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Introduction
Minister of Home Affairs Regulation (Permendagri) Number 13 of 2025 serves as a vital regulatory instrument to accelerate the formation and funding of Merah Putih Urban Village Cooperatives (KKMP) across all regencies and cities in Indonesia. This document establishes the role of the Regent/Mayor in granting approval for loans provided by state-owned banks and creating a support mechanism through the allocation of General Allocation Funds (DAU) and Revenue Sharing Funds (DBH).
In the effort to strengthen local cooperatives and empower community economies, this regulation positions local governments as facilitators responsible for reviewing business proposals, facilitating urban village consultations (Musbangkel), and signing formal support letters for DAU/DBH utilization once the loan approval is issued.
Scope of Permendagri Number 13 of 2025
Permendagri Number 13 of 2025 specifically regulates the governance of Regent/Mayor support in funding KKMP. It is based on Presidential Instruction Number 9 of 2025 regarding the accelerated formation of Merah Putih village/urban village cooperatives. The scope includes:
- Defining the KKMP legal entity and its funding structure.
- Procedures for loan applications and business proposal reviews.
- The roles and authorities of the Local Government Budget Team (TAPD).
- Mechanisms for providing DAU/DBH support letters as fiscal assurance.
- Supervision and evaluation by the Ministry, Governors, and local leaders.
Legal Framework
The regulation refers to several primary legal foundations that reinforce its legitimacy within the national regulatory framework:
- Article 17 paragraph (3) of the 1945 Constitution of the Republic of Indonesia.
- Law Number 23 of 2014 regarding Regional Government.
- Government Regulation Number 12 of 2019 regarding Regional Financial Management.
- Government Regulation Number 7 of 2021 regarding the Empowerment of Cooperatives and MSMEs.
- Presidential Regulation Number 12 of 2025 concerning the 2025–2029 National Medium-Term Development Plan (RPJMN).
Authorities and Obligations of the Regent/Mayor
Permendagri clearly establishes that the Regent/Mayor has the authority to grant funding approval in the form of loans for KKMP. This authority also includes providing incentives and facilities to help KKMP fulfill its financial obligations based on feasibility assessments from the bank and TAPD recommendations.
Operational obligations include:
- Conducting detailed feasibility studies on KKMP business proposals.
- Facilitating Musbangkel as a participatory forum for urban village residents.
- Coordinating loan repayment obligations to ensure fiscal health.
- Signing the DAU/DBH support letters for the Ministry of Finance.
The Funding Mechanism: Approval and DAU/DBH Support
The core process involves several sequential stages. First, the KKMP management submits a business plan encompassing investment and working capital requirements. Second, the TAPD conducts an analysis of the regional financial capacity and the cooperative’s risk profile.
Third, the Regent/Mayor orders sub-district and urban village heads to organize Musbangkel. Once the recommendation is issued, the Regent/Mayor must provide written approval within seven working days. The Support Letter for DAU/DBH is then submitted through the treasury monitoring system (OMSPAN) to the Ministry of Finance as a formal fiscal guarantee for the loan agreement.
Supervision and Reporting
To ensure transparency and professional accountability, Permendagri 13/2025 mandates a tiered supervision system. The Minister of Home Affairs provides general guidance, while Governors act as representatives of the central government to monitor regional progress. Regents/Mayors are required to submit quarterly reports electronically, detailing loan implementation, repayment progress, and the overall performance of the KKMP.
Practical Implications for Local Governments and KKMP
Practically, this regulation opens significant opportunities for inclusive economic empowerment. For local governments, it requires a higher level of fiscal readiness and active participation from sub-district and village heads. For the KKMP, it provides unprecedented access to state-owned bank financing, provided they can maintain professional business standards and transparent financial management.
Conclusion
Permendagri Number 13 of 2025 provides a robust legal framework for the funding of Merah Putih Cooperatives. By balancing financial access with strict fiscal oversight and community participation through Musbangkel, the government ensures that village cooperatives can become independent economic motors. Local governments are encouraged to strengthen their TAPD capacity and provide technical assistance to cooperatives to ensure long-term success.
Visit the Village Regulations page for official access.
