By: Rahman Prawira)*
National economic development ultimately stems from strengthening villages as the foundation for equality and independence. The Ministry of Finance, through strategic policy support and synergistic collaboration between agencies, has launched the Red and White Village/Sub-District Cooperatives (KDMP/KKMP) as a tool to accelerate village economic growth. Based on the philosophy of mutual cooperation, these cooperatives not only open up space for village community participation but also serve as drivers of economic inclusivity from upstream to downstream.
President Prabowo Subianto’s launch of more than 80,000 Red and White cooperatives on July 21, 2025, marked a historic milestone in building a comprehensive village economic ecosystem. The cooperatives’ business structure includes grocery stores, savings and loans, logistics, cold storage, and village clinics, providing direct access for villagers to essential services and new economic opportunities.
In an effort to strengthen fiscal synergy, Deputy Minister of Finance, Suahasil Nazara, emphasized that KDMP is a movement to empower the village economy as a center for an independent and sustainable economy towards Golden Indonesia 2045. He also added that this cooperative has been carefully planned so that it can utilize financing from the Association of State-Owned Banks (Himbara), as long as it meets clear planning criteria and village support.
In terms of regulation and funding, Minister of Finance Sri Mulyani Indrawati stated that cooperative financing is prepared through the Surplus Budget Balance (SAL) in the State Budget (APBN). This financing is carried out not through regular bank liquidity, namely with a low interest rate of 6%, a maximum tenor of six years, and a grace period of 6 to 8 months. This scheme is protected by due diligence and government guarantees.
In addition, Sri Mulyani emphasized the importance of monitoring good cooperative governance through the active role of village/sub-district heads. Equally important, Coordinating Minister for Food Affairs Zulkifli Hasan stated that the Merah Putih cooperative is a catalyst for the village economy with the potential to empower food products and partnerships with state-owned enterprises such as Bulog, Pupuk Indonesia, and PT Pos. This cooperative is equipped as an official agent for the distribution of basic necessities, fertilizers, and even village logistics and financial services. Zulkifli Hasan called this concept “a thriving economic ecosystem in villages with a bustling economy.”
Overall, synergy between institutions, starting with the Ministry of Finance in financing, the central government through state budget policies, and the Coordinating Ministry for Food Affairs in the food ecosystem, can create a new paradigm for village empowerment. This will not only create new business opportunities but also improve community welfare, shorten supply chains, and encourage financial inclusion.
Febrian Alphyanto Ruddyard, Deputy Minister of National Development Planning/National Development Planning Agency (PPN/Bappenas), stated that the Merah Putih Village Cooperative plays a strategic role in the development of the agro-maritime sector and food self-sufficiency. He also emphasized the importance of cooperatives as drivers of village production, as well as reducing inflationary pressures, boosting agricultural product prices, and suppressing unfair supply chain dominance. This cooperative is expected to be able to leverage diverse local potential, from procurement to distribution, and create new jobs in rural areas.
Coordinating Minister for Food Affairs Zulkifli Hasan also emphasized that the establishment of this cooperative is an effort to build a healthier and more productive rural economic ecosystem. Zulkifli stated that this ecosystem urgently needs to provide space for local creativity and open up job opportunities for village youth. This represents the hope that multi-sector synergy will not only create cooperatives as village economic entities but also as resilient economic networks oriented towards national development. With continued, serious support, it is possible that productive villages will become driving forces for comprehensive and equitable economic growth.
The Merah Putih Cooperative, as an inclusive village economy, is further strengthened by implementation initiatives that involve local communities in a participatory manner. Local governments are facilitated to incorporate cooperatives into development planning and budget documents. Furthermore, this demonstrates policy integration down to the grassroots level.
With the establishment of the Merah Putih Village Cooperative as the backbone of the village economy, the government has established a clear and strategic direction: building from the village, strengthening the people’s economy, and ensuring equitable distribution of development benefits. Local stakeholders are invited to actively participate in management, governance, and implementation synergies. This similar collaboration, integrated across fiscal, policy, and programmatic aspects, is expected to continue, supported by the commitment of village officials, regional heads, and financial institutions. The hope is that the village economy will not only grow independently but also become a pillar of progress for the national economy as a whole.
Furthermore, the establishment of the Merah Putih Village Cooperative is now a prerequisite for the disbursement of Phase II Village Funds for the 2025 Fiscal Year, in accordance with Presidential Instruction No. 9 of 2025 and the Circular Letter of the Minister of Finance. This confirms that village economic development is inseparable from the integration of fiscal and administrative policies, which further strengthens the synergy between the local and central levels in ensuring the success of the people’s economic program.
*)The author is a government policy observer
