The Financial Services Authority (OJK) and the International Labour Organization (ILO) have joined forces to bring digital transformation to Indonesia's dairy sector. The two institutions officially launched the first phase of the Dairy Ecosystem Digitalization Programme in Malang, East Java, on Tuesday (12/10), a key milestone in expanding access to finance and strengthening local economies through technology.
The initiative forms part of the Promise II Impact project, a collaboration between OJK and the ILO supported by the State Secretariat for Economic Affairs (SECO) of Switzerland. The project works to make financial systems more inclusive and responsive to the needs of small enterprises and cooperatives, particularly in rural areas.
"Digitalization is not just about technology, it's about opportunity and fairness," said Hasan Fawzi, OJK's Chief Executive for Financial Sector Technology Innovation, Digital Financial Assets, and Crypto Assets Supervision. "Through this collaboration, we are helping smallholder dairy farmers who have long been underbanked or unbankable to gain access to formal financial services."
Through this collaboration, we are helping smallholder dairy farmers who have long been underbanked or unbankable to gain access to formal financial services.
Hasan Fawzi, OJK's Chief Executive for Financial Sector Technology Innovation, Digital Financial Assets, and Crypto Assets Supervision
The programme introduces an Enterprise Resource Planning (ERP) system that integrates key cooperative functions, from milk collection and logistics to finance and animal health, into one transparent digital platform. The system will also connect with Alternative Credit Scoring Providers (PKA) and Financial Services Aggregator Operators (PAJK), enabling lenders to better assess risk and extend credit to small-scale farmers.
According to Djauhari Sitorus, ILO's Promise II Impact Project Manager, this approach has already shown results elsewhere. "At the ILO, we work to create decent work for all. Through this project, we're building a more inclusive financial system powered by technology," said Djauhari. "This digital ecosystem for dairy farming is not new to us; we've tested it in Pangalengan over the past two years. The system has already improved productivity, financial access, and even animal health. Now, we're ready to bring those benefits to East Java."
At the ILO, we work to create decent work for all. Through this project, we're building a more inclusive financial system powered by technology
Djauhari Sitorus, Promise II Impact Project Manager
Malang, one of Indonesia's largest dairy-producing regions, is home to more than 12,000 dairy farmers and over 85,000 cows. With a strong cooperative base, the region is an ideal pilot for scaling up digital integration across the value chain, a move expected to boost efficiency, transparency, and income for smallholders.
The launch event also featured a talk show discussing the practical implementation of digitalization within dairy cooperatives. Speakers included Tomas Sugiono, ILO's Promise II Impact Project Coordinator, who shared how the project's interventions in West Java have transformed local value chains; Aun Gunawan, Head of Koperasi Peternakan Bandung Selatan (KPBS), who shared experiences from the cooperative's digital journey in West Java; and Eva Marliyanti, President Director of Koperasi Unit Desa (KUD) KAN Jabung Syariah, East Java, who reflected on the opportunities ahead for local dairy farmers.
Tomas explained how the Promise II Impact project leverages technology to strengthen cooperative governance and enhance farmers' access to finance. "The ERP platform provides a digital bridge between dairy farmers, cooperatives, and financial institutions, ensuring better data visibility and enabling more accurate credit scoring," he said.
The event concluded with a field visit to local dairy farms in Malang, where participants observed best practices and explored potential collaborations to further enhance the sustainability and competitiveness of Indonesia's dairy sector.
