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Red-White cooperatives neither essential, nor strategic for now
Is this program essential and strategic now for rural development? The simple answer is no.
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Making his way: A farmer harvests salt on March 17, 2024, in the Talise area of Palu, Central Sulawesi.
(Antara/Basri Marzuki)
T
he government will embark on the establishment of 80,000 village cooperatives on National Cooperative Day on July 12 on the basis of Presidential Instruction No. 9/2025. This quite ambitious plan leaves massive question marks for the people, especially regarding the necessary resources and establishment mechanisms.
Is this program essential and strategic now for rural development? The simple answer is no.
The Red-White Cooperatives (KMP) program, according to the presidential instruction, aim to promote the welfare of village communities, overcome economic problems in rural areas and accelerate national economic growth within the regions. This program could absorb labor forces and mobilize the economy in both rural and urban villages. The KMPs, which include a savings and loan unit, are also expected to make people avoid online loan schemes, said the President.
The KMP establishment plan seems to be rushed. The KMP program is not directly stated in the Asta Cita, President Prabowo Subianto’s economic vision, nor was it mentioned during the presidential campaign. This seems like another overnight project which is not yet proven effective. There are several reasons for our doubts about this program.
First, in common practice, the establishment of a cooperative unit must be based on voluntary, independent family principles according to Law No. 25/1992 on Cooperatives. The top-down forces from the central government to establish the KMPs will make the cooperatives become dependent on government funding and prone to fraud.
Unlike business enterprises, cooperative units hold a one-man-one-vote system in their operations. The capital injection from the government will distort and shift the KMPs away from the common cooperative systems.
Second, this plan is calculated to need a whopping capital of around Rp 400 trillion (US$24 billion). Such an amount needed for the initial capital is much too large, especially among other current priority programs such as the free nutritious meal program, Sekola Rakyat (People’s School) and free health screenings.
