Indef Value of Human Capital Strengthening for the Red and White Cooperative

JAKARTA - The Executive Director of the Institute for Development of Economics and Finance (Indef) Esther Sri Astuti assessed that strengthening human resources (HR), governance, and supervision systems are crucial factors in the implementation of the Red and White Village/Neighborhood Cooperative (Kopdes).

He said, a number of aspects needed to be considered in the implementation of the program, especially in the selection and supervision of cooperative managers.

"There are several things to be aware of regarding the Red and White Village Cooperative, such as the risk of the inability of the elected manager to manage the cooperative business professionally that needs to be anticipated," said Esther as reported by ANTARA, Wednesday, April 29.

He assessed that the quality of human resources of cooperative managers was a determining factor because managerial ability would affect the performance of cooperative business.

The government previously opened recruitment for around 30,000 cooperative managers as an initial stage of strengthening the institutional and operational Red and White Kopdes.

The selection is open to graduates of D3, D4, and S1 in all majors with a maximum age of 35 years and a minimum GPA of 2.75.

According to Esther, this step needs to be balanced with the readiness of the management capacity so as not to pose risks in the implementation of the program.

He reminded that the management of cooperatives needs to be accompanied by an understanding and implementation of risk management so as not to trigger the problem of bad loans.

"The massive recruitment of cooperative managers risks triggering bad loans if the principle of risk management is not properly implemented," said Esther.

Indef recommends structured training for managers as well as the implementation of digital-based supervision and evaluation to improve the operational effectiveness of cooperatives.

Furthermore, he reminded the need for careful management considering that each cooperative is planned to obtain funding of around Rp3 billion to Rp5 billion.

In total, the funding needs of the Kopdes program are estimated to reach Rp240 trillion to Rp400 trillion, so it requires a strong oversight system to maintain sustainability.

He emphasized the importance of transparent governance to maintain accountability and prevent potential irregularities in cooperative operations.

"It is also necessary to strengthen supervision, starting from coordination with authorities such as OJK, clarity of regulations, to the use of integrated data platforms to monitor the performance and risks of cooperatives," he said.

Based on the Indef study, the Kopdes Merah Putih program has the potential to strengthen distribution, expand access to financing, and support food security at the village level.

However, Esther continued, the approach which is still considered centralized needs to be balanced with increased community participation so that cooperatives can run according to local needs.

He explained that the cooperative business model needs to be adjusted to the characteristics of the region in order to be able to create added value for the community.

"The most profitable business sector depends on the characteristics of the area, it cannot be compared between areas," he said.

Esther gave an example, that fish producing areas can develop cooperatives based on the processing of fishery products, ranging from access to financing to storage of processed products.

Meanwhile, the government stated that the Kopdes Merah Putih program would be formed to around 80,000 units throughout Indonesia with an integrated business model based on village potential.

The government also targets that the cooperatives have various business units, ranging from sembako outlets, savings and loans, warehouses, to the distribution of logistics and food commodities to shorten the distribution chain.

The program is expected to be a driver of the village economy as well as increase people's income through the strengthening of local-based businesses.