PATTIRO: BUMDes are considered to still need to strengthen governance and regulations

March 6, 2015

PATTIRO: BUMDes are considered to still need to strengthen governance and regulations

Jakarta – Executive Director of the Regional Research and Information Center (PATTIRO) Sad Dian Utomo said that the Ministry of Villages, Development of Disadvantaged Regions and Transmigration’s target of establishing Village-Owned Enterprises (BUMDes), in a number of villages, needs to be balanced with strengthening governance rules and regulations.

Dian said that the government should focus on establishing BUMDes in villages where village government conditions are running optimally. According to him, BUMDes must be institutionalized in village governance and the village economy.

Dian said that BUMDes should be established in independent villages that are able to optimize government functions, social institutions and village economic institutions as a whole.

“The three institutions, namely social, economic and government must run in balance,” said Dian in a press statement, Thursday (5/3/2015).

Apart from that, according to Dian, the legal basis for establishing BUMDes is still considered weak, even though the Minister of Villages has issued Ministerial Regulation Number 4 of 2015 concerning the Establishment, Management and Management and Dissolution of Village-Owned Enterprises.

Dian said that a weak legal basis makes BUMDes vulnerable to creating conflicts of interest. The conditions for establishing BUMDes through village deliberations and determined by village regulations are considered to have the potential to trap village heads in conflicts over natural resource management. The reason is, in many villages, management of natural resources has been handed over to the private sector.

For this reason, it is deemed necessary for the Ministry of Villages to develop a strategy for the formation and development of BUMDesa in the future (road map), especially by paying attention to the basic legal aspects to deal with possible conflicts and lawsuits.

Dian added that the Ministry of Villages also needs to fight for BUMDes to be legal entities and be on par with Cooperatives and Limited Liability Companies (PT). This is useful for increasing business opportunities to a higher level.

*This press release was published in the Thursday, March 6, 2015 edition ofbisniskeuangan.kompas.com. Click here to read.