The position of cooperatives in Indonesia is considered still unable to move away from the margins of national economic activity. The constitutional hope of making cooperatives the main pillar of economic democracy, as enshrined in Article 33 of the 1945 Constitution, remains far from reality. Over the past decade, the contribution of cooperative business volume to the national Gross Domestic Product (GDP) has stagnated at an average of 1.04 percent, and is even projected to shrink to 0.90 percent or around IDR 214 trillion out of a total GDP of IDR 23,821.1 trillion in 2025.

The dominance of unproductive cooperative activities is one of the causes of the slow development of this sector. Data shows that as of the first semester of 2026, out of a total of 224,256 registered cooperatives, about 80 percent still rely on savings and loan businesses, which mostly serve consumptive financing. This condition leaves cooperatives contributing minimally to creating national production added value, strengthening supply chains, or driving the real economy of grassroots communities.

To address this impasse, the Ministry of Cooperatives is urged to immediately conduct comprehensive institutional reforms. The government is asked to take firm action against fictitious cooperatives, shell cooperatives, and loan sharking practices disguised as cooperatives that violate Law No. 25 of 1992. This restructuring step needs to be followed by consolidation or mergers for small-scale savings and loan cooperatives to gain a more competitive economic standing, while those operating like commercial banks should be directed to transition into formal banking institutions.

Beyond internal restructuring, the government is also required to stop policy discrimination. Until now, the banking sector has been seen as enjoying various state privileges, from deposit guarantees and state fund placements to bailouts during crises. Similar incentives almost never reach the cooperative sector, even though philosophically, these institutions are oriented toward member service and collective welfare, rather than merely chasing financial profit.

The momentum for change now rests on the Red and White Village/Sub-district Cooperative (KDKMP) program. However, the success of this initiative must not be measured solely by the physical construction of offices or legal status. KDKMP must be pushed to become a real driving engine by transferring the distribution rights of subsidized goods and commodities with Highest Retail Prices (HET)—such as fertilizers, seeds, 3 kg LPG cylinders, SPHP rice, and Minyakita—directly to these cooperative networks.

This transfer is deemed strategic because subsidized goods are essentially public goods funded by taxpayers' money, meaning their distribution must be strictly controlled by the state so as not to be misappropriated by distribution mafias. By utilizing KDKMP, which is democratically managed by local villagers, social oversight will run more effectively, narrowing the scope for price speculation and ensuring state subsidies truly reach eligible citizens while establishing cooperatives as the primary pillar of the national economy.