Prabowo rolls out state-backed co-ops to boost grassroots

The Star

23-07-2025

JAKARTA: President Prabowo Subianto launches 80,081 cooperatives under the Red-and-White Cooperatives (KMP) programme during a ceremony in Bentangan village, Klaten, Central Java.
In his speech on Monday, Prabowo described the cooperatives as 'a tool of struggle' for the poor and a way for 'economically weaker groups' to build collective strength.
He framed the initiative as a 'strategic movement' aimed at challenging the longstanding economic dominance of big players.
'Initiatives like these aren't welcomed by major capitalists or large investors.
'In many of their minds, cooperatives may be seen as competitors. And there are certain countries that wouldn't be happy to see a big nation rise,' he said.
The state-backed cooperatives will be equipped with warehouses, cold storage facilities, delivery vehicles and retail outlets, such as basic goods stores and pharmacies, in an effort to streamline supply chains and reduce logistical bottlenecks.
They will also have access to 'super micro financing', Prabowo said, noting that the loan amounts will be smaller than those in typical microfinance schemes, with funds disbursed through state-owned banks.
He added that the government had allocated up to 2.5 billion rupiah (US$150,000) per village for the programme's first year, sourced from existing village funds, though actual costs 'could be lower in areas with idle public assets'.
Coordinating Food Minister Zulkifli Hasan, who also leads the task force behind the initiative, said that out of the 80,081 cooperatives established, only around 108 are ready to operate at the moment.
'We are preparing one million cooperative managers to support villagers and build a strong, prosperous Indonesia from the grassroots,' Zulkifli said during the launch.
Suroto, chief executive of the cooperative organisation Inkur, criticised the government's push to establish 80,000 village cooperatives as a form of 'structural coercion', saying the pressure was evident in the withholding of village fund disbursements for the sake of KMP's establishment.
Support letters and deeds for establishing cooperatives became requirements for villages seeking access to the second tranche of 2025 village funds.
The policy stems from a Finance Ministry circular issued in response to Presidential Instruction No. 9/2025 on accelerating the formation of village cooperatives.
'This is a top-down push to create what are essentially fake cooperatives,' Suroto said on Monday. 'You cannot build real co-ops by force from the top. That goes against the whole idea.'
He further argued that the government's move to set up cooperatives violates the Constitution's guarantees of freedom of association, assembly and expression, as the rushed rollout undermines the voluntary and democratic spirit of cooperatives by pressuring villagers into forming them.
Cooperatives Minister Budi Arie Setiadi denied in May that the effort is top-down, saying the government does not interfere in selecting cooperative leaders, as they are chosen through 'democratic voting' by villagers.
'The idea may be top-down, but the formation is still grassroots,' Budi said.
Suroto highlighted a glaring disconnect between the government's push for cooperatives and the public's understanding on the ground.
While officials were eager to scale up the initiative rapidly, he noted that many villagers still did not understand what a cooperative actually is.
'I have spoken to people in the field. The first questions they ask are: 'When do we get paid by the cooperative?' or 'When will the government pay our salary'?' he said.
Without proper education and groundwork, Suroto warned, these newly established cooperatives risk becoming inactive or collapsing entirely, as they lack the grassroots understanding and genuine community ownership needed to sustain them in the long term.
A new report by the Centre of Economic and Law Studies also highlighted serious fiscal and economic risks associated with the programme. — The Jakarta Post/ANN