Amid discussions on strengthening the people’s economy, the government’s Merah Putih Village Cooperative (Koperasi Desa Merah Putih or Kopdes Merah Putih) funding program has sparked fundamental concerns at the grassroots level. Rather than emerging organically from community needs, the program has taken a top-down approach, with an ambitious target of establishing 80,000 units nationwide. This has raised questions among academics regarding the program’s readiness and long-term sustainability.
These concerns surfaced during the International Guest Lecture and the Launch of the Merah Putih Cooperative Policy Paper Series, organized by the Department of Administrative Law, Faculty of Law, Universitas Gadjah Mada (FH UGM), on Tuesday (Sep. 28) at the faculty’s seminar hall.
The department head, Dr. Richo Andi Wibowo, highlighted several fundamental risks in the loan approval process for the Merah Putih cooperatives. He observed that the current regulatory framework places greater emphasis on accelerating loan approvals rather than ensuring thorough verification of the borrower’s information.
“Various legal instruments have been designed to encourage officials, including those from state-owned banks (Himbara), to approve business proposals from Merah Putih cooperatives to secure funding access,” he explained.
Dr. Wibowo cautioned that such a pattern might repeat the same issues seen under the Job Creation Law (UU Cipta Kerja), where permits were granted first and potential problems were considered only afterward.
He further expressed concern that the government’s quantitative target of establishing 80,000 village cooperatives could undermine the prudence required in verification processes.
“There is a real concern that the push to launch 80,000 cooperatives earlier this year may pressure officials involved in the verification process to approve business proposals simply to meet the target,” he said.
Another UGM law academic, Dr. Hendry Julian Noor, shared similar reservations, noting that the government’s program focuses heavily on funding access and risk mitigation through village fund blocking mechanisms, but provides limited guidance on the personal liability of cooperative managers in the event of losses.
“We must avoid a misunderstanding among cooperative managers that carelessness or deliberate losses are acceptable simply because future losses can be covered by blocking village funds or profit-sharing allocations,” he explained.
Syafa M. Aufa, a research assistant at the Department of Administrative Law, also pointed out the apparent haste in launching the program. She noted that only four months separated the issuance of the first legal document (the Minister of Cooperatives and SMEs Circular Letter on Mar. 18, 2025) from the program’s national launch on Jul. 21, 2025.
“It is illogical to expect cooperatives to produce well-prepared and high-quality business plans within such a short period,” she remarked.
Author: Aldi Firmansyah
Editor: Gusti Grehenson
Post-editor: Rajendra Arya
Photographs: Ministry of Cooperatives and MSMEs & FH UGM