BATIKNews-online — The national program to establish the Red and White Village/Sub-district Cooperatives (KDMP/KKMP) is one of the major economic agendas of President Prabowo Subianto's administration in 2026. The central government requires the establishment of village cooperatives as an instrument for strengthening the people's economy based on mutual cooperation. This policy is reinforced by Ministerial Regulation Number 10 of 2025, which allocates 58.03 percent of Village Funds for cooperative development.

The government views this program as a milestone in the revival of the people's economy. In his speech, President Prabowo called cooperatives a symbol of the collective strength of the common people who have been marginalized by the large economic system.

" One stick is weak, but hundreds of sticks united are strong ," said the President at the launch of the national village cooperative program.

Government data shows that in the first seven months of implementation, more than 1,061 cooperatives were operational. In fact, approximately 9,000 cooperative buildings, warehouses, and systems are said to be physically ready across Indonesia.

However, behind this optimism, serious concerns have emerged from a number of economic observers, state budget activists, and even village communities themselves. They question whether this program will truly provide an economic solution for the people or will instead create new patterns of debt dependency and structural burdens in rural areas.

The State's Great Ambitions Amidst Economic Pressures on the People

Conceptually, the KDMP is designed as a village economic distribution center. The cooperative will act as a liaison between farmers, MSMEs, food distributors, and the national Free Nutritious Meals (MBG) program.

The government targets:

  • absorption of millions of workers,
  • improving the village economy,
  • strengthening food security,
  • and reduction of extreme poverty.

However, the current economic situation is under severe pressure. Prices of basic necessities continue to rise in many areas. Household purchasing power is weakening. Many families are struggling to meet their daily needs.

The phenomenon of fluctuating dollar exchange rates has also attracted public attention. When the dollar appreciates, prices of basic necessities soar. However, when the dollar depreciates, prices of basic necessities do not experience a significant drop.

This situation raises a critical question among rural communities:
Should the state budget be focused on large-scale cooperative projects, or should it first address the real economic pressures facing the people?

Harsh Criticism: “The ABS Program and the Risk of Systemic Poverty”

Retired Indonesian National Armed Forces (TNI) Sunardi, a member of the Expert Council of the State Budget Utilization Advocacy Institute (LAPAN), is one of the most vocal figures in criticizing the implementation of the KDMP.

According to Sunardi, cooperatives can actually be a driving force for the people's economy if managed professionally, transparently, and based on the needs of the village community. However, he believes that overly forced implementation patterns have the potential to create new problems.

He mentioned that there is a tendency for national programs to be run using the “ABS” or “Asal Bapak Senang” pattern, namely projects that appear successful administratively but are weak in reality on the ground.

This criticism intensified after several social media videos circulated showing several village cooperatives appearing inactive shortly after their inauguration. One that garnered widespread public discussion was the KDMP in Plosowahyu Village, Lamongan District, Lamongan Regency, East Java.

The phenomenon of cooperatives closing shortly after their inauguration has given rise to suspicions that some cooperatives were formed only to meet central administrative targets, not based on the village's economic readiness.

According to Sunardi, this condition could be the beginning of "systemic poverty" if cooperatives are forced to operate without adequate human resource readiness, business management, or budget oversight.

The Threat of Crowding Out: Village Infrastructure and Human Resources at Risk

From a public economic perspective, allocating more than half of the Village Funds to cooperatives raises a risk known as the crowding out effect .

This phenomenon occurs when most of the budget is absorbed by a particular program so that other development sectors are neglected.

A number of village observers assess:

  • village road construction,
  • sanitation,
  • irrigation,
  • community education,
  • human resource training,
  • to social services

potentially experiencing a slowdown due to the budget being too focused on cooperatives.

If the cooperative fails to develop or experiences bad debts, it is feared that the village will only spend its budget to cover operational losses and loan burdens.

In the long term, this condition can:

  • weakening village fiscal,
  • increasing dependence on central aid,
  • and increase the potential for social conflict in society.

Synergy with the MBG Program: A Golden Opportunity or a New Corruption Loophole?

The government also made KDMP the backbone of the Free Nutritious Meal Program (MBG) food distribution plan for the future.

In theory, this scheme is considered ideal:
local farmers sell their crops to the village cooperative, and the cooperative then supplies MBG's kitchen needs.

The model is believed to be capable of creating:

  • money circulation in the village,
  • market certainty for farmers,
  • and local economic growth.

However, a number of observers warn that the national-scale food distribution chain has a very high risk of corruption if oversight is weak.

Sunardi said that without total transparency, KDMP has the potential to become:

  • budget play field,
  • formality project,
  • to the monopoly space of certain groups.

Moreover, the large flow of state funds to the village level is considered vulnerable to being exploited by local elites if the community is not actively involved.

Observer's Opinion: Cooperatives Can Succeed, But They Cannot Be Forced

A number of economic academics believe that cooperatives are a highly suitable economic model for Indonesia. The principle of mutual cooperation is believed to strengthen the economy of the poor.

However, the success of the cooperative is largely determined by:

  • quality management,
  • business mentoring,
  • member education,
  • and financial transparency.

Historical experience shows that many cooperatives fail not because their concepts are bad, but because:

  • political intervention,
  • weak supervision,
  • and low management capacity.

Some observers also warn that cooperatives that are formed en masse and in a rush risk becoming “nameplate cooperatives,” meaning they are active on the documents but do not operate economically.

Great Expectations and the Shadow of Risk

On the one hand, the KDMP program does have great potential to revitalize the village economy if it is run professionally and based on the real needs of the community.

But on the other hand, the public is also starting to question:

  • effectiveness of budget use,
  • readiness of village human resources,
  • and the long-term sustainability of cooperative businesses.

Without strict supervision, expert business mentoring, and active community involvement, the program, which was initially designed as a symbol of the people's economic revival, is feared to turn into an economic burden for future generations.

The State Budget Utilization Advocacy Institute (LAPAN) also issued an early warning for village communities to be more critical and actively monitor the entire process of establishing and using cooperative budgets in their respective areas.

Amidst the country's great ambition to build the village economy through cooperatives, one big question is now echoing in society:

Will the Red and White Cooperative truly be the path to a Golden Indonesia, or will it leave a legacy of new debt and poverty for the rural people? [ ***red ]