Deputy minister: Merah Putih cooperatives should become integrated village economic centers

Indonesia’s Merah Putih village and urban-village cooperatives should become integrated economic service centers rather than simple competitors to minimarkets, Deputy Home Minister Bima Arya said at a national seminar in Bandar Lampung.

The cooperatives are designed to connect residents’ needs, government services, business units and strategic partnerships within one local economic system. Bima said savings and loans would be only one part of the model. Stores selling staple goods, pharmacies and official distribution of subsidized products could also operate through the cooperatives.

The government expects the cooperatives to shorten supply chains by reducing the role of intermediaries. That, Bima said, could improve prices received by farmers while lowering prices for consumers. The program is also intended to support inflation control and create jobs in villages.

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This KDKMP will become an integrated village economic service center. Savings and loans are only one part. It could include a staple-goods store, a pharmacy, and all subsidized goods could be officially distributed through it.

KDKMP cooperatives are being directed to help distribute social assistance, direct cash transfers, subsidized SPHP rice, fertilizer and LPG. They are also expected to work with the Free Nutritious Meals program, including by serving as aggregators that generate wider economic benefits for local communities.

Bima said management remains in a transition period of about two years. During that time, PT Agrinas Pangan Nusantara is managing the cooperatives through appointed personnel, with further training and input from village and urban-village heads. After the transition, the cooperatives are intended to become assets owned by the villages or urban villages.

Some regions have already reported progress. The Sidomulyo cooperative in Jember has exported coffee to three countries, while a cooperative in Southeast Sulawesi has entered the Chinese market. East Java was described as having the highest national transaction value. Bima said local governments would play a central role from planning through implementation.

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KDKMP combines, first, the community’s needs, second, government services, and third, which is important and interesting, business services.