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View all search resultsVillage cooperatives have existed before. What will make the new ones last?
The government's push for establishment of 80,000 village cooperatives will only succeed if top-down state ambition gives way to genuine, bottom-up member control.
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A motorcyclist rides past a Red and White Cooperative outlet that has yet to begin operations in Ternate, North Maluku, on July 11, 2026. The Indonesian government aims to have 40,000 Red and White Cooperatives by the end of 2026 as part of efforts to strengthen rural economies, complete cooperative facilities and prepare professional staff to manage the program. (Antara/Andri Saputra)
I
ndonesia is embarking on an ambition rarely matched in its economic history: building Red and White Cooperatives (Koperasi Merah Putih) at unprecedented speed. Driven by Presidential Instruction No. 9/2025, which mandates the accelerated establishment of 80,000 village-level cooperatives, national progress is currently being measured by sheer numerical tally.
Yet, legal registration does not mean an enterprise belongs to its members. True ownership depends on whether they can contribute meaningfully in ways they recognize and retain actual control over the institution.
Mohammad Hatta placed that question at the center of the cooperative movement. He viewed cooperatives as an exercise in economic democracy, linked to collective ownership, self-help, participation and moral responsibility.
His concern extended far beyond legal form. Members had to develop the discipline required to manage a shared economic enterprise. A cooperative could distribute goods or perform a public assignment, but those activities alone did not make it democratic; its character came from members accepting ownership, participating in decisions and learning to sustain their common enterprise. (Arena Hukum)
The Culture Factor’s 2023 revision helps explain why cooperatives fit Indonesia socially while remaining vulnerable to hierarchy. Indonesia scores 5 for individualism, 78 for power distance, and 29 for long-term orientation. These metrics reflect an extremely collectivist society with a strong deference to hierarchy and a preference for visible, short-term results. The question, therefore, is not whether Indonesians can cooperate, but whether collective habits can be translated into member control without hierarchy capturing the institution. (The Culture Factor, 2025)
The arisan (rotating savings) practice offers a useful cultural analogy. Participants contribute regularly because the arrangement is familiar, the cycle is visible, and each person expects to recover their principal rather than earn interest. While not a commercial business model, the arisan illustrates why visible contributions, principal protection, and clear results matter to local participants.
However, a strong cultural foundation does not resolve the institutional challenge. Indonesia’s history with village cooperatives highlights the risks of building collective institutions through state policy.
