Legal Implication of Law No.11/2020 Concerning Job Creation on Village-Owned Enterprises in Indonesia

Abstract

The enactment of Law No.11/2020 concerning Job Creation ("Job Creation Law") is one of the most controversial issues in Indonesia towards the end of 2020. Village-owned enterprise ("BUM Desa") is one of the aspects that fall within the scope of this new law. This law changes the legal definition of BUM Desa. The change is not only important because it confirms the status of BUM Desa as a legal entity, but it also removes the concept of ownership criteria provisions as stipulated in the 2014 Village Law. The new definition also removes the concept of 'separated wealth' (kekayaan yang dipisahkan), which is the basic characteristic of public companies like BUMN and BUMD, as well as BUM Desa before the enactment of the Job Creation Law. Based on normative legal research, this paper seeks to identify the legal implication of issuance of the Job Creation Law on the legal aspects of BUM Desa. It aims to clarify to what extent the law addresses the various legal problems of BUM Desa and provides legal certainty for related stakeholders. The paper concludes that the Job Creation Law contains a number of provisions that have implications for the legal aspects of BUM Desa, among which: (1) the clarity and confirmation of the status of BUM Desa legal entities as stated in the new operational definition of BUM Desa; (2) The removal of ownership criteria from the operational definition of BUM Desa may open the possibility for BUM Desa to be controlled by private capital and dissolves the concept of village community ownership of BUM Desa; (3)The provisions regarding BUM Desa in the Job Creation Law has not clarified the misconception of BUM Desa as stipulated in the Village Law and the derivative regulations, but instead contains conflicting provisions that may spark further debate and maintain legal uncertainty in BUM Desa management and development. The implementing regulations relating to BUM Desa under the Job Creation Law to await finalization of the draft Law on BUM Desa to ensure consistency.