Palace Confirms No Opposition to Rp34.57 Trillion Village Fund Allocation for Village Cooperatives
State Secretary Minister Prasetyo Hadi has denied any opposition from village heads regarding the allocation of village funds for the Merah Putih Village/Sub-district Cooperative (Koperasi Desa/Kelurahan Merah Putih) programme.
Prasetyo made the statement in response to reports of village heads rejecting the village fund reallocation. He questioned the source of such claims and affirmed that the government had conducted discussions and socialisation from the outset.
“There is no opposition. Where is this opposition? Everything has been discussed from the beginning,” Prasetyo told reporters at the Parliamentary Complex in Jakarta on Wednesday, 18 February 2026.
Prasetyo explained that the policy does not constitute a reduction in village funds but rather a shift in allocation, which would remain focused on village needs.
“This is about shifting the designated purpose, not reducing it, and the focus location is still in the village,” he said.
According to him, village development does not depend solely on village funds. The government has various other programmes targeting rural areas, such as school revitalisation and renovation, as well as bridge construction. He added that these programmes do not draw from village fund budgets.
“Those do not use village funds. Although, in fact, village funds could also be allocated for such purposes,” Prasetyo said.
Prasetyo assured that the reallocation of village funds would not disrupt the village development process. The government is also committed to maintaining the continuity of village development whilst optimising the use of village funds for strengthening the community economy through cooperatives.
“It will not disrupt development,” he added.
The government has allocated 58.03 per cent of the 2026 Village Fund budget for the construction of Merah Putih Village Cooperatives (KDMP).
The policy is regulated under Finance Minister Regulation (PMK) No. 7/2026, signed by Finance Minister Purbaya Yudhi Sadewa and effective from the date of promulgation on 12 February 2026.
“The allocation adjustment resulting from government policy to support KDMP implementation is calculated at 58.03 per cent of each village’s Village Fund ceiling, or Rp34.57 trillion,” states Article 15 paragraph (3) of PMK 7/2026.
Article 20 paragraph (3) stipulates that the use of Village Funds to support KDMP implementation covers instalment payments for physical construction of retail outlets, warehousing, and KDMP facilities.
Disbursement of Village Funds to support KDMP is channelled directly from the State General Treasury Account (RKUN) to the designated fund disbursement holding account.