thomas 1 , Muhammad Umar Faruq 2

1,2 Economic Education Department, Faculty of Economics, Semarang State University, Indonesia

Permalink/DOI: http://dx.doi.org/10.15294/jejak.v10i1.9135

Received: May 2016; Accepted: September 2016; Published: March 2017

Abstract

Cooperatives are seen as one of the important instrument to improve economic and social conditions of societies, to arouse the spirit of initiative and improving the general knowledge and technical skills of the society. On the present cooperatives members are business people of small medium scale enterprises (SMEs) which need a guidance or development. The purpose of this study is to describe the role of cooperatives in small medium scale enterprises (SMEs) development. The method used is descriptive qualitative. Data collection techniques used are observation, documentation and interview.The results of research showed that KSU Padurenan Jaya is a multi- purpose cooperatives that has five business units i.e. save loan, store, embroidery service, marketing, research and development. KSU Padurenan Jaya was instrumental in developing the small medium scale enterprises (SMEs) embroidery and convection consists of (1) aspects of the market, by following the events of the exhibition or expo, online marketing, providing material needs in the cooperative store, and create innovative products according to consumer taste. (2) the aspect of technology, by socialization and demonstration of the use technology of embroidery machines, embroidery design with computer programs, internet information technology for promoting and marketing product, And to optimize the use of the machine by provide services embroidery using advanced machine in cooperation so that can improve the productivity and efficiency of the business. (3) the aspect of the capital, by providing save loan service with simple procedures, mentoring to access other sources of financing.

Key words : Role, Cooperatives, Development, Micro Small Medium Scale Entreprise.

How to Cite: Thomas, P., & Faruq, M. (2017). The Role of Multi Purpose Cooperative in Developing Economic Independence

Kebijakan, 10(1), 189-204. doi:http://dx.doi.org/10.15294/jejak.v10i1.9135

or SME’s.

ISSN 1979-715X

Address: Kampus Unnes Sekaran, Semarang 50229 E-mail: sonmuy@mail.unnes.ac.id

190 Partono Thomas & Muhammad Umar Faruq, The Role of Multi Purpose Cooperative

manufacturing sector's dependence on imports

INTRODUCTION

of-contents is one of the main causes of the Any steps done by community to realize

financial crisis which greatly buries the national the ideals of economic independence, or

economy, specifically the large economy with all known as "flipping the base into the back end

its continuously effects.

(membalik pangkal menjadi ujung kembali)" in One of the major supporting pillar of the structural way changes the "colonial

economy should be based on the principles economy" into the national economy, this

contained in Pancasila so that there will be the concept implies that by consciously shaping

strengthening of the economy of the people, patterns, the national-based production

namely cooperative. In line with this, the (pattern of production) based on one's own

independence is formed by the populist country's resources is completely overlooked.

economics axis which are able to break down and Manufacturing sector, without much

move the economy lower classes though. This is known, is now increasingly dependent on out-

exactly what pushed the national economy to not of-state. Its behavior turns into import

be driven to economic globalization sector. dependent. The high import contents in the

In some countries in Europe (Lang & products of our manufacturing is not only

Roessl, 2013) such as Estonia, Poland, Sweden, because of not building the economy in

and Norway, cooperative plays an important accordance with our natural resources

sector in the empowerment of Housing, besides, (resources based), but also the influence of

in Kwali Nigeri, cooperative holds very the bosses "import-business" which has

important role instrumental in providing economic interests in the micro, which is

employment, empowerment of the poor often at odds with macroeconomic

community, and improving the capacity of farm restructuring efforts.

(Innocent & JO, 2014). Moreover, the cooperative There are some roles of importers and

also greatly impacts and gives a very important bureaucrats group as foreign compradors,

role for the local economy in the United States who consciously or unconsciously distort the

(Zeuli & Deller, 2007).

efforts of macroeconomic restructuring The meaning in the sense of cooperatives activities. However, it is not impossible that

has explained that the cooperative is a the idea of restructuring is not well known or

community economic movement. In this case, not is a real political will of our bureaucracy.

the cooperative will become the place of Of the same way, we are inattentively the

economic activities of the people which generally same as them in forming national

contains groups of middle to lower (poor). They consumption patterns. Therefore, public

are generally not possibly be accommodated on consumptions are increasingly dictated to

other entities such as Firm, CV, or PT. By having consume goods and services which are full of

cooperative as the container, they will be able to imported-contents, which are of course at the

develop their economic activities, so it can their expense of the national economy.

income.

