Butterworth: The Ministry of Entrepreneur and Cooperatives Development (KUSKOP) is drafting a new Cooperatives Act to replace the Cooperatives Act 1993 as part of efforts to modernise and reform the governance of Malaysia's cooperative movement. Its minister, Steven Sim Chee Keong, said the proposed legislation would provide greater flexibility for eligible cooperatives to undertake investments without requiring prior approval from the Malaysia Cooperative Societies Commission (SKM), while retaining appropriate regulatory safeguards to protect members' interests.
According to BERNAMA News Agency, the new Act aims to facilitate cooperative business operations and streamline investment criteria, conditions, and approval processes. Sim shared these insights with reporters after officiating the national-level National Cooperative Day 2026 celebration at PICCA @ Butterworth Arena. Also present was SKM chairman Lieutenant-General (Rtd) Datuk Ahmad Norihan Jalal.
Sim announced two major reforms to the cooperative Ar-Rahnu sector, which will take effect this September, aimed at making Islamic pawn-broking services more transparent, competitive, and customer-friendly. The first reform abolishes the existing 2.5 per cent fee imposed on the pledged asset value, while profit rates for Ar-Rahnu services will be capped at one per cent per month for cooperative members and two per cent per month for non-members.
The second reform will allow cooperatives offering Ar-Rahnu services to dispose of unredeemed pledged items through a tender process, in addition to the existing public and electronic auction methods. This move is expected to enhance transparency, lower implementation costs, and provide greater operational flexibility.
Sim emphasized that these initiatives reflect KUSKOP's commitment to reducing bureaucracy and creating a more business-friendly environment for cooperatives. Sim also highlighted the strong growth of the national cooperative sector, with business revenue rising by almost 20 per cent to RM82 billion in 2025, compared with RM68 billion the previous year.
The cooperative Ar-Rahnu sector recorded a turnover of RM17 billion in 2025, accounting for 21 per cent of the cooperative sector's total revenue. As of December 31, 2025, Malaysia had 16,468 registered cooperatives with nearly 7.3 million members, indicating that one in every four Malaysians is a cooperative member.
To further strengthen the sector, the government has allocated RM254 million through SKM this year, the largest allocation since the cooperative movement was established in 1922. Of the total, RM226 million has been channelled through the SKM Revolving Capital Fund (TMP-SKM), with 18 cooperatives receiving financing totalling nearly RM53 million to expand their business operations and strengthen their capabilities.
Sim stated that the allocation would support 28 programmes, including seven new initiatives focusing on digitalisation, technology adoption, sustainability compliance, and green technology to enhance the competitiveness of Malaysian cooperatives. He added that KUSKOP remains committed to strengthening the cooperative movement as a key driver of people's economic development, aiming to increase the sector's annual revenue to more than RM100 billion by 2030 under the "Hebatkan Perniagaan Malaysia" (Elevate Malaysian Business) aspiration.