By: Lestari Wulandari
The government is actively promoting the strengthening of the people’s economy through the Merah Putih Village/Urban Cooperatives program. This initiative has become one of the national priority agendas aimed at expanding public access to the economy, particularly at the village and urban ward levels. In a virtual limited cabinet meeting led by President Prabowo Subianto, acceleration measures for the implementation of cooperatives were discussed as part of a strategy for equitable and sustainable economic development.
This initiative is not merely a technocratic policy response, but reflects the state’s alignment with the interests of the grassroots. President Prabowo views cooperatives as a strategic instrument to broaden economic access among communities, especially in villages and urban wards, which have long been marginalized in the mainstream of national economic development. With a grassroots approach, these cooperatives are intended to strengthen citizens’ competitiveness in entrepreneurship, expand job opportunities, and reduce economic disparities between regions.
Accelerating the establishment of legally registered cooperatives is now a cross-sectoral priority. The Ministry of Law and Human Rights, through the Directorate General of General Legal Administration (AHU), has even set a target of legalizing 80,000 cooperatives before the end of July 2025. As of mid-July, 78,000 cooperatives had already obtained legal status, with the remainder in the process of completion. Director General Widodo emphasized that legal certainty is the fundamental basis for building professional and sustainable cooperative governance.
The Merah Putih Cooperative Movement is not designed to be merely symbolic. Central Java has been selected as the pilot province, having successfully established the highest number of legally registered cooperatives—8,523 units employing over 68,000 workers. The national launch of this cooperative initiative is scheduled for July 21, 2025, in Klaten, Central Java, which will be attended directly by the President. In this location, cooperatives are expected not only to exist administratively but also to operate functionally with direct services such as basic food stalls, LPG distribution, pharmacies, financial services, and postal services.
The Coordinating Minister for Food Affairs, who also serves as Chair of the Merah Putih Cooperative Formation Task Force, Zulkifli Hasan, has firmly directed that cooperatives being launched should not be mere formalities. He stressed the importance of active and responsive cooperatives that address community needs, ensuring that economic transformation is genuinely felt at the grassroots level.
President Prabowo’s approach continues Indonesia’s long-standing cooperative tradition. The ideas of Mohammad Hatta, known as the Father of Indonesian Cooperatives, serve as the ideological foundation of this program. Cooperatives are seen not only as economic entities but also as tools for educating the populace, strengthening social solidarity, and embodying the practical application of Pancasila economics. In cooperatives, all members have equal rights regardless of capital contribution. This spirit aligns with the Trisakti principles of achieving economic self-sufficiency within the framework of national sovereignty.
However, significant challenges remain on the ground. Data from Statistics Indonesia (BPS) show that the contribution of cooperatives to national GDP in 2024 was only 0.97%, equivalent to around IDR 214 trillion. This is in stark contrast to MSMEs, which contribute over 60% to GDP, and to cooperatives in capitalist countries such as New Zealand and France, where contributions can reach 20% or more. This indicates that Indonesia’s cooperative movement still lags behind and requires both structural and cultural strengthening.
Said Abdullah, Chairman of the Supervisory Board of the Indonesian Cooperative Council (Dekopin), has repeatedly pointed out that the dominance of savings and loan cooperatives presents its own challenges. While not incorrect, cooperatives should ideally diversify. In other countries, large cooperatives successfully manage manufacturing, trade, and public services sectors. In Indonesia, steps toward business diversification must be supported by the government through training, access to financing, and legal protection.
To improve cooperative governance, President Prabowo emphasized the importance of transparency, accountability, and professionalism to rebuild public trust. The government not only facilitates but also actively supervises. The National Task Force for the Formation of Merah Putih Cooperatives has been mandated to oversee the program for the first two years, focusing on fostering and strengthening business systems.
This effort has also received full support from regional governments. During the 78th National Cooperative Day celebration in Central Java, Sujarwanto Dwiatmoko, Assistant for Economic and Development Affairs at the Central Java Regional Secretariat, asserted that Merah Putih Cooperatives are a strategic instrument for economic equity. Cooperatives are considered a means for citizens to break free from predatory lending practices while building resilient and competitive economic communities.
Community participation is also encouraging. Data show that around 30 million Indonesians are currently registered as cooperative members. This constitutes a significant social capital that, if mobilized systematically and sustainably, can drive change. With a solid legal foundation, cross-ministerial support, and active involvement of village communities, Merah Putih Cooperatives are positioned to become a new epicenter of Indonesia’s bottom-up economic development.
President Prabowo’s initiatives underscore a new direction in national economic development. No longer an economy driven by a handful of elites or conglomerates, but one rooted in villages, touching ordinary citizens, and upholding the principle of social justice. Through the Merah Putih Cooperatives, the government is building a long-term foundation for a more just, prosperous, and economically sovereign Indonesia. If implemented consistently, cooperatives will not only serve as instruments for wealth distribution but also as key pillars in realizing the true structure of Pancasila economics.
Public Policy and People’s Economy Researcher
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