The government-initiated Merah Putih Village Cooperative (KDMP) program is currently in the spotlight, especially regarding the ambitious target of establishing 81,738 cooperative units in all corners of villages and sub-districts. With a loan allocation of IDR 3 to IDR 5 billion per unit, this program is projected as the largest fiscal instrument in driving the rural economy. However, this great ambition is now faced with complex operational realities, particularly when cooperatives are required to enter the retail business sector.
The main issue arises in managerial and technological readiness. The modern retail sector is not merely conventional transaction activity, but an ecosystem relying on supply chain efficiency, ERP systems, and real-time data automation. The operational advantage possessed by giant retailers today is the result of accumulated system investments for over two decades. Without qualified human resource preparation and equivalent digital infrastructure, KDMP risks facing severe challenges in maintaining profitability amidst thin margins.
Furthermore, the mass institutional establishment approach prior to identifying real needs at the local level is considered inappropriate. Referring to Law Number 25 of 1992, the essence of a cooperative should grow out of the voluntariness and needs of its members, not the other way around. Data from the Ministry of Cooperatives and SMEs in 2023, which recorded that 51 percent of cooperatives were inactive, serves as a harsh warning that institutional expansion without a strong foundation has the potential to create new economic distortions.
For this program to yield a sustainable positive impact on the community, a strategic shift is required. Local governments are advised to conduct feasibility audits for KDMP before entering the retail sector. Partnership models, where cooperatives act as sub-distributors or aggregators of local products, are considered more realistic than competing directly with established retailers.
Business diversification is also a key factor. The allocation of existing funds should be directed towards sectors that match local potential, such as post-harvest processing facilities, warehousing, or cold storage, rather than simply forcing a minimarket model. Ultimately, the success of the rural economy is determined by managerial competence and member trust, not just the physical presence of cooperative units through regulatory protection alone.
