Digital Transformation of Market Cooperatives and Micro-Business Resilience: A Cross-Border Comparative Study between Indonesia and Southern Thailand (Academic research)

Summary

• The study examines how the regulatory environment and the digital capabilities of sharia cooperatives affect the resilience of micro-businesses in Central Java (Indonesia) and Southern Thailand (Yala).p.1
• The informants were 6 managers of Islamic market cooperatives/BMTs and 20 traditional market micro traders in Semarang, plus 4 managers of the Ibnu Affan Berhad Islamic Cooperative and 15 micro traders in Yala.p.5
• Central Java cooperatives follow a top-down pathway built on QRIS payment standardization linked to mobile microbanking.p.6
• Cooperatives in Yala follow a bottom-up pathway based on PromptPay, a national fee-free instant payment system, combined with upstream supply chain management.p.7
• Thailand has promoted an Islamic financial system since 1998, but Islamic savings and loan cooperatives lack specific legislation and operate under the secular Cooperatives Act.p.7
• The study concludes that digital transformation in Islamic cooperatives has no single path and depends on aligning digital instruments with the socio-cultural and legal realities of local traders.p.10

Key insights

1. In Central Java, QRIS standardization lets cooperatives link payments directly to their mobile microbanking application.p.6
2. Yala cooperatives independently used PromptPay, a fee-free instant payment ecosystem based on ID or phone numbers, to work around legal restrictions.p.7
3. In Yala, perceived ease of use is driven by the absence of transaction fees in the PromptPay system.p.8
4. Islamic financial literacy remains a crucial challenge in Southern Thailand, where most Islamic credit users still prefer direct cash transactions.p.8
5. In Central Java, automatically recorded digital transaction data lets cooperatives run credit scoring without burdensome physical collateral, reducing traders' dependence on loan sharks.p.9
6. The study recommends that the Thai government formulate specific regulations accommodating Islamic cooperatives at the national level.p.10