Indonesia’s logistics sector is emerging as a crucial pillar in President Prabowo Subianto’s ambitious plan to establish more than 80,000 Red-White Village Cooperatives (KDMPs), designed to boost rural economies and strengthen food distribution.
But while the project promises economic equality and market access for farmers, analysts warn that its success, or failure, will largely depend on logistics execution, financial safeguards, and private-sector partnerships.
During the 2026 State Budget (APBN) Finance Note speech before the People’s Consultative Assembly (MPR) last week, Prabowo reaffirmed his commitment to ensuring that KDMPs operate optimally.
“The establishment of Red-White Village and Subdistrict Cooperatives has begun this year. By the end of 2025, each cooperative will have a warehouse, cold storage, retail outlets, and two trucks to pick up and deliver their produce,” said Prabowo on Friday (15/8/2025).
The addition of facilities and distribution capacity is well justified. According to the President, these complete facilities support the government’s mission to improve public nutrition and increase the consumption of animal protein – particularly fish.
Tria Dianti
Moreover, the increased distribution capacity of KDMP, as the driving force of village economies, is also expected to accelerate the transportation of village products to reach the market.
On various occasions, both Minister of Cooperatives Budi Arie Setiadi and Deputy Minister Ferry Juliantono stated that KDMPs are planned to serve as distribution chains for production outputs and community needs, ranging from agricultural products to medicines. Therefore, a strong logistics system is necessary to support the success of this program.
The President’s commitment has received a positive response from national logistics and supply chain business players. Chairman of the Indonesian Logistics Forwarder Association (ALFI) Institute, Yukki Nugrahawan Hanafi, stated that integrating the logistics sector can drive economic equality, job creation, and the dynamism of the national supply chain logistics sector.
“We see an opportunity for collaboration within the national logistics sector to help realize this vision. However, we believe the government needs to consider four key factors to ensure the implementation runs optimally,” explained Yukki in a written statement received by SUAR on Friday (16/8/2025).
The four key factors mentioned by Yukki include: the organizational management capacity of KMP to run optimal logistics and supply chains, the availability of an efficient fleet, the digitalization of logistics and supply chains, and ensuring the availability of logistics and supply chain human resources.
“In this context, supply chain logistics business players are ready to work together in mentoring, training, and business collaboration to help realize this vision,” concluded Yukki.
Beware of Potential Failures
However, a cooperative researcher and Chairman of the Strategic Socio-Economic Cadres Association (AKSES), Suroto, warned of potential failure gaps in the implementation of KDMP’s grand plan, such as the idea proposed by President Prabowo. The critical point lies in the mechanism for transferring the risk of non-performing loans, which directly deducts from Village Funds and guarantees the commodities sold by KDMP to Himbara banks (government-owned banks).
“If the market does not absorb these goods, the losses will not fall on the bank or suppliers. The Village Funds, which should be used for community development and empowerment, will be deducted to cover those losses. Villages merely become an extension of execution, without authority to determine suppliers, types of goods, or business models,” Suroto wrote in a written statement received by SUAR on Friday (15/08).
At first glance, this mechanism makes villages vulnerable to being trapped in a prolonged debt cycle and losing autonomous development direction. On the other hand, the mechanism can act as a trigger for villages to strategize so that KDMP finances remain secure. Moreover, it can ensure optimal productivity and make village products competitively viable.
Partnerships must be by design
To ensure the KDMP functions optimally, logistics entrepreneurs emphasize that the implementation of the plan should not only consider the readiness of the macroscopic plan but also the technical aspects in the field.
The Chairman of the Indonesian Logistics Association, Mahendra Rianto, highlighted that the main challenges lie in the details, which are often overlooked in overly large and massive planning. In fact, field aspects are more decisive for the success or failure of the government’s plan. Therefore, the implementation of the logistics plan should not be carried out hastily.
He cited the government’s plan to provide cold storage in each KDMP unit as an example, yet it does not clarify the execution of the cold supply chain as a framework.
Mahendra explained that each commodity has a different cold supply chain and treatment. For instance, fish from Sulawesi and Maluku. “Can our government ensure that markets in Singapore, Malaysia, Hong Kong, China, or Australia buy our fish? The shelf life of fish as a perishable food is short. Bacterial levels must be strictly monitored, especially in countries with high standards. Have we done that yet?” he emphasized.
According to Mahendra, the biggest challenge in the cold supply chain is the degree of difference in freshness quality between the harvested product and what is received by buyers in the market. Transportation needs, therefore, must be part of a comprehensive, integrated plan.
“Cold storage does not solve the problem. What solves the problem is moving the goods to the market to be sold. If they are only stored in cold storage and not sold, they will eventually spoil,” Mahendra concluded when contacted by SUAR on August 16.
“Cold storage does not solve the problem. What solves the problem is moving the goods to the market to be sold,” said Mahendra.
Mahendra reminded that efforts to procure cold storage were already carried out several years ago, with results falling far short of expectations. “Now, those cold storages just sit there, empty. We must not repeat the same mistakes due to unclear information and pouring funds into something that was flawed from the start,” he said.
There is an effective strategy the government can adopt to prevent repeated mistakes in implementing the plan to increase distribution capacity. That is, partnering with the private sector to provide training and upgrading human resources, as well as establishing quality control to make KDMP products competitive in the market.
“Try having the supermarket chains that have operating permits teach the cooperatives and take the products from them. Not the other way around. The government can say, ‘Please take these goods from the village community. Ask them to show the proper way to meet the quality standards.’ So it’s the supermarkets that guide them,” Mahendra suggested.
Additionally, KDMP can only succeed if there is mutual understanding among the government, farmers/fishermen, and the market. “The fact is, our farmers need money every day. The government must understand this if it wants to fix the supply chain. We must avoid a situation where after harvest, farmers are in debt while middlemen profit. The government must be honest and transparent about this issue,” he said.
Writers: Benediktus Krisna Yogatama and Christian Wibisana