Economist calls for multi-layered oversight of Red and White Village Cooperatives

Economist from the Center of Reform on Economics (CORE) Indonesia, Dipo Satria Ramli, believes that multi-layered oversight is needed in the management of Village/Subdistrict Cooperatives (Kopdes) Merah Putih to prevent potential deviations and ensure accountable governance. He stated that the scale and diverse functions of Kopdes, which encompass commercial to social aspects, require the division of supervision across institutions according to their authority. Speaking to ANTARA in Jakarta on Wednesday (22/4), Dipo assessed that for financial units such as credit disbursement, oversight should be under the Financial Services Authority (OJK), considering the higher complexity and risks. “For credit matters, it must certainly be overseen by OJK,” he said. In addition to regulatory oversight, Dipo emphasised the importance of periodic independent audits by third parties to detect potential moral hazards. On the other hand, he reminded that oversight also needs to be supported by strong internal governance, including the recruitment of professional managers based on the local community to strengthen the sense of ownership. According to him, management involving local villagers will create a sense of ownership that is important for maintaining the sustainability of the cooperative. Village cooperatives will act as off-takers for agricultural products; distributors of strategic goods such as 3kg LPG, fertiliser, rice; channels for social assistance, to providers of financial services including the disbursement of 6% interest credit.