While the Import mindedness gets The previous phenomena of course come rampant, the consumptive demonstration

with a note: the cooperative must have the ability effect becomes more severe as a result of the

to nurture and develop their economic activities. great wars and the advanced advertising

Therefore, cooperatives should really be market. Also, the magnitude of the

managed professionally to be able to become a

JEJAK Journal of Economics and Policy Vol 10 (1) (2017): 189-204 191

place of people's economic activities which is economy is structured as a joint venture based conducive. If this can be carried out at each of

on family principles", the agreement between the districts, undoubtedly, the people poverty

article 33 of the 1945 Constitution with Law No.25 across Indonesia will gradually be alleviated.

/ 1992 becomes the foundation of the presence of When the cooperative is correctly and

cooperative which is considered appropriate to professionally managed, the people who

assist the economic development of society. become members of the cooperative will

Hanel (2005) states that cooperative is increase the standard of living in accordance

seen as an important instrument to improve the with the purpose of the cooperative. What is

economic, social and cultural, to arouse people's meant by improving the living standard is the

initiative and help to improve public knowledge increase in economic capacity (income /

and technical skills of its members. Again, purchasing power) and non-economic

cooperative enterprises is seen as the most good capacity (e.g. education and social). Along

to encourage and support the growth of social with the improvement of education and social

economy.

abilities, they would be able to further The concrete manifestation of the people's increase their economic capabilities.

economy is micro, small, medium enterprises Regarding the above explanation, their

(UMKM) which are mostly carried out by people economic capacities (income) will grow even

or UMKM/ MSME people as an integral part of greater. With increasing economic capacity

the national economy which has a great potential (income), it is hoped that the inequality in

in moving the economic activities as well as a income between small communities with

pedestal source of income for most people in middle to high society will be minimized. This

welfare. However, the means that inequality in income will be

improving

the

development of UMKM/ MSME in Indonesia reduced by the increase in income of poor

cannot be separated from a variety of problems. people who are fostered through the

According to research conducted by cooperative.

Winarni and Situmorang in the journal of Arief, Cooperatives in Indonesia's economy is

it is stated that that the problems faced by expected to play a role in improving the

UMKM/ SMEs are summarized as follows: (a) economic and social welfare of the members

lack of capital, (b) the difficulty of marketing, (c) and the community by building and

the simple organizational structure with a developing their economic potential. It is a

division of labor that is not standard, (d) the low business entity that is suitable to improve the

quality of management, (e) limited and low welfare of society, as described in Law No.25

quality of human resources, (f) mostly lack a of 1992, "The cooperative is a business entity

bona fide financial statements, (g) the weak legal consisting of individuals or legal entities

aspect, (h) the poor quality of the technology. cooperatives, with the bases its activities

In Kudus, UMKM/ MSME is one sector based on the principle of cooperation as well

which plays an important role in the regional as people's economic movement, which is

economy. Accordingly, Bambang Tri Waluyo Plt, based on family principles ". The explanation

the Head of Department of Industry, Trade and of the cooperative definition is in harmony

Cooperation in Kudus District, in the interview with the Constitution of 1945 article 33,

dated February 22, 2016, stated that the UMKM/ paragraph 1, which reads, "The Indonesian

MSME is an important sector in the economy

192 Partono Thomas & Muhammad Umar Faruq, The Role of Multi Purpose Cooperative

that contribute Kudus District. It could be development of rural communities. In addition, said that Kudus Regency is booming through

the summary is in the table 1. UMKM/ MSMEs. In 2015, there were as many as 13,847 UMKM/ MSME units consisting of

The table 1 indicates that UMKM/ MSME various businesses producing goods and

of embroidery and convection in Padurenan services.

Village are able to provide employment for 1491 contribute to the GDP of Kudus District by

people with the details of the embroidery 63% and wa able to provide employment for

business units to absorb as much as 376 and the 158,988 people.

convection absorbs as many as 1115 people. One of the featured UMKM/ MSME in

Alternatively, the labor force is largely from rural Kudus regency namely embroidery and

Padurenan people and the rests are from the convection which currently have 661 units of

surrounding villages. Meanwhile, the amount of businesses with the production value reached

the salary of an employee embroidery is Rp Rp 80,917,404,7. Again, UMKM/ MSME of

720,000 and Rp 780,000 for convection employee embroidery and convection are featured as

per month. This indicates the presence of the implementation of One Village One

UMKM/ MSME of embroidery and convection in product program (OVOP) in Kudus and

the village Padurenan could be a source of specifically create an UMKM/ MSME Cluster

income and could build the economy. of embroidery and convection in the village of

In its development, however, the UMKM/ the District Padurenan Gebog.

