Jakarta. Chief Economic Affairs Minister Airlangga recently said that cooperatives played an important role in Indonesia's economy.

According to Airlangga, the government continues to encourage the empowerment of cooperatives or people-centered enterprises as the driver of the people's economy. The same goes for Indonesian micro, small, and medium enterprises (MSMEs). It is important for cooperatives to strengthen its human capital by equipping them with technologies and also improve the governance within the enterprise.

"We hope that cooperatives can continue to contribute to our economic growth as well as the productive sector in accordance with the Cooperatives Law," Airlangga told the Indonesian Cooperative Council (Dekopin) forum.

At present, about 66 percent of Indonesian cooperatives are in the financial services sector, while 17 percent come from trade. Their participation in the real economy, such as agriculture, plantation, and animal husbandry, is still somewhat lagging behind. Airlangga called for the optimization of the production sector to increase the number of cooperatives.

"The production sector is expected to employ many people and the production sector can increase the supply of goods domestically," Airlangga said.

Microloans, popularly known as Kredit Usaha Rakyat (KUR), are available for cooperatives and MSMEs at low interest rates. Disbursed microloans have reached Rp 269.48 trillion ($16.6 billion) as of the end of November, or about 96.24 percent of the 2024 target. Its non-performing loan rate stood at 2.19 percent.

The Revolving Fund Management Institution (LPDB) at the Cooperatives Ministry has also provided funding for cooperatives. The funds distributed to cooperatives in the real economy had also risen from Rp 38.7 billion in 2020 to Rp 506.2 billion in 2023, marking a 960.53 percent increase.

Airlangga also encouraged cooperatives to adapt to the digital industry. Digital transformation is expected to boost their efficiency. It can also help link these businesses to the supply chain.

The Indonesian economy still expanded at 5.03 percent in January-September. Inflation still stood at 1.55 percent year-on-year as of November, still within the country's target of between 1.5 and 3.5 percent. Household consumption remains robust and is expected to grow beyond 5 percent this year.

Indonesia's Consumer Confidence Index in November still falls within the optimistic range, reaching 125.9 last month. NielsenIQ data shows that Indonesians are now shopping more as their total spending in the third quarter hit Rp 256 trillion.

"The government will continue to maintain the people's purchasing power and business' competitiveness by launching a series of economic stimulus packages. These packages are dedicated to low-income families, the middle class, and businesses," Airlangga said.