Challenges for Village Cooperatives in Indonesia: Human Resources to Business Competition

A May 2025 survey by the Center of Economic and Law Studies (Celios) identified seven key challenges facing village cooperatives in Indonesia.

The most prevalent issue reported by respondents was the lack of quality or capability among the human resources (HR) managing the cooperatives.

"Many cooperatives are still managed by administrators lacking adequate managerial capacity, in areas such as business planning, financial management, and member services," Celios stated in its report, *Ko Peras Desa Merah Putih Pedoman Pelaksanaan, Perubahan dan Alternatif Program* (Red and White Village Cooperative: Guidelines for Implementation, Changes, and Program Alternatives).

Celios noted that this lack of professionalism often leads to non-transparent governance, minimal accountability, and unresponsiveness to market dynamics. This, in turn, contributes to low trust among members and the wider community.

"Furthermore, limited infrastructure, both physical and digital, presents an additional obstacle to improving operational efficiency and market access," Celios added.

The following list details the main problems facing Indonesian village cooperatives, based on the Celios May 2025 survey:

• Lack of managerial capability: 68%
• Lack of capital: 38%
• Inadequate infrastructure: 31%
• Inter-member conflict: 14%
• Low interest from villagers in cooperatives: 13%
• Low community participation: 13%
• Competition with other business institutions: 11%

Concurrently, Celios also gathered respondent opinions on solutions needed for the development of village cooperatives in Indonesia. The results are as follows:

• Increased training and capacity building for cooperative managers: 78%
• Public education to increase participation: 50%
• Easier access to capital: 46%
• Development of cooperative infrastructure such as buildings or facilities: 43%
• Provision of information technology to facilitate cooperative management: 39%
• Provision of wider market access for cooperative products: 35%
• Development of flagship local products for marketing: 34%
• Collaboration with private sector entities, inter-regional collaborations, or state-owned enterprises (SOEs): 32%

"This highlights that the biggest challenges facing cooperatives lie in human resources and institutional governance. Therefore, improving the capabilities of managers is considered more fundamental than addressing capital shortages and infrastructure limitations," Celios stated.

Celios conducted this survey with 108 respondents working as village officials across 34 provinces in Indonesia. Data collection took place from May 3rd to 20th, 2025, using a quantitative approach and multistage random sampling.