MSME of embroidery and convection in The existence of UMKM/ MSME of

Padurenan are not be separated from the various Embroidery and convection in the village

obstacles or problems. Based on information Padurenan plays role as the leading sector or

collected from the catalog Profile of Padurenan, economic basis that its existence is

the problems encounter: (1) Lack of capital; (2) indispensable in the development of a region

The limited variation of the product; (3) and could become a major driver of economic

minimum sales promotion of information development in the village. As the dominant

technology (such as: Embroidery website of the sector, UMKM/ MSME of embroidery and

Holy typical); (4) The conventional system of convection become the foundation of

marketing and sales; (5) no financial accounting economic activities that is able to contribute

by UMKM/ MSME that is BI standard, it is less in increasing income, employment, economic

eligible for capital loan assistance from BI.

Table 1. The Existence of UMKM/ MSME of Embroidery and Convection in Padurenan Village, Kudus

Business

Total

Employee Average Salary

Units

(Unit) (People)

(per month)

Source: Padurenan Productive Village Profile 2015 (processed in 2016).

JEJAK Journal of Economics and Policy Vol 10 (1) (2017): 189-204 193

It also was expressed by the Chairman of assistance, Business Protection, Partnership, the Group I of UMKM/ MSME, Mr. Chalimi

Training, Promotion, Cooperation. Again, during the interview. He stated that some of

Dirlanudin (2008) revealed that small business the problems experienced by UMKM/ MSME

development is nothing but the empowerment of embroidery and convection in Padurenan

that includes the creation of a conducive climate; namely (1) Capital, the majority of UMKM/

training and development; financing; guarantee; MSME have only working capital with

partnerships; entrepreneurship development, so minimum capital investment; (2) Model /

that the small business community is able to variation is limited due to the lack of

grow into a strong and independent businesses. creativity of entrepreneurs, market demand

On the one hand, Budiarto, et al (2015) revealed and the quality of the embroidery motif which

that when the UMKM/ MSME's problems are requires employers to develop their creativity;

mapped, the solutions can be sought by the (3) Traditional ways on sales and marketing

development of UMKM/ MSME in several which are through the traditional sellers /

aspects: (1) Aspects of the Market, (2) Aspects of collector; (4) Not technology utilization in

technology and innovation, (3) Aspect Capital, marketing.

and (4) Management Aspects. By looking at the various problems

As we become an agent in this economic faced by UMKM/ MSME, the researchers are

matter, therefore, we must be careful to concerned for its development by regards that

distinguish between the efforts of economic UMKM/ MSME are an integral part of the

recovery (IMF and the neo-classical views) with national economy which has a great potential

Reformatory. Some views of such phenomena in the community economic activities as well

can be interpreted that the development of as a source majority of people in improving

economic independence of UMKM/ MSME their welfare. Thus, any empowerment or

involves various parties, both the Central developments are necessary of UMKM/

Government, Local Government, the Business MSME. Such efforts can be important and

and Society to participate actively to the crucial things to do to make UMKM/MSME

development process, so does Cooperative. The

be the strong, independent and develop into cooperative as a business entity which conducts large businesses.

business with the goal of welfare of members in Law Number 20 Year 2008 on Micro,

particular and society in general. By referring to Small and Medium Enterprises describes the

the previous explanations, there is a development as the effort made by the

phenomenon of the Multi-Purpose Cooperative Government, Local Government, Business

(KSU) in Padurenan Village namely KSU World, and the Society for empowering

Padurenan Jaya as the cluster management on Micro, Small and Medium Enterprises

UMKM/ MSME of Embroidery and Convection. through the provision of facilities, coaching,

As a cooperative cluster management, the mentoring and help retrofitting to foster and

cooperative is intended to be the real media that enhance the capabilities and competitiveness

can be used to facilitate the development of of Micro, Small and Medium Enterprises. In

economic independence and drive the line with this, Hafsah (2004) revealed the

implementation of OVOP (One Village One development of UMKM/ MSME, including

Product). On the other hand, the members of the the creation of a conducive climate, capital

cooperative are perpetrators of UMKM/ MSME

194 Partono Thomas & Muhammad Umar Faruq, The Role of Multi Purpose Cooperative

of embroidery and convection. That UMKM/ researched and most know the operational MSME are leading sectors that contribute

activities related to cooperative efforts. However, substantially to the economy of the society,

the researchers also involved other informants to but is still facing various problems or

give further support and strengthen. In this case, obstacles on its development.

the researchers employed the cooperative Based

members by considering their involvement and description, in fact, thing to note is related to

tasks to do in cooperatives by the numbers of 10 the role of cooperatives in which whether the

informants. Passive participation observation cooperative could contribute to the

was also done by observing the activities carried development of UMKM/ MSME, as well as the

out by the cooperative in daily operations. reality of undertaken cooperative activities so

Moreover, Secondary data were obtained by the as to play a role in developing UMKM/ MSME.

study of documentation on cooperative Meanwhile, role is an action in the form of a

documents namely document Management series of efforts and activities run by

Report, Consolidated Annual Members Meeting cooperative due to its position as a society

Business Unit, photo economic movement as well as a joint venture

(RAT),

reports

documentation of the cooperative activities. entity based on the principle of kinship and

Data validation of this study was pursued economic democracy, which is expected to

by having credibility / reliability test by method influence the members of the community in

of triangulation. Triangulation is a technique accordance with the purpose of the

used to validate any data by utilizing any sources cooperative. Role also shows the involvement

beyond the data. Such technique sources used in of self or the participation of individuals and /

this study were the comparison of the results of or groups in making an effort to reach a

observation, interviews with the contents of the certain goal on obligatory tasks and must be

Moreover, test of done in accordance with the position.

documents related.

