Indonesia’s Village Cooperatives Program Gains Momentum with Focus on Rural Economic Empowerment

Jakarta – Indonesia’s Red and White Village Cooperatives (KDMP) program is gaining traction as a key national strategy to bolster rural economies and improve the livelihoods of disadvantaged communities. Minister of Villages and Development of Disadvantaged Regions, Yandri Susanto, has been actively promoting the program, emphasizing its potential for sustainable growth and equitable distribution of wealth.

Strategic Importance and Financial Model

KDMP has been designated a national strategic program, meriting concerted efforts from all sectors of Indonesian society, according to Minister Susanto . A core principle of the program is its business-oriented model, requiring each cooperative to reinvest its net surplus directly into the rural community. “One hundred percent of the net surplus is returned to villages, delivering benefits especially for poor residents,” Susanto stated, referencing those categorized within the National Single Socioeconomic Data (DTSEN) .

Financial Contributions to Regional Revenue

Village cooperatives are mandated to contribute at least 20% of their profits to regional original revenue, as stipulated by Village Minister’s Regulation No. 10 of 2025, which was enacted following a 2025 presidential instruction to accelerate the program’s implementation . This financial contribution aims to strengthen regional economies and support local development initiatives.

Empowering Local Economies and Protecting Rural Markets

The government envisions KDMPs as a vehicle for empowering rural communities by prioritizing the absorption of locally produced commodities. Measures are being taken to protect village cooperatives from competition by restricting the establishment of fresh outlets for major modern retail companies in rural areas . Susanto explained that modern retailers, while potentially providing employment, often do not contribute profits back into the local community, unlike village cooperatives which directly channel all earnings to residents.

Village Ownership and Financial Flows

All assets associated with the Red and White Village Cooperatives, including buildings, stalls, trucks, and warehouses, will be fully owned by the village administration . This structure ensures that the benefits of the cooperatives remain within the village. The 20% revenue contribution to the Villages Budget (APBDes) is designed to further enhance local financial resources .

Regulatory Framework and Loan Guarantees

A draft regulation concerning village funds, intended to guarantee loans for the Red and White Village Cooperatives (Kopdes), was targeted for release in August 2025 . This regulation will outline obligations, procedures, and decision-making processes within the cooperatives. The regulation, in the form of a Mendes PDT Regulation, references Article 1 paragraph 5 of the Minister of Finance Regulation (PMK) Number 49 of 2025 . Village heads and members of the Special Village Deliberation (Musdesu) will be responsible for overseeing the operations of the Kopdes and assessing the feasibility of loans, with village funds potentially serving as a guarantee .

Program Expansion and Implementation

As of September 22, 2025, approximately 80,000 Red and White Village Cooperatives had been established and legalized throughout Indonesia, following Presidential Instruction No. 9 of 2025 and Presidential Regulation No. 9 of 2025 . The government is actively accelerating the physical development of stalls, warehouses, and other necessary facilities for these cooperatives .