On 18 June 2025, CELIOS released a critical report titled “Squeeze the Red-White Village: Legal Risks Await Village Heads.” The report exposes legal flaws, corruption risks, and the potential for political mobilization in the Merah Putih Village Cooperative (Kopdes MP) program, initiated by the central government through Presidential Instruction No. 9/2025. CELIOS asserts that the establishment of Kopdes MP has no valid legal basis, resting solely on a presidential instruction and interministerial circulars—two instruments that have no authority to establish institutions managing public funds.

The program’s implementation is considered to violate several laws, including the Village Law, the Cooperative Law, and the Anti-Corruption Law. CELIOS’s report identifies at least 15 potential legal violations that could implicate village heads, ranging from misuse of village funds to position-related gratification. The financing scheme, involving loans from Himbara banks backed by village funds, was also found to risk giving rise to collusive corruption, with potential losses to village finances reaching IDR 4.8 trillion per year.

Beyond the legal issues, CELIOS highlights the potential use of Kopdes MP as a tool for political mobilization. Appointing village heads as cooperative chairs without democratic procedures makes them key nodes in aid distribution, the cultivation of political loyalty, and the control of information among residents. Field findings show that 35% of village officials see political interests in the program, while CELIOS simulations estimate that 80,000 cooperatives with 100 active members each could mobilize up to 5.6 million votes—enough to influence the outcome of the 2029 elections. The report serves as an early warning about the risk of local democracy being captured through an opaque populist economic scheme, and calls for a full policy review before the accountability crisis in village fund governance deepens further.

CELIOS released a critical report titled “Ko Peras Desa Merah Putih: Legal Risks Await Heads of Village.” The report exposes legal flaws, corruption risks, and the potential for political mobilization within the Merah Putih Village Cooperative (Kopdes MP) program initiated by the central government through Presidential Instruction No. 9/2025. CELIOS highlights that the establishment of Kopdes MP lacks a legitimate legal foundation, as it is based solely on a presidential instruction and ministerial circulars—two instruments that have no authority to create institutions managing public funds.

The implementation of this program is deemed to violate several laws, including the Village Law, the Cooperative Law, and the Anti-Corruption Law. CELIOS identified at least 15 potential legal violations that could implicate heads of village, ranging from misuse of village funds to gratification offenses. The financing scheme—using village funds as cooperative capital to secure loans from state-owned banks (Himbara)—was also found to carry the risk of systemic corruption, with potential losses to village finances reaching up to IDR 4.8 trillion per year.

Beyond the legal issues, CELIOS warns that Kopdes MP could function as a political mobilization tool. Heads of village are appointed as cooperative leaders without democratic procedures, positioning them as key distributors of aid, builders of political loyalty, and controllers of community information. Field findings reveal that 35% of village officials see political interests embedded in the program, while CELIOS simulations estimate that 80,000 cooperatives with 100 active members each could mobilize up to 5.6 million votes—enough to significantly sway the outcome of the 2029 elections. This report serves as an early warning against the capture of local democracy through a populist economic scheme rife with vested interests, urging a full policy evaluation before the accountability crisis in village fund governance deepens further.

Narahubung / Contact Persons :

Mhd Zakiul Fikri (+62 853-2811-5510)

Muhamad Saleh (+62 821 3329 0067)

CELIOS-Red-White Village Cooperative [Law] series Download