New Act will empower local cooperatives in Malaysia, minister says

New legislation to empower local cooperatives is currently being drafted by Malaysia’s Entrepreneur Development and Cooperatives Ministry, the government has confirmed. The new Act will replace the Cooperative Societies Act 1993.

Minister Ewon Benedick said the Cabinet paper on the matter was presented to the Cabinet and it was agreed in principle earlier this year. He said: “The main objective of drafting the new cooperative act is to strengthen the cooperative movement by liberalising regulations and empowering the Malaysia Cooperative Societies Commission as the regulatory body for cooperatives.

“With this new act, the ministry is optimistic it will create responsive and dynamic cooperatives, facilitate business activities of cooperatives and improve governance,” he said.

Ewon highlighted that the decision to draft the act was based on the findings of the ministry’s 2023 study entitled ‘Study on Related Laws and Constraints on Cooperatives as Business Entities within the Legal Context’.

He said the study revealed that existing laws restricted cooperatives from venturing into certain business areas, including regulations requiring cooperatives to establish subsidiaries under the Companies Commission of Malaysia.

Malaysia’s National Entrepreneurship Policy 2030 (DKN2030) recently set a target for cooperative revenue generated by 2025 to reach RM60 billion (£10.3 billion), said Benedick.

The minister expects the revenue to increase to RM100 billion by 2030 through efforts and initiatives that will be implemented under the policy.

“To strengthen the cooperative movement, DKN2030 has outlined the role of cooperatives through a strategic core, such as stimulating the development of integrated and holistic entrepreneurship that focuses on cooperatives as a driver for inclusive socioeconomic development,” he said.

He said there are 15,315 cooperatives in Malaysia with a total income of RM38.5 billion, and a total of RM16.99 billion in share capital and cooperative membership fees have been recorded with total assets of RM159.9 billion.

South-east Asia growth set to slow

ASEAN’s economic growth outlook looks uncertain, due to the impact of reciprocal tariffs, leading to downward revisions in growth forecasts for several member states.

CGS International’s latest report notes that Malaysia, Singapore and Thailand have all experienced a slight decrease in their projected growth rates. However, it also points out that some ASEAN countries might benefit from product substitution as a result of the high tariffs imposed on China.

The report anticipates that the 10% minimum tariff will remain in effect, and ASEAN will seek concessions to prevent further increases. Nevertheless, the report suggests that securing a deal favourable to the bloc is unlikely.

The impact of the 10% reciprocal tariff varies across ASEAN economies, according to CGS International. Vietnam is considered particularly vulnerable due to its high reciprocal tariff and strong reliance on the US market. Malaysia and Thailand are assessed to have a medium level of exposure, followed by Singapore. Indonesia is seen as the most insulated, attributed to its low dependence on exports and reduced exposure to the US.

The exemption list, which includes semiconductors, provides some relief, as over 60% of Malaysia and Singapore’s exports to the US are exempted. However, CGS International cautions that this relief might be temporary, given reports that the US administration is considering separate tariffs on the semiconductor and pharmaceutical industries.

The analysis suggests a shift in the dynamics of international trade, with the potential for a permanent minimum tariff and efforts to weaken the US dollar. This shift could pose challenges to ASEAN’s export-oriented growth model, necessitating a transition towards greater reliance on consumption-driven growth.

The report said that:

• Malaysia’s 2025F GDP growth forecast revised to 4.2% from 4.6%.

• Singapore’s 2025F GDP growth forecast lowered to 1.6% from 2.5%.
• Thailand’s 2025F GDP growth forecast revised to 1.8%, compared with the April 2 assessment of 1.5%, but still lower than the pre-April forecast of 2.3%.
• Indonesia’s 2025F GDP growth forecast maintained at 5.0%, acknowledging the fluid situation and potential for future downgrades.