Rural cooperatives shatter the dream of inclusive development
A single top-down mandate is draining Indonesia’s village coffers for state cooperatives, gutting the local budgets that keep maternal clinics running, malnourished children fed and grassroots democracy alive.
A nationwide mandate has slashed the funds allocated to Indonesia's rural cooperatives, threatening the core services that keep villages functioning. The Red and White Village Cooperatives program, mandated under Finance Ministry Regulation (PMK) No. 7/2026, extracts a substantial portion of the village fund for building and operating rural cooperatives.
This leaves villages with a meager Rp 26 trillion (US$3.44 billion) for their regular expenses, including public services, infrastructure development, and community empowerment. Each village now experiences an annual budget cut of Rp 500 million to Rp 600 million (US$30,000 to US$38,000) to service these cooperative installations.
This leaves barely any resources for village officials to manage their duties, let alone implement community programs or address local priorities. The cooperative program has undermined local planning authority, which was previously the bedrock of village development. Since 2015, villages have had the right to plan and manage their own initiatives, ensuring community participation.
Law No. 6/2014 on Villages emphasized the importance of consultative planning, and the Villages and Development of Disadvantaged Regions Ministry Regulation No. 21/2020 furthered inclusive, gender-responsive planning. Despite these policies, the cooperative mandate has eroded this participatory framework, leaving villages vulnerable to neglect and underinvestment.
Written by urgent.news from The Jakarta Post Academia's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
