Indonesia Puts Villages at the Centre of Development, Minister Says

Indonesia's government says development should start in the village rather than the capital, and it is building a national cooperative network to make that happen. For international investors the policy is worth following, although the source reports on village economics rather than on property.

From objects to subjects

The minister responsible for villages and disadvantaged regions says that, over the first two years of the current presidency, villages have become the main subject of development. He contrasted this with earlier administrations, arguing that villages "have usually been made objects, not subjects." The stated aim is economic equity and poverty reduction through a bottom-up approach, anchored in the sixth of the government's eight development missions, known as Asta Cita.

The Red and White Village Cooperatives

The main instrument is the Red and White Village Cooperatives, known as KDMP. According to the minister, they are meant to strengthen the community economy and to make sure villagers can buy subsidised goods. The cooperatives are designed to run alongside Village-Owned Enterprises (BUMDes), with a division of business areas so that the two reinforce each other rather than overlap. BUMDes will focus on business development, such as export villages, tourism villages and thematic villages. The cooperatives will secure access to subsidised goods.

The minister's main example is liquefied petroleum gas (LPG). Subsidised LPG is still found at Rp24,000 to Rp30,000 in several places. Through the cooperatives, the price is expected to fall to around Rp16,000 to Rp18,000. At a reference rate of about Rp16,500 to the US dollar, that is a difference of roughly USD 0.36 to 0.73 per unit. The source does not give the cylinder size, so the saving per household cannot be calculated from it.

Who owns the assets

The minister said the cooperatives' assets will eventually belong fully to the village. Residual business income, known as SHU, is to be split 20 percent to the village's own-source revenue and 80 percent to cooperative members. The cooperatives are formed through special village deliberations involving the village head, the Village Consultative Body (BPD) and community figures. This structure matters because it ties the economic return to local government and residents, rather than to an outside operator.

Targets and progress

Of a target of 80,000 cooperatives, around 35,000 are targeted to finish construction by the end of October 2026, and around 10,000 are already operating. The figures in the source are:

80,000 cooperatives targeted ~35,000 targeted to finish construction by end October 2026 ~10,000 already operating

The distance between the target and current operations is wide. The source gives no timetable beyond October 2026 for the remaining cooperatives. Programmes of this scale often change in scope and speed, so these numbers should be read as official targets and progress reports, not as independently verified results.

What this means for investors

The source does not mention property, land, rental yields or foreign investment. Any direct link to the South Lombok market would therefore be an inference, not a finding. Three points are worth tracking:

• Village-level income. If cooperatives lower household costs and channel business income back to villages, spending power in rural areas could change. The source does not quantify this effect.
• Tourism villages. Tourism is one of the three focus areas named for BUMDes. The source gives no list of villages or locations, so it does not show where, if anywhere on Lombok, this will happen.
• Ownership context. Anyone considering property in Indonesia should keep the foreign-ownership rules in view. Foreigners cannot hold freehold (Hak Milik), which is reserved for Indonesian citizens. Their routes are leasehold (Hak Sewa), Hak Pakai, or a PT PMA holding Hak Guna Bangunan (HGB). Nothing in the source alters those rules.

The next checkpoints will be the end of October 2026 construction target and whether subsidised LPG prices fall toward the expected range. Those two observations will tell investors more about the policy than any announcement.

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