Jurnal Lemhannas RI (JLRI) E-ISSN : 2830-5728 Vol.
13 No.
June 2025: 183-198 DOI: 10.
55960/jlri.
https://jurnal.
id/index.
php/jkl Cooperatives and MSMEs in Strengthening Indo-Pacific Economic Resilience and Sovereignty Caturida Meiwanto Doktoralina1*.
Volkhonova Mariya Igorevna2.
Lucky Nugroho3.
Nurul Hidayah4 Universitas Dian Nusantara.
Jakarta.
Indonesia Financial University under the Government of the Russian Federation.
Russia Universitas Mercu Buana.
Jakarta.
Indonesia (*) Corresponding Author: doktoralinacm@undira.
Article Info:
Abstract Keywords:
Purpose: This article examines the contribution of cooperatives and micro, small, and medium enterprises (MSME.
to IndonesiaAos economic resilience and sovereignty amid rising geopolitical competition in the Indo-Pacific Economic Resilience.
National Competitiveness.
Medium and SMEs.
Indo-Pacific geopolitics.
ResourceBased View Article History:
Received : 19-12-2024 Revised : 28-04-2025 Accepted : 30-06-2025 Article DOI :
55960/jlri.
Study Design/Methodology/Approach: The study applies a descriptive qualitative method grounded in Systems Theory and the Resource-Based View.
It analyses secondary data drawn from government records, academic sources, and institutional publications using content and thematic analysis.
Findings: Cooperatives and MSMEs significantly support national output and community-level economic engagement.
However, their role remains peripheral in IndonesiaAos geoeconomic orientation.
Strengthening their institutional capacity through policy realignment, digital advancement, and deeper integration into regional supply chains is essential to reinforce their resilience and economic sovereignty.
Originality/Value: By framing cooperatives and MSMEs within the Astagatra framework, the article highlights their relevance to both social and natural resilience pillars of national strength.
Their embeddedness within grassroots economic structures and their adaptive capacity provide a foundation for decentralised economic defence.
The article offers a novel perspective by linking community-based economic actors to IndonesiaAos long-term national resilience agenda, advancing geostrategic discourse beyond state-centric paradigms.
How to cite : Hasan Syadzily.
TB.
Ace .
An Examination of Pesantren Regulatory Policy within the Framework of National Resilience.
Jurnal Lemhannas RI, 13.
, 183-198.
https://doi.
org/10.
55960/jlri.
This work is licensed under a Creative Commons Attribution-ShareAlike 4.
0 International License.
Any further distribution of this work must maintain attribution to the author.
and the title of the work, journal citation and DOI | A 2025 The Author.
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INTRODUCTION
The Indo-Pacific region currently occupies a central position in global discussions due to its strategic importance as a vital route for world trade and the increasingly complex geopolitical dynamics that define it (Koga, 2.
This region has become an arena for strategic competition between major global powers, particularly the United States and China.
This competition manifests not only in military terms but also through soft power, including economic influence, infrastructure investments, and strategic alliances (Syahputra et al.
, 2.
Indonesia, strategically located in the heart of the IndoPacific, holds a critical position (Anwar, 2.
In this regard, economic resilience becomes essential in strengthening national sovereignty.
Cooperatives and Micro.
Small, and Medium Enterprises (MSME.
are instrumental in creating a resilient and independent domestic economic framework (D.
Scott, 2.
In this regard, economic resilience becomes essential in strengthening national sovereignty.
Cooperatives and Micro.
Small, and Medium Enterprises (MSME.
are instrumental in creating a resilient and independent domestic economic framework (Rani et al.
, 2.
The importance of fortifying these sectors is underscored by their significant contribution to the national According to the Ministry of Cooperatives and SMEs (Kemenkop, 2.
, 4 million MSME operators employ 123.
3 million workers, accounting for 71% of the total national workforce.
Furthermore, this sector contributes over 60% to IndonesiaAos Gross Domestic Product (GDP).
