Indonesia launches digitalization and inclusive financial access initiative for the dairy sector in East Java

MALANG, East Java (Press release) – The International Labour Organization (ILO), in collaboration with the Financial Services Authority (OJK), the Coordinating Ministry for Economic Affairs, the East Java Provincial Government, and the Swiss Government through the State Secretariat for Economic Affairs (SECO), today (11/6) launched an Enterprise Resource Planning (ERP) system and an initiative to enhance access to inclusive finance for the dairy sector in East Java.

The launch, held at the Agro Niaga Cooperative (KAN) Jabung in Malang Regency, marks an important step in accelerating the digital transformation of the dairy farming sector while strengthening an inclusive financial ecosystem that supports farmers, cooperatives, and businesses along the dairy value chain.

One of the main challenges is the limited availability of well-documented and reliable business data that can be trusted by financial institutions. This condition often creates information gaps that complicate risk assessment and, consequently, limit farmers’ access to formal financing sources and business development opportunities.

To address this, the ILO, through the Promoting SME Enterprises through Improved Access of Entrepreneurs to Financial Services Phase 2 (Promise II Impact) project, together with OJK and the East Java Provincial Government, supports the development and implementation of ERP systems in three dairy cooperatives: KAN Jabung in Malang Regency, Setia Kawan Cooperative in Pasuruan Regency, and Tani Wilis Cooperative in Tulungagung Regency.

This ERP system facilitates the management of production data, ensures milk quality, improves business transactions, and creates more integrated, transparent, and real-time cooperative member profiles. Beyond administrative digitalization, ERP also serves as a foundation for developing a more inclusive financial ecosystem.

The Governor of East Java, Khofifah Indar Parawansa, stated that the dairy sector plays a strategic role in regional economic development while supporting national food security. She emphasized that strengthening the dairy sector is not only about increasing milk production but also about improving farmers’ welfare, strengthening cooperatives, and building a more resilient rural economy.

“Through digitalization and expanded access to finance, we are building a new foundation for a livestock sector that is accountable, modern, and competitive,” said Governor Khofifah, welcoming the collaboration.

Meanwhile, OJK’s Chief Executive for Financial Technology Innovation, Digital Financial Assets, and Crypto Assets Supervision, Adi Budiarso, highlighted that digitalization of the real sector is an important part of the national strategy to expand productive financial inclusion. According to him, developing data-based ecosystems such as ERP will strengthen trust and expand farmers’ access to various financial products and services that support business growth.

Systematically documented data can help financial institutions better understand farmers’ business profiles, open opportunities for data-based credit scoring, and expand access to financing, livestock insurance, and other formal financial services. This digitalization not only improves cooperative operational efficiency but also creates new economic opportunities for thousands of farmers and their families.

“When technology is used to strengthen grassroots enterprises, its impact goes beyond increasing productivity and expanding access to financing—it also strengthens business resilience and creates better job opportunities,” said Simrin Singh, ILO Director for Indonesia and Timor-Leste. “This partnership demonstrates how innovation, public policy, and multi-stakeholder collaboration can work together to ensure more inclusive economic growth.”

The Swiss Ambassador to Indonesia, Timor-Leste, and ASEAN, Olivier Zehnder, reaffirmed the Swiss Government’s support, stating: “When farmers have better access to information, technology, and financial services, they gain greater capacity to invest, become more productive, and contribute to regional economic development. We are proud to support partnerships that deliver tangible impacts for communities.”

This launch also marks a renewed joint commitment among the government, cooperatives, financial institutions, dairy processing industries, and development partners to continue strengthening the dairy sector ecosystem in East Java. This collaborative model is expected to serve as an example for developing other MSME value chains in Indonesia, contributing to stronger national and regional economic growth.