Village Minister Regulation Number 10 of 2025 – Approval Mechanism from the Village Head for Merah Putih Village Cooperative Financing

Permendesa PDT Number 10 of 2025 regulates the mechanism for the Village Head’s approval regarding financing for the Merah Putih Village Cooperative (KDMP). This regulation was created to support the implementation of Presidential Instruction Number 9 of 2025 concerning the formation of village cooperatives, which is expected to accelerate local economic development and strengthen village governance. This article discusses the regulation, objectives, obligations, and procedures that must be followed by the village government.

Objectives and Background

The formation of the Merah Putih Village Cooperative is part of the government’s effort to reduce economic disparity and empower village communities. Based on Presidential Instruction Number 9 of 2025, the establishment of these cooperatives aims to accelerate village development through the provision of bank-based financing, supported by loan repayment facilities sourced from the Village Fund (Dana Desa).

General Provisions in Permendesa PDT Number 10 of 2025

In the first article, this regulation explains several essential definitions for the Village Government to understand:

• Village Fund (Dana Desa): Funding provided by the government to support governance, development, and community empowerment.
• Merah Putih Village Cooperative (KDMP): A cooperative consisting of residents from the same village, verified by their National Identity Card (KTP).
• Loan: Credit or financing provided by banks to KDMP as initial capital.

The Village Head’s Approval Mechanism

1. Authority of the Village Head

The Village Head has the authority to grant approval for financing in the form of loans to the KDMP. This approval must be granted through a Village Assembly (Musyawarah Desa) or a Special Village Assembly involving the village consultative body (BPD) and the community.

2. Obligations of the Village Head

The Village Head’s obligations include:

• Conducting a review of the business proposal submitted by the KDMP.
• Coordinating the payment of principal installments and interest for the approved loan.
• Executing administration and budget reporting regarding the use of the Village Fund for loan repayments.

Loan Repayment Support

A crucial aspect of this regulation is the support provided by the village government for loan repayment. If the funds in the loan payment account are insufficient, the Village Fund can be used to meet these obligations under certain conditions:

• Repayment support is capped at a maximum of 30% of the annual Village Fund ceiling.
• This support is provided while considering the village’s financial capacity and strategic needs for development and community empowerment.

Procedure for Loan Approval by the Village Head

The approval process begins with an application from the KDMP to the Village Head:

1. Submission of Loan Application: The Chairman of the KDMP management submits a request along with a business plan proposal detailing business activities, budget, and repayment plans.
2. Village Assembly (Musdes): The Village Head and the BPD hold a meeting to discuss and agree on the loan proposal based on the submitted business plan.
3. Approval Letter: Once agreed upon in the assembly, the Village Head issues an official approval letter, which serves as the basis for the loan application to the bank.

Service Fees for the Village Government

KDMP is required to provide a service fee to the Village Government as part of their business profits. The amount is set at a minimum of 20% of the KDMP’s net profit. This fee is recorded in the Village Budget (APB Desa) and used according to village authority as decided in the village assembly.

Coaching and Supervision

To ensure smooth implementation, the Ministry of Villages and Development of Disadvantaged Regions carries out coaching and supervision regarding the financing approvals made by Village Heads. This is done in coordination with relevant ministries or agencies to ensure compliance with applicable regulations.

Conclusion

Permendesa PDT Number 10 of 2025 is a significant step in accelerating the formation and management of the Merah Putih Village Cooperative. With a clear decision letter and approval mechanism from the Village Head, it is expected that these cooperatives will thrive with full support from the community and the government. This regulation emphasizes transparency, community participation, and the effective use of the Village Fund.

Visit the Village Regulations page for official access.