These figures reveal that cooperatives and MSMEs are not only the primary drivers of the people's economy but also fundamental pillars in maintaining the stability and sustainability of the national economy (Rohadin & Yanah, 2019.
Widodo et al.
, 2.
This role is becoming increasingly significant amid geopolitical tensions, as cooperatives and MSMEs serve as a socio-economic cushion, mitigating vulnerabilities to external shocks, whether economic, political, or security-related (Agosyn et al.
, 2011.
Labetubun et al.
, 2.
Global shocks, including the COVID-19 pandemic and intensifying geopolitical tensions in the Indo-Pacific, have tested the economic resilience of cooperatives and MSMEs in Indonesia.
A national survey by the Insight Center indicated that over 63 per cent of MSME operators experienced revenue declines exceeding 30 per cent during Cooperatives, functioning as public-oriented financial institutions, encountered serious liquidity constraints as a result of rising non-performing loans and significant member withdrawals (DAoAmato et al.
, 2.
The vulnerability of both sectors has become increasingly evident, particularly given their substantial contribution to national output and community-based economic participation.
Despite this contribution, cooperatives and MSMEs remain structurally marginal in IndonesiaAos economic defence A lack of integration into global value chains continues to reduce their international competitiveness (Grashuis, 2.
Furthermore, enterprises in remote and coastal regions continue to experience limited access to financial services, technological innovation, and reliable market information (Maiti & Kayal, 2.
Low levels of digital literacy and minimal utilisation of information technology in operational management have further reduced efficiency and productivity (Umboh & Aryanto, 2.
Incidents involving KSP Indosurya and Sejahtera Bersama have damaged public trust in cooperatives as accountable collective institutions (Kocher et al.
, 2015.
Pak et al.
, 2.
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Most notably, the contribution of cooperatives and MSMEs to civil components of national defence has yet to be integrated into development policy, despite the recognition that local economic resilience represents a core foundation of national resilience within the Astagatra framework (Saputro et al.
, 2.
The research examines how cooperatives and MSMEs support IndonesiaAos national economic resilience and strategic positioning in the Indo-Pacific region.
The study adopts a multidisciplinary approach to explore the economic potential of these sectors and their relevance to geoeconomic strategies and civil defence.
Three guiding questions frame the First, in what ways do cooperatives and MSMEs strengthen national economic resilience amid structural pressures? Second, how can these economic actors improve IndonesiaAos competitiveness under increasing geopolitical tensions in the IndoPacific? Third, how do they support decentralised civil defence mechanisms aligned with the Astagatra framework? This work aims to contribute to the development of inclusive, community-based economic policies that enhance IndonesiaAos capacity to shape a peaceful and sustainable Indo-Pacific order.
By exploring the informal sectorAos role in promoting national stability, the study highlights the strategic importance of grassroots economies within geoeconomic and non-military resilience frameworks.
Theoretically, the article advances the literature on community economics by linking it to economic geopolitics and sustainable The integration of perspectives from development economics, strategic studies, and institutional governance sets the analysis apart from previous studies.
Practically, the findings provide a roadmap for strengthening cooperatives and MSMEs through innovation, adaptability, and long-term sustainability.
The policy recommendations offer relevant insights for designing decentralised resilience strategies that align with IndonesiaAos maritime vision.
Drawing on the work of Dewantoro & Doktoralina .
Doktoralina et al.
, the study positions cooperatives and MSMEs as essential pillars of national economic resilience in an increasingly interconnected and contested Indo-Pacific region.
LITERATURE REVIEW
Grand Theory This article applies Systems Theory and the Resource-Based View (RBV) to analyse how cooperatives and MSMEs strengthen national economic resilience within the Indo-Pacific region.
Systems Theory views these entities as integral components of a broader economic structure, requiring coordination and integration to ensure system-wide resilience (Caws, 2.
Their collective nature and embeddedness in social systems enable stronger recovery in times of crisis (Osumba & Oboka, 2.
Meanwhile.
