CORE: Separation of Accounting for Kopdes Business Units Crucial for Transparency

Researcher from the Center of Reform on Economics (CORE), Yusuf Rendy Manilet, assesses that separating accounting between business units within the Merah Putih Village Cooperatives (Kopdes) is a crucial step to improve the transparency of management. According to him, with the multitude of functions being carried out, Kopdes needs a clear structure so that every activity can be measured accountably. “It must be clear which is the distribution unit, which is the savings and loans unit, which is related to social assistance. Without that, there will be opaque cross-subsidies, and we will never know which unit is actually healthy and which is problematic,” Yusuf stated to ANTARA in Jakarta on Wednesday. The government states that Kopdes Merah Putih is part of the state infrastructure designed to strengthen the economic access of rural communities. Village cooperatives will act as off-takers of agricultural products, price stabilisers, distributors of strategic goods, channels for social assistance, as well as providers of financial services with 6 per cent interest credit. However, Yusuf assesses that demanding one entity at the village level to carry out too many functions at once has the potential to create vulnerabilities because the burden carried becomes too great. He emphasises that if the programme continues to be implemented, at least the separation of business units must be done from an accounting perspective so that the performance of each function—from goods distribution, financial services, to absorption of agricultural products—can be evaluated objectively. Non-business functions such as the distribution of social assistance, according to him, should also not be permanently attached, but rather in the form of assignments with a certain duration and periodic evaluations. From a supervision perspective, Yusuf warns of the potential for moral hazard because part of the financing risk is borne by the state. “If bad debts are charged to the fiscal, while the distributing institution does not bear equivalent risks, the incentive to be careful becomes weak. This often happens in subsidised credit programmes,” he said. He encourages the establishment of a layered supervision system to ensure accountability, especially in units managing public funds and financing. According to him, there needs to be supervision from authorities that understand financial risks for savings and loans units, strict audits of funds sourced from the State Revenue and Expenditure Budget (APBN) or village funds, and transaction data transparency so that social supervision can run effectively. “Beyond that, public transparency is also important. As long as transaction data is not open, social supervision is difficult to implement,” he stated.