Indef says KDKMP could become a new source of village revenue

The Institute for Development of Economics and Finance (Indef) has assessed that the Koperasi Desa/Kelurahan Merah Putih (KDKMP) has the potential to become a new source of village revenue if it can manage various business units professionally. Head of Indef’s Macroeconomics and Finance Centre, M. Rizal Taufikurahman, said the existence of KDKMP could strengthen village economic activity while contributing to Village Original Revenue (PADes) through various business activities run by the cooperative, such as basic food stalls, fertiliser, logistics, and savings and loans. “Its contribution to PADes can indeed increase every year. However, the main requirement is that the cooperative must generate sustainable profits, not merely depend on capital injections from the government,” Rizal said when contacted in Jakarta on Friday. Nevertheless, Rizal cautioned that contributions to Village Original Revenue can only be realised if the cooperative has a sound business model and is able to grow and develop in the long term. He explained that in principle, a cooperative not only functions as an economic institution that distributes profits but also needs to build business capacity so it can continue to grow and provide greater benefits to the community. In addition to potentially increasing village revenue, he assessed that KDKMP could also improve community welfare through various economic benefits generated from business activities, including the distribution of profits or surplus (SHU). In accordance with cooperative principles, the main beneficiaries of SHU distribution are members because they contribute capital and transact within the cooperative. Meanwhile, he continued, villagers who are not yet members can still enjoy indirect benefits, such as access to basic necessities at more affordable prices, easier access to financing, and increased employment opportunities. “With this scheme, the economic benefits become fairer while encouraging the community to actively become members and strengthen the cooperative as a driver of the village economy,” Rizal said. The government has ensured that the majority of KDKMP profits will be returned to the village community, while the remainder will be used to strengthen village development capacity through PADes. Minister of Villages and Development of Disadvantaged Regions Yandri Susanto stated that 80 per cent of KDKMP profits will be returned to the village community, while 20 per cent will become Village Original Revenue. According to Yandri, the existence of the Merah Putih Village Cooperative will also strengthen village economic independence because the business assets built will eventually become village property. These assets include warehouses, distribution trucks, cold storage facilities, and other business support facilities.