As we celebrate Cooperative Month in October, it’s worth discussing reforms about Cooperative Development Authority’s (CDA’s) governance and increases in its meager budget, which is slightly bigger than a senator’s countrywide development fund (CDF), later called Priority Development Assistance Fund (PDAF).
Too little for so big. It is lamentable that while 24,552 cooperatives as of 2015 benefited 10.7 million members and employed directly 290,662 people and 1.5 million in indirect jobs, CDA’s budget was only about P350 million a year the past years, which is small compared to its big responsibility.
Cooperatives must, in fact, be strengthened and encouraged as they address the prevailing lack of inclusive growth. An Asian Development Bank (ADB) study on 51 developing countries noted that for every 1% increase in Gross National Product (GDP), poverty is reduced by 1.5% or even by 2% in many Asian countries, except the Philippines, which ironically experienced stagnation or even increases in poverty rates, despite high growths, indicating an “elite capture” or lack of inclusiveness.
Cooperatives help correct this problem as incomes are fairly distributed with massive participation of members with individual ownership limits. Despite the sector’s huge contributions to GDP and in jobs and investment generation, CDA’s budget is only 59 percent bigger than a senator’s PDAF of P220 million.
Foreigners favored more? CDA’s meager budget is negligible compared to the P7.96 billion in power subsidies reportedly granted from 2014 to mid-2015 to a handful of foreign companies as provided under the Sept. 2007 Executive No. 666, which sounds like and unholy number to some Christians.
For the 2016 budget, subsidy allocation for Texas Instruments alone was P2.1 billion. Power subsidies for Texas Instruments were an exchange deal for Texas to invest $1 billion. Others benefitting similarly are Hanjin Heavy Industries, Samsung and Phoenix Semiconductor Philippines.
CDA’s budget is even smaller, at one time, than Philippine Carabao Center’s budget of P621.97 million plus supplements, all totaling P908 million as of Dec. 2013. (Check Page 24 of the Carabao Center’s annual report). It’s good CDA’s budget increased from P350 million the past years to P404.75 million for 2017.
Laxer regulations needed? Bigger budgets for CDA are great, but perhaps it needs to relax more its stringent regulations, which are blamed as barriers to entry for new koops and causing the slow death of thousands of small koops. Years back, scores of regulations were issued in about two years time, including ridiculous rules like dictating dimensions of signages, which were untenable and therefore not followed.
Koops are also required to submit yearly five tedious documents: Compliance Annual Performance Report (CAPR), Audited Financial Statements, Social Audit Report, Listing of Officers; and List of trainings attended. A penalty of P100 a day of delay is slapped per document, thus some incur hundreds of thousands in backlog penalties. In contrast, Securities and Exchange Commission (SEC) slaps a maximum penalty of P10,000 a year to even the biggest corporations. CDA relaxed this on small koops.
Early this February, CDA Chairman Orlando Ravanera issued Memorandum Circular 2017-02, centralizing all Pre-Membership Educational Seminars (PMES) as requirement for registration, an activity done by accredited koops, local government units (LGUs) and the academe. Worse, it has specified frequency of seminars at “once a month at Extension Office and once per quarter at CDA Field Offices.”
Thus, it takes 2-3 months to get a schedule as CDA could not accommodate rising demand being constrained by its regulations. CDA may be violating Executive Order 95 and 96, mandating all LGUs and government offices to promote and assist koops.
Worst, even after the seminars, and for transport koops, another similar seminar with the Office of Transport Cooperatives (OTC), actual releases of registration take three more months, and for some even as long as 10 months owing to delays in signature releases or recurring reviews of pro-forma registration papers, requiring tedious unnecessary signatures on every page.
Go developmental, not regulatory. SEC approves registration in 2-3 days, and if there are minor corrections still needed, require applicants to issue pledges of undertaking to complete corrections and pending requirements, say, in one year. In short, CDA must not limit itself to regulatory work, but spend more on developmental work, otherwise, it gets the moniker Cooperative Regulatory Authority (CRA), an acronym now mocked by some circles for sounding like “sira” or defective.
I hope CDA officials don’t take criticisms personally, and must understand media just articulates the complaints from the ground and that public service is fair game to critiques, which are what actually trigger reforms.
Perhaps, CDA must focus on the big void, but huge potentials, in organizing more koop intra-trade, koop intra-investment forums, and koop joint investments, focusing this time on increasing the pie or more productive physical wealth-creating ventures and common koop service facilities. Concretely, this complies with the barely unimplemented cooperative principle, which is cooperation among cooperatives.
Leverage potentials. As koops are required to allocate 3% of their surplus on community projects or cooperative social responsibility (CSR), CDA can organize Big Brother-Small Brother Koop partnerships to help upstart small koops in PMES, registration, or in building common koop service facilities.
CDA must focus, this time, on development than on regulatory work, by facilitating project math-making and organizing koop joint ventures, in which the combined equities can be leveraged by Bangko Sentral ng Pilipinas’ (BSP) Credit Surety Fund (CSF), which has a facility whereby every P1 in koop equity is matched 10 times in CSF financing at concessional rates, no collaterals, and 10 years of amortization. This way the organized poor thru koops can own bigger and more sustainable livelihood projects.
(E-mail: mikealunan@yahoo.com).