Transferability was also applied to have indication about the degree of accuracy or

RESEARCH METHODS

applicability of the results to a population in by which samples were taken. It was done by

This study used a qualitative approach writing research report in the form of theses and

with descriptive methods. Therefore, this published scientific journals which include

research will answer any symptoms or details, clarity, systematic and trustworthiness.

phenomena based on the research focus Further, dependability test was also conducted

namely the role of Padurenan Jaya Multi- to meet the validity criteria of dependability. It

purpose cooperative (KSU) in developing was done by the researchers by making a trail of

UMKM/ MSME of embroidery and field activities (field notes) that was attached to

convection. the back page of the thesis in the form of

The data used were primary and documentation of data collection, observation,

secondary data. Primary data were obtained documentation, interviews with informants, the

using interview and observation techniques. research permit and a certificate of research

The main data source or informant was the results. The last, Confirmability test was done to

cooperative board (Mr. Suwito, Mrs. meet the validity of confirmability criteria. To

Sudarminah, and Mr. Karadenan) by pursue this, the researchers tested the findings of

considering informant involvement in or the study by having lecturer or test examiner to

associated directly with the problem being

JEJAK Journal of Economics and Policy Vol 10 (1) (2017): 189-104 195

assess the results of the study and then District of Kudus. It was established since the deciding the agreement of the results.

implementation of the program OVOP (One Data analysis techniques in this study

Village One Product) in Kudus which later was was done by using an interactive model that

developed into productive village of UMKM/ goes on continuously until complete by using

MSME Cluster Embroidery and Convection. The data analysis, namely collection, data display,

cooperative serves as Cluster Management which data reduction, conclusion drawing /

is intended as the real media that can be used to verifying. Basically, data collection is realized

facilitate the development of economic by searching various forms and types of data

independence and the drive the program related to the focus of the research problem,

implementation.

using certain techniques to the data in the The Vision of Padurenan Jaya Multi- field. In this study, the data collected were

Purpose Cooperative namely "to make data from Padurenan Jaya Multi-Purpose

Padurenan village as tourist cluster that has the Cooperative (KSU) development, UMKM/

productivity and competitiveness of the high MSME development data, the data and

industry, for can be a motor for economic growth information of various business activities

in surrounding villages.".

conducted by cooperative. In collecting the Regarding the above vision, Padurenan data, researchers used observation, interview

Jaya Multi-Purpose Cooperative's missions are as and documentation study. After grouping the

follows:

data, the researchers filtered the prospective

1. To empower communities in Padurenan and appropriate data for this study, while the

productive village to be religious, creative, unimportant data were eliminated so as to

productive, have business ethics and high make no obstacle in data analysis of this

social capital people;

study. The results of data reduction that the

2. Promote the active involvement of authors sorted into then grouped based on

government officials in the development of the formulation of the problem. Meanwhile,

physical / infrastructure and relevant stake presentation of data in this research was done

holders in improving the competitiveness of in the form of charts and narrative text

industrial embroidery and convection so that descriptions that described various programs

it can support the establishment of cluster or

embroidery and convection in Padurenan independence of UMKM/ MSME of

activities to

develop

economic

productive village;

3. Encourage the growth of a wide range of Padurenan conducted by Padurenan Jaya

Embroidery and Convection in the village of

supporting industries and business networks Multi-Purpose Cooperative (KSU). After the

that work together to improve the presentation of the data, then the next step

competitiveness of clusters embroidery and was the conclusion (Verification).

convection in Padurenan productive village. In order to achieve the main objective of a cooperative, it is required a container to organize

RESULTS AND DISCUSSION

all the activities and the programs of the Padurenan

Jaya

Multi-Purpose

cooperative. Such container is realized in the

form of cooperative organizational structure. established in the village of Padurenan Gebog

Cooperative (KSU) is a cooperative

The organizational structures is necessary to

196 Partono Thomas & Muhammad Umar Faruq, The Role of Multi Purpose Cooperative

distinguish the boundaries of authority and may be experiencing overbooked and unable responsibility which systematically indicate

to work on his own and thus require relief the relationships between these elements

embroidery services from the cooperative. therein.

