The Merah Putih Village Co-operative Program was launched to strengthen rural economies, but it has also sparked criticism over its funding model and the prioritisation of existing co-operatives. What are the key arguments in this debate, and how do the principles and experiences of co-operatives in Indonesia compare with those in Australia?
The Indonesian Merah Putih Subdistrict/Village Cooperative Program, which kicked off in 2025 under President Prabowo Subianto, has now been running for more than a year. In June 2025, the first steps towards reaching 80 thousand Merah Putih cooperatives in Indonesia were taken by the government.
The program was said to be part of efforts to strengthen the rural economy and simplify the community’s basic needs supply chain. However, the cooperative program has drawn multiple criticisms, including from economic expert Riandy Laksono, who questioned the project’s funding, which he claimed has landed further blows on the already compromised rural development funds.
Isnawati Hidayah, a senior researcher at Centre of Economic and Law Studies said that Indonesia already had scores of cooperative units needing assistance and guidance - thus the government should provide that assistance instead of starting a new project.
Isnawati said that cooperatives have strong roots in Indonesian history, since the era of the nation’s first vice president Mohammad Hatta. She added that while the cooperative model was seen to match Indonesians’ communal spirit, the units should form organically and voluntarily in order to help boost the economy from the grassroots level.
According to Molly Kendall from The Co-op Federation, the co-op tradition in Australia began to take off around the period of the second world war, when dairy farmers came together and collectively pooled and marketed their products in order to be in a better position in the product sales. However, she has heard several times that First Nations co-op members consider the model to make the most sense culturally, and therefore the co-op model or some resemblance of it might have existed in Australia for a longer time.
She said that the co-op model is popular amongst those wanting a more democratic business models where employees could have a bigger say and more profits could be allocated towards employees’ well-being.
Currently, the Federation has around 200 cooperatives as members spread across multiple locations in Australia. Co-operatives can take on many forms and run in various types of business sectors, such as housing and services. In several regions, community members have taken the initiative to form a co-op to take over certain facilities previously owned by the government, such as a community hall.
According to Kendall, one of the strategies to give co-ops a better chance of success is to be mindful of the seven international co-operative principles, that include voluntary and open membership. Major decisions should be discussed with members and made democratically, she added.
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