Jakarta. Indonesia is accelerating the nationwide rollout of its Red and White Village Cooperatives, combining large-scale physical expansion with a subsidized 6% loan program aimed at boosting rural economies and curbing predatory lending.

The initiative, launched by President Prabowo Subianto in March 2025, targets the establishment of tens of thousands of cooperatives across villages and sub-districts to strengthen grassroots economic activity and improve welfare.

Government data shows the program has already surpassed its initial target. A total of 83,762 cooperatives have been established nationwide, with 83,395 legally registered, according to the official Red and White Cooperative Management Information System. The figures reflect different stages of development. Around 83,000 cooperatives have been established and most are already legally registered, meaning they exist as formal entities. However, only about 34,000 have so far built physical facilities such as outlets or warehouses, with roughly 2,500 fully completed and ready to operate.

The cooperatives are designed to play a central role in rural development by improving food security, shortening supply chains, reducing reliance on middlemen, and lowering prices. Authorities also expect the program to create jobs, raise purchasing power, and support poverty reduction.

Cooperatives Minister Ferry Juliantono said progress on the ground has been significant, particularly in physical infrastructure.

“Some 34,000 physical facilities — including warehouses, retail outlets, and supporting infrastructure — have been built across Indonesia, with around 2,500 already fully completed,” Ferry said in Surabaya.

The construction phase follows a complex legal process requiring village-level deliberations to formalize each cooperative. Physical development only begins after legal status is secured, a process that has been underway since mid-2025.

Under Presidential Instruction No. 17/2025, state-linked firm Agrinas Pangan Nusantara has been tasked with leading construction, supported by the Indonesian National Armed Forces.

The government is targeting the completion of 10,000 cooperative facilities by August–September 2026.

Once operational, the cooperatives are expected to serve multiple functions — from grocery outlets and distributors of subsidized goods to microfinance providers, logistics hubs, warehouses, pharmacies, and even village clinics.

A key pillar of the program is the introduction of ultra-micro financing at a 6% interest rate, aimed at expanding access to affordable credit in rural areas.

Ferry said the scheme is designed to shield communities from illegal online lenders and loan sharks, which often impose exorbitant borrowing costs.

“The Red and White Cooperative provides low-interest financing to prevent people from being trapped in loan shark practices and illegal online lending,” he said in Jakarta.

The program also seeks to reduce farmers’ dependence on informal lenders, where borrowing costs can reach as high as 1% per day — a burden that has long contributed to rural inequality.

Loans will be distributed through financial units embedded within each cooperative. Beyond lending, the cooperatives will also act as offtakers for local produce and suppliers of affordable essential goods, creating an integrated rural economic ecosystem.

To support the expansion, Finance Minister Purbaya Yudhi Sadewa has allocated Rp90 trillion (approximately $5.7 billion) for the program in the first quarter of 2026, underscoring the government’s commitment to scaling up the initiative.