Embroidery services in a cooperative are Padurenan

supported by computerized embroidery Cooperative is a multi-purpose firm so that it

Jaya

Multi-Purpose

machines and skilled workers that can work has a wide range of business types. As for the

effectively and efficiently. type of business conducted by the

4. Marketing Division, to further encourage and categorization of job divisions as follows:

improve product marketing of cooperatives

1. Division of Savings and Loans, as a by providing a display of products like shop container for the collection of members'

located strategically to be visited by the capital in the form of capital Principal,

consumer. As technology advances, the Mandatory, Voluntary and Special

cooperative also develops online marketing Deposits. Also, can further be distributed

through websites and social media. in the form of loans to members in the

5. Development and Training Division, to form of a loan and so on.

develop the ability to design and product

2. Store Division, cooperative has a shop quality, also facilitate cooperative members provider of raw materials and auxiliary

with a variety of training, study, discussion materials to meet the needs or

and so forth so that members of the requirements of members in production.

cooperative have the capability and quality of They are in the form of various kinds of

human resources competitiveness. fabrics, sewing thread, embroidery thread,

Multi-Purpose double penguin, buttons, zippers and

Padurenan

Jaya

Cooperative (KSU) members are the villagers of other sewing supplies. The price offered

Padurenan village who are mostly businesses can be lower than the grocery store in the

embroidery and convection. Over the past five market.

years running, in the table 2 indicate the

3. Services Division Embroidery, Embroidery development of cooperative members who are services cooperative serve members who

classified by type of business.

Table 2. The Members of Padurenan Multi-Purpose Cooperative Based on the Types of Businesses Types of Businesses

Total Year

Members 2010

Embroidery Convection

Source: Annual Members Meeting Reports year 2010-2015 (processed in 2016)

JEJAK Journal of Economics and Policy Vol 10 (1) (2017): 189-204 197

Based on a preliminary analysis of the However, despite of the opportunities study or the SWOT analysis, the researchers

there are also threats, among others, (1) draw the following conclusions:

intensive competition, (2) the role of science

A. Strength and technology is increasing, (3) there is a The strength of the cooperative is

lack of trust for mutual cooperation with having a lot of manpower, by the fact that

economic agents and between UMKM/ the Padurenan Village area is a kind of

MSME, (4) The limited deployment and the large village of vocational producer of

provision of technology for UMKM/ MSME, embroidery and convection in Kudus. Next

(5) the existence of a free market MEA, (5) is the good work ethic in UMKM/ MSME

Lack of access to infrastructure and facilities clusters Padurenan.

available in the region, such as financial

B. Weakness institutions, production and marketing. In contrary strength, Padurenan

Based on these analyses, then the UMKM/ MSME cluster have a couple of

Padurenan Cooperative takes chances and problems that must be faced, including the

consistently strives to optimize the business weakness of the capital structure of

performance of UMKM/ MSME in the cluster of UMKM/ MSME, poor management of

Padurenan. According to the findings, this study businesses, the inadequate level of

aimed to determine and describe the Padurenan capability and professionalism of UMKM/

Jaya Multi-Purpose Cooperative's roles in MSME, less innovative management, less

developing UMKM/ MSME in the village of in mastery of the technology, difficulty to

Padurenan, Kudus District. The role is an action determine the core business.

in the form of a series of efforts and activities run

C. Opportunity by cooperative due to its position as a society In tune with the strengths and

economic movement as well as a joint venture weaknesses

entity based on the principle of kinship and competitors of embroidery and convection

when seen

from

economic democracy, which is expected to other than UMKM/ MSME clusters of

influence the members of the community in Padurenan, it can be described (1) a strong

accordance with the purpose of the cooperative. political will from the government Kudus

The role also shows the involvement of self or the regency and demands growth of society of

participation of individuals and / or groups in Gebog Sub-district to further establish

making an effort to reach a certain goal on a task UMKM/ MSME, (2) economic conditions

that has an obligation and must be done in which are sufficient to support the

accordance with the position. existence UMKM/ MSME, (3) the existence

Multi-Purpose of

Padurenan

Jaya

Cooperative (KSU) as a cooperative which is commodities produced by UMKM/ MSME,

market opportunities for

the

located in the village of Padurenan or, the village (4) the investor who wants to cooperate

which are developed into a Productive Village of with UMKM/ MSME, (5) the potential

UMKM/ MSME Cluster of Embroidery and areas of support in the implementation of

garment. On the one hand, cooperative members the activities of UMKM/ MSME.

themselves are the perpetrators of UMKM/

D. Threats (Threats) MSME of embroidery and convection. Therefore, cooperative action is expected to be a driving

200 Partono Thomas & Muhammad Umar Faruq, The Role of Multi Purpose Cooperative

element and ability enhancement of UMKM/ consumer demand. Therefore, it was done as MSME. Moreover, cooperatives are expected

follows:

to play a role in developing UMKM/ MSME.

