KDMP: Made Without True Market Research, Will Be a Loss Not a Profit

JAKARTA - The existence of the Red and White Village Cooperative (KDMP) is once again in the spotlight, after a number of cooperatives are reported to have minimal daily turnover, only ranging from hundreds of thousands.

In the last week, news of a number of KDMPs that were quiet and had minimal sales went viral. The head of Campurejo Village, Bojonegoro Regency, Edi Susanto, recently spoke about the unclear governance system and business model of KDMP. He also said that the daily turnover of KDMP only ranged from Rp. 100,000 to Rp. 300,000. With this condition, Edi assessed that it would be difficult to cover the operational costs of the outlets and employee salaries.

Dozens of KDMP outlets in Bojonegoro Regency were also reported to have closed as a form of protest against the lack of clarity on wages, contracts, and cooperative management systems.

Director of Economics Center of Economic and Law Studies (Celios) Nailul Huda said that one of the reasons for the low turnover obtained by KDMP was that the distribution of subsidized goods had already been determined at a price that sometimes had a very thin margin. This means that the profit will be very thin that comes from the sale of subsidized goods such as Minyakita, SPHP rice or 3kg LPG gas.

"If the profit is very thin, then the story related to profits of only hundreds or even tens of thousands per month will be very massive," he told VOI.

Apart from Bojonegoro Regency, other KDMPs are also reported to have similar conditions. Let's just say the Melawai KDMP, South Jakarta, which has become the focus of public attention because the amount of residual business results (SHU) is considered very minimal.

During the six months of operation, the cooperative has only recorded SHU of around Rp78,000, while the managers admitted that they had not received any salary at all.

Last week, the Chairman of the Bojonegoro KDMP Association, Sugianto said that at least 54 outlets had closed. However, the closure was only temporary and the company resumed operations after receiving a response from PT Agrinas Pangan Nusantara, the party tasked by the government to manage KDMP throughout Indonesia, regarding a number of points regarding the rights of cooperative workers.

CELIOS Executive Director Bhima Yudhistira explained at least several reasons that led to the low turnover of the Red and White Village Cooperative initiated by President Prabowo Subianto.

Among them, the value of KDMP transactions is concentrated in a few areas. According to the findings of CELIOS, 82.1 percent of national transactions only come from 15 and 514 regencies/cities, with Tuban Regency recording the highest transaction value. At the provincial level, East Java alone accounts for 58.2 percent of national transactions.

"These findings show that claims of program success on a national level reflect the performance of certain regions more than the success of the implementation of the KDMP throughout Indonesia," said Bhima.

He added that KDMPs were also built in many non-strategic locations. Around 80 percent of KDMPs at the district/city level are in areas with relatively remote village characteristics, namely located far from the sub-district center.

Districts/cities with more remote village characteristics, lower electrification levels, more limited market access, and lower prevalence of existing cooperatives consistently show a higher proportion of zero-transaction KDMP.

When contacted separately, Nailul Huda also expressed a similar opinion. The low turnover obtained by KDMP is due to the distribution of subsidized goods which have predetermined prices, which sometimes have very thin margins. This means that the profit will be very thin that comes from the sale of subsidized goods such as Minyakita, SPHP rice or 3kg LPG gas.

"If the profit is very thin, then the story related to profits of only hundreds or even tens of thousands per month will be very massive. Meanwhile, the salary of KDKMP employees depends very much on the profits obtained by the business," added Huda.

Second, related to how the demand or market conditions in the KDKMP area operate. For example, the KDMP located in the Blok M area. Although it is a crowded area, the KDMP at this location only generates minimal turnover. He assessed that the construction of this KDMP was the wrong target, because in the city center it should require fashion or culinary shops.

"There is no market research on every condition in each location that ultimately makes the demand very low. Low demand must have low income as well," he explained.

"Even in a crowded market, the competition must also be seen. If you look at the competition directly with minimarkets and grocery stores, yes, it has the potential to go bankrupt faster," added Huda.

If it continues like this, Huda believes that the existence of the Red and White Village Cooperative will not last long, and even has an impact on the pile of remaining debts that must be paid by the villagers.

With the still dominant administrative achievements compared to real economic activities, CELIOS assesses that the sustainability of the KDMP program needs to be reviewed. The use of Village Funds will be more effective if it is directed back to village development based on community needs, with more transparent and accountable budget management.

"We suggest that the kopdes must have an exit strategy, not to be a retail shop but to be converted into sports infrastructure (GOR), warehousing rental, to rent a multipurpose building (wedding, etc)," said Bhima.

"We ask the government and the DPR to immediately convene an exit strategy so that kopdes does not become a financial loss or village," he said.