Since long ago, villages have been directed to manage their own businesses. This is stated in the Explanation to Article 21 of Law Number 5 of 1979 concerning Village Government. In Law Number 22 of 1999 concerning Regional Government it is stated that villages can establish business entities, which was then confirmed through Law Number 32 of 2004 concerning Regional Government and Government Regulation Number 72 of 2005 concerning Villages.
This was then followed up with the issuance of Minister of Home Affairs Regulation (Permendagri) Number 39 of 2010 concerning Village-Owned Enterprises (BUM Desa). The issuance of the Minister of Home Affairs Regulation is accompanied by support from various central and regional government programs to stimulate the village economy which is expected to improve the welfare of village communities.