1. Improving market information The development of UMKM/ MSME should

Market information is usually related to

be targeted, for there is a need for any any product or commodity information such strategies and concrete steps so that the

as product types, product prices, consumer comprehensive and synergistic development

tastes, as well as related information such as of UMKM/ MSME can be achieved

the sourcing of production factors and raw (Budiarto.dkk, 2015: 19).

material prices. Padurenan Jaya Multi- In collecting the data, researchers

Purpose Cooperative conduct activities to directly went into the field to get the data and

improve the information access of input information needed in research. The methods

markets by providing a store that sells a wide used were observation, documentation and

range of business support materials interview. After the data collected then

embroidery and convection. Meanwhile, for reduction is done for then being presented.

commodity market The following are descriptions of the findings

the product

information is realized by conducting of the data and information in the study.

exhibition which can provide product information or desirable consumer demand.

The Role of Cooperatives in Developing Market Aspects of Micro, Small, Medium

2. Launching innovative products

Enterprises (UMKM)

Jaya Multi-Purpose Aspects of Market Development

Padurenan

Cooperative produces innovative embroidery Activities in UMKM/ MSME are aimed at

and convection such as embroidery on the strengthening the priority markets to

hood, mukena, wallets, Bali sarong, factory penetrate any existing markets and minimize

uniforms, school uniforms or student the barrier to entry to the market. One way

organizations and others. In the creation of that is achieved is by improving market

innovative products, previously, cooperative information. The market information is

also performed detection of any changes in typically in form of associated information

consumer tastes towards the results of the related to products or commodities such as

exhibition and some orders can also be used product types, product prices, consumer

to see the review of the convection and tastes, as well as related information such as

embroidery products that consumers want the sourcing of production factors and raw

now. This is consistent with the theory material prices. Padurenan Jaya Multi-

revealed by Budiarto.dkk (2015) that in order Purpose

to launch innovative products in accordance encouragement of access information of the

with the taste of the market, stakeholders are factors of production markets by providing a

expected to help to detect and anticipate store that sells a wide range of business

changes in consumers' tastes by creating support materials of embroidery and

innovative product design according to the convection. In addition, the encouragement

market.

of product or commodity market information

3. Joining exhibition events both inside and is realized by holding an exhibition which can

outside the city on a national scale. provide product information or desirable

JEJAK Journal of Economics and Policy Vol 10 (1) (2017): 189-204 199

3. The existence of an online shop website with products through the website. However,

4. Doing online marketing activities of

regards the embroidery and convection this activity is not implemented

products of Padurenan village. maximally, for, currently, there have been

4. The invention of UMKM/ MSME's trademark more training and cooperation with the

in embroidery and convection. government agencies such as the

5. Reaching the marketing of embroidery and Department of Cooperatives and UMKM/

convection products venturing out of the city MSME and the private sectors such as the

in Central Java such as Jepara, Demak, University of Muria Kudus, Semarang

Semarang, Solo, Yogyakarta, until the other Private University and Telkom to give

provinces such as East Java, Bali and Mataram. trainings with regards online shop.

6. Increasing product orders of embroidery and

5. Cooperative has built a building to be used convection both in small and large scale. as a showroom and designed like a supermarket which will originally be used

The Role of Cooperatives in Developing

to display and sell the products of UMKM/

Technological Aspects of Micro, Small,

MSME, but is still in the process of

Medium Enterprises (UMKM)

preparation of the fixtures and fittings. Technology is an important element in the These results are consistent with the

development of UMKM/ MSME. The UMKM/ theory that disclosed to Budiarto.dkk

MSME will not develop without any adoption (2015) that for both the development /

and development of technology, in this case the expansion

appropriate technology. By referring to the stakeholders are expected to play a role

weaknesses of UMKM/ MSME in general, it through joint marketing, improve the

appears that the technological aspects still need promotion and others.

to be strengthened. In line with this, by the help Some

of technology, some problems can be solved; for independence development of UMKM/

example, in production and marketing. MSME's aspects of the market that have been

Moreover, Padurenan Jaya Multi-Purpose done by Padurenan Jaya Multi-Purpose

Cooperative (KSU) undertakes technological Cooperative apparently contribute good

development activities of UMKM/ MSME of affect for the development of UMKM/ MSME

embroidery and convection by socialization and of embroidery and convection in Padurenan

demonstration, as well as optimizing the use of Village, while the outputs of those activities

technology.

are as follows:

1. The products of UMKM/ MSME of Cooperative (KSU) in develops the technological embroidery and convection of Padurenan

aspects of by performing the following activities: village are well known inside and outside

