Kelantan is a rural state in the northeast of Peninsular Malaysia. Muslims make up the majority community and the GDP per capita is only $3,500, making it the poorest of the 13 states in Malaysia. Over the years, many young people have gone to big cities to find jobs and the local economy of Kelantan has lost its vitality. But quite surprisingly, here lies a successful youth cooperative called KO-UMMAH. Ummah is an Arabic word, meaning the Islamic community. Since its establishment in 2014, the cooperative has emerged as a medium-sized cooperative with 3,262 members, 140 employees and an annual revenue of $688,000. They are focusing on retail business called U-Shop and expanding into such businesses as mineral water, gold shops, advertising and printing, creative studio, car service center, and recently, they opened a hospital.
Chairman Luqman (5th from left) and Board of Directors of KO-UMMAH
The business diversification is usually aimed at activities that meet the needs of members and one that the cooperative can be competitive. Kelantan is famous for its high demand for gold. When Ummah entered the business, it was able to supply gold products at a cheaper price to its members. The same goes for other businesses like the car service center and hospital. In Malaysia, private hospitals have a very wide range of prices; the hospital operated by Ummah provide its members with quality medical services at reasonable prices. Sometimes the co-operative enters new businesses for strategic reasons. For example, when the state government decided to sell its bottled water business, Ummah took it over despite complications. "Now everyone buys mineral water," recalls Mr. Luqman, 31, the Chairman of Ummah. “I thought we needed to make the brand 'Ummah' widely known to the public in order to do business and we have U-shops to sell it. It was an opportunity we couldn’t miss."
Inside one of the ‘U-shops’.
Ummah tries to sell products produced by entrepreneurs in Kelantan through U-Shops and makes great efforts to recruit competitive entrepreneurs as members. This strategy of Ummah has been a major factor contributing to rapid growth in a short period of time and received favourable response from many local entrepreneurs. The value of co-operatives was highlighted by seeing these young people leading the cooperative movement with member welfare as the top priority and looking to establish competitive businesses in their area. One can already anticipate the growth of this co-operative over the next 5-10 years.
