The initiative will make cooperatives the main tool for empowering the village economy.
However, given the program's potential, it is essential to ensure that it does not become just another initiative, but has a real and positive impact on village communities.
In the last decade, village-owned enterprises (BUMDes) have been set up in villages. They function as managers of village businesses based on local potential. Many of them have succeeded in developing businesses in various sectors, starting from clean water management to agrotourism.
Village funds, which are provided annually, should be sufficient to strengthen BUMDes if managed optimally. However, one of the main challenges BUMDes face is the lack of professional management and sustainable assistance.
In this context, the Red and White Village Cooperatives can help accelerate the improvement of the village business ecosystem, instead of serving as a competitor that confuses people with a new scheme.
Earlier, village unit cooperatives (KUD) played an important role in supporting the village economy, especially the agriculture sector.
KUDs were the main partners of farmers for distributing subsidized fertilizers, superior seeds, and production equipment. Unfortunately, due to changes in policy and lack of innovation, many KUDs have stagnated or ceased operations.
If the government wants to revive the village economy with the help of cooperatives, bringing KUDs back with a more modern, transparent, and technology-based business model could be a more effective measure.
According to Cooperatives Minister Budi Arie Setiadi, the Red and White Village Cooperatives have been initiated based on the vision of President Prabowo to build a collaborative-based economy, in keeping with Article 33 of the 1945 Constitution.
The program has been designed to overcome several obstacles that have hampered village economic growth, such as long distribution chains, limited capital, and the dominance of middlemen who often depress the prices of agricultural and village products.
By making cooperatives the center of the village economy, the government hopes to cut distribution costs, increase the competitiveness of farmers and local producers, and accelerate village communities' access to wider markets.
National strategy
In view of this, it seems that the Red and White Village Cooperatives will not merely add to existing programs, like BUMDes and KUDs, but also fill gaps that have not been optimally tapped.
BUMDes have indeed played a role in village business management, but many of them are still facing managerial issues and lack access to flexible funding.
Meanwhile, KUDs, which used to be the backbone of fertilizer distribution and agricultural production facilities, are now experiencing stagnation or are no longer active.
In this context, the Red and White Village Cooperatives are expected to serve as new models that are more adaptive to current economic challenges.
As part of the national strategy, the plan to establish 70 thousand village cooperatives is not premature.
According to Minister Setiadi, the government has mapped the characteristics of villages in Indonesia by dividing them into four development clusters: Sumatra; Java and Bali; Kalimantan-Sulawesi-Nusa Tenggara; as well as Maluku and Papua.
This is aimed at ensuring that the planned village cooperatives can adjust to the special needs and potential of each village. Therefore, the cooperatives will become the center of the economy and optimize local resources.
In their functioning, the village cooperatives will not rely solely on funds from the state and regional budgets, but also obtain funding from village funds, mandatory member savings, grants, corporate social responsibility (CSR) programs, and special financing schemes offered by state-owned banks.
One of the interesting aspects is the plan to establish modern warehouses and six strategic outlets at each cooperative that will function as centers of production and goods distribution, including staple goods, medicines, and agricultural products.
With this model, cooperatives will not only function as financial institutions, but also as real economic drivers in villages.
The presence of cooperatives is also expected to accelerate the financial inclusion of village communities.
With more villages setting up cooperatives, access to micro-business financing and savings and loans will open up further. Thus, people will no longer need to depend on high-interest loans from loan sharks or other informal financial institutions.
In addition, village cooperatives could also serve as spaces to educate the community about financial literacy and business management—aspects that have so far been one of the main obstacles to micro business management in villages.
Learning from experience
According to Director of the Cooperative Research Center of the Keling Kumang Institute of Technology Suroto, one important thing that must be given attention to in the development of village cooperatives is learning from past experience.
Indonesia must not let the issue of non-optimal systems, as seen in KUDs, arise in the new program.
Existing cooperatives must be developed at the initiative of the community, and cooperatives must be required to educate their members about cooperative ideology, benefits, rights and obligations, as well as democratic cooperative governance.
If cooperatives are not based on a strong organizational system, no matter how good the investment is, it will be difficult for them to develop.
Suroto said that the success of the village cooperatives still depends on several key factors, including professional and transparent governance.
Based on the experiences from BUMDes and KUDs, many village-based businesses face obstacles due to weak management and lack of accountability in managing funds.
For that reason, the government needs to ensure that each cooperative has a good management system, backed by trained human resources and access to sustainable technical assistance.
The cooperatives must adapt to technological changes. Digitalization is the key to accelerating the growth of cooperatives, both in internal management and product marketing.
Through the utilization of digital platforms, cooperatives can expand market access, reduce operational costs, and increase distribution efficiency.
Thus, the government needs to support the development of digital infrastructure in villages, for instance, by building more equitable Internet access.
Cooperatives must also have a clear market orientation. One of the common mistakes in community-based economic programs is overly focusing on the production aspect without considering market demand.
In order for cooperatives to grow, they must develop a mature marketing strategy, including establishing partnerships with large industries and digital marketplaces, as well as utilizing a wider distribution network.
This approach will ensure village cooperatives do not only rely on local consumption but can also reach regional and national markets.
The government must also ensure the presence of a strict monitoring and evaluation mechanism. In very large-scale programs, there are always risks of misuse and inefficient implementation.
Therefore, there must be a transparent monitoring system that involves various parties, including village communities, academicians, and civil society organizations.
That way, the cooperatives can develop in a healthy manner and truly provide benefits to their members.
The move to set up Red and White Village Cooperatives is a big step that can spark significant changes in the village economy.
With a well-thought-out and correct strategy, these cooperatives can become the new engine of growth.
However, the success of the program cannot only rely on funding and infrastructure schemes. The most important thing is to build a robust ecosystem that is based on good governance, technology utilization, and effective marketing strategy.
If the government can ensure that they are managed professionally, are based on local potential, and are closely linked to the market, the Red and White Villages Cooperatives could mark a new milestone in village economy development.
With a strong business model and sustainable approach, the establishment of cooperatives will not end up as a short-term project but build a legacy that continues to drive the village economy in the long term.
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Editor: Rahmad Nasution
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