Distribution of Social Assistance through Red and White Village Cooperatives Deemed Risky, CORE's Notes

Researchers from the Center of Reform on Economics (CORE) Yusuf Rendy Manilet have emphasised the importance of strengthening governance in involving Red and White Village Cooperatives (Kopdes Merah Putih) in the distribution of social assistance (bansos) to avoid creating new problems. According to him, in theory, village involvement can improve distribution accuracy because they better understand their residents’ conditions.

However, if governance is weak, it opens the door to patronage, where access to bansos depends on closeness rather than need, Yusuf stated in Jakarta on Wednesday (22/4/2026).

He also highlighted the potential for conflicts of interest in the scheme, particularly if social assistance recipients are also involved as managers or workers in the cooperatives distributing the aid.

If recipients of bansos also become part of the management or workforce in the distributing cooperatives, the boundary between recipients and distributors becomes blurred. This is risky, he said.

According to him, in social protection practices, separating the roles of distributors and recipients is an important principle to maintain accountability. To ensure bansos distribution remains on target, Yusuf stressed several prerequisites that must be met.

First, recipient data must be connected to the central system and updated regularly, rather than relying solely on static local lists.

Second, the distribution mechanism should preferably be non-cash to allow for traceability.

Third, an independent complaint channel should be provided, not dependent on the cooperative or village government structure, so that the public has a safe space to voice grievances.

In addition, he assessed that policy implementation should not be carried out directly on a large scale.

A pilot test and evaluation are needed first before expansion, Yusuf stated.

The government states that Kopdes Merah Putih is part of national infrastructure designed to strengthen public economic access.

Village cooperatives will act as off-takers of agricultural products, price stabilisers, distributors of strategic goods, social assistance distributors, and providers of financial services with 6 percent interest credit.