SUSTAINING RURAL ECONOMIC TRANSFORMATION THROUGH THE MERAH PUTIH VILLAGE/SUBDISTRICT COOPERATIVE: AN ANALYSIS OF COMPETITIVE PRESSURES ON INCLUSIVE BUSINESS MODEL IN A HYBRID MARKET

Abstract

This article analyzes the Merah Putih Village/Subdistrict Cooperative (KDKMP) as an instrument for sustaining rural economic transformation in Indonesia. The program is developed through an inclusive business model structured around seven integrated business units to strengthen institutional capacity and expand rural economic activities. The analysis employs Porter’s Five Forces framework to identify the competitive pressures faced by the cooperative within a hybrid market structure-namely, the interaction between market mechanisms and government policy intervention. The findings indicate that although the national target for establishing KDKMP has been surpassed, significant operational gaps remain at the regional level, including in Central Java Province. Variations in business management capacity, limited human resources, and strong dependence on policy support have resulted in uneven operational performance among cooperatives. In addition, KDKMP faces considerable competitive pressure from local retail businesses, microfinance institutions, and consumer goods distribution networks that have already established a strong presence in rural markets. These findings underscore that the sustainability of KDKMP is determined not only by institutional expansion, but also by the cooperatives’ ability to build operational efficiency, managerial adaptability, and business competitiveness. Therefore, strengthening KDKMP as an inclusive business model requires not only policy intervention, but also market resilience at the local level.