RBV highlights how cooperatives and MSMEs gain competitive strength from internal resources, including local knowledge, social capital, and adaptive capabilities (Barney.
By combining both frameworks, the study evaluates how these institutions mobilise unique strengths, contribute to economic coherence, and respond to regional geopolitical shifts.
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Cooperation In accordance with Law No.
25 of 1992, cooperatives are business entities formed by individuals or cooperative legal entities that operate based on cooperative principles and serve as a people's economic movement grounded in kinship (Warnilah et al.
, 2.
Cooperatives function as both social and economic institutions, prioritising member participation, equitable benefit distribution, and the principle of solidarity (Fardiansyah et al.
, 2022.
Gil et al.
, 2021.
Lailatul et al.
, 2.
Micro.
Small, and Medium Enterprises (MSME.
Micro.
Small, and Medium Enterprises (MSME.
are categorised based on asset value, annual turnover, and workforce size.
In Indonesia.
MSMEs contribute more than 60 per cent to the gross domestic product (GDP) and involve over 96 per cent of the national labour force (Herliansyah et al.
, 2020.
Rumijati & Hakim, 2.
MSMEs significantly support job generation, reinforce domestic consumption, and drive economic growth in peripheral and underdeveloped areas.
Economic Resilience Economic resilience denotes the capacity of a country or community to absorb, adapt to, and recover from external shocks, including financial crises, pandemics, and geopolitical instability.
At the policy level, economic resilience aligns with national resilience through the development of a strong and self-reliant peopleAos economy.
Gupta & Singh .
and Nugroho et al.
emphasise that the survival of MSMEs during the pandemic relied heavily on their adaptive responses to market and technological National Competitiveness National competitiveness reflects a countryAos capacity to produce goods and services that perform effectively in international markets while promoting sustainable income growth for its population.
Rather than relying solely on large corporations, competitiveness also emerges from the contribution of cooperatives and MSMEs, which advance innovation, entrepreneurship, and inclusive economic progress (Endris & Kassegn, 2.
Indo-Pacific Geopolitical Tensions The Indo-Pacific region has become a focal point of strategic rivalry among major global powers, particularly the United States and China.
Ongoing disputes in the South China Sea, the formation of strategic alliances, and the proliferation of competing economic initiatives, including the Belt and Road Initiative and the Indo-Pacific Economic Framework (IPEF), continue to escalate geopolitical tensions.
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developments influence regional trade patterns, disrupt logistics infrastructure, and undermine overall stability (Ibrahim et al.
, 2023.
Li, 2.
Research Concept Framework The conceptual framework developed in this article draws on grand theory and the defined variables to illustrate how geopolitical developments in the Indo-Pacific shape national economic structures through trade, investment, and institutional Cooperatives and MSMEs operate as foundational actors in fostering economic resilience at the community level.
By enhancing their institutional capabilities, advancing technological innovation, and facilitating integration into global value chains, their strategic function becomes increasingly prominent.
Economic resilience serves as a key mediating variable that strengthens the national capacity to absorb shocks and enhances the countryAos negotiating position in international economic forums.
National competitiveness is positioned as the expected outcome, shaped by the adaptive strength and resilience of cooperatives and MSMEs.
As illustrated in Figure 1, this framework suggests a causal relationship in which geopolitical pressures influence national economies, while cooperatives and MSMEs moderate these effects by reinforcing both resilience and competitiveness.
Source: From various sources that have been processed Figure 1.
Research Conceptual Framework
METHODS
Research Design This study applies a descriptive qualitative approach to provide a systematic, factual, and accurate account of the role of cooperatives and MSMEs in enhancing national economic resilience and competitiveness amid geopolitical tensions in the IndoPacific region.
According to Creswell & Creswell .
, qualitative research is appropriate for exploring complex social phenomena that require contextual and interpretative analysis.
This method offers a suitable framework to examine interconnected socio-economic dynamics influenced by both global developments and domestic institutional frameworks.
