Indonesia Accelerates Village Cooperative Program with $12 Billion Funding

Hadisur Rahman, JadeTimes Staff

H. Rahman is a Jadetimes news reporter covering Asia

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Image Source: REUTERS/Willy Kurniawan/File Photo

The Indonesian government is intensifying efforts to establish 80,000 village cooperatives nationwide, aiming to bolster rural economic growth and job creation. This initiative, known as the "Red and White Cooperatives" program, has received a significant boost with the allocation of 200 trillion rupiah (approximately $12.2 billion) to state-owned banks.

Launched in July, the program seeks to enhance economic development at the grassroots level, aligning with President Prabowo Subianto's goal of increasing Indonesia's economic growth from 5% to 8%. The cooperatives are designed to provide essential goods and services, such as basic household necessities, subsidized cooking gas, and fertilizer, thereby improving access and affordability for rural communities.

Each cooperative is eligible to apply for loans up to 3 billion rupiah, with a capped interest rate of 6%. These loans are intended to support the establishment and operation of the cooperatives, facilitating their role in local economic development.

As of mid-September, over 1,000 cooperatives have been identified by state banks, including Bank Rakyat Indonesia, Bank Mandiri, Bank Negara Indonesia, and Bank Syariah Indonesia, with a potential loan disbursement totaling approximately 1.06 trillion rupiah. The government aims to expedite the loan distribution process, targeting the funding of 16,000 cooperatives by the end of the month.

This strategic move underscores the government's commitment to fostering inclusive economic growth and addressing disparities between urban and rural areas. By empowering local communities through cooperative enterprises, Indonesia anticipates a more equitable and sustainable economic landscape.tionships, and limit margin erosion will likely shape investor sentiment in the months ahead.