The Effectiveness of the BUMG Program in Improving the

Community Economy in Nagan Raya District

Adam Sani

Universitas Teuku Umar, Alue Peunyareng, Meulaboh, West Aceh, Indonesia

Keywords: Effectiveness, BUMG, Community Economy

Abstract: The purpose of this study was to determine the effectiveness of the Gampong-Owned Enterprises (BUMG)

program on improving the community's economy in Nagan Raya Regency and to find out the obstacles of

Gampong-Owned Enterprises in improving the economy of the people of Nagan Raya Regency. The method

used in this research is through a descriptive qualitative approach with data sources taken through observation,

interviews and documentation and then analyzed through an interactive model of analysis. The results showed

that the Gampong-Owned Enterprise (BUMG) program has not been effective in improving the community's

economy in Nagan Raya Regency. This is evidenced from the 222 gampongs in Nagan Raya Regency in 2021

to 2022, only 5 (five) villages/gampongs have been able to manage BUMG well, 7 (seven) villages/gampongs

are on the way to good management and the remaining 210 other villages/gampongs are only able to survive

the return on investment for the program they are running. The BUMG program in Nagan Raya Regency

focuses on the agricultural, plantation, fisheries, livestock, industrial and building/goods rental sectors. The

BUMG program that is not running and almost no longer implemented in the community is saving and

borrowing business capital. The obstacles of Gampong-Owned Enterprises (BUMG) in improving the

economy of the people of Nagan Raya Regency are limited human resources, lack of management, limited

capital and lack of guidance and supervision.

1 INTRODUCTION

Building Indonesia from the periphery by

strengthening regions and villages within the

framework of the Unitary State of the Republic of

Indonesia is one of the contents of the nine Nawacita

programs of the President and Vice President of

Indonesia. This is a form of development policy that

is considered strategic, where strengthening the

lowest area (village) becomes a milestone of national

sovereignty to be globally competent.

The goal of national development is to improve

the welfare of the community to manage the region so

as to create a productive and independent region.

Each region will increase progress in various fields

such as the social, cultural, political, and economic

fields, especially in the economic field, it will have a

large enough impact if the economy increases to

advance the region. Especially in the modern era, it

provides great opportunities for each region that

continues to develop and advance its own region.

Economic development is one of the pillars of the

region to achieve national development.

Several studies show that the number of poor and

poorest people in rural areas is still quite large, half of

them is in the category of absolute poor. Rural areas

at this time can be identified with the word "poverty".

Most of the Indonesian population lives in rural areas.

In general, they live in limitations, poverty and

powerlessness in the face of various developments

and changes that occur. The powerlessness of rural

communities, including the poor, is not only caused

by economic problems, but also the lack of

community access to improve community skills and

abilities, including information.

Economic development in rural areas has long

been carried out by the Indonesian government

through various programs. The Indonesian

government is expected to create a business climate

that encourages healthy economic development, both

in improving the welfare of members and the

surrounding community, as well as participating in

building the national economic system as an

economic organization. One of the new approaches

that are expected to stimulate and move the wheels of

the economy in rural areas is through the

Sani, A.

The Effectiveness of the BUMG Program in Improving the Community Economy in Nagan Raya District.

DOI: 10.5220/0011567000003460

In Proceedings of the 4th International Conference on Social and Political Development (ICOSOP 2022) - Human Security and Agile Government, pages 321-325

ISBN: 978-989-758-618-7; ISSN: 2975-8300

 2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)

321

establishment of economic institutions that are fully

managed by rural communities. So that the existence

of this economic institution is not controlled by

certain groups who have large capital in rural areas.

So the ownership of the institution is by the village

and jointly controlled, where the main goal is to

improve the community's economic standard of

living, one of which is through Village-Owned

Enterprises (BUMDes) or in Aceh Province known as

Gampong-Owned Enterprises (BUMG). The

development of this village/gampong-owned

enterprise cannot be separated from the competitive

conditions it faces with other economic actors.

Village-Owned Enterprises or Gampong which are

pillars of economic activity in villages/gampongs that

function as social and commercial institutions.

