Integration of BUMD and BUMDes to Maximize Existing Potential in
Indonesia
Karina Kurniawati H., Salsa Wirabuana Dewi, Usman Fathoni, Keren Yuni S. and Putri Selfi W.R.
Magister of Notarial Law, Faculty of Law Universitas Airlangga Surabaya Indonesia, Department of Airlangga University
Jl. Dharmwangsa dalam selatan, Surabaya
Keywords: BUMD, BUMDes, Indonesia.
Abstract: Since the Law of the Republic of Indonesia number 6 of 2014 concerning Village has been ratified on January
15th, 2014, Indonesia has BUMDes as coordinating institution for the welfare of society especially in the
village. One of the purposes of the government ratification on the Law of the Republic of Indonesia number
6 of 2014 is to advance the economy of village society and overcome the national development gap. In 2015,
when Indonesia agreed to join the 2030 Agenda for Sustainable Development Goals proposed by United
Nations, there are two points of Sustainable Development Goals (SDGs) which are in line with the Law of
the Republic of Indonesia number 6 of 2014. The two points are; Decent Work and Economic Growth (point
number 8) and Reduced Inequalities (point number 10). Unfortunately, after a couple of years of
implementation, the researchers still cannot see satisfactory results that many are expecting from the
application of the newly ratified law even after the government has given a quite significant amount of fund
to each village since the ratification of the law in 2014. The researchers found that the lack of clear objectives
and mentorship from more experienced organizations as well as systematic operational procedures that many
of these newly found BUMDes are experiencing may have contributed to the slow process of these BUMDes
growths.
1 INTRODUCTION
In September 2015, the General Assembly applied the
2030 Agenda for Sustainable Development which
includes 17 Sustainable Development Goals (SDGs).
Based on the principle of "leaving no one behind", the
new Agenda emphasizes a holistic approach to
achieve sustainable development for the public (UN,
2019).
Adopted by all United Nations Member States in
2015, the 2030 Agenda for Sustainable Development
provides a shared blueprint for peace and prosperity
for people and the planet, today and tomorrow. At its
heart are the 17 SDSs, an urgent call for action by all
developed and developing countries in a global
partnership. These countries realize that ending
poverty and other deprivations must go hand-in-hand
with strategies which can improve health and
education, reduce inequality, improve economic
growth, resolve climate change, as well as preserve
the oceans and forests (UN, 2019).
Collectively, they offer broader insights of
sustainable development and give a sense of the
extent of the 2030 Agenda for Sustainable
Development as well as its diverse social, economic,
and environmental issues (Shawki, 2016) into five
core principle which balancing them. The five core
principles are people, planet, prosperity, peace, and
partnership. These five principles distinguish the 17
SDGs from Millennium Development Goals
(MDGs). MDGs had 8 goals and as the agenda ended,
SDGs proposed "a new development agenda, has
been conceived to continue what the MDGs have
started in the next fifteen years and may have to be
applied to all countries for societal peace, more job
opportunities and a global agreement for eliminating
change" (Sumil, 2015).
562
H, K., Dewi, S., Fathoni, U., Yuni S., K. and Selfi W. R., P.
Integration of BUMD and BUMDes to Maximize Existing Potential in Indonesia.
DOI: 10.5220/0008433705620567
In Proceedings of the 2nd International Conference on Inclusive Business in the Changing World (ICIB 2019), pages 562-567
ISBN: 978-989-758-408-4
Copyright
c
 2020 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

Table 1: Sustainable Development Goals
Source: 2030 Agenda for Sustainable Development
Integration of BUMD and BUMDes to Maximize Existing Potential in Indonesia
563

SDGs are approved by 193 countries which are the
member of UN including Indonesia. In Indonesia,
Joko Widodo as the President ratified Presidential
Decree of Republic of Indonesia number 59 of 2017
regarding Achieving the Sustainable Development
Goals, on July 4th, 2017. Presidential Decree of the
Republic of Indonesia number 59 of 2017 regarding
Achieving the Sustainable Development Goals
elaborate 17 goals of SDGs which are included in
national goals as implemented in National Mid-term
Development Plan of 2015-2019 as we called in
Indonesia ‘Rencana Pembangunan Jangka Menengah
Nasional (RPJMN) Tahun 2015-2019’. Article 15 of
Presidential Decree of Republic of Indonesia number
59 of 2017, written that:
(1) “Untuk pencapaian sasaran TPB Daerah,
Gubernur menyusun RAD TPB 5 (lima) tahunan
bersama Bupati/Walikota, diwilahnya masing-
masing dengan melibatkan Ormas, Filantropi,
Pelaku Usaha, Akademisi, dan Pihak terkait
lainnya.”