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examination of how cooperatives and MSMEs apply practices, strategies, and policies that support economic adaptability.
Instead of using experimental procedures or quantitative hypothesis testing, the study adopts an interpretive method by analysing secondary data obtained from government reports, academic literature, and institutional The analytical process involves describing, synthesising, and critically evaluating these sources to construct a coherent understanding of how grassroots economic actors contribute to national resilience.
Data Collection Sources and Techniques This study adopts secondary data as its primary source, drawing from documents, official reports, scholarly articles, government policies, and research findings issued by relevant national and international institutions.
The adoption of secondary data is appropriate given the macro nature of this research, which requires a broad historical The data comprise academic journal articles and conference proceedings that offer critical analyses of geoeconomic strategies, the role of MSMEs and cooperatives in national resilience, and the relationship between geopolitical dynamics and domestic Data Analysis Process The data analysis was conducted using content and thematic analysis techniques.
Both methods are used to interpret the content of secondary documents and identify patterns, themes, and conceptual relationships relevant to the research questions.
Furthermore, the research theme was analysed based on document narratives, macroeconomic context, and alignment with the grand theories (Systems Theory and RBV).
The results of this analysis are then assembled to answer two main research questions, namely: .
How can cooperatives and MSMEs strengthen Indonesia's economic resilience?.
How can cooperatives and MSMEs increase national competitiveness amid geopolitical tensions in the Indo-Pacific region?.
The research process begins by identifying global phenomena (Indo-Pacific tension.
, then moves to domestic responses .
he role of cooperatives and MSME.
, and then to expected outputs .
esilience and national competitivenes.
Using the grand theory of Systems Theory, the relationship between system elements .
lobal, national, communit.
can be explained comprehensively.
Meanwhile, the RBV framework is applied to examine how the internal capabilities of cooperatives and MSMEs can serve as sources of advantage in the context of global competition.
Therefore, through this approach, the research seeks to describe the phenomenon and build a strategic argument that strengthening cooperatives and MSMEs constitutes a long-term investment in enhancing IndonesiaAos sovereignty and economic leverage.
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RESULT AND DISCUSSION
Cooperatives and MSMEs can Strengthen Indonesia's Economic Resilience National economic resilience is crucial in maintaining the country's stability and sovereignty, especially amid increasingly uncertain global dynamics (Bristow & Healy.
In the Indonesian context, the role of cooperatives and MSMEs has become significant as a grassroots economic force in direct contact with the broader community (Fadjarenie et al.
, 2024.
Istianah & Nugroho, 2024.
Nugroho et al.
, 2.
Based on Systems Theory developed by Ludwig von Bertalanffy, cooperatives and MSMEs can be seen as a complex national economic system subsystem.
This theory emphasizes the importance of interconnectedness and interdependence between system elements to achieve stability and resilience.
This means that strengthening the cooperative and MSME sectors will positively impact national economic performance.
Cooperatives and MSMEs contribute substantially to IndonesiaAos economic They engage over 96% of the national workforce and account for more than 60% of the Gross Domestic Product (GDP), serving as drivers of economic growth and pillars of social and economic resilience, particularly among lower-income communities (Hasan et al.
, 2.
From a Systems Theory perspective, strengthening these subsystems through targeted policies and institutional support enhances the stability of the national economic system in facing external pressures, including global crises and Indo-Pacific geopolitical tensions.
The Resource-Based View (RBV) further explains that competitive advantage stems from unique and inimitable resources.
In the case of cooperatives and MSMEs, these include strong community ties, social capital, flexible decision-making, and rich local knowledge.
When managed effectively and innovatively, these resources position cooperatives and MSMEs to reinforce national competitiveness.
This strategic potential underscores the importance of accelerating digital transformation, improving managerial capabilities, and expanding their integration into both domestic and international economic networks.
Geopolitical tensions in the Indo-Pacific, particularly the rivalry between major powers including the United States and China, influence global trade structures, disrupt supply chain stability, and affect the investment climate (Riyanto et al.
, 2.
