We visited one of the pilot Merah Putih village cooperatives (KDMP) in Hambalang, Bogor, West Java. Below are the key takeaways:
Structure. The Hambalang KDMP comprises a five-member management team led by a Head of the Cooperative and a three-member supervisory board chaired by the Village Chief (Exhibit 1). It was established through a village consensus meeting in May and currently has 300 members out of 9,600 residents. To become a member, individuals must make an initial deposit of IDR50k and pay monthly dues of IDR25k. Members gain access to various cooperative products and services at lower prices.
Establishment. The land on which the cooperative operates is owned by the village, while renovation costs were funded by BRI (neighboring pilot KDMPs are supported by other SOE banks such as Bank Mandiri). The KDMP office is located next to the Village Chief s office. Additional loans from SOE banks will depend on KDMP s operational readiness, so large-scale borrowing is not needed at this stage. Alternative funding sources such as project-based partnerships with corporations are preferred due to their lower risk. Bank loans will be guaranteed by the Village Fund, although this may reduce resources available for regular expenditures such as local infrastructure development.
Operations. The cooperative manages six business lines: savings and loans, grocery store, LPG distribution, food storage, fertilizer distribution, and clinic-pharmacy services the latter still constrained by limited human resources. Doctors are sourced from the regional hospital (RSUD) and local health centers (Puskesmas). Fertilizer is the most purchased item, as approximately 80% of the population are farmers, followed by LPG. Sales of subsidized fertilizer are limited to eligible households, while LPG purchases are capped at three units per household per month.
Existing local retailers. Regarding local business competition, traditional stalls (warung) have so far raised no concerns and do not see the grocery store as a competitor of KDMP. The next phase will involve establishing partnerships to supply these stalls. Previously, most local retailers purchased their monthly groceries at the Citeureup traditional market, located 5km from the village.
Margins. Goods are sold at lower prices and supplied by government agencies (including Pertamina, ID FOOD, Bulog, Pos Indonesia, the Local Health Office/Dinkes, and Kimia Farma) under a two-cycle consignment scheme, with full payment made after the second cycle (Exhibit 2). The cooperative earns a profit of IDR2,700 per LPG cylinder (~14% margin) and IDR37,000 per sack of fertilizer (~13%), while margins for staple goods are lower (~2%). According to the Village Head, there is currently no linkage between the village cooperative and the free nutritious meal program.
Savings and loans. For its savings and loan unit, the KDMP Hambalang collaborates with BRI through BRI Link. KDMPs can forward members financing proposals to BRI Link, which will conduct screening and due diligence, although this process is still under development. The need for sizable loans may arise from the establishment of storage facilities for local farmers. The nearest BRI branch is 5 km from the village. Previously, the Ministry of Finance issued a regulation on KDMP loan financing (see Policy Watch: A Deep Dive into Merah Putih Village Cooperatives). Funding sources include initial capital from members and partial support from village funds transferred annually by the central government. The village now receives IDR2bn per year, of which around 3% may be allocated as a grant.