1. Socialization and demonstration of the use of the city, and became famous among the

technology

people. This activity is performed in cooperative

2. The production of various types of production room which has advanced embroidery and convection in accordance

computer embroidery machine. Next, the with the wishes of consumers and keep

UMKM/ MSME came to the cooperative and abreast of trends.

then, accompanied by production expert and

200 Partono Thomas & Muhammad Umar Faruq, The Role of Multi Purpose Cooperative

production employee who described how the engine works. The use of computer programs was also presented there (Wilcom Embrodiery Studio) to create a design motif embroidery. There is also training about the use of internet technology and social media for online shop. These results supported by the theory stated by Budiarto.dkk (2015), that one of the ways of technology retrofitting efforts is through socializing the benefits of new technologies by all stakeholders, especially intended for targeted UMKM/ MSME. By the dissemination and demonstration, new useful technologies can be disseminated and immediately applied to UMKM/ MSME.

2. Providing Computer Embroidery Services The use of technology development activities in the production process are aimed at increasing the productivity of UMKM/ MSME of Padurenan Jaya Multi- Purpose Cooperative (KSU) which has Embroidery Services Business Unit. The cooperative

provides

computer

embroidery using embroidery machine with the scale of lots production. This is done because many UMKM/ MSME are still limited in the machine, but receive many orders or even excess orders that are not suitable to do, so they are delegated or done by the cooperative. Thus, by utilizing this Embroidery Service further increase the effectiveness and efficiency of the production of the UMKM/ MSME can be achieved. Such cooperatives and UMKM/ MSME are in line with the pattern of subcontracting which is mostly done by small and large industries such as small industrial convection shirts of Dagadu Jogja. The results of many studies reveal that the patterns of subcontracting are able to contribute benefit for both small and

large industrial industries. Moreover, subcontract

patterns

provide some

opportunities. First, the opportunity to maintain business continuity of production; Second, opportunity for the emergence of new entrepreneurs; The third opportunity to promote the business (Budiarto, et al, 2015).

The Role of Cooperatives in Developing Capital Aspects of Micro, Small, Medium Enterprises (UMKM)

One of the supporting factors which are quite important in the business continuity and increase of productivity as well as business efficiency is the availability of capital. In the ideal level, the capital used should come from private property. In fact, UMKM/ MSME do not have enough capital to run their business. Loans eventually became the temporary address of the problem. Meanwhile, in reality, UMKM/ MSME still regard the Bank as an institution that is not easily accessible or difficult to access. It is, therefore, necessary to find solutions in the form of effective financial institutions for UMKM/ MSME and create ideal pattern of loan / financing for UMKM/ MSME, one of which is by making cooperative as an institution that reflects the social and economic principles. Thus, Padurenan Jaya Multi-Purpose Cooperative conducts activities in order to develop the capital aspect of UMKM/ MSME of embroidery and convection in Padurenan Village.

Padurenan

Jaya

Multi-Purpose Cooperative develops their capital aspect of embroidery and convection by the following efforts:

1. Savings and Loans Service This effort is specifically addressed by the Business Unit Savings and Loans with easy and simple procedures. The procedures namely, UMKM/ MSME come directly to cooperative and fill out the form for then the money will be immediately disbursed.

JEJAK Journal of Economics and Policy Vol 10 (1) (2017): 189-204 201

Meanwhile, the payback period can be of the amount of loans received by members or done with installment per week, per

UMKM/ MSME are still few and only to the month up to a maximum of two years or it

extent of the loan which could be used to could be paid for with a number of net

supplement working on capital business income (SHU) owned by members.

operations. Meanwhile, the payback period can However, until now, the ability of

be done by having installment per week, per cooperative in lending to UMKM/ MSME

month up to a maximum of two years or it could is still weak, it is known from the allocation

be paid for with a number of net income (SHU) of capital in the cooperative savings and

owned by members.

loan business unit which is relatively small, The study found that Padurenan Jaya amounting to 15% of the total capital.

Multi-Purpose Cooperative in developing Then, the large amount of loans received

UMKM/ MSME capital aspect of embroidery and by UMKM/ MSME is slightly few that is

convection, Padurenan village provides services between Rp 1,000,000 to Rp 5,000,000.

that are specifically handled by Business Unit

2. No Direct Monitoring of the use of credit / Savings and Loans with simple procedures by loan

requiring the client to directly come to the Cooperative management is based on

cooperative. This is consistent with the theory an element of trust, namely because the

argued by Ridwan in Budiarto (2015: 113) that the cooperative members are business people

lending institutions must have procedures that who are basically UMKM/ MSME

are simple and practical, but still pay attention to businessmen who need loans for working

the aspect of prudence. The simplicity of the on the capital improvement It of course

procedure is the key to success in providing makes loans being used for their business

services to small and micro businesses. Apart continuity purposes, and not for the

from that, for UMKM/ MSMEs, the credit should benefit of other consumption.

