Between identity, regulation and governance: modernizing Indonesia’s outdated cooperative framework

Purpose This study aims to analyze the legal framework of Indonesian cooperatives, focusing on the misalignment between the outdated Cooperatives Act (1992) and international standards, which has led to a loss of cooperative identity despite Indonesia having the world’s largest cooperative network. Design/methodology/approach Using normative legal research, the study uses four approaches: statutory analysis of current laws, conceptual examination of cooperative principles, analytical assessment with ICA standards and comparative assessment against global best practices. Findings This research reveals that while Indonesian cooperatives maintain unique member-focused characteristics, the current legal framework fails to support their modern development. Three critical gaps were identified: definitional inconsistencies with ICA standards, lack of modern governance principles and insufficient oversight mechanisms. Originality/value This study offers novel proposals for legal reform through an integrated framework of Good Cooperative Governance, risk compliance and cooperative audits. These recommendations provide a practical roadmap for aligning Indonesia’s cooperative legislation with global standards while preserving local cooperative values.