Indonesia to Launch Village Cooperatives Offering 8% Microloans, Integrated Economic Services

Jakarta, The Gulf Observer: Indonesian President Prabowo Subianto has announced that the Red and White Village Cooperatives will provide micro and super-micro loans at an annual interest rate of 8 percent, significantly expanding access to affordable financing for communities across the country.

Speaking at the main celebration of the 79th National Cooperative Day in Jakarta on Sunday, President Prabowo said the financing scheme would also cover the Mekaar (Fostering Prosperous Family Economy) collateral-free lending programme, with its annual interest rate reduced from 22 percent to 8 percent.

“The interest rate used to be 22 percent, and I have reduced it to 8 percent. Compared to 22 percent, 8 percent is quite a relief,” the president said.

Prabowo explained that the Red and White Village Cooperatives would go beyond the traditional savings and loan model based on members’ deposits and instead function as institutions providing accessible microcredit services to the wider public.

He said the cooperatives would also serve as integrated village economic service hubs, supporting local economic development through a range of essential facilities under one roof.

These hubs will include grocery stores, savings and loan services, village pharmacies, logistics centres, storage warehouses, and cold storage units designed to preserve the quality of agricultural, plantation, fishery, and other local commodities.

The president further announced that the Red and White Village Cooperatives would become the primary distribution channel for various government-subsidised goods, helping ensure assistance reaches eligible beneficiaries more efficiently.

“The Red and White Village Cooperatives will serve as integrated hubs for village economic services,” Prabowo said, underscoring the government’s commitment to strengthening rural economies and improving public welfare.