Government Should Facilitate, Not Direct Village Red and White Cooperatives
In this era of democracy, the government’s function is merely to provide facilitation through regulation and financing incentives and network access, not to direct, command, or guide as was done during the New Order period.
The Village Red and White Cooperative (KDMP) programme, now a government priority initiative, has attracted considerable scrutiny from the public. Concerns range from top-down cooperative formation, mandatory financing extracted through substantial cuts to village funds, construction of offices, warehouses and retail outlets requiring minimum land areas of 1,000 square metres, to the sudden procurement of 105,000 pickup trucks and lorries from India whilst the cooperatives themselves have not yet commenced operations, with questions about what other problems may emerge later.
The true principle of cooperatives is a grassroots economic movement growing from the bottom-up, not a directive project or command from the central government. A cooperative is an economic enterprise with a social and democratic character. Sovereignty rests with its members. Government’s obligation is to facilitate, not to direct, especially not in a rigid manner.
Indonesia previously had lengthy experience with Village Unit Cooperatives (KUD) during the New Order era. Although nationally initiated, their growth was relatively more organic and gradual. Not all villages were forced to establish them simultaneously.
By contrast, the Red and White Cooperatives are designed to be established simultaneously in approximately 80,000 villages and municipalities. Yet villages are heterogeneous—some are self-sufficient, some are progressing towards self-sufficiency, and many remain dependent. Moreover, villages possess original autonomy based on customary law or tradition that predates the existence of our nation itself.
The 1945 Constitution mandates respect for the existence of villages that possess original structures (zelfbesturendelandchappen). All regulations must respect these customary rights. Consequently, state policies imposing uniform designs risk violating constitutional intent.
In the past decade, villages have received an average of approximately Rp 1 billion annually. Now they will manage only around Rp 200 million to Rp 300 million for various village government affairs. Village planning has already been set in the 2025 village budget (APBDes). Suddenly at the start of 2026 this will be slashed. The result will be slowed village development and threatened public services.
Village funds during Joko Widodo’s administration have indeed faced governance issues, including village head corruption cases. However, the solution in my view is to improve oversight and governance systems, not to drastically reduce allocations that have served as engines of village development acceleration. If there is mismanagement, fix the governance. Do not take the money.