This document has been made available in electronic format by the International Co-operative Alliance (ICA) 

Development of School Co-operatives in Malaysia (1998)

Dec., 1998
(Source: Co-op Dialogue, Vol. 8, No. 3, Oct.-Dec., 1998, pp. 30-33)

(This is a working paper presented by ANGKASA President Royal Prof. Ungku A. Aziz, at the School Co-operatives Seminar on June 27, 1998 at Wisma Ungku A. Aziz, Jalan SS6/3, Kelana Jaya, Selangor Darul Ehsan. - Editor)

School co-operatives are the vital seeds for the healthy growth of the Co-operative Movement. The development wave for the Co-operative Movement in any country depends on the ability of the Co-operative Movement to create echelons of co-operative members that can take turns one after another over time. It is like the large and small waves that take turns to lash the shores.

An echelon of elderly leaders can be replaced by an echelon of young leaders if the young people are given the opportunity to undergo training and harness experience when they are in their teens or still in school.

The appropriate terminology and concept in this matter is continuity. As there was no School Co-operative Movement from the time of independence to the 60s, the building of the echelon of young leaders has not been orderly.

Nevertheless, we can be proud that with the co-operation of the Ministry of Education almost all secondary schools today have co-operatives and a large number of them have joined ANGKASA, and more are being registered every month.

However, we should not remain satisfied with this achievement. For example, there are more than one million members, or 80 per cent of secondary schools already have co-operatives. Furthermore, the sales turnover or the long list of services is only statistics that prove the business success of school co-operatives. Actually, of more importance is the extent to which the school system itself has influenced the minds and spirit of co-operative members to enable them to really understand the principles of co-operatives and whether they have enjoyed the benefits that can be derived from school co-operatives in daily life.

We have to figure out how school co-operatives can focus the minds of students so that they are not only aware of the benefits in the area of business or production but can also get the opportunity to involve themselves in co-operative matters and the decision-making process while consolidating the appropriate caring attitude.

This is the problem that we are facing in developing a School Co-operative Movement that can be appreciated by all the people and our national leaders. We have to understand that the school co-operative is different from the usual co-operative.

The school co-operative is made up of four parties that must have a common objective and can work together. First come the students who make up the membership of a school co-operative. Secondly, a teacher who is entrusted with the responsibility of guiding the school co-operative. Thirdly, every school has a head master or a principal who has the responsibility of taking charge of all matters at school. He has close contact with the Ministry of Education that has several administrative wings according to the federal and state or district governments. The structure is also distributed according to functions, such as sports, co-curriculum and so on.

As far as ANGKASA in concerned, we have to have sincere co-operation from all officers and teachers so that the agreed objective can be implemented.

From one aspect, school co-operatives are dependent on the likes, enthusiasm or inspiration of the students and teachers towards co-operative ways in the management of markets, production or loans and savings and so on. From another aspect, school co-operatives depend on the charity of the principal towards co-operatives, which may increase the burden of problems.

One major aspect that has yet to be resolved is the burden of work for the teachers who lead school co-operatives. Generally, their leadership and effort in striving to lead the school co-operative to success are not given appropriate recognition from higher authorities and they are not given any less routine work or a good recommendation for promotion and the like.

There are two more matters that need to be considered. Firstly, there is a circular that should be reconsidered by the authorities, that is the policy of the Finance Ministry disallowing a school co-operative from furnishing supplies to the school in which it operates.

In my opinion, if the school co-operative manages the transaction through a system of returns in accordance with orders or rebate, there should not be any conflict of interest. If there is profit when the accounts are closed at the end of the year, the rebate from the school procurement can be given to the school or spent on matters determined by the principal.

And if the procurement is undertaken through the lowest tender or quotation, then the school can buy from anyone who offers the lowest price, regardless of whether it is the co-operative or not.

If the membership of the school co-operative is confined to students, I do not see how a conflict of interest can arise. The Parent-Teacher Association and the Internal Audit Department of the Ministry of Education can monitor such a transaction. The involvement of the principal and teachers is for the sake or providing guidance and advice.

If the school co-operative is exempted from the restriction, it can augment the types of goods traded and the students can gain experience in managing a wider range of goods. Secondly, it will be for the better if the Treasury can determine the policy and conditions governing the management of canteens in schools. In view of the fact that there are more than 1,200 secondary schools with co-operatives, I believe a burden of work can be eased if Paragraph (iii) of the Circular is replaced with a system of quotation or tender.

Paragraph (iii) states :

(iii) Special permission must be sought from the Treasury before the school can surrender management of the canteen to the co-operative if it is found that there was no participation or response to the tender/quotation from external suppliers.

This is an example of what we are facing now though the Co-operative Movement in Malaysia is assumed to be very successful by the world at large.

