Merah Putih Cooperatives: Ambitious Village Economy Plans Face Ecosystem Hurdles

The Merah Putih Village and Urban Cooperatives (KDKMP) programme is one of the most ambitious strategic policies in Indonesia’s history of people’s economic development. Amid challenges such as food security, economic inequality, low micro-business productivity, and digital disruption, the government aims to use cooperatives as a tool to consolidate rural economic potential on a larger and more modern scale.

The concept deserves appreciation. However, development history in Indonesia and other countries shows that a programme’s success is not determined by the number of institutions created, the amount of funding injected, or the strength of regulatory support.

Success is more determined by the programme’s ability to build a thriving ecosystem, create adequate economic scale, strengthen community social capital, and produce sustainable business models.

In modern development theory—from Community-Based Development to Endogenous Development, Territorial Development, and Smart Rural Development—cooperatives are not the end goal. They are merely instruments. The ultimate aim is to improve community welfare, strengthen local economies, and foster village self-reliance.

Learning from Development Failures and Successes

A key lesson from global development programmes is that institutions built without strong social and economic foundations often become empty shells. Indonesia has a long history of rural economic institutions that were initially launched with great enthusiasm but later failed to develop due to lacking viable businesses, members, and healthy business models.

The emerging concerns about KDKMP should be viewed as constructive criticism. If not carefully designed, some KDKMPs may face the same fate: buildings standing, signs hung, committees formed, but minimal economic activity.

In somewhat satirical terms, communities are beginning to refer to the possibility of ‘mass cooperative museums’—cooperatives that exist administratively, with grand buildings, but are economically inactive.

The risk grows when cooperatives are built as institutional projects rather than solutions to real community needs. This is why it is crucial to understand that successful cooperatives almost always emerge from genuine economic needs, not merely from programmes.