The legal basis for the existence of Village-

Owned Enterprises (BUMDes) is Law Number 6 of

2014 concerning Villages. Article 87 paragraph (1)

Villages can establish village-owned enterprises

called BUMDes, paragraph (3) BUMDes can run

businesses in the economic sector and/or public

services in accordance with the provisions of laws

and regulations. While the purpose of the

establishment of BUMDes is as a village business

which is intended to accommodate all activities to

increase community income, both those that develop

according to local customs and economic activities

that are submitted to be managed by the community

from government and local government project

programs. The establishment of BUMDes is an

embodiment of the productive management of the

village economy which is carried out in a cooperative,

participatory, emancipatory, transparent,

accountable, sustainable manner. Therefore, serious

efforts are needed to make the management of

BUMDes run effectively, efficiently, professionally,

and independently. To achieve the objectives of

BUMDes, it is carried out by meeting the needs

(productive and consumptive) of the community

through the distribution of goods and services

managed by the community and the village

government.

Village-Owned Enterprises (BUMDes) in Law

Number 6 of 2014 concerning Villages, namely

Village-Owned Enterprises (BUMDes) are business

entities who’s entire or most of the capital is owned

by the village through direct participation from

village assets which are separated to manage assets,

services and other businesses for the welfare of rural

communities.

Whereas specifically for Aceh Province and

Regencies/Cities within Aceh province, Village

Owned Enterprises (BUMDes) are better known as

Gampong-Owned Enterprises (BUMG). The

difference in the name is based on the difference in

the designation of the village to the name of the

gampong in Aceh Province. The legal basis for the

use of gampongs in Aceh Province, namely Article 1

paragraph (20) of Law Number 11 of 2006

concerning the Government of Aceh explains that

"Gampongs or other names are legal community units

that are under the mukim and are led by a keuchik or

other name who has the right to carry out business

affairs. his own household”.

The existence of gampong-owned enterprises

(BUMG) in Aceh province and districts/cities in Aceh

should be able to strengthen the community's

economy if managed properly, because these

village/gampong assets will become the foundation of

the community in improving their economy.

However, it is undeniable that many

villages/gampongs, especially isolated

villages/gampongs, have not been able to take full

advantage of the BUMG program so that it affects the

slow progress of the community's economy.

This research was conducted to determine the

effectiveness of the Gampong-Owned Enterprise

(BUMG) program in improving the community's

economy in Nagan Raya Regency.

2 LITERATURE REVIEW

2.1 Effectiveness

Effectiveness is the ability to do something right.

Effectiveness has a lot to do with goals because the

closer an organization is to its goals, the more

effective it is. Effectiveness is a condition that shows

the extent to which an organization realizes the

activities carried out and the goals achieved.

According to Budiani, to measure the

effectiveness of a program, it can be done by using

the following indicators:

a. Program Target Accuracy

b. Program Socialization

c. Program Objectives

d. Program Monitoring.

2.2 Gampong-Owned Enterprises

Gampong-Owned Enterprises (BUMG) are business

entities whose capital is wholly or most of the capital

is owned by the gampong (village) through direct

participation originating from gampong assets which

are separated in order to manage assets, services and

ICOSOP 2022 - International Conference on Social and Political Development 4

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other businesses for the maximum welfare of the

gampong community.

Gampong-Owned Enterprises (BUMG) are

institutions formed by the village government and the

community manages these institutions based on the

needs and the village economy. Gampong-Owned

Enterprises are formed based on the applicable laws

and regulations based on an agreement between

village communities. The purpose of BUMG is to

improve and strengthen the village economy.

Gampong-Owned Enterprises (BUMG) have a

function as a commercial institution through offering

local resources that aim to seek profit and social

institutions through contributing to the provision of

social services that favor the interests of the

community.

According to the Center for Studying the

Dynamics of the Development System for Gampong-

Owned Enterprises, BUMG is a gampong business

institution managed by the community and the

gampong/village government in an effort to

strengthen the gampong/village economy and is

formed based on the needs and potential of the

village. As one of the economic institutions operating

in the village, BUMG must be different from other

economic institutions in general. This is intended so

that the existence and performance of BUMG can

make a significant contribution to improving the

welfare of the community. In addition, so as not to

develop a capitalistic business system in the village

which can cause disruption of the values of social life.