(1) to achieve regional TPB target, the Governor
composes an annual 5 (five) RAD* with the
Regent/Mayor, in their respective regions by
involving mass organization, Philanthropy, Business
Actors, Academics, and other related Parties.
(2) “Ketentuan lebih lanjut mengenai mekanisme
koordinasi penyusunan, pemantauan, evaluasi,
dan pelaporan pelaksanaan RAD TPB 5 (lima)
tahunan ditetapkan dengan peraturan Menteri
Perencanaan Pembangunan Nasional/Kepala
Badan Perencanaan Pembangunan Nasional”
(2) Further provisions concerning the
coordination mechanism for the preparation, control,
assessment, and reporting of the implementation of
five annual RAD TPB are set by the regulation of the
Minister of National Development Planning or Head
of the National Development Planning Agency.
*RAD is referred to Rencana Aksi Daerah or
Regional Action Plan.
Related to those goals, in this paper we would
focus on Goal 8 concerning Decent Work and
Economic Growth, especially in the regional section.
“Sustainable economic growth will require societies
to create the conditions that allow people to have
quality jobs that stimulate the economy while not
harming the environment. Job opportunities and
decent working conditions are also required for the
whole working age population. There needs to be
increased access to financial services to manage
incomes, accumulate assets and make productive
investments (UN, 2019).” And BUMDes can be one
of the answers to reach that goal.
2 BUMDES IN INDONESIA
The efforts to promote Village economic growth had
begun since a few years ago despite the fact that the
efforts have currently yet to produce satisfactory
results. Therefore, the idea to stimulate village
economy growth in Indonesia has been re-introduced
with the existence of the Law of the Republic of
Indonesia number 32 of 2004 concerning Regional
Government. The article 213 paragraph (1) stated that
“Desa dapat mendirikan badan usaha milik desa
sesuai dengan kebutuhan dan potensi desa” (Villages
can build their village-owned enterprises based on the
needs and potential of the village), in Article 213
paragraph (2) it is furtherly explained that “Badan
Usaha Milik Desa adalah badan hukum sebagaimana
yang diatur dalam peraturan perundang-undangan”
(Village-Owned Enterprises are legal entities as
regulated in legislation). Also, reinforced by
Government Regulation number 71 of 2005
concerning Villages, it is stated that the establishment
of a Village-Owned Enterprise is also accompanied
by efforts to strengthen its capacity and supported by
regional policies (from districts/cities) that facilitate
and protect rural communities businesses from the
threat of competition from large investors.
Therefore the existence of BUMDes as an
economic institution has been recognized since 2004,
with the existence of Law of Republic Indonesia
number 32 of 2004 concerning Regional
Government. However, considering that BUMDes is
the new economic institution which operates in rural
areas, they need strong a foundation to grow and
develop, which is why the Law of Republic Indonesia
number 6 of 2014 appears as a statutory regulation
that discusses more details about BUMDes.
The Law of the Republic of Indonesia number 6
of 2014 that is in concern to Village stated that
Village-owned Enterprises referred to as Village
BUM is a business entity whose most of the capital is
owned by the village through direct participation
from the separated assets of the village in order to
manage the assets, services, and other business for the
greatest welfare of the community.
The birth of Law of Republic Indonesia number 6
of 2014 itself is an attempt to explain the articles
listed in the Constitution of 1945, article 18B
paragraph (2) of the constitution of 1945, declared
that:
“Negara mengakui dan menghormati kesatuan-
kesatuan masyarakat hukum adat beserta hak-hak
tradisionalnya sepanjang masih hidup dan sesuai
dengan perkembangan masyarakat dan prinsip
Negara Kesatuan Republik Indonesia, yang diatur
dalam undang-undang”
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(The state acknowledges and respects the units of
customary law community along with each of the
traditional rights as they are alive and in line with the
development of the society and the principles of the
Republic of Indonesia regulated in the Law).
