Wedding catering, school uniform tailoring, expedited freight: just some of the diverse services offered by Koperasi Warga Semen Gresik (KWSG), one of Indonesia’s largest cooperatives. The cooperative’s unique history is closely intertwined with that of the country’s biggest cement producer, PT Semen Gresik (Persero) Tbk, recently renamed as Semen Indonesia, the first state-owned enterprise to go public on the Indonesia Stock Exchange.

PT Semen Gresik was founded in 1957 in Gresik, just outside Indonesia’s second-largest city, Surabaya, in East Java. In 1963, the company’s employees founded the “Multi-Business Cooperative of the Employees of State-Owned Enterprise Semen Gresik” to supply them with basic consumer goods, and later employee uniforms. Then in the early 1990s, the cooperative renamed itself “Cooperative of Semen Gresik People” (Koperasi Warga Semen Gresik) and made a big leap in its business activities when it began distributing PT Semen Gresik’s cement products. It went on to sell building materials, and now has 52 sales units around Java, Bali, Lombok and Sumatra.

Over the decades, KWSG has developed into a multipurpose company with a wide-reaching structure, and is involved in activities as varied as supermarkets, savings and loans, catering, trading of building and mining materials and event organization. KWSG supplies Semen Indonesia with mining products like coal and gypsum, industrial spare parts, mechanical equipment and office supplies, as well as transporting its cement products. This highly diversified business has been going from strength to strength, with KWSG revenue in 2011 up 26% from the previous year.

KWSG has benefited from support from the Indonesia government. Indonesia’s cooperative programme was named one of the world’s most successful during an event at the United Nations in 2012. Indonesian cooperatives even have their own government minister, Syarief Hasan, the Minister of Cooperatives and Small and Medium Enterprises, who has said that the Indonesian government is supporting the growth of cooperatives and SMEs because they help reduce unemployment and poverty rates. The Ministry has helped KWSG rebuild its official website, including translating the contents into English, as well as promoting the cooperative at the Ministry’s annual trade fair and helping it get lower loan rates at Indonesian state banks.

The welfare of its members and employees is at the heart of KWSG’s mission, says Edi Kartika, the chairman of the board of directors. He gives the example of the cooperative’s “patronage refund”, which gives members returns in the form of net income. “The refund is paid six times a year and we plan in the future for it to be paid 12 times a year,” he says. This change will likely come sooner than planned thanks to KWSG’s latest foray, into the manufacturing industry. In early 2013, the cooperative began work on a plant in the Mojokerto district of East Java for the production of fibre cement boards, with an annual production capacity of 81,600 tonnes. The plant is scheduled to start trial production in October 2015. According to Burhan Wahid, one of KWSG’s Management System Development staff, this new line of business as a manufacturer should increase KWSG’s net profit from around 2-2.5% up to 21-25%, which will also increase the amount of profit distributed annually to its members through the refund system.

According to Kartika: “We keep our identity as a cooperative entity by focusing on increasing the prosperity level of our members. Those businesses we run are only the instrument to keep that prosperity.”