Jakarta has built 15,845 village co-ops, and the army holds some of the keys

Indonesia had finished 15,845 Merah Putih village cooperatives by July, with 19,539 more under construction and a target of 80,000. Jeff Neilson went to see some of them and, writing for New Mandala, quotes the phrase villagers kept using: murni top-down, purely top-down. Each building costs about 3 billion rupiah, near US$166,000, and comes in the same 20 by 30 metre shape whether the village sits on a rice plain or a mountainside. The scheme has already taken more than 34 trillion rupiah out of this year's national budget.

The money is the part villages feel first. Most of it is not new money: it is taken from the Dana Desa, the yearly Village Fund each village used to spend on its own priorities. Villages also carry state-bank loans for the buildings, at 6 per cent interest over six years, repaid by cutting the transfers Jakarta sends them. One village head told Neilson his allocation fell from 900 million rupiah to 400 million. "What can I do with only 400 million?" he asked.

Control runs the same direction. Babinsa and Koramil, the army's village and sub-district posts, hold the keys to some of the buildings and attend village meetings to see that the decision comes out right. One village head put it plainly: "Whether we want to or not, we must." A village that refuses can lose its funds. The members are mostly officials who were already in the village office, and their compulsory share payments often come from the village budget rather than their own pockets.

Indonesia Corruption Watch found markups of 60 to 69 million rupiah on each imported pickup truck bought for the cooperatives, which across the fleet reaches into the trillions. Agrinas, the state company building and running the network, got the work by presidential assignment instead of open tender. In North Toraja only 17 of 111 villages had a finished cooperative by July, mostly because people would not hand over customary land. Staff at one warehouse were already talking about turning it into badminton courts.

Why it matters

If your village has one of these buildings going up, the road, clinic or irrigation work you were expecting from the Village Fund is probably what paid for it, and the loan repayment will keep eating the transfer for six years. Warung owners have a second problem, because a state-backed shop selling the same goods next door does not compete on equal terms. Ask your village head two questions: how much Dana Desa is left this year, and who signed for the loan.