Berbeda dengan koperasi, BUMDes bukan
ditujukan untuk mewujudkan kesejahteraan
anggotanya, melainkan masyarakat desa secara
keseluruhan. Masing-masing BUMDes per tahunnya
menerima anggaran 800 Juta hingga 1,2 milyar dari
pemerintah dan mendapatkan pendampingan
Kementrian Desa, Pembangunan Daerah Tertinggal,
dan Transmigrasi (KDPDTT). Tujuan akhir dari
BUMDes adalah melahirkan produk yang berdaya
saing secara nasional untuk kemudian meluas secara
regional dan internasional (Masri, 2017).
(Unlike the Cooperative, BUMDes is not
intended to actualize the welfare of its members, but
the village community as a whole. Each of BUMDes
receives a fund of 800 million to 1.2 billion per year
from the government and receive guidance from the
Ministry of Villages, Disadvantaged Regions, and
Transmigration, or as we have known in Indonesia
asKementerian Desa, Pembangunan Daerah
Tertinggal dan Transmigrasi (KDPDTT). The final
goal of BUMDes is to engender products that are
nationally competitive to then expand regionally and
internationally).
BUMDes is one of the new economic institutions
that are expected to be the pioneer in bridging
economic strengthening efforts in rural areas,
therefore, in its operation, BUMDes is supported by
village monetary institutions (financing fields) as the
fields that conduct financial transactions in the form
of credits and savings. If the economic institutions are
strong and supported by adequate policies, therefore
the economic growth accompanied by the equitable
distribution of assets to the people at large will be able
to overcome various economic problems in the
countryside. However, from the tens of thousands of
BUMDes that have been formed, there are still many
BUMDes that need immediate assistance.
“Menurut data kami, sudah terbentuk sekitar 41
ribu BUMDes dari total 74.957 Desa di Indonesia.
Berarti kan sudah 64 persen, bahkan mendekati 70
persen kalau desa-desa di Indonesia sudah punya
BUMDes” kata Sekretaris Jendral (Sekjen)
KDPDTT, Anwar Sanusi. “Dari jumlah itu, belum
semuanya berkembang, dan masih banyak yang perlu
mendapat pendampingan agar bisa menjadi pilar
ekonomi dan menampung seluruh aktivitas ekonomi
yang tumbuh dipedesaan”, ujarnya (Pertana, 2018).
(According to our data, around 41 thousand of
BUMDes have been formed from a total of 74,957
villages in Indonesia. It means, that it is already 64
percent, even close to 70 percent of villages in
Indonesia already have BUMDes, "said General
Secretary of KDPDTT, Anwar Sanusi. "Of that
number, not all have developed, and there are still
many that need guidance in order to become an
economic pillar and accommodate all economic
activities that thrive in the village," he said.)
3 MAXIMIZE THE EXISTING
POTENTIAL WITH VERTICAL
STRUCTURAL
With the number of villages totaling at 74,957,
ideally, villages should become the pioneer of
economic growth in Indonesia. However, based on
the fact that we gather, there are still many BUMDes
which are currently not productive enough to help
drives the growth of economic power in rural areas or
villages. We realized that we need to revolutionize the
way BUMDes runs currently. Analogically speaking,
we can address many of BUMDes as if they were
children without a parental figure to look up to. They
have to figure out how to walk, eat and think for
themselves without a mentor figure to guide them on
how to do what they want to do in the most effective
and efficient way possible.
Some possible problems that may appear and stall
the growth of BUMDes in the village area are: the
lack of complete or whole understanding about each
villages hidden or existing potential, the lack of
organizational or business experience for those who
runs BUMDes, the limited availability of skillful
human resources, and the limited business network
available in the rural areas.
The general steps on how to start a successful
BUMDes usually involves mapping Village’s natural
resources potential, the human resources skill levels
and their availability, understanding the primary
needs of each community, and the ability to read the
condition and business potential in each community.
Each village is unique in their own ways, therefore
we cannot apply the same set of methods to asset each
village potential. Consequently, we will end up with
various BUMDes that will specialize in their own
business based on their own village potential, which
also works in our benefits because we can have
different local BUMDes in the same region to support
each other needs and help each other sustain their
business model. In a bigger scope, if each of these
BUMDes grows and able to support a wider range of
customers, we will be making an impact in a National
or even International scale.
