The Merah Putih Village Cooperative Boosts the Village Economy with State Budget Support of IDR 71 Trillion
By: Dina Wulansari)*
The Red and White Village Cooperative Program is a strategic step to strengthen the village economy through cooperative empowerment. Supported by a State Budget (APBN) of Rp 71 trillion, this program aims to create an inclusive and sustainable economic ecosystem at the village level. The Red and White Village Cooperative is designed to improve the welfare of village communities by providing access to affordable and quality economic services.
The Chairman of the Financial Services Authority (OJK), Mahendra Siregar, stated that the OJK fully supports the Red and White Village Cooperative. The OJK hopes this cooperative will improve access to financing for rural MSMEs and ensure proper governance and risk oversight by the distributing banks. The program encompasses six main activities: office management, savings and loan units, daily necessities stores, distribution of fertilizer, seeds, and pesticides, village pharmacies, and village clinics.
Through this activity, Kopdes Merah Putih is seen as being able to reduce the dependence of village communities on loan sharks and online loans that often burden them. Furthermore, cooperatives also play a role in distributing basic necessities at reasonable prices, increasing access to healthcare services, and opening new business opportunities for village communities. Deputy Minister of Cooperatives, Ferry Joko Juliantono, emphasized that the Rp71 trillion allocated for Kopdes Merah Putih is not a direct grant from the state budget, but rather an initial investment of Rp5 billion per cooperative sourced from a combination of the state budget, regional budgets, village funds, and bank financing. This is considered a redistribution of assets and economic equality, not just fiscal assistance. Furthermore, the loan ceiling will be channeled through state-owned banks.
Coordinating Minister for Food Affairs Zulkifli Hasan stated that the initial capital of Rp3 billion per cooperative is not a grant from the state budget, but rather a loan ceiling from state-owned banks. He emphasized that cooperatives must be profit-oriented, avoiding unnecessary debt, and that they will be monitored by various state institutions. This financing scheme utilizes People’s Business Credit (KUR) specifically for village cooperatives, offering low interest rates and long terms, thus avoiding a direct burden on the state budget. For example, the loan ceiling can reach Rp3 billion per cooperative with 6% interest per year and a term of up to 10 years.
Village funds (APBDes) can also be used to support the formation and initial operations of cooperatives, including legal fees and the purchase of supporting equipment. This is also regulated in a circular from the Ministry of Villages regarding the Red and White Kopdes program. However, the use of village funds must be approved through a Village Deliberation (Musdes) and included in the Village Government Work Plan (RKPDes) to ensure transparency and accountability.
The government plays a crucial role in supporting the success of the Red and White Village Cooperatives through supportive policies and adequate facilitation. Through Presidential Instruction (Inpres) No. 9 of 2025, the government targets the establishment of 80,000 village cooperatives by July 2025, with operations commencing in September 2025. Furthermore, the government is partnering with State-Owned Enterprises (BUMN) to provide basic necessities such as 3-kg gas cylinders, fertilizer, and basic necessities through village cooperatives. Thus, village cooperatives function not only as economic institutions but also as strategic partners in the distribution of goods and public services at the village level.
The Ministry of National Development Planning (PPN)/National Development Planning Agency (Bappenas) views Kopdes as part of the 2025–2029 National Medium-Term Development Plan (RPJMN) strategy to achieve economic equality, improve food security, and promote an inclusive economy in villages. Bappenas’ role includes policy design, monitoring and evaluation, and facilitating partnerships between the private sector and international development. Deputy Minister of PPN, Febrian Alphyanto Ruddyard, stated that these cooperatives should be the “drivers of the village economy,” particularly in shortening supply chains, reducing consumer costs, and strengthening the position of farmers.
The Merah Putih Village Cooperative has excellent potential for the village economy. It can increase financial inclusion with access to structured credit through bank ceilings. Village communities, especially Micro, Small, and Medium Enterprises (MSMEs), can obtain business capital without relying on loan sharks or illegal loans. Furthermore, it can shorten the supply chain and collaborative sector, namely by distributing basic necessities directly from village cooperatives, which can lower consumer prices and increase added value for local farmers and producers.
Furthermore, self-reliance and empowerment are achieved through collaborative village Kopdes management through deliberation and a democratic system, thereby strengthening village participation and reducing development disparities between regions. Furthermore, new job opportunities can be created, leading to poverty reduction through productive village businesses such as village pharmacies, logistics agents, and digital marketplaces. This increases the potential for job creation and accelerates village economic growth.
However, the success of this program depends heavily on the readiness of human resources, infrastructure, and an effective monitoring system. Therefore, collaboration between the government, communities, and other sectors is crucial to achieving this program’s goals. With a spirit of mutual cooperation and shared commitment, the Red and White Village Cooperatives (Kopdes Merah Putih) can become a driving force for an independent, sustainable, and inclusive village economy, contributing to overall national economic development.
)*The author is an economic observer