The establishment and management of Gampong-

Owned Enterprises (BUMG) is the embodiment of

productive village economic management which is

carried out in a cooperative, participatory,

emancipatory, transparent, accountable, and

sustainable manner. Therefore, serious efforts are

needed to make the management of these business

entities run effectively, efficiently, professionally and

independently.

Efforts to achieve the objectives of BUMG are

carried out by meeting the needs (productive and

consumptive) of the community through the

distribution of goods and services managed by the

community and the gampong government. The effort

to fulfill this need is not to burden the community,

considering that BUMG will be the most dominant

gampong business in driving the village economy.

2.3 Community Economic

Improvement

Improvement according to the Big Indonesian

Dictionary (KBBI) is progress, change. While

economics is the science of the principles of

production, distribution, use of goods and wealth

(finance, industry, trade), the economy is an

economic action, rule or method.

The term economics comes from the Greek words

"oikos" and "nomos". This means that household

governance, governance is needed so that the welfare

of household life can be achieved. Here the term

“economy” refers to the process or business of

procuring goods and services for household needs.

Meanwhile, in terms of terminology or terms,

economics is knowledge about tourism and issues

related to individual or group human efforts in

meeting unlimited needs faced with limited resources.

The economy is a human problem and social

system that organizes activities to meet basic needs

(i.e. food, shelter and clothing) and non-material

wants (such as education, knowledge and spiritual

gratification).

Society is a group of people who interact with

each other continuously, so that there are patterned,

organized social relations. According to Paul B.

Harton, society is a group of people who are relatively

independent, who live together long enough, who

inhabit a certain area, have the same culture and carry

out most of the activities in that group.

Community economic improvement is a way or

tactic carried out in an activity to make improvements

in terms of the prosperity felt by the community in

carrying out their business, where the business can

improve the standard of living of the income earned

from the business, so that the business or activity runs

smoothly.

Efforts to improve the community's economy can

be realized in several strategic steps to expand public

access to development resources and create

opportunities for lower-level communities to

participate in the development process, so that people

can overcome their economic competitiveness.

a. According to Mubyarto, the improvement of the

community's economy can be seen from three

aspects.

b. Creating an atmosphere that allows the potential

of the community to develop. The starting point

of his thinking is the recognition that every

human being has potential that can be

developed.

c. Strengthen the economic potential of the

community. Efforts that are very basic are

increasing the level of education and health

status as well as opening up opportunities to take

advantage of economic opportunities

d. Developing the community's economy also

means protecting the community and preventing

The Effectiveness of the BUMG Program in Improving the Community Economy in Nagan Raya District

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unequal competition, as well as preventing the

exploitation of the strong economic group over

the weak.

Some of the terms and understandings above can be

concluded that what is meant by improving the

community's economy is advancing the community's

economy for the better to improve the standard of

living.

3 RESEARCH METHODS

The research method is the method used for certain

research in accordance with the objectives to be

achieved. This research uses a qualitative descriptive

approach. Descriptive research aims to accurately

describe phenomena that occur systematically,

actually, and accurately in accordance with existing

facts by collecting data, explaining and analyzing

objectively in the sense that the results of this study

will emphasize more on the description of the actual

research object.

In the qualitative approach the researcher makes a

complex picture, examines words, reports in detail

from the respondents' views, and conducts a study of

natural situations.

Primary data sources are obtained through

observation, interviews and documentation from

related parties, while secondary data sources are

obtained through library materials such as books,

articles, dictionaries, newspapers, magazines,

inscriptions, meeting minutes, agendas, and so on.

The main or main data sources that are used as

research and analysis materials.

The data collection used in this research is carried

out through observation, interviews and

documentation and then analyzed using the Miles and

Hubberman model, which is called the interactive

model of analysis. According to H.B. This Sutopo

model consists of three main components, namely:

data reduction, data display, conclusion drawing.

4 RESULTS AND DISCUSSION

Village-Owned Enterprises (BUMDes) or in Aceh

better known as Gampong-Owned Enterprises

(BUMG) are defined by Law Number 6 of 2014 as a

business entity who’s entire or most of the capital is

owned by the village/gampong through direct

investment originating from the village. from village

assets which are separated to manage assets, services

and other businesses which are broadly for the benefit

of the welfare of the village community.

