Cooperative Fund: Distribution of Revolving Funds for Merah Putih Cooperatives

Ministerial Regulation Number 1 of 2025 is a major milestone for Indonesian rural development. This regulation provides a clear legal framework for the Cooperative Fund. Specifically, these revolving funds target “mock-up” cooperatives at the village and sub-district levels. This initiative aims to strengthen the local economy and increase regional independence through structured financial support.

In the national economic context, cooperatives act as a community-based movement. The government, through the Ministry of Cooperatives, is committed to building sustainable institutions. Therefore, the Cooperative Fund distribution must be effective and accountable. By empowering village cooperatives, the government helps them manage productive businesses that benefit everyone.

Furthermore, Regulation 1 of 2025 introduces specific mechanisms that improve upon previous rules. This policy is an innovative way to make mock-up cooperatives a successful model. These models can later be replicated across various regions to ensure broader economic impact.

Legal Foundations and Strategic Goals

Several legal provisions govern the Cooperative Fund. The primary foundation is Law Number 25 of 1992, which focuses on justice and social welfare. Additionally, Presidential Instruction Number 9 of 2025 supports the acceleration of these Merah Putih Cooperatives. These laws ensure that the fund operates within a transparent and professional environment.

The main goal of the Cooperative Fund is to provide capital to qualified cooperatives. This funding covers both investment and working capital. By strengthening business potential, the government ensures long-term benefits for rural residents. Moreover, the regulation guarantees that funds are managed with high integrity and prudence.

Special Provisions for Revolving Funds

The 2025 regulation establishes unique characteristics for the Cooperative Fund. For instance, the management agency distributes funds directly to village cooperatives. This direct method removes middlemen, making the process faster. Consequently, local businesses receive the support they need without unnecessary delays.

The funds are versatile. Cooperatives can use them for fixed assets, such as warehouses or logistics vehicles. They can also apply the funds as working capital to expand services. Currently, the maximum loan limit is IDR 5 billion per cooperative. Service rates are also adjusted for both conventional and Sharia models to maintain financial fairness.

Application Process and Requirements

The procedure to obtain the Cooperative Fund is rigorous but transparent. This ensures that only professional and responsible cooperatives receive government support.

Stages of Funding Application

1. Proposal Submission: Cooperatives draft a detailed plan that includes business goals and repayment strategies.
2. Verification: The agency reviews administrative documents to check for initial eligibility.
3. Field Audit: Officials conduct on-site assessments to verify financial health and member activity.
4. Approval: Once a cooperative passes all tests, they sign a loan agreement to receive the fund.

Eligibility Criteria

To qualify for the Cooperative Fund, a cooperative must meet these conditions:

• A valid and officially registered business license.
• An active membership base with a clear track record.
• A realistic business plan that shows long-term sustainability.
• Transparent and audited financial statements.
• No ongoing legal disputes or ethical issues.

Evaluation and Risk Mitigation

Monitoring is essential for the success of the Cooperative Fund. Recipients must submit financial reports every three months. These reports detail how they use the funds and the growth of their business. Additionally, the agency conducts routine audits to ensure full accountability.

Risk mitigation is also a priority. The agency uses strict feasibility studies to assess a cooperative’s ability to repay. Furthermore, business mentoring programs are available to help managers improve their skills. These steps reduce the risk of financial failure and protect the government’s investment.

Conclusion and Future Outlook

Ministerial Regulation Number 1 of 2025 is a strategic step for rural empowerment. Through the Cooperative Fund, the government builds a professional foundation for village businesses. This program encourages healthy growth and national independence. In the future, these cooperatives will serve as inclusive economic engines for all Indonesians.

Visit the Village Regulations page for official access.