Regulations
Experts warn that without the intensive mentoring long associated with microfinance, an area in which the Red and White Cooperatives still lag, the loans risk turning into bad debt.
Three children walk past a Red and White Cooperatives outlet that has yet to begin operations in Ternate, North Maluku, on July 11, 2026. The government aims to have 40,000 such cooperatives operating by the end of 2026 as part of efforts to strengthen rural economies, complete cooperative facilities and prepare professional staff to manage the program. (Antara/Andri Saputra)
President Prabowo Subianto has announced that microloans managed by PT Permodalan Nasional Madani (PNM), a grassroots-focused financial institution owned by state-owned lender BRI, will be disbursed through his flagship cooperatives program. Experts, however, have warned that the move may have negative implications for the country’s microloan structure.During his speech at the Cooperatives Day ceremony in Jakarta on Sunday, Prabowo announced that PNM’s microloan program, known as Mekaar, will be channeled via the Red and White Cooperatives.
“The only way to protect the poorest people is through the strength of cooperatives. But I realized when I started establishing cooperatives that without authority, without power, it’ll be very slow, very slow, correct? If one only has small capital or none at all, it’s tough to get a loan anywhere,” said the President.
