Red and White Village Co-ops: Navigating Risks and Rewards
Jakarta, indonesianpost.com – The Indonesian government’s plan to establish 80,000 Red and White Village Cooperatives has sparked a heated debate across the nation.
The initiative, aimed at boosting economic growth and empowering rural communities, has raised concerns about its potential risks. Critics warn that, if poorly managed, the program could pose a threat to the local economy.
President Prabowo Subianto has highlighted the importance of food independence, village economic sovereignty, and mutual cooperation. However, questions remain: Can the cooperative plan truly achieve these goals?
Under Prabowo’s leadership, the government aims to launch the cooperatives on July 12, 2025, with operations beginning by October 28. The project, estimated to cost around Rp400 trillion (US$24.5 billion), will offer loans of up to Rp3 billion (US$184,116) per cooperative, which must be repaid over six years.
Challenges and Opportunities
The Ministry of Cooperatives identifies eight key challenges in establishing the cooperatives, including low public participation, a negative perception of cooperatives, lack of technological adoption, and disparities in village economies and human resources.
A major concern is the financing scheme, which could expose villages to long-term debt and affect their ability to fund critical infrastructure projects like roads and schools. Some also worry that the loans, backed by village funds, could increase non-performing loans for banks.
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Moreover, the role of cooperatives in selling essential goods like LPG and fertilizers has raised alarms about the impact on small village businesses. Critics fear that cooperatives with greater capital could threaten small shops that are the backbone of village economies.
In response, the Ministry of Cooperatives has assured that the cooperatives will support, not harm, small businesses. It has also pledged to improve human resources, management systems, and institutional oversight to prevent abuse of power and corruption.
Despite these challenges, the cooperatives have the potential to generate significant profits, with estimates suggesting each could earn up to Rp1 billion (US$61,372) per year. By cutting out middlemen and improving efficiency in distributing subsidies, the government hopes to save up to Rp90 trillion, which could be reinvested in villages.
However, past failures of village cooperatives and village-owned enterprises cast doubt on the program’s success. The government must ensure strict oversight, transparency, and sufficient preparation to avoid repeating history.
Ultimately, the success of the Red and White Village Cooperatives depends on proper management and the readiness of villages to embrace the initiative. If done right, it could foster real economic independence for rural communities. If not, it risks becoming just another failed program. (BL)