Celios Raises Concerns Over Kopdes Merah Putih's Financial Impact

Potential Rp240 Trillion Banking Exposure

The Center of Economic and Law Studies (Celios) has expressed significant concerns regarding the government's Koperasi Desa/Kelurahan Merah Putih (Kopdes Merah Putih) program, warning that it could potentially burden Indonesia's banking sector with approximately Rp240 trillion in exposure. This substantial figure is derived from the government's claim of establishing around 80,000 koperasi, with each cooperative potentially accessing up to Rp3 billion in bank financing.

Lack of Clear Business Model Raises Default Risks

Celios' Director, Nailul Huda, emphasized that the Kopdes Merah Putih program carries high risk due to the absence of a clear business and operational model. The lack of transparency regarding how these cooperatives will operate and generate revenue raises significant concerns about their ability to repay bank loans, potentially leading to a substantial increase in non-performing loans within the banking sector.

Government's Ambiguous Koperasi Figures

The analysis highlights a discrepancy between the number of Kopdes Merah Putih reported to be operational and the government's claims. While the government asserts that approximately 80,000 koperasi have been established, only about 27,000 units have been confirmed as completed. This discrepancy further complicates the risk assessment for potential bank exposures.

Implications for Indonesian Banking Sector

If the government's figures are accurate, the potential Rp240 trillion exposure represents a significant portion of Indonesia's banking sector's total lending capacity. This scenario could have far-reaching implications for financial stability, particularly if a substantial number of these cooperatives default on their loans. The banking sector would need to absorb these losses, potentially affecting their capital adequacy ratios and overall financial health.

Regulatory Scrutiny Needed

The Celios warning underscores the need for enhanced regulatory oversight of the Kopdes Merah Putih program. Clear guidelines on the operational and financial management of these cooperatives are essential to mitigate potential risks to the banking sector. Without proper regulation and oversight, the program's ambitious targets could translate into significant financial vulnerabilities.