RRI.CO.ID, Jakarta - The Indonesian government is introducing a strategic shift in its poverty alleviation model, moving away from traditional aid distribution toward an ownership-based economy.

By integrating welfare recipients into village-level cooperatives, known as Kopdes Merah Putih, the state aims to transform “beneficiaries” into “shareholders” of local enterprises.

The initiative was formalized on Friday, January 23, 2026, through a Memorandum of Understanding (MoU) signed by the Minister of Cooperatives, Ferry Juliantono, and the Minister of Social Affairs, Saifullah Yusuf.

The partnership represents a structural effort to help Family Beneficiaries (KPM) graduate from state dependency toward sustainable financial independence.

“Beneficiaries can also participate in business activities at Kopdes and receive a share of the revenue, or remaining business results, generated by Kopdes Merah Putih,” Minister Ferry Juliantono said during a press conference at the Ministry of Cooperatives, as quoted by Antara.

Minister Saifullah Yusuf noted that the initiative fulfills Presidential Instruction (Inpres) No. 8 on the eradication of extreme poverty and Inpres No. 9 on community empowerment.

He emphasized that the cooperative model establishes a sustainable circular economy within villages by empowering welfare recipients through three primary economic functions.

First, it facilitates product sales, enabling beneficiaries with micro-businesses to use the cooperative as their marketplace to reach a wider customer base. Second, members gain direct access to staples, enabling them to purchase essential goods at competitive prices.

Finally, the model ensures long-term financial benefits through dividend distribution, where members, acting as co-owners, receive a formal share of the remaining business results (SHU) at the end of each fiscal year.

“The advantage is that beneficiaries are not only consumers but also cooperative shop owners. They receive double benefits, and it is hoped this will stimulate local economic growth,” Saifullah added.

The government plans to form a joint task force to roll out the program, focusing initially on villages with strong infrastructure and management readiness.

Beyond basic retail, expectations are high for these village cooperatives to expand their role. Earlier this year, the National Nutrition Agency (BGN) expressed hope that more Kopdes Merah Putih entities would serve as official suppliers for the Free Nutritious Meal (MBG) program, further solidifying their position as engines of local economic growth.

The next phase of the collaboration will involve rigorous field assessments to ensure that selected cooperatives have transparent governance and the facilities required to manage increased activity from new member-beneficiaries. ***