Celios suggests KDMP focus on aggregation to avoid competing with village SMEs

Jakarta (ANTARA) - Executive Director of the Center of Economic and Law Studies (Celios), Bhima Yudhistira, suggests that the Red and White Village/Subdistrict Cooperatives (KDMP) should be focused on the function of aggregating products to avoid clashing with micro, small, and medium enterprise (MSME) actors in villages.

“The Red and White Village Cooperative should become an aggregator of MSME products to be sold through outlets, rather than becoming a competitor,” Bhima told ANTARA in Jakarta on Wednesday.

He assessed that the potential for overlap could arise if the cooperative sells subsidised products similar to those already marketed by local business actors.

“The problem is that it has the potential to become a competitor to the MSMEs in the village, as long as the products sold are subsidised and relatively similar,” he said.

According to Bhima, the aggregation function allows the cooperative to collect production from small business actors, then add value through processing and packaging before marketing to a wider audience.

With that role, the cooperative is seen as able to expand MSME market access while strengthening the supply chain at the village level.

“So if there are MSMEs there, for example producing porang, the KDMP must be able to package it, process it, and even find buyers outside the village,” Bhima stated.

In addition, he emphasised the importance of designing a cooperative business model that is not only oriented towards sales but also the development of local business actors’ capacity.

On the other hand, Bhima also warned of the need for caution in the financing aspect of the programme, given that the scheme involves the state budget (APBN), transfers to regions, and Village Funds, which could pressure fiscal space.

He added that if not managed well, the risk of business failure could have a chain reaction impact on central and regional government finances, as well as the banking sector.

“If it fails business-wise, the effects could be chain reactions, not only to central and regional finances but also to the banking sector, with high non-performing loans (NPL),” he explained.

Meanwhile, the government asserts that the existence of Red and White Village Cooperatives is not intended to replace or kill off small businesses in villages.

Special Staff to the Minister of Cooperatives for Productive and Creative Cooperative Business Economy, Ambar Pertiwiningrum, stated that village cooperatives are directed to strengthen community economies through membership and financing schemes.

“KDMP will not kill small businesses, will not kill small shops. Even small shops owned by residents will become cooperative members,” Ambar revealed.

According to her, small business actors in villages can utilise the cooperative as a financing access through savings and loan units to develop their businesses, so the cooperative acts as an empowerment vehicle.

Previously, the government planned to establish around 80,000 KDMP units across Indonesia, with a target of building about 20,000 to 30,000 KDMP units completed by June 2026, as the initial stage of accelerating the programme in various regions.