A business opportunity will be a source of income

that provides additional income to the community if

it is able to capture business opportunities that have

the potential to be developed into a real business

activity. Thus, the community's ability to take

advantage of existing opportunities will be influenced

by the community's ability to seize the opportunity

itself. In addition, the ability to organize the resources

owned in such a way that the potential opportunities

become businesses that can actually be

operationalized. Although not all BUMG activities

absorb labor from the community, the community

must be smart in generating sources of income for

them. The policies of the government, the village and

the ability of the community to benefit from the

development of BUMG are very influential. This will

determine the variety of income sources that appear

later.

Good management of Gampong-owned

enterprises (BUMG) will be able to increase village

assets and support the local community's economy,

the success of BUMG will make the village

independent, less dependent on the government, build

villages from and the results of BUMG and also

increase job opportunities for the community in

improving its economy.

Nagan Raya Regency is one of the regencies in the

Aceh Province of the Republic of Indonesia which

has natural potential in the fields of plantations,

agriculture, mining, fisheries and marine affairs. This

potential is utilized by the gampong community to

develop in the BUMG program. Various programs

can actually be used to develop Gampong-Owned

Enterprises, but in Nagan Raya Regency in general,

villages/gampongs only have several BUMG

programs that are run, including the agricultural,

plantation, fishery, livestock, industrial and

building/goods rental sectors. Then until now there is

one BUMG program that is not running and almost

no longer implemented in villages/gampongs in

Nagan Raya Regency, namely business capital

savings and loans due to difficult prayers during the

process of depositing results from loans to Gampong-

Owned Enterprises (BUMG).

The implementation of the BUMG program in

Nagan Raya Regency which is carried out by villages

in 2021 to 2022 only 5 (five) villages/gampongs have

been able to manage BUMG well, 7 (seven)

villages/gampongs are on the way to good BUMG

management and the remaining 210 other

villages/gampongs were only able to survive the

return on investment for the program being

ICOSOP 2022 - International Conference on Social and Political Development 4

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implemented. Gampong-Owned Enterprises

(BUMG) in Nagan Raya Regency have not been

effective in carrying out their duties to improve the

community's economy. This is based on the fact that

BUMG programs have not been implemented

optimally, although every year there are proposals for

BUMG programs in various fields.

Obstacles in the management and development of

Gampong-Owned Enterprises (BUMG) in Nagan

Raya Regency mostly lie in the issue of Human

Resources, Managerial, Capital and Supervision.

a. Limited Human Resources (HR)

The problem that often arises is regarding human

resources who manage BUMG themselves. The main

problem in the management of BUMG is the inability

of human resources to manage and be competent in

their fields. This is because in the process of

establishing and determining the party that manages

BUMG, not many community members understand

the management of BUMG.

b. Lack of Management Management.

In the management of BUMG in Nagan Raya

Regency, another problem faced by BUMG managers

is that they have not implemented a BUMG system

and management based on good governance

principles or based on Good Corporate Governance

principles. This obstacle is due to the different

structure and characteristics of BUMG in each region.

The difference in the BUMG management system is

due to the different characteristics and programs of

the BUMG itself.

c. Limited capital

The capital owned by BUMG in Nagan Raya

Regency which only relies on assistance from village

funds is also an obstacle for BUMG in developing the

community's economy.

d. Supervision and construction of BUMG

Supervision and guidance when viewed from the

structure of the BUMG management is carried out by

the gampong government itself, both the Village

Head/Keuchik and the village/gampong government.

The implementation of supervision and development

of BUMG in Nagan Raya Regency has not been

maximally carried out internally in

villages/gampongs within the scope of Nagan Raya

Regency.

5 CONCLUSIONS

5.1 Conclusion

The Gampong-Owned Enterprises (BUMG) program

in Nagan Raya Regency has not been effectively

implemented and has not been able to improve the

economy of the local community. BUMG's obstacles

in carrying out its program are due to limited human

resources, lack of management, limited capital and

lack of internal control.

5.2 Suggestions

It is recommended to the Nagan Raya Regency

Government to continue to foster BUMG in villages

within Nagan Raya Regency so that the management

of BUMG is getting better and it is recommended to

BUMG managers to be more active and consistent in

implementing the BUMG program for the benefit of

improving the community's economy.

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