For Indonesia, these dynamics present an opportunity to reinforce domestic economic resilience by optimising the contribution of cooperatives and MSMEs.
As decentralised and community-driven entities, they demonstrate a high degree of adaptability due to their flexible operational structures and responsiveness to local socio-economic conditions.
During the COVID-19 pandemic, although many suffered financial setbacks, cooperatives and MSMEs exhibited notable endurance.
A recent survey indicates that over 63% of MSMEs experienced turnover reductions exceeding 30% (Nugroho.
Briandana, et al.
, 2.
Despite these challenges, numerous enterprises managed to recover by leveraging strong community networks and adopting digital technologies and innovative business models.
This capacity to recover aligns with the concept of systemic resilience in Systems Theory and reflects the effective utilisation of unique internal resources, as emphasised in the Resource-Based View.
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Cooperatives and MSMEs face structural challenges, including low digital literacy, limited access to finance and markets, and weak governance (Sacchetti & Tortia, .
and Santoso et al.
, .
Cases like Indosurya have eroded public trust in cooperative Strengthening these sectors requires inclusive financing, digital training, supply chain integration, and governance reform.
From a Systems Theory perspective, such interventions enhance interdependence within the national economy, while the Resource-Based View positions them as means to optimise unique internal capacities.
Saputro et al.
argue that national defence strategies should incorporate economic resilience by empowering grassroots production and logistics systems.
Digital transformation, supported by collaborative efforts across sectors, fosters broader market access and governance efficiency (Chege et al.
, 2019.
Imani et al.
, 2023.
Nugroho.
Melzatia, et al.
, 2024.
Ritz et al.
, 2.
Systems Theory regards digitalisation as a mechanism for adaptation, and RBV sees it as a dynamic capability for sustaining competitive advantage.
Ultimately, cooperatives and MSMEs must be recognised as strategic pillars of non-military economic defence amid Indo-Pacific geopolitical Cooperatives and MSMEs can Increase National Competitiveness Amid Geopolitical Tensions in the Indo-Pacific Region The Indo-Pacific region has become the epicentre of global power competition, characterised by intensifying military rivalries and geoeconomic pressures.
Strategic maritime corridors such as the South China Sea, the Malacca Strait, and the Indian Ocean have emerged as arenas of influence among the United States.
China, and other regional actors (Lanteigne, 2008.
Sidik et al.
, 2.
Heightened tensions undermine regional stability and compel developing nations, including Indonesia, to enhance national competitiveness through resilient economic strategies.
Cooperatives and MSMEs serve as key grassroots economic agents that strengthen the domestic economy by promoting inclusive growth and fostering sustainable development (Laorden et al.
, 2.
Referring to Ludwig von Bertalanffy's Systems Theory, a state must be understood as an integrated entity rather than a set of isolated components (Slaton & Hurst, 2.
National competitiveness depends not only on macroeconomic policies and the performance of large industrial sectors but also on the resilience of small-scale economic actors within society.
Cooperatives and MSMEs function as essential subsystems within the national economy by contributing substantially to Gross Domestic Product (GDP), distributing welfare, and facilitating labour absorption.
Roberts et al.
emphasise that geoeconomics has emerged as a central arena of interstate Conflicts affecting maritime logistics, including disputes in the South China Sea, highlight the need for robust domestic economic systems.
Countries equipped with adaptable and community-rooted structures are more capable of sustaining economic performance amid external disruptions.
By positioning cooperatives and MSMEs as integral components of the national economy.
Indonesia can enhance its capacity to absorb external shocks and maintain long-term resilience.
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While Systems Theory outlines the role of cooperatives and MSMEs within macroeconomic structures.
BarneyAos Resource-Based View .
offers a perspective focused on internal capabilities.
The theory asserts that competitive advantage arises from the effective management of resources that are valuable, rare, and difficult to replicate.
Cooperatives and MSMEs in Indonesia possess intangible strengths, including trust-based social networks, strong social capital, and close integration with local communities.
