CORE: Red and White Village Cooperatives Need to Strengthen Village Economic Linkages

Cooperatives are not just for cooperatives, but to drive the grassroots economy. Jakarta (ANTARA) - Executive Director of the Center for Reform on Economics (CORE) Indonesia, Mohammad Faisal, emphasised that the Red and White Village/Urban Village Cooperatives (Kopdes Merah Putih) need to strengthen linkages with local economic activities to promote village economic growth. “Cooperatives are not just working for cooperatives, but to drive the grassroots economy. So there should be a multiplier effect, including on job creation,” Faisal told ANTARA in Jakarta on Wednesday. This was stated amid the government’s plan to establish up to 80,000 Kopdes Merah Putih units with funding support estimated to reach Rp240 trillion to Rp400 trillion. The government has also opened recruitment for around 30,000 cooperative managers as an initial stage to strengthen the institutional and operational aspects of Kopdes Merah Putih. Faisal explained that the impact of Kopdes should not only be measured by the number of workers absorbed for cooperative operations, but also by their ability to encourage the growth of businesses in the village. According to him, such linkages can be created if the cooperative is able to absorb local products and connect them to wider markets. “It should absorb local products from the area and then connect them to the market,” he said. He assessed that cooperatives can act as aggregators that collect production from small business actors in the village, then channel it to larger buyers or offtakers. With that role, cooperatives are expected to be able to increase the scale of businesses as well as the added value of local products. Faisal added that the business sectors developed by cooperatives should follow the village’s economic drivers, such as agriculture and local flagship commodities. In addition, cooperatives can also develop businesses based on other potentials, such as village tourism, including craft products, fashion, and culinary items. However, he emphasised that the effectiveness of Kopdes still depends on the readiness of the system and proper management. “A good manager will not succeed without a system. A good system will also be less effective if not led by a good manager,” he said. He also assessed that understanding local conditions is important so that cooperatives can operate in accordance with the economic and socio-cultural characteristics of the village. “If the recruited manager is not from the local area, the challenge is knowledge about the conditions of the area where the cooperative is located,” he said. Faisal added the need for a performance-based monitoring and evaluation system to ensure cooperatives can operate optimally. He warned that the development of Kopdes should not disrupt existing local business actors. “Don’t let the existence of the Red and White Village Cooperatives kill the economy and existing local actors,” he said. According to him, the success of Kopdes is ultimately measured by its ability to drive the village economy broadly, including creating jobs and strengthening local businesses. Meanwhile, Coordinating Minister for Food Affairs Zulkifli Hasan (Zulhas) stated that Kopdes Merah Putih is designed as village economic infrastructure to strengthen community access to logistics, financing, and markets. He said the cooperative will function as an offtaker that absorbs the production results of farmers and fishermen, and channels them to markets or institutions like Bulog to maintain price stability at the producer level. The government targets the construction of 20,000 to 30,000 Kopdes Merah Putih units to be completed by June 2026, with more than 32,000 locations already prepared and some of them entering the completion stage.