The government is currently ramping up the Red and White Village/Sub-district Cooperative (KDMP) program with an ambitious target of establishing 81,738 units. Supported by capital loans reaching IDR 3-5 billion per unit, this program is one of the largest fiscal interventions in the past decade aimed at promoting economic equity in rural areas.
However, real challenges emerge when KDMP is required to enter the retail sector. The phenomenon of modern retail store closures in several regions alongside the rollout of this program has sparked concerns regarding the managerial readiness of cooperatives. Modern retailers like Indomaret and Alfamart possess a competitive advantage built on massive supply chains, sophisticated ERP systems, and strict operational procedures, which are difficult for new entities without systemic advantages to match.
If forced to compete directly, KDMP risks facing operational difficulties. Furthermore, efforts to close existing retail outlets through regulation actually risk creating service voids and local job loss waves that are counterproductive to the village economy.
Looking at the fundamental principles of cooperatives in Law No. 25 of 1992, the essence of a cooperative should arise from the real needs of its members, not merely from meeting massive institutional establishment targets. Given that data from the Ministry of Cooperatives and SMEs shows 51 percent of cooperatives are currently inactive, a deep evaluation of the KDMP business model becomes highly crucial.
As a middle ground, the government is advised to prioritize partnership schemes. KDMP could act as a sub-distributor or aggregator of local products for modern retail supply chains. Additionally, diversifying business models based on local potential—such as developing warehousing, post-harvest facilities, or service sector offerings—is considered more sustainable than forcing every unit to become a minimarket.