Koesrianti and Tanega .
demonstrate that digital transformation and institutional strengthening significantly improve the contribution of MSMEs to the national digital economy, supported by findings from Teng et al.
By managing their human resources, local linkages, and digital tools effectively, cooperatives and MSMEs can establish a resilient and competitive foundation amidst geopolitical shifts.
One major challenge remains digital integration.
Although Indonesia has approximately 64 million MSMEs, only about 32 per cent have adopted digital platforms (Badriyah & Muhtarom.
The limited engagement of MSMEs in digital activities has constrained their contribution to the national economy.
In 2022, their share of IndonesiaAos digital gross domestic product reached only 5.
7 per cent, which remains significantly below their actual potential (Koesrianti & Tanega, 2.
Within the framework of the ResourceBased View, information and communication technologies represent dynamic capabilities that improve operational efficiency, broaden market access, and reinforce bargaining position.
(Doktoralina et al.
, 2.
emphasised that digital transformation models designed for coastal and community-based enterprises can reduce disparities and support inclusive competitiveness.
Strengthening national competitiveness, therefore, requires coordinated policy support in the form of structured training, investment in digital infrastructure, and well-targeted fiscal incentives.
Eraydn .
Rizzi et al.
, and M.
Scott .
, emphasise that geoeconomic resilience rooted in communities forms a crucial pillar of economic The Indo-Pacific tensions disrupt trade, investment, logistics, and food and energy systems, which presents an opportunity for cooperatives and MSMEs to contribute to non-military national defence strategies.
By empowering local economic actors, governments can secure the distribution of essential goods when global supply chains are under strain.
Systems Theory supports the notion that democratically managed cooperatives may function as decentralised logistics centres, microfinance hubs, and local food managers.
Digitally capable MSMEs further ensure continuity in essential services.
Chibanda et al.
, and Messabia et al.
point out institutional weaknesses and a lack of transparency in many cooperatives, which has eroded public trust.
MSMEs also face constraints involving capital, bureaucratic complexity, and limited global market To overcome these challenges, integrated and harmonised policies between central and regional authorities are needed, covering mentorship, digital literacy, fiscal instruments, and regulatory coherence.
Long-term strategies to elevate national competitiveness should embed inclusive and sustainable cooperativeAeMSME ecosystems supported by partnerships across government, private sectors, and academia.
Evidence from community programmes in Banjarnegara and Ciwandan (Harsono et al.
, 2.
illustrates the transformative role of grassroots initiatives.
Strengthened institutions.
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enhanced digital capabilities, and reformed governance will reinforce IndonesiaAos ambition as a maritime nation with robust economic and social resilience.
CONCLUSION
This article concludes that cooperatives and micro, small, and medium enterprises (MSME.
are strategic actors in reinforcing IndonesiaAos economic resilience and advancing its national competitiveness amid escalating geopolitical challenges in the Indo-Pacific region.
Systems Theory frames cooperatives and MSMEs as interconnected components within the broader national economy, while the Resource-Based View (RBV) highlights the value of unique internal resources, including social capital, local knowledge, and adaptability, in sustaining long-term competitive advantage.
Despite their potential, several structural constraints persist, particularly in the areas of digital adoption, access to finance, and institutional governance.
These challenges require immediate policy attention through structured and inclusive interventions.
Theoretically, this study expands the literature by integrating grassroots economic frameworks into national resilience discourse, connecting cooperative and MSME development with the dual imperatives of economic sovereignty and social stability.
Practically, government, academic, and private-sector collaboration must support digital innovation, institutional reform, and integration into global markets.
From a policy perspective, strengthening community-based economic systems contributes directly to national resilience as defined within the Astagatra framework.
A resilient economic structure at the grassroots level enhances the capacity of the nation to adapt to external shocks while preserving social cohesion and economic independence.
Further empirical research using mixed methods, particularly in maritime and frontier regions, will be instrumental in validating the strategic role of cooperatives and MSMEs in national REFERENCE