The Inauguration of the Merah Putih Village Cooperative Drives Village Economic Transformation
By: Raka Pradipta)*
The inauguration of 80,081 Red and White Village Cooperatives by President Prabowo Subianto marked a significant milestone, reflecting a new direction for Indonesia’s economic development. This step not only expanded rural communities’ access to modern economic institutions but also revitalized the spirit of mutual cooperation within a formal and productive institutional format. Cooperatives are positioned as a key instrument for achieving true independence: freedom from dependency, economic exploitation, and structural inequality between villages and cities.
President Prabowo Subianto emphasized that cooperatives are not merely economic entities, but rather a manifestation of social solidarity built on trust and shared goals. The idea that cooperatives are like a bundle of sticks, fragile on their own but strong when joined together, underscores the importance of collectivity in facing global challenges. Amid global economic uncertainty, cooperatives serve as a resilient instrument that strengthens the foundations of village economies.
The concrete steps taken to establish tens of thousands of cooperatives are inseparable from the synergy between ministries and institutions. One of the main foundations of establishing a cooperative is legality, which underpins sustainability and public trust. Minister of Law and Human Rights, Supratman Andi Agtas, expressed his appreciation to the Indonesian Notaries Association (INI) for ensuring the comprehensive legality of cooperatives. Without a strong legal foundation, cooperatives will struggle to develop due to limited access to financing and other formal institutions.
This legality is strengthened through the role of thousands of notaries across Indonesia, reaching even remote areas. The Chairman of the Indonesian Cooperatives Association (PP INI), Irfan Ardiansyah, explained that the role of notaries extends beyond recording cooperative deed of establishment but also strengthens the cooperative’s credibility in the eyes of the public and financial institutions. Even in geographically challenging regions like Papua and Kalimantan, the presence of notaries ensures that no village is left behind in this institutional transformation process. This demonstrates that village reform begins with legal certainty.
On the financing side, support for cooperatives also comes from the banking sector. BRI President Director Hery Gunardi stated that the state-owned bank has designed an inclusive, turnover-based financing scheme, enabling cooperatives of all sizes to access appropriate working capital. He also emphasized the importance of financial literacy and managerial capacity among cooperative administrators for effective and transparent fund management. To support this, BRI relies on Rumah BUMN (State-Owned Enterprises House) and BRILiaN Villages as training and business incubation facilities for village cooperatives.
Furthermore, BRI also sees the potential of cooperatives as a link between local markets and national and export markets. Various superior village products, such as agricultural products, crafts, and processed foods, can be facilitated through business matching programs. In this regard, the presence of AgenBRILink strengthens access to financial transactions at the village level. These agents, spread across more than 1.2 million locations, play a crucial role in providing affordable and accessible basic financial services to cooperative members.
The issue of protecting rural communities from the clutches of the informal economy is also a serious concern. Coordinating Minister for Food Affairs Zulkifli Hasan emphasized the importance of cooperatives as a shield against illegal loans and loan sharking practices. By acting as an extension of official financial institutions, cooperatives can distribute People’s Business Credit (KUR) in a structured and targeted manner. He encouraged banking institutions to expand education through cooperative networks to prevent economic exploitation in rural areas.
From an institutional perspective, the Merah Putih cooperative creates space for greater economic aggregation. Through networking, cooperatives can consolidate raw material purchases, collectively market products, and reduce production and distribution costs. This provides competitive economies of scale for micro and small businesses in villages. This collective mechanism creates efficiency while strengthening their bargaining position in regional and national markets.
This model also reflects the principles of institutional economics and community-based governance. Through a common pool resource approach, cooperatives enable village communities to manage local resources collectively, fairly, and sustainably. Good governance, strict internal oversight, and active member participation are the pillars of cooperative success. With established legal standing and professional support, cooperatives become more than just business entities—they become social and economic drivers.
The integration of cooperatives into the formal financial system also demonstrates the state’s presence through regulations that encourage public participation. From an institutional economic perspective, this policy creates “rules of the game” that minimize transaction costs and economic risks at the micro level. Cooperatives integrated into the formal system have greater opportunities for growth, expansion, and innovation at the village level.
The inauguration of the Merah Putih Village Cooperative is a monumental step, marking a new era in village-based national development. It is not merely a legal or economic infrastructure, but a symbol of people’s sovereignty in managing their own resources. With full support from the legal, financial, and public policy sectors, village cooperatives have a significant opportunity to become the backbone of a resilient and independent national economy.
This strategic step deserves appreciation as the government’s effort to strengthen the people’s economy from the bottom up. When cooperatives grow healthily and productively, villages will prosper, and when villages are strong, the nation will stand strong amidst the onslaught of global challenges.
)* Observer of People’s Economy and Village Financial Inclusion Activist