In case of making it happen, BUMDes can’t do it
just by themselves. BUMDes needs structural power
on the vertical side who will guide and train them, and
the answer is Badan Usaha Milik Daerah (BUMD) or
Integration of BUMD and BUMDes to Maximize Existing Potential in Indonesia
565

Regional Owned Enterprises. In this case, we should
say that BUMD as BUMDes parents.
Pemerintah daerah mendirikan dan memiliki
Badan Usaha Milik Daerah (BUMD) sebagai
perusahaan. Kewenangan pemerintah daerah dalam
membentuk dan mengelola BUMD sudah ditegaskan
dalam Peraturan Pemerintah nomor 25 Tahun 2000
tentang kewenangan pemerintah dan kewenangan
provinsi sebagai daerah otonom (Wikipedia, 2019).
(BUMD are companies which are established
and owned by local governments. The authority of the
regional governments to establish and manage
BUMD is confirmed in Government Regulation
number 25 of 2000 concerning the authority of the
government and provincial authorities as autonomous
regions.)
Pendirian BUMD didasarkan pada kebutuhan
daerah dan juga kelayakan bidang usaha BUMD
yang akan dibentuk. Hal ini bertujuan untuk
memberikan manfaat bagi perkembangan
perekonomian daerah pada umumnya dan juga
menyelenggarakan kemanfaatan umum berupa
penyediaan barang dan/atau jasa yang bermutu bagi
pemenuhan kebutuhan hidup masyarakat yang sesuai
dengan kondisi, karakteristik, dan potensi daerah
yagn bersangkutan dengan berdasar tata kelola
perusahaan yang baik. Selain itu, diharapkan dapat
menghasilkan laba dan/atau keuntungan (Asikin &
Suhartana, 2016).
(The establishment of BUMD is based on regional
needs, and the feasibility of BUMD business sector
that will be formed and aims to provide benefits to
regional economic development in general, to provide
public benefits in the form of quality goods and/or
services to fulfill people’s livelihoods according to
conditions, characteristics and potential the area
concerned is based on good corporate governance,
and earn profits and / or profits.)
We believe that BUMD is able to take the role of
BUMDes marketing and business distributors
because BUMD may have greater resources to help
them mapping market potential and could help direct
BUMDes business strategy on which products to
create or produce, and the BUMD could help the
BUMDes in terms of transportation and logistics
needed to distribute their products.
Another role that BUMD could take is to
represent BUMDes in the various negotiation process
and to gain trust from principals in the Regional,
National, and International scale. Second, Build trust
with good communication. Third, as business
development for monitoring, training, and motivation
to describe the market potential.
On the legal sides, BUMD could take the role as
a BUMDes’s facilitator in legal standard practices,
defining each organization responsibility and rights to
avoid overlap in the day to day practices, and
licensing process. Furthermore, BUMD could help
BUMDes to make integrated Standard Operational
Procedures (SOP) regarding finance, accounting, and
taxation. Additionally, BUMD could also help
BUMDes by acting as an auditor function of
BUMDes.
Ultimately, the most important thing to make all
those happen is that the Government as the Executive
Body and the House of Representatives as the
Legislative Body must take the first step to decide and
ratifies the Law that says BUMD as a regionally
owned business institution to act as the direct
supervisor of locally owned business (BUMDes).
4 CONCLUSIONS
The role of Government as the Executive and the
House of Representatives as the Legislative are the
key to make this proposed idea happen. We believe
that the Government and the House of
Representatives agreed to ratify the bill that assigns
BUMD as the direct vertical structure for BUMDes in
each region, it will help to boost the growth of the
currently struggling BUMDes by giving them what
they need the most, which are guidance and assistance
in various scopes such as business and laws.
If we can help each BUMDes to achieve their
maximum potential and grow into sustainable
business that can support not only their Local,
Regional, National but also International needs,
without a doubt we will see Indonesia successfully
tackled the challenge of 2030 SGD’s Agenda number
8 (eight) “Decent Work and Economic Growth” as
well as Agenda number 10 (ten) “Reduced
Inequalities” to become one of the pioneer countries
that could be the leading example of good governance
practices in the world.
ACKNOWLEDGEMENTS
Thanks for Toto Sucartono, S.E, M.BA, a
practitioner,for giving us the idea to write for this
paper and to share this idea to the world. Also, thanks
for Dimas Setyawan, S.Kom., a language advisor, for
helping us proof-read our paper.
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