What was discussed above was the general background to the matter. Let us now look at the School Co-operative Movement in greater detail. I will discuss three things :

1. The co-operative principles and their implementation by school co-operatives.

2. The wise approach to management by school co-operatives.

3. The practice of democracy in school co-operatives.

At its general meeting held in Manchester, UK, on September 23, 1995, the International Co-operative Alliance (ICA) adopted seven co-operative principles. In an effort to make the principles easily understood by members of school co-operatives, I will put the seven principles into three approaches :

i. The co-operative practice by all.

ii. The involvement of members in the management of co-operatives.

iii. Co-operative education and social awareness.

a) The basic differences between a co-operative and a corporate organisation, even if it is a commercial government agency, are clear if we study the governance in the three types of institution. In a co-operative, those implementing policy must always bear in mind the policy approved by the members at the board meeting or general meeting. A dictator is anathema to a co-operative. Therefore, the teacher leading the co-operative, and also the head of the school, must take the call of the membership into account. The most difficult matter is striking a balance between the teacher who guides and the students who should consider and think of alternatives, and if they agree then following the teacher's advice.

I compare the duty of a teacher leader to that of a teacher who educates students. Although they hold the compass, they should always instill in the minds of students those things that they must consider and the requirements for arriving at a wise decision. This also requires the teacher to change his or her attitude of 'Let me do it' to 'What's the students' suggestion to undertake this job?' The teacher should also instill in the students ethical values such as trust, transparency, social responsibility and caring attitude.

The co-operative must give rise to situations that can increase the opportunities for self-reliance. A school co-operative should not depend on grants or gifts from others. A co-operative should be wary of business links with non-co-operative organisations owing to the possible danger of the co-operative being exploited by the private organisation. Seek ways to work together with other school co-operatives and with ANGKASA.

b) There are at least two important objectives in management, they being :

i. Participation of members in co-operative activities by way of adopting major and minor policy decisions.

ii. Manage wisely so that the co-operative does not suffer losses and the members and school get as many services as possible.

Participation of members includes opportunities to take part in several services such as restaurants, laundry service, barbershop, hairdressing salon, school tourism and so on. Members are encouraged not only to attend general meetings and all courses, etc., but are also encouraged to think of topics for discussion.

For example, one aspect of participation by members, that is students, in co-operative business is the opportunity to serve as internal auditors. As an encouragement, ANGKASA has prepared internal auditors' courses especially for school co-operatives so that the students and the teacher leader can receive adequate training to undertake the task efficiently.

Members must be responsible and as far as possible should purchase from the school co-operative. If it is felt that the goods sold are expensive or of poor quality, the matter should be conveyed to the students who make up the board of directors for appropriate action.

iii. Among other things, wise management should be practised at least in two fields :

a. Keeping the accounting records and all documents neatly and systematically. This is a field for students and teachers who are able to use computers.

b. Always keeping watch over cash. Money in the bank that can be withdrawn with the use of cheques should also be kept watch over. Stocks must be neatly arranged, and stocks for display should be arranged such that they are able to draw customers.

Staff of co-operatives should be paid appropriate salaries and they should be attended to sincerely.

Generally, it is not necessary for a co-operative to seek huge profits. Returns in accordance with orders or rebate are more important than payments of dividends on capital. This is the basic principle of co-operatives.

A matter that large co-operatives sometimes forget is that in a co-operative it is not essential to increase the share value. In my opinion, a co-operative should also not borrow for the sake of liquidity. Recently, one or two events took place in a large co-operative that proved the influence of ready cash and its ill effects.

For example, if a school co-operative wants to buy a bus, it must organise a fund-raiser for the purpose. Members can increase their share capital. When the capital is sufficient, only then can the co-operative buy the bus. A projection of income and expenditure for three or four years should be drawn up so that members can understand that the project is viable or capable of progress in the medium term.

In conclusion, the teacher leader should train students to differentiate between policy drawn up by the board or general meeting and the authority of implementation by staff or the teacher leader. Here, we should also be aware of the principle of accountability. If there is any wrongdoing or mistake, the matter should be investigated thoroughly and not swept under the carpet. As the co-operative is different from private sector business, co-operative members should be given much education and training. In the history of co-operatives, the education and training system has become one of the important elements to determine the success of a co-operative. Therefore, education is one of the seven principles of a co-operative.

The ICA had also stressed the importance of distribution of information by co-operatives. We have to differentiate between information and knowledge. Although with IT, we can harness information in an almost frontier-less world, the information can be useless unless we process it or understand it so that it becomes knowledge.

A recent example can be from the World Cup soccer competition. Watching Iran beat the USA 2-1 on television is only an information.

We can turn the information into knowledge if we link the game with Iran's position in Group F where the two teams were grouped. We can perhaps link the information with the international political situation.

The last point, for this working paper, is how school co-operatives can strengthen social awareness in members. One good way is through welfare programmes. Members can clean old folks' homes or their compounds. Members can hold campaigns to collect old newspapers, discarded bottles and cans for recycling. Members can help the nation with fund-raising campaigns and so on.

The School Co-operative Movement can play an important role in national development. Apart from preparing a young echelon to take over the duties of co-operative members and leaders in the country, students can contribute their brain and brawn directly to national development efforts while being members of school co-operatives.