be interpreted as a stimulus and capital

3. Assistance injections which are temporary. Moreover, the Assistance is directed to improve any

Lending should encourage production which accesses to the bigger sources of capital.

ultimately will increase the capitalization of the Therefore, the cooperative facilitates

business (Budiarto.dkk, 2015: 111). UMKM/ MSME to access finance

Ideally, financing activity should be information to the Bank of Central Java.

accompanied by mentoring or monitoring. This The way Padurenan Jaya Muti-Purpose

activity is carried out with the aim to monitor the Cooperative develops their UMKM? MSME of

use of credit, repayment of installments as well embroidery and convection is by providing

as increased access to financing sources. savings and loan services that are specifically

Regarding this issue, this study found that handled by Business Unit Savings and Loans.

Padurenan Jaya Multi-Purpose Cooperative does Unfortunately, until now the ability of

not do direct monitoring to monitor the use of cooperative in lending to the UMKM/ MSME

credit / loan. The Cooperative members only or its own members is still weak, it is

emphasize on an element of trust, namely considered by the allocation of capital in the

because the cooperative members are business cooperative savings and loan business unit

people who are basically UMKM/ MSME which is relatively small. Then, the magnitude

businessmen who need loans for working on

202 Partono Thomas & Muhammad Umar Faruq, The Role of Multi Purpose Cooperative

capital improvement, of course loans given by liaison of bank financial institutions with MSMEs the cooperative are used for business

directly are used. It is done by several steps. The continuity purposes they are not for the

first step is to conduct cooperative business benefit of other consumption.

administration training such as financial While the mentoring aimed at

bookkeeping so that UMKM/ MSME will have improving the access to larger capital sources,

the ability and meet the requirements of access the cooperative conducts of business

to capital sources. The pattern of the linkage as administration training such as financial

shown in the figure 1.

bookkeeping. Also, Padurenan Jaya Multi- From the figure 1 Linkage Program pattern, Purpose Cooperative facilitates UMKM/

it can be seen that UMKM/ MSME are directly MSME to access finance information to the

related to the general bank commercial banks, Bank of Central Java in order to increase the

rural banks, or to cooperatives. On the other capacity of financing services, as well as

hand, any network constraints commonly network development can be applied using

experienced by UMKM/ MSME to public banks the pattern of linkage program, that is the use

can be eliminated by the presence of many rural of micro-finance institutions or cooperative as

banks and cooperatives which are scattered

a liaison of bank financial institutions with across the town / village (Budiarto.dkk, 2015: 115). UMKM/ MSME directly.

It is also in line with the findings of Ogisi et.al In accordance with the increase of the

(2007: 69-77) that cooperatives provide a positive capacity of financing services, as well as

and significant influence which can enhance the network development which is applicable

growth and development of UMKM/ MSME in with the linkage program pattern, the micro-

the furniture sector and convection in the Delta finance institutions or cooperative as the

City of Nigeria.

Figure 1. The Pattern of Linkage Program of Financial Institution

DYNAMIC SUSTAINABLE MICRO,

SMALL AND MEDIUM ENTERPRISE

TECHNO EI CAP

REI

REINFORCEMENT OF SPIRITUAL ASPECT

Figure 2. The Aspects of Economic Independence Development of UMKM/ MSME

JEJAK Journal of Economics and Policy Vol 10 (1) (2017): 189-204 203

Based on the research that has been demonstration of the use of embroidery done and described above, it is found that

technology with advanced computer embroidery Padurenan Jaya Multi-Purpose Cooperative

machines, embroidery motif design with a performs various program activities in

computer program, as well as the use of Internet developing UMKM/ MSME of embroidery

technology and social media for online and convection. The activities are aimed at

marketing. Again, the activities also optimize the the development of economic independence

use of the machine by providing embroidery of UMKM/ MSME which are going to be

services using advanced machine in cooperative driven on several aspects: (1) Aspects of the

so as to improve the productivity and business Market, (2) Aspects of technology and

efficiency. Padurenan Jaya Multi-Purpose innovation, (3) Capital Aspect, and another

Cooperative (KSU) develops UMKM/ MSME of matter which performs as the foundation to

embroidery and convection on a capital aspect in give anchor and direction namely the spiritual

a project to provide savings and loan services aspect that is the spirit and motivation and

with simple procedures, but the ability remains also sublime ethics in doing business. Those

weak because of the little capital owned. Then, are realized in the figure 2.

the magnitude of the amount of loans received by members or UMKM/ MSME can only be used

CONCLUSION

The Role of Multi Purpose Cooperative in Developing Economic Independence or SME’s