Jakarta. The rapid formation of tens of thousands of rural cooperatives is creating ripple effects far beyond the countryside, unsettling Indonesia’s automotive industry and reigniting debate over modern retail expansion.

The government aims to establish 80,000 “Merah Putih” village cooperatives, with thousands inaugurated simultaneously and 30,000 expected to be operational by the end of May. To support their logistics needs, state-owned agribusiness firm Agrinas Pangan Nusantara has begun to import 105,000 fully built pickup trucks and light-duty vehicles from India.

The move has drawn criticism for appearing to contradict Jakarta’s own push to maximize local content and prioritize domestic manufacturing. The Indonesia Automotive Industry Association (Gaikindo) said domestic production capacity for pickups and trucks remains ample and underutilized.

Agrinas CEO Joao Angle De Sousa Mota defended the imports, arguing the vehicles require all-wheel-drive capability — a specification he said is not readily available from local assembly plants. He also criticized bidders for offering uncompetitive prices despite a government order valued at about $1.5 billion.

Yet some cooperative managers question whether four-wheel drive is necessary. “We don’t operate in mining or oil palm plantations,” said Arissandi, manager of the Merah Putih Cooperative in Mategal village, Magetan regency, East Java. “We’ve never used 4x4 vehicles for cooperative transport.”

He added that the imported pickups offer smaller cargo capacity compared with models such as the Mitsubishi L300 or Isuzu Traga, making them less suitable for hauling rice, fertilizer, and other goods handled by village cooperatives.

Controversy has also emerged in the retail sector. Villages and Underdeveloped Regions Minister Yandri Susanto renewed his proposal to halt new permits for modern retail chains such as Indomaret and Alfamart, arguing they could undermine rural cooperatives.

“We must not allow minimarkets to enter villages and kill rural businesses,” Yandri said.

Not all cabinet members agree. Trade Minister Budi Santoso noted that retail licensing authority rests with regional governments, not the central administration.

Iqbal Shoffan Shofwan, director general of domestic trade, said modern retail remains concentrated in urban areas, with rural expansion limited by purchasing power. “When chains open stores, they calculate demographics and income levels,” he said. “That’s why we rarely see them in villages.”

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